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Northwest Pilots Vote to Approve Contract Including Pay Slash

Posted on: Friday, 5 May 2006, 12:02 CDT

By Jane Roberts, The Commercial Appeal, Memphis, Tenn.

May 4--By nearly two to one, pilots at Northwest Airlines voted to approve a contract that cuts their pay by nearly a quarter, knocking them from among the industry's highest paid to about No. 8.

Passengers, travel agents and investors breathed a sigh of relief. With the most powerful labor group now on board, Northwest appears to have won the argument that it must dramatically cut operating costs just to survive.

What's next, industry watchers say, is lots of experimentation as America's legacy carriers settle into the low-fare model Southwest Airlines made famous while still offering the "high touch" customers expect, said David Stempler, president of Air Travelers Association.

"We're going to see the airlines try all kinds of things -- charging for checked luggage, charging for preferential seating. At some point, you might start paying for beverage service."

Most changes will be in the back of the plane because airlines can't afford to irk high-profit travelers up front.

Expect lots of grumbling in the beginning. "But once people understand the rules, they'll go along with them," Stempler said.

The pilot vote is part of the process of reducing cost on the things airlines can control, all the more important when oil is trading at $75 a barrel, analysts say.

The pilots voted 63 percent to 37 percent in favor of the 5-year contract that will save Northwest $358 million a year. Ninety-five percent voted.

Wednesday, Northwest praised them and their union for "playing an extraordinary leadership role\rdblquote in the company's need to realize $2.5 billion in annual improvements.

"With today's vote, our pilots and their families have made another significant sacrifice to help secure Northwest's future," said Northwest President Doug Steenland.

The company also announced that April passenger counts were down 5.4 percent from the period last year.

The pilots -- who earn from $60,000 to $160,000 -- took a 15 percent cut in late 2004. Late last year they gave another 23.9 percent in temporary cuts designed to preserve the company in bankruptcy.

That cut is now permanent in a deal that includes 1.5 to 2 percent raises a year, starting in 2008.

"Our goal in negotiations was to provide contract changes that addressed Northwest's needs but also provided security for Northwest pilot jobs," said Capt. Mark McClain, chairman of the union's master executive council.

The pilots, represented by the Air Line Pilots Association, worked diligently to maintain jobs, especially on routes Northwest wanted to outsource. Under the agreement, the pilots will fly planes with 77 or more passengers, giving Northwest the right to outsource work on planes with up to 76 seats.

Under the old contract, outsourcing was limited to planes with fewer than 55 seats.

The pilots will also receive an $888 unsecured claim in the company and will be eligible for profit-sharing once it emerges from bankruptcy.

"Now is the time for Northwest pilots to unite and begin looking forward to our company's successful emergence from bankruptcy," McClain said.

Uniting the rank and file may be easier than uniting union leaders, who were so divided, they did not recommend members approve or reject the deal.

That element alone made the outcome tenuous, said David Beckerman, director of consulting at BACK Aviation Solutions in Washington.

"As a result, the results were not clear-cut. They didn't get 80-90 percent of the votes."

McClain particularly took heat over the division. Union leaders blamed him for the lack of consensus and last week called a meeting to oust him and the council's vice chairman, saying the pilots needed a unified front in case the contract failed.

The motion was tabled.

Northwest now has permanent agreements with four of its seven labor groups and a deal that covers a portion of workers represented by the International Association of Machinists and Aerospace Workers. The last to vote are the carrier's flight attendants, who will begin the process Sunday on a contract that cuts pay 21 percent.

With the powerful pilot group on board, "any chance we had of the flight attendants' contract being turned down is gone now," said Memphis resident Marion Balentine, 58, with the carrier nine years.

"People think we're taking a 21 percent straight pay cut. No, we're not; it's closer to a 45 percent cut."

The difference, she said, includes changes in work rules and per-diem earnings that paid flight attendants extra for downtime and time away from their home base.

"Now, if a plane is delayed due to air traffic control issues, we'll be sitting there on the plane with the passengers, and we won't be getting paid," she said.

"I thoroughly enjoy my job, but Northwest is making it so much harder to give the people what they really deserve."

NWA EMPLOYEES

Minneapolis/St. Paul: 14,691

Detroit: 8,595

Memphis: 1,742

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Copyright (c) 2006, The Commercial Appeal, Memphis, Tenn.

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NWACQ,

Source: The Commercial Appeal

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