Airline Banks on Replacements; Union Faces Job Losses

Aug. 21–In hindsight, the inevitability of a strike at Northwest Airlines was telegraphed last week by Wall Street analysts.

The airline’s stock, left for dead by investors, came to life and rose 34 percent for the week. Analysts hiked their recommendations, citing Northwest’s contingency plans to fly through a mechanics strike.

“Frankly, we’re hoping for a strike,” Jamie Baker, an analyst with J.P. Morgan Securities, said in a report. A strike coupled with solid weekend operations would “warrant an even warmer market embrace.”

Whether Northwest gets that hug or a brush off depends on how well its 1,200 replacement workers and 300 managers keep its planes running.

The airline has spent 18 months and tens of millions of dollars refining the most ambitious deployment of replacements in more than 15 years. It believes it will operate smoothly without its 4,400 union mechanics, cleaners and custodians.

“Northwest customers can continue to depend on Northwest for their travel needs,” Doug Steenland, president and chief executive, said in a statement. “We intend to operate our normal schedule of domestic and international flights.”

Mechanics are betting that Steenland will be proven wrong. Jim Young, chairman of the mechanics union’s negotiating committee, called the business-as-usual claim “a joke.”

Northwest has acknowledged that it can’t afford widespread operating problems, noting in regulatory filings that it might have to seek bankruptcy protection if that happens.

The Aircraft Mechanics Fraternal Association at Northwest said it had no choice but to launch the second strike at the airline in seven years. The more they tried to bargain with Northwest, which included five final days at National Mediation Board headquarters in Washington, D.C., the worse the offers got.

A MFA national director O.V. Delle-Femine, in a statement, called the negotiations “an arrogant farce with a predetermined ending.”

Julie Hagen Showers, vice president of labor relations and co-leader of the Northwest negotiating team, acknowledged that the airline stuck to its demand that the union serve up $176 million in annual cost cuts. “They were faced with difficult choices.”

Other unions at Northwest have told their members to report to work as usual, a move that was not unexpected. Professional Flight Attendants Association president Guy Meek indicated that individual flight attendants might refuse to cross picket lines and that the union would defend their right to do so.

Mechanics for Northwest regional carrier Mesaba Airlines — who had indicated that they would honor a picket line by their colleagues at Northwest — were stopped by a federal judge on Friday. They also are represented by AMFA, but under a separate contract.

Pilots’ union leaders, meanwhile, told members in an e-mail that Northwest management had advised them that “operations will likely be affected over the coming days as a result of a large number of aircraft currently out of service and a high volume of (noncritical maintenance items) on in-service aircraft.”

Labor experts say the mechanics union — which is independent from the AFL-CIO and has no strike fund — is taking on Northwest at a particularly tough time.

“This dispute is taking place in a time when labor is at its weakest point in the last 75 years,” said Hy Berman, a labor historian and professor emeritus at the University of Minnesota. “It is taking place in a company that is committed to ending union contracts, and it is done at a time when the union involved is not now or never was a part of the labor movement.”

Northwest has racked up more than $3 billion in operating losses since 2000 as a series of blows — from a business travel slowdown and terrorism jitters to record high fuel prices — have battered the industry.

Newer competitors with lower cost structures have blossomed and now account for nearly one-third of the market. Now saddled with the highest labor costs in the industry, Northwest says it needs to cut annual labor costs by $1.1 billion. It has secured just $300 million in concessions from Northwest pilots and salaried and management employees.

In addition, the carrier is asking its unions to agree to a freeze of the current defined benefit pension program. In its place, Northwest has proposed a new defined contribution pension program. It also is asking Congress to give it more time to make payments to its pension plans.

Because of the failure to reach an agreement with AMFA leadership prior to the deadline, Northwest “has implemented new terms and conditions for its mechanics as permitted by the federal Railway Labor Act,” the statement said. The act governs labor relations for the U.S. airline industry.

Now, the airline must show that replacement workers and managers can keep its planes ready to fly without major delays or cancellations. Northwest said its operations will continue to meet federal safety regulations.

It’s been more than 15 years since an airline attempted to deploy a large number of replacements. When machinists went on strike at Eastern Air Lines in 1989, other unions refused to cross the picket lines. The airline operated with replacements for a year or so and then collapsed in bankruptcy.

“The company went under and all those jobs ceased to exist,” said John Remington, a professor of industrial relations at the University of Minnesota’s Carlson School of Management. “In the end, the company was not able to successfully replace them. But that was a different time, a different state and a different environment.”

On Friday night, the mood was subdued among the 20 pickets to have the first strike shift in front of Building C, one of Northwest’s main facilities. They paced slowly in the semi-dark, cheered briefly by the occasional honking horn from nearby I-494.

Some seemed resigned to the idea that their jobs were gone forever.

“This isn’t about mechanics negotiating a contract — it’s about bankruptcy,” said Mark Yoshida, 42, of Plymouth, who had been a Northwest mechanic for 21 years. “We’re just the scapegoat.”

One picket, a cleaner for the airline for two decades who didn’t want to be identified, said she’d already gotten another day job at Home Depot. She said she didn’t know if she’d have a Northwest job to come back to.

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