MINNEAPOLIS – Flight attendants at Northwest Airlines accepted a pay cut deal on Tuesday, the final step in the airline's push to get $1.4 billion a year in savings from its workers.
Northwest was set to exit bankruptcy protection on Thursday with or without the approval of flight attendants. And flight attendants have been working under similar pay cuts since July, when Northwest imposed new terms with a bankruptcy judge's permission.
But acceptance by the rank-and-file will put an estimated $15,000 in their hands in exchange for their concessions, an opportunity they would have lost after Northwest emerges from bankruptcy protection. And for the airline it removes the threat of a strike, although that had been appearing increasingly remote.
Northwest Airlines Corp. has now locked all its unions into lower pay and more company-friendly work rules through the end of 2011. That would set Northwest up for a long stretch of labor peace after enduring two strikes since 1998.
Northwest's 8,100 flight attendants had voted down two earlier pay cut agreements negotiated by their unions. And they approved the most recent tentative agreement by the narrowest of margins -- 50.9 percent to 49.1 percent, or 104 votes. The union said 6,442 flight attendants were eligible to vote, and 484 ballots were voided. Some flight attendants could not vote because their union dues were not current.
Management compensation could have been another factor in the close vote. After the tentative agreement was reached April 26, Northwest disclosed that its top 400 managers would come out of bankruptcy owning about 5 percent of the company, infuriating the unions.
The cuts capped top flight attendant pay at about $35,400 a year, down from $44,190 before Northwest filed for bankruptcy protection, according to the union.
By approving the new contract, flight attendants will split up a $182 million claim in Northwest's bankruptcy reorganization. The union has said that could be worth some $15,000 to each flight attendant, depending on how much the claim sells for.
Some flight attendants rejected the bankruptcy claim as too small in light of their sacrifices, said Jay Hong, president of the Northwest branch of the Association of Flight Attendants-CWA. But it could mean a lot to a worker close to losing a house, he said.
The equity claim was the reason why the union sent the contract out for a vote at all, Hong said. Ultimately, union leaders sent the agreement to members without a recommendation on how they should vote on it.
"I made no bones about why we did this, we did this because of the equity claim. That was not something I think the union could justifiably make a decision" on, he said. "It's always the flight attendants that are going to make a decision about money like that."
Northwest began seeking worker pay cuts in 2003, and the process continued after it filed for bankruptcy protection on Sept. 14, 2005. Bankruptcy laws allow companies to reject union contracts, giving managers a lot of leverage in negotiations. After flight attendants rejected a second negotiated agreement Northwest, with a judge's permission, imposed pay cuts last July. Courts blocked flight attendants from striking.
"I realize that the past 20 months have been a difficult period for our employees and I want to thank them for their hard work and sacrifices that helped Northwest complete its restructuring," Northwest Chief Executive Doug Steenland said in a prepared statement. "I am pleased that our employees are seeing the benefits of the restructuring already in the forms of unsecured claims and profit sharing." He said Northwest hopes to distribute a total of $1.6 billion in unsecured claims and profit sharing payments through 2010.