CHICAGO – The union representing pilots at Northwest Airlines (NWACQ) said it reached a tentative deal with the airline on a 24 percent pay cut that would stall the carrier's effort to have a bankruptcy court void the pilots' contract.
The Air Line Pilots Association (search) (ALPA) said late on Thursday that the deal, which requires the approval of its members and the bankruptcy court, would reduce pilot costs for the airline by $17.9 million a month.
The concessions in the temporary deal would amount to $214.8 million a year in labor savings for the airline. That amount is 60 percent of the $358 million Northwest is seeking from nearly 5,200 pilots.
Northwest, which is restructuring in bankruptcy, has said it needs a total of $1.4 billion in annual labor savings to survive. The carrier has asked for court permission to cancel the labor contract of any employee group that has not agreed to the concessions it says are required.
The airline said on Wednesday, however, that it would delay a November 16 hearing on the request to cancel contracts until mid-January if the unions representing its pilots, flight attendants and ground workers would agree to temporary concessions equal to 60 percent of the $1.4 billion.
ALPA said a permanent agreement eventually will result in more extensive contract changes. But the additional bargaining time would allow the union to craft a better deal for the pilots.
"In effect, our pilot group would gain additional time for negotiations at no cost — time which may allow us to reach a more satisfactory longer-term agreement than might otherwise be possible," ALPA said.
In addition to cutting wages by 24 percent, ALPA said the temporary deal would cut some international flying rates, reduce sick pay to 75 percent of regular hourly pay and eliminate domestic crew meals.
The union representing Northwest's flight attendants on Wednesday offered givebacks worth $117 million to the airline in exchange for more time to negotiate a new contract.
A spokesman for the International Association of Machinists, which represents about 14,400 ground workers, said union leaders have yet to produce a temporary concessions package, but that IAM expects Northwest to ask the court on Friday to impose a temporary contract on those workers.
IAM said it expects Northwest to ask for a 19 percent reduction in pay and sick pay of 70 percent of regular wages.
Northwest, which filed for bankruptcy in September, has said it must reduce its labor costs to achieve $2.5 billion in overall yearly savings.
Other carriers in bankruptcy, such as UAL Corp.'s (UALAQ) United Airlines, have used bankruptcy to extract savings from their workers that might have been impossible out of court.
Northwest, along with other major U.S. airlines, has been battered by soaring fuel costs, weak revenue and low-fare competition.
The airline had the weakest on-time performance in September of 20 airlines tracked by the U.S. Department of Transportation (search).
The government data showed that Northwest landed 74.81 percent of its flights on time — within 15 minutes of scheduled arrival.
September's on-time performance, however, was an improvement over August, when the carrier saw only 67.17 percent of its flights arrive on time. Northwest suffered delays in August related to a dispute with its mechanics over a labor contract.
The workers went on strike on August 20 and since have been replaced by new technicians and outside vendors.