Minneapolis – Northwest Airlines Corp. asked a bankruptcy judge on Wednesday for permission to reject union contracts, starting a countdown for workers to either make a deal or live with pay cuts imposed by the company. The nation’s fourth-largest airline said it would be forced to shut down unless employees work for less.
Union leaders had expected the move and have said they will negotiate rather than let the company impose its terms. Northwest said it is willing to negotiate around-the-clock. Bankruptcy rules give the unions up to 51 days before Northwest could impose its terms.
“Now we know the clock is ticking,” said Peter Fiske, spokesman for the Professional Flight Attendants Association. The union has talks scheduled three days a week through November.
Northwest has already imposed new pay and work rules on striking mechanics, and the airline has begun permanently replacing them.
Even so, mechanics and the airline planned to meet today to see if they could resolve their differences.
The airline filed for bankruptcy protection on Sept. 14 and said it has been losing nearly $4 million a day this year. It said its losses will hit $8 million a day in the slower fall and winter travel seasons.
“Northwest cannot continue to burn cash at the current rate for very long before it must make the decision to close its doors,” the airline said in its filing in bankruptcy court in New York on Wednesday.
Northwest wants to cut $2.5 billion in costs, including $1.4 billion annually in labor costs.
Northwest said salaried and management employees will have taken 31-40 percent cuts to salaries and incentives when a second round of cuts takes effect in December. Those same employees took a 15 percent pay cut as part of a deal with pilots last fall.
United also sought to reject its union contracts in bankruptcy. Its ground workers and mechanics nearly struck in May before agreeing to concessions.
Delta, which is also operating under bankruptcy protection, has said it will ask a judge to impose terms on pilots if they don’t make a deal. Other Delta workers are non-union, so it doesn’t need a judge’s permission to cut their pay.
“The typical outcome seems to be last-minute settlements, and I think that’s because everybody has too much to lose in a strike. The unions know that a strike could kill the airline,” said bankruptcy attorney David LeMay.
