Northwest Pilots OK 15% Cut in Their Pay

From Associated Press

Northwest Airlines pilots overwhelmingly approved a new contract Friday that gives them a 15% annual pay cut for the next two years and allows the company’s regional affiliates to carry more passengers.

The agreement would allow Northwest Airlines Corp., the nation’s fourth-largest carrier, to increase revenue by adding regional jets and increase the number of seats in existing small jets.

Of the 4,129 pilots who voted, 89% favored the agreement and 11% opposed it, the pilots union announced.

The concessions are part of an agreement between Eagan, Minn.-based Northwest and the Air Line Pilots Assn. to generate $265 million in savings as the struggling company attempts to slash its labor costs by $950 million a year amid higher fuel costs and tougher competition.


Union leaders unanimously approved the contract earlier and recommended that rank-and-file pilots follow suit to help Northwest renegotiate a $975-million credit agreement that expires in October 2005.

Failure to refinance the deal could have consequences for other credit agreements and for the company’s continued financial viability. The new contract won’t take effect until after the credit agreement is renegotiated.

Besides the 15% pay cut, pilots would have to pay 20% of their health insurance premiums, a first for Northwest pilots. They would also be subjected to a 1,200-hour-a-year cap on sick leave.

As part of the agreement, Northwest executives would accept the same 15% salary cut as pilots. New Northwest Chief Executive Doug Steenland’s base salary of $675,000 would be reduced to $573,750, and his annual performance pay would take a hit as well.


The airline has lost $2.1 billion on operations since the beginning of 2001.

Shares of Northwest rose 23 cents to $10.16 on Nasdaq.