Northwest Proposes Job, Pay Cuts to Stem Losses
Northwest Airlines Corp. proposed eliminating almost 50% of mechanics’ jobs and reducing the pay of remaining workers by 26% to stem growing losses.
The airline said in contract negotiations that it wanted to cut 2,031 of Northwest’s 4,412 aircraft and equipment maintenance jobs to try to reduce annual costs by $176.2 million, according to a posting on the Aircraft Mechanics Fraternal Assn. website Friday. Northwest would hire contractors for some work now performed by its own staff, the union said.
“They want us to negotiate a suicide pact,” Ted Ludwig, president of the mechanics’ union, said Monday. Northwest spokesman Bill Mellon said the company did not comment on labor discussions.
St. Paul, Minn.-based Northwest is seeking to reduce total expenses by $1.1 billion a year as it tries to compete with lower-cost rivals. Chief Executive Douglas Steenland said last month that cutting labor costs this year was “imperative” for the company, which is trying to stem increasing quarterly losses.
The five biggest U.S. airlines have posted more than $33 billion in losses over the last four years, largely because of increased competition from discount carriers such as Southwest Airlines Co.
UAL Corp.’s United Airlines and US Airways Group Inc. have used bankruptcy protection to whittle away costs, including labor expenses.
Northwest’s first-quarter loss doubled to $450 million from a year earlier, and analysts surveyed by Thomson First Call expect the airline to lose money every quarter for the rest of this year.
Northwest shares fell 33 cents to $5.46 on Nasdaq.
Under the company’s proposal to the mechanics’ union, Northwest also is seeking to eliminate most of the workers who clean its aircraft between flights, reducing their ranks to 73 employees from 882. The cleaners also are represented by the Aircraft Mechanics Fraternal Assn.
Remaining cleaners would have a 25% pay cut, and employees who clean buildings would take a 26% pay cut.
The proposals were reported Sunday by Associated Press.
