jarhead
master of my domain
- Joined
- Mar 27, 2002
- Posts
- 1,162
From today's online edition of the StarTribune.
NWA seeking less in pilot pay cuts
Liz Fedor, Star Tribune
June 19, 2004 ALPA0619
The price for labor peace and lower pilot costs may be going down at Northwest Airlines.
The carrier's management has told pilots it wants $300 million in annual cost savings, down from its original demand of $442 million and closer to the pilots' offer of $200 million.
The 32 percent reduction indicates that Northwest is committed to reaching an agreement with pilots by the fall, a goal publicly stated by its top executives.
Northwest's counterproposal is a "significant move" from the company's opening proposal, Hal Myers, a spokesman for the Northwest branch of the Air Line Pilots Association (ALPA), said Friday.
Still, Mark McClain, chairman of the Northwest pilots union, cautioned that the $300 million goal is "well above what ALPA believes is necessary." McClain made his comments in a memo that was sent to Northwest pilots on Thursday.
McClain and Myers also emphasized that any cuts in pilot compensation are contingent on "success sharing" provisions such as a profit-sharing program and stock grants.
Union leaders said they will not discuss the size of cuts until management provides a counterproposal on the profit-sharing and equity components of their plan.
Myers said Friday that the union is optimistic that the success sharing proposal will surface soon. During a Thursday negotiating session, he said, "They recognized that we needed that response. They were working on a counterproposal in that area." Talks are to continue next week.
Northwest initially asked for $442 million in annual pilot cuts in February 2003, when it had a workforce of 5,715 active pilots and 633 pilots on furloughs. The company wanted the pilots to accept a 17.4 percent pay cut and forgo a 5.5 percent pay raise set for September 2003.
Some of the savings that management was seeking would come from laying off an additional 343 pilots. There have been many retirements and layoffs since early 2003, so Myers said Northwest's active pilot ranks will be about 5,350 on June 30.
Currently, Northwest's pilot costs are the second-highest in the industry. Pilot costs at United Airlines and US Airways were cut during bankruptcy proceedings, and American Airlines slashed its pilot costs on the threat of bankruptcy.
In United's case, wage rates were cut about 30 percent. In 2003, United pilots gave up about $1.16 billion a year over a six-year restructuring agreement, according to the United branch of ALPA.
Late Thursday, a federal loan board denied United's application for $1.6 billion in federal loan guarantees, making it likely that United will seek further wage cuts from its employees. This week, Delta Air Lines pilots said they are preparing a new wage-cutting proposal in response to that airline's worsening financial condition.
Northwest ALPA's Myers declined to speculate on how talks at United and Delta might influence the outcome of a Northwest pilot agreement.
Joel Denney, an airline analyst at Piper Jaffray & Co. in Minneapolis, said Northwest must reduce labor costs to return to profitability. Since 2001, the airline's management has cut $1.6 billion out of its annual cost structure, but it has not reduced wage rates for union or salaried workers.
To compete over the long-term, Denney said Northwest cannot operate with a labor "cost disadvantage" when it comes to its peers in the airline industry.
After studying Northwest's financial condition for more than a year, McClain said the union had a sound basis for proposing $200 million in cuts. "We based the proposed savings on what would be necessary to make NWA pilot costs more competitive with those at restructured network carriers who are our primary competitors," he wrote.
In early 2003, Northwest said it wanted to cut union and salaried labor costs by $950 million a year. On Friday, Northwest spokesman Bill Mellon said it is not backing off that target. "Approximately $950 million as a total labor savings number is still an operative number," Mellon said. He declined to elaborate on the company's rationale for reducing its pilot proposal to $300 million.
Doug Steenland, Northwest's president, said at an investment conference Tuesday that the pilots have concluded that "it's appropriate, necessary and in their interest to engage in labor cost restructuring."
Pilot leaders sit on Northwest's Labor Advisory Council, Steenland said, which is a forum for management to share financial data and strategic plans with labor officials.
"They acknowledge that overall labor costs have to be reduced, that Northwest pilot costs in particular are not competitive," Steenland said at the New York conference. While he characterized the pilots' offer of $200 million in cutbacks as "not enough," Steenland remained confident that the two sides can reach a deal by fall.
Northwest is in contract talks with its ground workers who are represented by the International Association of Machinists and Aerospace Workers. Contracts for flight attendants and mechanics come open in 2005.
NWA seeking less in pilot pay cuts
Liz Fedor, Star Tribune
June 19, 2004 ALPA0619
The price for labor peace and lower pilot costs may be going down at Northwest Airlines.
The carrier's management has told pilots it wants $300 million in annual cost savings, down from its original demand of $442 million and closer to the pilots' offer of $200 million.
The 32 percent reduction indicates that Northwest is committed to reaching an agreement with pilots by the fall, a goal publicly stated by its top executives.
Northwest's counterproposal is a "significant move" from the company's opening proposal, Hal Myers, a spokesman for the Northwest branch of the Air Line Pilots Association (ALPA), said Friday.
Still, Mark McClain, chairman of the Northwest pilots union, cautioned that the $300 million goal is "well above what ALPA believes is necessary." McClain made his comments in a memo that was sent to Northwest pilots on Thursday.
McClain and Myers also emphasized that any cuts in pilot compensation are contingent on "success sharing" provisions such as a profit-sharing program and stock grants.
Union leaders said they will not discuss the size of cuts until management provides a counterproposal on the profit-sharing and equity components of their plan.
Myers said Friday that the union is optimistic that the success sharing proposal will surface soon. During a Thursday negotiating session, he said, "They recognized that we needed that response. They were working on a counterproposal in that area." Talks are to continue next week.
Northwest initially asked for $442 million in annual pilot cuts in February 2003, when it had a workforce of 5,715 active pilots and 633 pilots on furloughs. The company wanted the pilots to accept a 17.4 percent pay cut and forgo a 5.5 percent pay raise set for September 2003.
Some of the savings that management was seeking would come from laying off an additional 343 pilots. There have been many retirements and layoffs since early 2003, so Myers said Northwest's active pilot ranks will be about 5,350 on June 30.
Currently, Northwest's pilot costs are the second-highest in the industry. Pilot costs at United Airlines and US Airways were cut during bankruptcy proceedings, and American Airlines slashed its pilot costs on the threat of bankruptcy.
In United's case, wage rates were cut about 30 percent. In 2003, United pilots gave up about $1.16 billion a year over a six-year restructuring agreement, according to the United branch of ALPA.
Late Thursday, a federal loan board denied United's application for $1.6 billion in federal loan guarantees, making it likely that United will seek further wage cuts from its employees. This week, Delta Air Lines pilots said they are preparing a new wage-cutting proposal in response to that airline's worsening financial condition.
Northwest ALPA's Myers declined to speculate on how talks at United and Delta might influence the outcome of a Northwest pilot agreement.
Joel Denney, an airline analyst at Piper Jaffray & Co. in Minneapolis, said Northwest must reduce labor costs to return to profitability. Since 2001, the airline's management has cut $1.6 billion out of its annual cost structure, but it has not reduced wage rates for union or salaried workers.
To compete over the long-term, Denney said Northwest cannot operate with a labor "cost disadvantage" when it comes to its peers in the airline industry.
After studying Northwest's financial condition for more than a year, McClain said the union had a sound basis for proposing $200 million in cuts. "We based the proposed savings on what would be necessary to make NWA pilot costs more competitive with those at restructured network carriers who are our primary competitors," he wrote.
In early 2003, Northwest said it wanted to cut union and salaried labor costs by $950 million a year. On Friday, Northwest spokesman Bill Mellon said it is not backing off that target. "Approximately $950 million as a total labor savings number is still an operative number," Mellon said. He declined to elaborate on the company's rationale for reducing its pilot proposal to $300 million.
Doug Steenland, Northwest's president, said at an investment conference Tuesday that the pilots have concluded that "it's appropriate, necessary and in their interest to engage in labor cost restructuring."
Pilot leaders sit on Northwest's Labor Advisory Council, Steenland said, which is a forum for management to share financial data and strategic plans with labor officials.
"They acknowledge that overall labor costs have to be reduced, that Northwest pilot costs in particular are not competitive," Steenland said at the New York conference. While he characterized the pilots' offer of $200 million in cutbacks as "not enough," Steenland remained confident that the two sides can reach a deal by fall.
Northwest is in contract talks with its ground workers who are represented by the International Association of Machinists and Aerospace Workers. Contracts for flight attendants and mechanics come open in 2005.
