NWA pilots told 400 jobs will be cut

pb4ufly

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NWA pilots told 400 jobs will be cut
Liz Fedor and Joy Powell Star Tribune Published September 16, 2005
On its first day in bankruptcy Thursday, Northwest Airlines management told the pilots union that it will cut 400 pilot jobs, with the first round of layoffs coming in November. The company also briefed union leaders about deeper concessions that management will seek.

Union officials, having braced for the worst after Wednesday's bankruptcy filing, were dismayed nonetheless.

"The company doesn't have any conscience; they will go after everybody," said Bobby DePace, president of District 143 of the International Association of Machinists and Aerospace Workers (IAM).

Northwest did not ask a federal bankruptcy judge in New York for permission to impose new pay rates, saying it wanted to first attempt to negotiate those cuts.

The court meanwhile granted Northwest approval to pay travel agencies, health insurers, aircraft maintenance firms and other businesses that its relies on daily. In addition, some aspects of Northwest's planned restructuring emerged in court filings.

The Eagan-based carrier, which operates one of the oldest fleets in the industry, filed a motion to reject or abandon 13 airplanes that have been parked for an extended period or which it can no longer operate economically, including six Boeing 757-200s and four DC-9-30s.

Also, Northwest reported that over a 45-day period it wants to renegotiate terms on leases and debt financing for 102 airplanes.

Northwest owes about $5 billion on about 300 aircraft, including regional jets operated by Pinnacle and Mesaba airlines, according to a bankruptcy statement by its CEO, Doug Steenland.

"Returning aircraft will, of course, reduce the size of the company's operations," Steenland wrote, but the resulting airline "albeit smaller, will be more profitable."

Some unsecured creditors were not worried about getting paid.

Travel agency owners were especially confident, given that 65 percent of Northwest's passenger revenues through the first six months of the year came from flights booked by travel agencies.

Northwest owes Carlson Travel Group and Carlson Travel Network Associates more than $4 million, according to bankruptcy filings.

"If anything, from the sales team at Northwest it's an increased focus," said Michael Batt, president of Carlson Wagonlit Travel, the nation's biggest travel franchiser. "They want revenue. The worst thing that could happen to any company in their business is that their revenue base could start eroding, and they'd lose customers and revenue to competitors."

Northwest owes Medica nearly $1.53 million and United Healthcare $13.2 million. Together, those carriers provide insurance coverage for more than 50,000 covered by Northwest health plans.

"They have filed motions to be authorized to pay anything that they do owe us," said Larry Bussey, a spokesman for Minneapolis-based Medica. "We expect that to happen, and our plan is to keep doing business as usual with them, paying claims on their behalf."

Layoffs expected

Northwest had warned Wednesday that job cuts would come before the end of the year as it reduced operations by 5 to 6 percent. It took the carrier less than 24 hours to act on that statement.

The pilot layoffs do not require approval from a New York bankruptcy judge. The 400 furloughs are allowed under the existing contract between Northwest and the Air Line Pilots Association (ALPA).

Even before Northwest sought bankruptcy protection Wednesday, it planned to reduce its flight capacity -- especially in domestic markets where it faces intense competition from low-fare carriers.

In a hot-line message Thursday evening, the pilots union said management told pilot union leaders that the hours flown by Northwest pilots will be slashed by 13 percent. The pilot layoffs will occur over eight months. Currently, there are about 5,200 Northwest pilots actively flying and 500 more on furloughs.

Northwest could ask the bankruptcy judge to impose lower wages and alter work rules for a few months. But the airline chose not to take that step in its initial filings.

"We want to reach consensual agreements with our unions," Northwest spokesman Bill Mellon said Thursday. "However, we need to reach these agreements as soon as possible."

Northwest has raised its companywide labor concessionary goal to $1.4 billion, up from $1.1 billion set in late March.

"We are expecting a dramatic increase in the company's cost-cutting target," DePace said. He did not disclose a new target amount Thursday, because he said he wants Northwest to put its numbers in writing.

Previously, union members for the IAM had been asked for $107 million in annual concessions, but that figure will now be higher as Northwest seeks deeper cutbacks in bankruptcy.

"They'll up the ante because they now have the bankruptcy judge behind them," DePace said.

While Northwest management has sought concessions over the past two years, many Northwest union employees and some consumers have complained about the compensation of Northwest executives.

In Northwest's initial filing, it asked the court to preserve an incentive program for key employees and senior management. It put the pricetag for all of the incentive plans at $20 million.

In other news, Fitch Ratings on Thursday downgraded its bond-rating outlook for Minneapolis-St. Paul International Airport to "negative" from "stable."

Northwest could seek to reduce the rent it pays at the airport. In the Twin Cities, Northwest had been expected to pay about $113.6 million in rent and landing fees. In addition, it was expected to generate $52.7 million in passenger facility charges.

Shares of Northwest plunged 99 cents, or almost 53 percent, Thursday to close at 88 cents.
 

Pedro

Not too happy...
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I second that one, I know a lot of great people that work at NWA.
 

Av8rPHX

The Dude abides...
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enough
I echo the sentiments on here. I wish my friends and everyone at the red tails the best of luck. Its going to be a long road ahead.
 

320AV8R

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In Northwest's initial filing, it asked the court to preserve an incentive program for key employees and senior management. It put the pricetag for all of the incentive plans at $20 million.

Oh boy.......these tools treat their employees like sh!t, run the company into the ground, ask everybody else for massive pay and benefit reductions........and they want to keep their executive pay, benefits and perks. It only costs $20 million.


Why do I feel like a battered spouse ?

320AV8R

 

Deli Guy

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These boys work quick. I really think managements plan is to get as many bodies out of mainline for better divide and conquer tactics as well as trim the fat for mergers. Looks like I am toast. Come on ALPA! Try and make this work. (Not holding my breath--but it never hurts)
 

Dangerkitty

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Can someone tell me how far these furloughs go in regards to Hire Dates? I have a few friends that I thought would be clear of the job cuts but it looks like they could be on the chopping block.

Sorry to hear about the furloughs. Been there, done that. Got the reduction in force letter framed in my office.
 

JT8D

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pb4ufly said:
In Northwest's initial filing, it asked the court to preserve an incentive program for key employees and senior management. It put the pricetag for all of the incentive plans at $20 million.

.

That says it all right there about management doesn't it?


Deli,

Will you be in the 400?

If so, that sucks man, sorry to hear that.
 

vtwo

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Remeber the bk rules change oct 17th.
After that date it will be harder to convince the judge and the creditors to approve the Senior Executive Retention Plan. ala the 20 milion dollar bonuses. above the regular salary plan.

This shi7 needs to made more public every day. remember ENRON.

Jailed exectutives what an example. not bonuses to please stay and help keep running this airline.

Corporate america has no shame
 

ThisistheDream

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I saw on the news yesterday in MSP a limo driving an NWA executive with the executive in the back seat putting his hand over his face so his shameless identity couldnt be recoginzed!!!! How can a bankruptcy judge say yes to preserving a bonus and salaries for top mgt. when the company is in Chptr 11?? The law have to change otherwise this industry is not worth it anymore
 

capt. megadeth

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320AV8R said:
In Northwest's initial filing, it asked the court to preserve an incentive program for key employees and senior management. It put the pricetag for all of the incentive plans at $20 million.

Oh boy.......these tools treat their employees like sh!t, run the company into the ground, ask everybody else for massive pay and benefit reductions........and they want to keep their executive pay, benefits and perks. It only costs $20 million.



Now there's a shocker
 

NTS ALL 4

Close the bleeds, please
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Deli Guy said:
These boys work quick. I really think managements plan is to get as many bodies out of mainline for better divide and conquer tactics as well as trim the fat for mergers. Looks like I am toast. Come on ALPA! Try and make this work. (Not holding my breath--but it never hurts)

Don't worry! I'm sure NWA ALPO has a no furlough clause! Enjoy the free magazine and new ALPO card with Furloughed is now where Active used to be.

ALPA dues at work again!

Welcome to the club my ALPO brother.
 
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