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NWA Wants....WHAT?

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Deli Guy

Well-known member
Aug 12, 2005
Hey All,
I wish I knew how to post some of this crazy stuff but it is pretty loco!!! (I do not think our Mesaba buddies need to worry about that AVRO going away! That was shooting blanks.) Anyhow, could someone smarter than me post the proposal so we can discuss it? You NWA haters are going to have a field day!

Northwest wants more from pilots

Terry Fiedler, Star Tribune September 30, 2005 NWALABOR0930

Northwest Airlines told its pilots union this week that it now wants $358 million in annual cost reductions, 11 percent more than its prior proposal, and an amount that the head of Northwest's pilot union called "extreme."
"In our domestic fleet, [the proposal] would put us below all of our legacy peers, in or out of bankruptcy, and below regional carriers such as Comair," said Capt. Mark McClain, chairman of Northwest's Air Line Pilots Association (ALPA). "For what's proposed for people in our domestic fleet, some could make more money driving a truck, and that's not union rhetoric. That's the truth."
Pilots would take base pay cuts of 28.4 percent as part of the new proposal, given to the pilots Tuesday. Northwest has also asked the union to take an additional, temporary 5 percent reduction during the period the company is in bankruptcy.
Northwest is seeking a total pilot staff reduction of 1,290, including the previously disclosed layoff of 400 pilots in the next eight months.
In addition to pilot concessions, Northwest wants $195 million in annual savings from its flight attendants and $190.4 million from ground workers. For the sacrifice, the airline has proposed that all employees would participate in a profit-sharing plan that would pay out 10 percent of all pretax profit, excluding extraordinary items, in excess of $1 million.
Northwest spokesman Kurt Ebenhoch confirmed that the company was seeking $358 million in cost savings from pilots, and added that Northwest is offering "a menu of ways that those cost savings can be achieved. The specific combination of ways those cost savings are achieved are the subject of negotiations."
The new round of concessions would come on top of a $265 million cut in December that resulted in a 15 percent pay reduction for pilots. In the past several weeks, Northwest had been asking for $322 million more in cost savings from a 22.3 percent pay cut and pilot job cuts of as many as 1,181. There are about 5,200 active Northwest pilots and more than 500 on furlough. Their current pay range is $35,000 to $208,000 a year.
According to an ALPA memo to members, the company continues to push the use of a separate, lower-cost subsidiary to operate airplanes with 76 to 100 seats, and it contends that it needs the savings from the move to allow it to afford DC-9 replacement aircraft. ALPA continues to resist that idea. The ALPA memo said that "continued outsourcing of our product is not, in our view, the way to economically provide a consistent, high-quality product."
McClain believes that the latest proposal is the company's beginning position in negotiations. "This is all theoretical and speculative until we see a business plan that includes long-term viability. Northwest has not shown us that yet."
A key part of a viable plan would be "charging a ticket price that covers the cost of production," he said. "They have managed for market share and liquidity, not profitability."
McClain said the union has just begun talks with management about the possibility of an "early-out program" for senior pilots that would give them a yet-to-be determined benefit in exchange for leaving the airline.
ALPA expects Northwest to file a motion in bankruptcy court rejecting the current contract that would allow for up to a 51-day period to negotiate a settlement. If one can't be reached, the court will decide what needs to be done, McClain said.
ALPA also believes it has a good chance to be selected by the court as a member of the credit committee for unsecured creditors.
Elections for ALPA officers will be held Oct. 14. McClain declined to comment as to whether he would seek reelection.
Terry Fiedler is at [email protected].

Sorry I am such a poor paster. I tried to post the PDF file from the union but I must be challenged.
The summary:

Management values the Sept. 27, 2005 term sheet at a total of an average of $358 million per year in pilot labor cost savings with a reduction in required pilot staffing of 890 pilots, not including the 400 furloughs already announced. That would bring the total staffing reduction to 1,290 pilots (not including the more than 500 pilots currently on layoff).

The annual savings shown in the table on Page 5 is considered “steady state.” Steady state savings are those which are fully recognized after the new contract is in place for a period of time. This number differs from the immediate savings generated by a modification due to the time period required for work rule savings to be fully realized as transition and implementation issues are ironed out and any resulting displacements occur. The smaller, first-year cost savings, when totaled with the steady state annual savings ($361.8 million per year), and averaged over the five year contract, saves $358 million per year in pilot labor costs.

Remember, the dollar savings and staffing reductions above are in addition to our 2004 Bridge Agreement. This means the reductions would occur on top of the $265 million annual savings ($250 million annual savings in management’s view) already agreed to by NWA and ALPA beginning in December 2004.

The staffing reduction of 1,290 pilots is in addition to the over 500 currently furloughed NWA pilots. In other words, under management’s proposal and using its costing numbers, it would take 1,290 fewer active pilots than we currently have to operate this airline at management’s planned level. Based on the July 2005 seniority list this would make seniority number 4123 approximately the most junior pilot on the property with a hire date of Aug. 1996. This is only an estimate and the real impact of these types of changes could vary widely due to retirements, leaves, resignations, accuracy of the staffing impact number and the airline’s level of operations. This does however give you an idea of the magnitude of
management’s proposal and how it would affect pilot staffing.

Company’s Latest Scope Proposal
On July 14, 2005 (and again on Sept. 27, 2005) NWA management approached the Negotiating Committee with a scope proposal which would essentially allow NWA to operate 76-100 seat aircraft under a separate subsidiary of NWA (termed “Newco”) or through outsourcing to another carrier. The proposal included a general statement that pay rates, work rules and benefit levels would be similar to those found at airlines such as Comair, AMR Eagle and Mesaba. Pilots working for this separate subsidiary would not be on the NWA system seniority list, but would be allowed to flow back and forth between the two airlines as needs require. The above costing numbers and staffing impacts do NOT reflect this scope proposal.

Management indicated that absent our agreement to such a proposal it would be impossible for NWA to afford to purchase a DC-9 replacement aircraft. We are somewhat perplexed by this statement, since aircraft in the current Airlink fleet are purchased by NWA and leased to those carriers. Management presented its proposal without any financial justification, back-up data, operating plan or delivery plan. To say that the MEC Negotiating Committee was disappointed and frustrated by this proposal is an understatement. For some time now we have acknowledged the necessity of creating a competitive feed structure for NWA. For more than 18 months we have tried to get management to engage in a meaningful discussion of the small jet issue in a manner that would allow NWA pilots to perform this flying on a competitive basis as a division of NWA and under our pilot contract. NWA has shown little desire to address any of our concerns in this area and has provided no cost justification for its assertions and proposals.

NWA MEC Negotiating Committee 6 Sept. 28, 2005

The Negotiating Committee continues to recognize NWA’s need for cost-effective SJ feed and a cogent 100-seat replacement strategy. However, outsourcing this work to another entity is not the answer. Continued outsourcing of our product is not, in our view, the way to economically provide a consistent, high quality product to our customers. We remain committed to keeping all aircraft 60 seats and greater under the NWA contract and to have them flown by NWA seniority list pilots. An attempt by management to rush this complex issue to completion through the Chapter 11 process may lead to a major confrontation with this pilot group. The MEC Negotiating Committee has requested clarification and justification for management’s “Newco” proposal. We continue to await management’s response to our request for more information and for a complete operational plan. It is impossible to respond in any meaningful way without knowing the timing and specifics of such a SJ feeder operation.

What’s Next?
Communications outlining the bankruptcy process will continue. Since NWA has filed for bankruptcy protection under Chapter 11, the timeline for negotiations is likely to accelerate. So far, NWA management has indicated that it wishes to reach voluntary agreements with labor that will allow it to restructure labor costs. Most likely this will take place under Section 1113(c) of the bankruptcy code. This section provides for a maximum 51-day period (unless extended by agreement of both parties and approved by the judge) from the filing of a motion to reject the contract to a decision by the bankruptcy court judge, effectively defining the period of negotiations once the company files its motion. The goal of the 1113(c) process is to reach new agreements that restructure labor costs in a timely manner. If the process is unsuccessful, the bankruptcy judge can allow management to reject the contract if the statute’s requirements are met, clearing the way for management to impose work rules and benefits it deems necessary to achieve its cost reduction goals and a successful reorganization. If management takes this step, our pilot group will then have to decide how to respond, including any possible exercise of self-help.

The MEC and Negotiating Committee will continue to evaluate whether or not there is a reasonable path that will result in a voluntary agreement that is in the best interests of the NWA pilot group. We will continue to provide you with additional information on the bankruptcy process. A web-based presentation by our bankruptcy counsel Richard Seltzer of Cohen, Weiss and Simon LLP is also available on the MEC website (www.nwaalpa.org/pilots). As events continue to unfold we will provide you with information and analysis as quickly as possible.

MEC Negotiating Committee
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Wow! That's a lot of potential pilot furloughs....

Doesn't surprise me that the new CFO at NWA formerly worked at USAirways - he and Siegel walked away from that disaster with $ MILLIONS.... Good luck to everyone involved!
It is a race to the bottom! What is this profession worth?
Let me see if my math is correct . . . 28.4% + 5% (temporary cut while in Ch 11) + 15% (pay cut from 2004 Bridge Agreement) = 48% pay cut from the 2003 payscale? That's pretty sweet. Lay off another 1300 pilots? How can you operate a company with 400+ airplanes with only 4000 pilots? I guess NWA's plan is to dump the 1300 pilots, start up Newco to replace all the DC-9 flying, then hire the 1300 back to work at Newco earning 32 bucks an hour flying EMB-190s. Is that about right?

I know this is only managements "starter" proposal, but if recent Ch11 history is any indicator, they'll get everything they want from the judge if it comes to that. And they know it.

Where (and how) will it ever end.
MsFan said:
I guess NWA's plan is to dump the 1300 pilots, start up Newco to replace all the DC-9 flying, then hire the 1300 back to work at Newco earning 32 bucks an hour flying EMB-190s. Is that about right?

No that's not quite right, it's worse.

"The above costing numbers and staffing impacts do NOT reflect this scope proposal. "

Meaning the furloughs to outsource NEWCO are in addition to the 1300 planned furloughs and 500 current furloughs.
Wow, just wow. My girlfriend's mom saw a lot of this coming and took an early out not too long ago. She was in the purchasing dept. Is there a way to reverse the trend?
Would supporting your mechanics strike have helped you guys out or did you slice your own throat by sitting on the sidelines?

Good luck though, sounds like NWA is going south.

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