A federal bankruptcy judge imposed a 19 percent pay cut on Northwest Airlines’ ground workers Wednesday, in essence slashing their wages to 1989 levels.
The ruling by Judge Allan Gropper rubber-stamped the request by Northwest to cut pay and benefits by $114 million for the 14,500 workers represented by Machinists Air Transport District 143.
The Machinists refused to agree to the cuts, part of $190 million in total concessions the airline wants from its reservations clerks, ticket agents, baggage handlers and other airport workers.
“It’s very difficult for a lot of us to deal with,” said Ken Hooker, president of Machinists Lodge 1833, which represents workers at Minneapolis-St. Paul International Airport. “But the courts aren’t there for our side, they’re there for the company.”
Five other unions reach ‘voluntary’ agreements
Gropper also approved temporary agreements between Northwest and five other unions. The two largest of those unions – the pilots and flight attendants – agreed to a combined $332 million in cuts, most of it in wages.
The pilots will absorb a 23.9 percent cut in base pay, on top of a 15 percent cut they agreed to a year ago. The flight attendants accepted pay cuts of 20.7 percent.
If there’s any bright side for workers, it’s that Gropper’s actions delay – until at least mid-January – the airline’s request to essentially abolish union contracts as part of bankruptcy proceedings. That delay gives the Machinists, pilots and flight attendants more time to negotiate long-term agreements on the airline’s concession demands. Northwest’s demands include job cuts, outsourcing, and massive changes in jurisdiction and work rules.
Northwest already has reached long-term agreements with three smaller unions – the Aircraft Technical Support Association, the Northwest Airlines Meteorology Association, and the Transport Workers Union. The airline imposed $203 million in cuts and new work conditions on mechanics when the Aircraft Mechanics Fraternal Association went on strike Aug. 19.
Wiping out two decades of wages
The Machinists remain adamant that the court-imposed cuts are unfair to its members. A typical worker will absorb a pay cut of nearly $4 an hour, Hooker said, instantly wiping out nearly 20 years’ worth of wage growth. That’s on top of workers going more than three years without a general pay raise, paying higher health-care costs, and having to cover more work with fewer employees.
The impact may be greatest on the bargaining unit’s lowest-paid workers, who start at just $10 an hour, Hooker said. “For them, taking a 19 percent pay cut is just absolutely ridiculous.”
The pilots’ agreement actually sets wage scales back to 1983-’85 levels, said Hal Myers, a spokesman for the local Master Executive Council of the Air Line Pilots Association. “It’s a pretty dramatic decline,” he said – pointing out that those are raw number that don’t account for the impact of inflation.
Although pay cuts and job losses demonstrate the most obvious impact of bankruptcy, Myers said, the changes in work rules that Northwest is seeking also would wipe out decades of gains made through contract negotiations and, occasionally, strikes.
Losses pile up
The cuts in wages, benefits and work rules are part of Northwest’s attempt to slash its labor costs by 37 percent – from 4.1 cents per available seat mile to 2.6 cents. Northwest’s goals include wiping out nearly 5,700 jobs, on top of the more than 16,000 it already has eliminated or outsourced since 2001.
Northwest says salaried employees are not immune. The airline is imposing cuts in “salary and annual incentive pay” totaling $76 million, or as much as 45 percent for some executives. Northwest, however, has not revealed how much it will reduce stock compensation, which accounts for the biggest share of officers’ pay.
“I think it’s safe to say that some of upper management will have to fire one of their gardeners,” Myers said. “A lot of our employees may have sell their homes.”
Northwest lost $475 million in the third quarter, which includes about $159 million related to its bankruptcy actions. The airline, which lost nearly $2.5 billion total in the past four years, expects to lose an additional $1.7 billion this fiscal year.