A proposal by Northwest Airlines to set up an internal small-jet subsidiary as it reorganises in bankruptcy has provoked strike threats by its pilots union, a warning observers are taking seriously.
Facing similar strike vows by a flight attendants union, the airline could find itself in the unwanted position of writing bankruptcy law, which does not contain a clear position on the right to strike against a company in Chapter 11 reorganisation. Airlines in bankruptcy protection have argued that no strike would be legal, but none in recent times has had to test that claim in the courts.
Most labour disputes in recent bankruptcies have been resolved consensually, or as consensually as is possible in a negotiation coloured by the bankruptcy law provision allowing a company unilaterally to eject a union contract, cut wages, and impose its own work rules and terms. And no US airline in recent bankruptcies has exercised this power, because the mere threat of unilateral action has forced agreement, however unenthusiastic. Northwest stands to make bankruptcy history, since several of its unions have vowed to fight its concession demands.
Its proposed NewCo would operate as many as 105 larger regional jets in the 70- to 100-seat range under its own FAA certificate, which sparked anger among the pilots, who see it as a way to circumvent their scope clause contract protections. The Air Line Pilots Association contract at Northwest reserves the flying of the smallest mainline jets to its members, and Northwest has honoured this by upgrading large numbers of its oldest McDonnell Douglas DC-9s.
Despite progress on pilot pensions and a promise to staff NewCo with furloughed mainline pilots, negotiations on the scope issue have been fruitless, prompting Northwest to seek bankruptcy court permission to scrap its pilot contract along with other union contracts. This provoked the Professional Flight Attendants Association to say that it had given so much in concessions that it saw “no downside in a strike”. Its statement comes even after Northwest replaced mechanics who went on strike in August.
NewCo would serve about 20% of Northwest’s markets, the carrier’s chief executive Doug Steenland says in an employee newsletter, adding that the Northwest system has more small cities than competing carriers. “To operate at a profit, we must invest in these aircraft, and we must do so quickly,” he says.
Northwest’s move comes as it pressures its Airlink feeder-service providers. It has said it will accept bids for the contract now held by Pinnacle Airlines, and has moved to dispose of many aircraft it had assigned to its other main Airlink provider, Mesaba Airlines. Mesaba entered bankruptcy shortly after Northwest’s own 14 September filing, while Pinnacle remains solvent. ■
DAVID FIELD / WASHINGTON
Source: Airline Business
