The Air Line Pilots Association (ALPA) deal with Northwest Airlines to cut wages and increase productivity was hammered out just hours before a bankruptcy-court deadline that would have allowed the airline to tear up its ALPA contract and decide what pay rates and work rules would apply.
The pilot deal loosens scope clause restrictions to allow Northwest to fly nearly three times as many small jets as the 36 now allowed. Those 36 are four-engined 69-seat Avro RJs that had been flown under contract by Mesaba Airlines. The new tentative agreement allows Northwest to fly up to 90 regional jets in the 51- to 76-seat range through contract flying or through its own subsidiary.
Just after Northwest won the pact, it agreed to pay $2 million to the estate of defunct regional Independence Air for an FAA operating certificate, which lets Northwest set up a regional jet unit in-house. The subsidiary, likely to have 45 aircraft in the 76-seat size, would be flown by furloughed pilots working at hourly rates that would be competitive with pay at separately owned regionals that fly as Northwest Airlink carriers. JP Morgan’s Jamie Baker thinks the new carrier would likely fly Bombardier CRJ900s in a two-class configuration.
The deal needs final approvals from a separate bankruptcy court overseeing the liquidation of Independence parent FlyI as well as of Northwest’s court. The pilot deal will require direct ratification by the union’s 4,500 members. That vote, expected to be completed by early May, is not guaranteed, given the emotions that nearly drove the union to strike, an unprecedented step against a bankrupt major.
Mark McClain, chairman of the pilot leadership council, says: “While this tentative agreement will bring hardship to pilots and their families, there are no reasonable alternatives.” Other leaders are divided over endorsing the deal. As proposed, Northwest pilots give up $358 million a year in pay, benefits and work-rule changes. Since 2004, the pilots have taken two pay cuts, totalling 39%. ■
Source: Airline Business
