[ QUOTE ]
Liz Fedor, Star Tribune
August 6, 2004 NWA0806
Pilots union leaders at Northwest Airlines have labeled the company's stock offer as "grossly inadequate," and they criticized management for delaying efforts to negotiate a new contract by the fall.
"Management has been saying that they want to have negotiations completed by this fall. However, they are not acting like that at the negotiating table," pilots union spokesman Curt Kruse said. "They are not displaying any sense of urgency."
In April, the pilots offered to cut their labor costs by $200 million a year to help the Eagan-based airline return to profitability. They want 20.7 million shares of Northwest stock in return, 19.4 percent of the company's outstanding shares.
In June, Northwest countered with a proposal for $300 million in labor cost cuts, down from its original demand of $442 million.
It has offered pilots 1 million stock options, the union said.
"We don't consider their current offer a serious one," Kruse said.
Northwest declined Thursday to comment on the stock offer. On the pace of negotiations, Northwest spokesman Bill Mellon said, "We are working to reach an agreement by this fall."
But Mark McClain, chairman of the Northwest branch of the Air Line Pilots Association (ALPA), disputes that interpretation in a newsletter mailed to pilots this week.
"Is there any real deadline?" McClain asked.
Since early 2003, Northwest has been trying to cut labor costs by $950 million a year, but the pilots union has been the only work group willing to discuss cutbacks.
ALPA leaders are attempting to negotiate a two-year agreement, which they consider a "bridge" contract. Under that scenario, Kruse said, the pilots could assess the condition of the airline industry two years from now and the airline would get the chance to negotiate contracts with other labor unions.
However, before an agreement can be reached, it appears intense negotiations will occur over a stock deal.
McClain, writing in the pilot newsletter, said "NWA's top five senior executives were granted 625,000 options in 2004 alone. Management is now proposing that over 5,000 pilots share 1 million options."
In April, the Northwest board of directors awarded the executives shares of restricted stock, which will vest in three annual installments beginning in April 2005. The executives must remain with the airline to derive the full benefit of the shares.
While pilot leaders criticized the pace and substance of negotiations, the two sides were back negotiating Thursday. Kruse said the pilots expected to get a response to their proposal for flying 70-seat regional jets.
Those negotiations are occurring against a backdrop of continuing turmoil in the airline industry. United Airlines and US Airways, which used bankruptcy to win big pay cuts from employees, are now seeking additional cuts.
Delta Air Lines, which has the highest pilot costs in the industry, is pressing for $1.02 billion in annual cuts from its pilots and has warned of a bankruptcy filing. Delta's pilots union, which has offered about $700 million in cuts, strongly objected to the company's proposal on Wednesday.
The Delta union's proposal would bring Delta's pilot unit costs in line with the pilot costs that Northwest ALPA has proposed, McClain said. But he also emphasized that Northwest is in a stronger financial condition than Delta.
"We do not view a potential restructuring of the Delta pilots' contract as having an impact on our current negotiations," McClain said.
But Northwest CEO Richard Anderson referred to labor costs at American, United and Delta in a July 22 message to Northwest employees. "In the end, it's a parity world," Anderson said. "If we're going to be competitive and successful over the long term -- which is the only guarantee of job security -- we have to face up to that fact."
Liz Fedor is at
lfedor@startribune.com.
[/ QUOTE ]
Liz Fedor, Star Tribune
August 6, 2004 NWA0806
Pilots union leaders at Northwest Airlines have labeled the company's stock offer as "grossly inadequate," and they criticized management for delaying efforts to negotiate a new contract by the fall.
"Management has been saying that they want to have negotiations completed by this fall. However, they are not acting like that at the negotiating table," pilots union spokesman Curt Kruse said. "They are not displaying any sense of urgency."
In April, the pilots offered to cut their labor costs by $200 million a year to help the Eagan-based airline return to profitability. They want 20.7 million shares of Northwest stock in return, 19.4 percent of the company's outstanding shares.
In June, Northwest countered with a proposal for $300 million in labor cost cuts, down from its original demand of $442 million.
It has offered pilots 1 million stock options, the union said.
"We don't consider their current offer a serious one," Kruse said.
Northwest declined Thursday to comment on the stock offer. On the pace of negotiations, Northwest spokesman Bill Mellon said, "We are working to reach an agreement by this fall."
But Mark McClain, chairman of the Northwest branch of the Air Line Pilots Association (ALPA), disputes that interpretation in a newsletter mailed to pilots this week.
"Is there any real deadline?" McClain asked.
Since early 2003, Northwest has been trying to cut labor costs by $950 million a year, but the pilots union has been the only work group willing to discuss cutbacks.
ALPA leaders are attempting to negotiate a two-year agreement, which they consider a "bridge" contract. Under that scenario, Kruse said, the pilots could assess the condition of the airline industry two years from now and the airline would get the chance to negotiate contracts with other labor unions.
However, before an agreement can be reached, it appears intense negotiations will occur over a stock deal.
McClain, writing in the pilot newsletter, said "NWA's top five senior executives were granted 625,000 options in 2004 alone. Management is now proposing that over 5,000 pilots share 1 million options."
In April, the Northwest board of directors awarded the executives shares of restricted stock, which will vest in three annual installments beginning in April 2005. The executives must remain with the airline to derive the full benefit of the shares.
While pilot leaders criticized the pace and substance of negotiations, the two sides were back negotiating Thursday. Kruse said the pilots expected to get a response to their proposal for flying 70-seat regional jets.
Those negotiations are occurring against a backdrop of continuing turmoil in the airline industry. United Airlines and US Airways, which used bankruptcy to win big pay cuts from employees, are now seeking additional cuts.
Delta Air Lines, which has the highest pilot costs in the industry, is pressing for $1.02 billion in annual cuts from its pilots and has warned of a bankruptcy filing. Delta's pilots union, which has offered about $700 million in cuts, strongly objected to the company's proposal on Wednesday.
The Delta union's proposal would bring Delta's pilot unit costs in line with the pilot costs that Northwest ALPA has proposed, McClain said. But he also emphasized that Northwest is in a stronger financial condition than Delta.
"We do not view a potential restructuring of the Delta pilots' contract as having an impact on our current negotiations," McClain said.
But Northwest CEO Richard Anderson referred to labor costs at American, United and Delta in a July 22 message to Northwest employees. "In the end, it's a parity world," Anderson said. "If we're going to be competitive and successful over the long term -- which is the only guarantee of job security -- we have to face up to that fact."
Liz Fedor is at
lfedor@startribune.com.
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