The contract covering 5,500 Northwest Airlines employees in the Twin Cities is up Feb. 25, but the union and company are nowhere near a settlement.

Instead, with two competitors in bankruptcy court, and a third apparently on the way, Northwest is playing a waiting game to 'see how other airlines are doing, to see what concessions they're getting,' said John Massetti, secretary-treasurer of Machinists Air Transport District 143. 'It's a rotten time to be in negotiations.'

In public statements - though not face to face - Northwest has made it clear it wants to cut employee wages.

?Restructure' labor costs
In a special edition of the company newspaper Passages, Northwest CEO Richard Anderson and president Doug Steenland this month claim 'the new realities in air travel have created a radically altered marketplace.' In eight pages of columns by company executives, industry analysts and other 'experts,' Anderson and Steenland argue an urgent need to reduce costs.

Their primary solution? 'Restructuring our labor costs.'

They say Northwest must be able to compete with low-cost carriers such as Southwest and AirTran, and with network carriers such as U.S. Airways and United whose labor costs are being slashed in bankruptcy court. American Airlines also is on the verge of bankruptcy.

Northwest, which lost more than $1.2 billion during the past two years, already has cut about $1.2 billion in costs, including 12,000 jobs, since 2001. Anderson says the airline needs to cut at least $1 billion more in permanent costs.

Bobby DePace, president of District 143, says he's 'sick and tired of hearing the same old excuse that we are the problem.' In a letter to members, he said: 'Labor did not cause the broken ticket pricing structure. Labor did not cause the overcapacity of the seats in the airline industry.'

Massetti says the argument that Northwest has to cut wages and benefits to match airlines like United is misleading. Even with the 13 percent pay cut that the bankruptcy court imposed upon United's Machinists, 'they're still above us,' Massetti said.

His members' wages at Northwest average just over $17 an hour, plus benefits.

Cuts in benefits, pension funds
Even without official contract concessions, Northwest already has cut employee benefits. Most visibly, the airline unilaterally shifted 20 percent of the costs of its most popular health plans onto employees and retirees beginning Jan. 1.

That move costs employees as much as $190 a month more out of pocket, while it saves the airline an estimated $60 million a year.

The Machinists are challenging Northwest, claiming the health-care decision violates contract language dating back to 1970. Arbitration hearings ended Jan. 28, Massetti said; the union now is waiting for legal briefs to be competed before arbitrator James Conway issues a ruling.

Northwest is also balking at hundreds of millions of dollars it owes employee pension plans. First, instead of funding the pension plan out of its $2.2 billion cash reserve, Northwest wants to substitute about $220 million worth of stock in its Pinnacle Airlines subsidiary. That stock is not yet traded publicly, Massetti said.

In addition, Northwest is seeking federal government permission to spread out additional cash payments, which are due this year, until 2008.

?Been there before'
District 143 represents 17,000 workers at Northwest, including customer service and reservations agents, baggage crews, and administrative staff.

Given the financial mess in the airline industry, the union scaled back its contract proposal 'to our needs, not our wants,' Massetti said. The union focused primarily on job security and pensions.

'They said ?no, no, no' to everything,' Massetti said. Talks essentially broke off in January.

Under the Railway Labor Act, the Machinists' contract becomes 'amenable' Feb. 25, but does not expire. Negotiators would have to go through a lengthy period of mediation before the union could even consider a strike.

Massetti said members understand the airline's financial crunch. Many also remember the last time Northwest fell on hard times.

'In '93, we were all willing to help the company when it needed help,' Massetti said. 'We cut our pay $2 an hour. A few months later, they started making money, but I don't recall them coming back to us and giving our wages back.

'Our members are saying, ?We've been there once before.' We're trying to make sure Northwest Airlines survives, but we're not going to just give them the purse.'

Other unions
The Machinists are not the only union arguing that Northwest and other major airlines are clinging to a flawed business plan that is incapable of making money except in the best economic times. The industry as a whole has lost more than $18 billion over the past two years.

'A lot of people are pointing the finger at labor, but loss of revenue is the real problem,' said Will Holman, spokesman for the Master Executive Council of the Air Line Pilots Association at Northwest.

The pilots' union, whose contract is up for renewal in September, is using both internal and external consultants to analyze Northwest's finances. Holman said union leadership meets to examine the reports March 11, and won't respond to Northwest's calls for cost restructuring until after that.

Teamsters Local 2000, which represents Northwest's flight attendants, is more blunt in its response.

'We will not ? be willing to discuss any proposition that takes more money out of our members' pockets or that will further jeopardize their benefits,' said Mollie Reiley, trustee for the local.

'The flight attendants at Northwest Airlines are not responsible for the mismanagement, the greed, the fare wars?' Reiley said in a letter to her members. 'We did not cause the problems this industry is now facing and it makes no sense to believe that concessions will fix them.'

Written for The Union Advocate newspaper, the official publication of the St. Paul Trades and Labor Assembly. Used by permission. E-mail The Advocate at: advocate@mtn.org

For more information

Visit the Machinists District 143 website, www.iam143.org