Northwest Airlines said yesterday that it was increasing the amount it wanted in labor concessions to $1.1 billion a year and that it would seek to freeze employee pension plans.þþThe moves were the latest sign of the toll that record fuel prices are taking on the airline industry.þþNorthwest, which began pushing its unions for wage and benefit cuts more than two years ago, had sought $950 million in cuts, but the chief financial officer hinted last week that the airline would have to increase that amount. Northwest and other airlines are being hurt by fuel prices that have reached $1.62 a gallon, up 25 cents since mid-February. That is a third higher than they paid at this time last year, according to the Energy Department. þþThe increase has prompted furious cost reductions at several airlines, including Northwest. This month, Northwest said it would take 30 planes out of its fleet, including two dozen of its aging McDonnell-Douglas DC-9's, which would eliminate 130 jobs. The airline also said it expected its available seats this year to be flat with 2004, instead of growing 2 percent to 3 percent.þþDespite the moves, Northwest has been unable to persuade union members to agree to wage and benefit cuts. Only Northwest's pilots, who approved a two-year contract with $265 million in cuts last fall, and its salaried employees, who contributed $35 million in cuts, have gone along with the company's request.þþThe airline has not been able to reach agreements with unions representing its flight attendants, mechanics, ground workers and other employees. A federal mediator is taking part in talks between the airline and several unions.þþA Northwest spokesman, Kurt Ebenhoch, said the airline would focus first on winning wage and benefit cuts from those unions. Once that is complete, Mr. Ebenhoch said, the airline planned to resume negotiations with its pilots on another round of concessions. Northwest did not specify how much it would seek from each union.þþThe airline did not set a deadline for obtaining the cuts, but said it hoped to complete negotiations as soon as possible.þþNorthwest is well behind its rivals in its quest for wage and benefit cuts. Workers at the two major airlines in bankruptcy protection, United and US Airways, have agreed to multiple cuts since 2002, while unions at American, Delta and Continental have granted wage and benefit concessions in the last two years.þþIn addition to gaining cuts, Northwest wants to freeze its three employee pension plans, covering pilots, other union members and salaried employees, and replace them with defined-contribution plans like a 401(k) program, the airline said. Northwest's three pension plans have an unfunded liability of $3.8 billion.þþFreezing a plan means that it will not accept new members, and that the company will not make any more contributions. Workers covered by the frozen plans would receive benefits on retirement.þþNorthwest's pilots' union told its members last month that it would discuss the idea with the airline.þþPilots at Delta Air Lines, which are that company's only unionized employee group, agreed to freeze their pension plan last year, when they granted concessions of $1 billion a year.þþIn an employee newsletter distributed this month, the chief executive of Northwest, Douglas M. Steenland, said fixing the pension problem was critical to efforts to restore its profitability. þþIf it cannot do that, Mr. Steenland said, Northwest could be the latest airline to seek bankruptcy protection. Northwest has lost $2.5 billion in the last four years, but it has maintained a strong cash position, which industry analysts say has been its best protection against a Chapter 11 bankruptcy filing. þþMr. Steenland warned that a bankruptcy filing could damage the airline. ÿIt could, in fact, be the beginning of the end for Northwest,ÿ he said, ÿas it has for other airlines that originally saw bankruptcy as a way out of crisis.ÿþþ
Source: NY Times
