=20 ---------------------------------------------------------------------- This article was sent to you by someone who found it on SF Gate. The original article can be found on SFGate.com here: http://www.sfgate.com/cgi-bin/article.cgi?file=3D/news/archive/2003/02/28/f= inancial1323EST0129.DTL ---------------------------------------------------------------------- Friday, February 28, 2003 (AP) Northwest outlines proposed cuts for pilots, ground workers KARREN MILLS, AP Business Writer (02-28) 10:23 PST MINNEAPOLIS (AP) -- The union representing pilots at Northwest Airlines says it is studying = an airline proposal that would reduce pilots' wages and benefits by about 37 percent and save $2.76 billion over the next six and a half years. Northwest, the nation's fourth-largest carrier, told the Air Line Pilots Association that its proposal would mean furloughs for an additional 343 pilots, to bring the total of pilots on furlough to 1,036 by 2004. It also would mean that most pilots would work two or three more days each month. Northwest has about 5,700 pilots. Northwest's proposed contract would run through 2009, Mark McClain, head of the Airlines Air Line Pilots Association at Northwest, said Thursday night. The proposal would reduce pilot pay by 17.4 percent from current rates, eliminate a 5.5 percent pay increase scheduled to take effect Sept. 12 and provide no increase in pay rates until July 1, 2006. Pay would be increased by 2 percent in July of 2006, 2007, 2008 and 2009. Pilot pay now ranges from $35,000 to $213,000, with an average of $110,000. Other savings would come from changes in work rules and reduced benefits, including reduced vacation, sick leave and medical benefits. McClain said Northwest did not seek help with its short-term financial struggles. The company's proposal, he said, would save the airline only $112.3 million in 2003. However, Northwest estimated the average annual cost savings at $442 million a year. "They are proposing, instead, to completely redefine the value of Northwest pilots over the long term to compete in what they view as the future airline marketplace," he said. The company did not propose any snapbacks in wages or benefits if the airline industry becomes profitable again. McClain stressed that the Northwest proposal was just that, a proposal. "Its existence does not necessarily mean that any negotiations between Northwest pilots and management, should they occur, will be based on the proposal or the assumptions therein," McClain said in a message to pilots. ALPA will continue its analysis of Northwest's financial condition and business plan and will base its decision on the results of the analysis, he said. Union leaders will meet March 11-14 in Memphis, Tenn., to discuss the analysis and have said they won't respond to Northwest's proposal until then. "Management has indicated they are willing to discuss alternate proposals from ALPA which would resolve the labor cost problems they perceive," McClain said. Northwest has declined to comment on specific proposals it is making to its labor groups. District 143 of the International Association of Machinists also is studying a proposal by Northwest that would sharply diminish work rules and benefits for its 17,000 members. However, Northwest isn't expected to present its wage cut proposal to the IAM until late March. Northwest, like the rest of the airline industry, has been struggling for the past two years as lucrative business travel dwindled in the slow economy and demand for air travel dropped after the terrorist attacks of Sept. 11, 2001. The Eagan-based carrier, which lost $1.22 billion in 2001 and 2002, says it believes those events have permanently changed the industry. United Airlines and US Airways already have filed for bankruptcy and Northwest management has vowed to avoid a similar fate. Northwest says it must cut an additional $1 billion to $1.5 billion in annual costs to return to profitability, on top of the $1.2 billion trimmed over the last two years. The company, which has cut about 12,000 jobs, says it expects much of the new savings to come in labor costs -- its single largest expense. Both ALPA and the IAM are negotiating contracts this year. Contracts with Northwest's two other large unions, representing flight attendants and mechanics, don't become amendable until 2005. On the Net: Northwest Airlines: www.nwa.com Air Line Pilots Association Northwest local: www.nwaalpa.org =20 ---------------------------------------------------------------------- Copyright 2003 AP