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Northwest CEO: Pilots, management resolve key differences

There's a deal in principle on expanding the regional jet fleet and saving
jobs, Northwest's CEO said. But pay issues still loom as a Friday deadline
approaches.

Liz Fedor, Star Tribune

Last update: February 23, 2006 - 12:39 AM

There have been breakthroughs on two key issues involving Northwest Airlines

and its pilots, the carrier's CEO said Wednesday.

Doug Steenland told the Star Tribune that management and pilots have agreed

to a framework that would allow Northwest to increase regional jet flying
and save pilots' jobs.

"It addresses the pilots' concerns over jobs, outsourcing and making sure
that the replacement aircraft for the DC-9 gets flown [by Northwest pilots],

and that represents significant progress," Steenland said. He called the
issue of who flies regional jets the "most controversial" in Northwest's
negotiations with the Air Line Pilots Association (ALPA).

Steenland added that "the lion's share" of job-protection issues have been
resolved, including saving pilot jobs in the event of a merger, the sale of

part of Northwest's business or code-sharing arrangements with other
airlines.

The pilots union and Northwest have been locked in intense negotiations
since early January, and the pilots are taking a strike authorization vote
that concludes Tuesday. If the pilots and flight attendants fail to reach
agreements with Northwest by Friday, a bankruptcy judge could void their
existing labor contracts and allow the airline to impose new pay rates and
work rules. U.S. Bankruptcy Judge Allan Gropper also could give the parties

a second extension to conclude their talks.

Steenland has maintained a low public profile during the recent
negotiations. He emphasized in an interview that management and the pilots
union have come together on "very difficult issues."

He indicated that he sees a path to an agreement.

Northwest intends to replace its DC-9s, which are more than 30 years old,
with Bombardier or Embraer regional jets. The company wanted to shift those

regional jets to a new subsidiary, but the pilots have said there will be no

deal if pilot jobs are outsourced.

"This regional jet flying issue is so crucial to our careers that any
negotiated agreement that would lose any of that flying would be a
significant setback for our pilots," said Wade Blaufuss, a spokesman for the

Northwest branch of ALPA.

Northwest pilots and their families will rally in St. Paul today.

Steenland pledged to continue working with Duane Woerth, president of ALPA
International, to win congressional approval of a bill that would give
Northwest more time to make contributions to its underfunded pension plans.

The pilots previously agreed to freeze their pension plan at current benefit

levels. They are in negotiations with Northwest concerning the company's
contributions to 401(k)-style plans for future retirement benefits.

"Finding a way to maintain the frozen plans is a very significant benefit to

Northwest employees, particularly with respect to our pilots," Steenland
said.

The pension changes are among several concessions the pilots have accepted.

In 2004, the pilots agreed to a 15 percent pay cut. Since mid-November, an
additional interim pay cut of about 24 percent has been in effect.

Now, Northwest wants $358 million in annual concessions in a long-term
contract.

Steenland acknowledged that "there are still significant open issues that we

have to address," including bridging the gap between the two sides on the
total concessions.

"We remain hopeful that we'll be able to reach agreement," Steenland said.

Blaufuss said the pilots also want a negotiated deal, an outcome that he
stressed depends largely on airline management. "If Northwest does not back

off from the remaining open issues, then they can expect us to do what's
necessary to defend our careers," Blaufuss said.

Northwest pilots last went on strike in 1998, and many have said they are
prepared to walk off the job again this year. The pilots have the ability to

shut down the airline.

Negotiators for the Professional Flight Attendants Association are "slowly"

moving toward an agreement with management, but the union remains at odds
with Northwest over the hiring of foreign workers, said Andy Damis, PFAA
secretary-treasurer.

The union also is still bargaining on job protection issues.

"We want this behind us just as much as the company does," Damis said. He
said negotiators have asked why "they still continue to fight us," even
though the union has met the airline's demand for $195 million in annual
labor concessions.