Northwest CEO: labor cuts or bankruptcy
Northwest Airlines Corp. must get labor concessions by the end of the year or face possible bankruptcy, says its chief executive, Doug Steenland.
He termed the pay cut offer by mechanics inadequate. Flight attendants have maintained opposition to any cuts.
”If we are unsuccessful in realizing labor cost restructuring, we are going to have to consider the Chapter 11 bankruptcy option,” Mr Steenland said Tuesday in a speech to Minneapolis business leaders, according to the Associated Press.
Mr Steenland’s comment was similar to a statement made by Northwest in a filing with the Securities and Exchange Commission.
Northwest has been seeking $1.1 billion in labor cost savings from its workers.
Northwest pilots have already taken a pay cut. But flight attendants are offering no concessions at all.
‘The flight attendants are not in a position where they’re going to give anything at this point,” Professional Flight Attendants Association vice president Jeff Gardner said after listening to Mr Steenland’s speech.
In an SEC filing on Friday, Northwest said its ”financial viability primarily depends on” labor cost cuts and a change in pension laws that would allow it to spread out payments to its underfunded pension.
Prudential analyst Bob McAdoo said in a note to investors Tuesday that strike talk is common in the airline industry, and that he believes Northwest will get labor cuts.
”It is unlikely Northwest will seek bankruptcy protection anytime in the near future,” he wrote.
Northwest is looking for other ways to make more money, Mr Steenland said.
The airline recently stopped giving away even pretzels on domestic flights in favor of a bag of trail mix that it sells.
Mr Steenland also noted a new fee for luggage service.
Report by David Wilkening
David
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