This week, Northwest Airlines will sit down at the bargaining table with representatives from its mechanics union. We wish them luck.
It took the airline 19 months to reach a two-year deal with its pilots that will result in about $265 million in savings. The pilots agreed to take a 15 percent pay cut, while salaried workers at the Eagan-based carrier will take cuts ranging from 2 percent to 23 percent.
The necessity for these cuts shouldn't be news to anyone. From 2001 through 2003, U.S. airlines lost more than $23 billion, and losses this year will exceed $6 billion. Since August 2001, about 123,000 U.S. airline workers, or about one in six, have lost their jobs. Airlines have cut capital spending 62 percent and operating expenses by 13 percent, according to the Air Transport Association.
Northwest alone has lost $2 billion and about 17,000 employees since 2001. To stay afloat, it'll need concessions from its mechanics on wages as well as outsourcing.
The latter is particularly troubling to the mechanics. Their union representatives visited our offices recently and were honest about the fact that they were trying to save their jobs, with average wages of about $70,000 a year. Where they lost us was when they claimed that Northwest was endangering the public — in terms of both safety and post-9/11 security — by outsourcing maintenance.
In truth, outsourcing is nothing new to the industry. In fact, Northwest is behind the curve. Southwest, Continental, AirTran and current industry darling JetBlue outsource most or all of their heavy aircraft maintenance. United, which is closing maintenance facilities in Indianapolis and Oakland, is joining that crowd.
"To be cost-competitive in a globally interdependent marketplace, we need to outsource some of our maintenance," said Kris Bauer, Northwest's vice president of aircraft maintenance. "Northwest will not be successful if its costs exceed those of its principal competitors like United."
Under the current labor agreement, outsourced maintenance is capped at 38 percent of total spending. The airline would like to raise it to 50 percent, which would still have it at a competitive disadvantage to other carriers.
And contrary to what the union claimed, contractors are no less secure than the union-run facilities at the airport. In fact, in Singapore, which union reps tried to convince us was less secure than Minneapolis-St. Paul International Airport, the work is done on a military base.
We understand the union is worried about its members' jobs, which are important to the local economy. But Northwest, and its workers, must compete to prosper. This includes cutting costs and trimming salaries if necessary.
In negotiating with its pilots, Northwest showed it was willing to meet labor halfway. The mechanics would do well to recognize this as they head into their talks with the struggling airline.
