MINNEAPOLIS - Northwest Airlines CEO Doug Steenland said he wanted a deadline for a pay-cut deal with mechanics. He has one now.
Mediators on Wednesday released Northwest and the mechanics from talks, launching a 30-day cooling-off period that could end with a strike at 12:01 a.m. EDT on Aug. 20 unless they make a deal. The two sides are expected to keep meeting until the deadline.
Northwest, the nation's fourth-largest airline, has pledged to keep flying if there's a strike, using managers and mechanics from contractors. But even if they make a deal, the uncertainty could hurt bookings at Northwest during the busy summer flying season - and push Northwest closer to a bankruptcy filing.
President Bush could appoint a presidential emergency board that would delay a strike, as he did when Northwest mechanics came within days of striking in the spring of 2001. But on Wednesday the White House signaled that wouldn't happen this time.
''The National Mediation Board has found that a labor action at Northwest would not present a substantial disruption of interstate commerce. The administration does not dispute this conclusion based on current information and the president is not creating a presidential emergency board,'' Bush spokesman Scott McClellan said.
Mechanics, technicians and cleaners authorized a strike with 92 percent of the vote on Tuesday.
Northwest, squeezed by rising fuel prices, competition from low-cost carriers, growing pension obligations and looming debt payments, is seeking $1.1 billion in annual labor cost savings. It lost $458 million during its most recently reported quarter.
Steenland has said he believes it will take a firm deadline to reach a deal with mechanics. The airline wants them to take a 25 percent pay cut in a package that would save Eagan, Minn.-based Northwest $176 million a year. The Aircraft Mechanics Fraternal Association has offered temporary pay cuts it valued at $143.5 million. However, the airline said the union offer includes past layoffs and is really worth only $87 million.
Mechanics said Northwest never responded to the union offer.
''By refusing to budge from their unreasonable initial offer, they made a consensual agreement impossible and forced the process toward a strike,'' AMFA National Director O.V. Delle-Femine said.
For mechanics, layoffs have been as much an issue as the size of their paychecks, which can run from $50,000 to $70,000 per year for mechanics and $20,000 to $40,000 per year for cleaners. But AMFA ranks have shrunk from about 8,390 in January 2002 to about 4,500 now. And the airline has taken advantage of a contract provision that allows it to send as much as 38 percent of its aircraft maintenance to outside contractors - and Steenland has said he wants further work outsourced.
Northwest has gotten $300 million from pilots and managers, and is seeking $148 million from flight attendants, according to their union.
The last major U.S. airline strike occurred in 1998 when Northwest pilots walked off the job. That strike lasted for 15 days and resulted in a 12 percent raise over four years for pilots. In the spring of 2001 Northwest mechanics came within days of a strike, but Bush appointed an emergency board, pushing back the deadline, and the two sides made a deal.
In May, AMFA mechanics at bankrupt United Airlines threatened to strike if a judge imposed pay cuts. Instead, mechanics approved a contract that included a 3.9 percent pay cut and fewer benefits.
Calyon Securities analyst Ray Neidl said Northwest's labor costs are the highest in the industry.
''On the one hand, Northwest needs everything they're asking for. And they really can't afford to take less if they're going to be cost-competitive,'' he said. ''On the other hand the sacrifice being asked by the union is immense, and I can't see how a union leader can accept that. So it looks like there's going to be a clash.''