Northwest Airlines files court motion to implement new labor laws

Northwest Airlines files court motion to implement new labor laws

CHICAGO - The No. 4 U.S. airline Northwest Airlines Corp asked a bankruptcy judge on Wednesday to allow it to nullify its labor contracts if the employee unions do not react favorably to cost adjustments amounting to $1.4 billion a year.

The struggling airline said in a statement that this was a part of the overall $2.5 billion savings including the return of passenger jets that are burdened with expensive leases.

Elaborating on the move, Northwest's Chief Executive Doug Steenland issued a statement saying, "We must quickly reduce our labor costs by $1.4 billion annually. Our court motion gives union leaders and Northwest management time to reach the necessary agreements, before the court would be compelled to intervene and impose new contracts."

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Northwest and No. 3 U.S. carrier Delta Air Lines Inc have already filed for bankruptcy protection in September last as soaring fuel costs and a weak market hit them badly. Most of the US airline industry is reeling under recession because of the same.

"Northwest's remaining cash is being rapidly depleted. If it does not quickly reduce its costs it may soon reach a point when reorganization would be out of reach. At such a time, Northwest would have to begin an orderly liquidation, and approximately 35,000 employees would lose their jobs," the airline said in a court filing. Under the existing bankruptcy laws, Northwest and the unions would have to reach a consensus in 51 days. If they fail to do so, the judge can cancel the existing agreements and allow the airline to implement new labour laws.

The airline is also cutting its capacity by 8 percent to what it was a year ago. It expects to reduce it by 11 percent in January next year.

The unions had mixed reactions to Northwest's move. Will Holman, spokesman for the Air Line Pilots Association said, "We have been preparing for expedited negotiations. We continue to meet with NWA management and believe we can reach a negotiated settlement, but only if management doesn't overreach in negotiations."