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Without Cuts, Northwest Could Downsize or LiquidateJanuary 18, 2006 By: Susan Young Travel Agent
Attorneys for Northwest Airlines argued in U.S. Bankruptcy Court that the airline's proposed business model, which calls for labor cost savings and cuts in retiree health benefits, is necessary for the company's reorganization and fair to its employees and retirees. The airline has suffered $4 billion in losses since 2001, and the attorneys said "there is really no alternative to achieving competitive labor costs. And there is no more time to wait." Tuesday was the first day of the hearing regarding Northwest's motions seeking to reject the company's collective bargaining agreements with the Air Line Pilots Association (ALPA) and the Professional Flight Attendants Association (PFAA). Also, the judge is considering Northwest's plea to modify its retiree employee benefits. ALPA, PFAA and a committee representing Northwest retirees have each filed objections with the court to Northwest's motions. Northwest said that without the needed $1.4 billion in cost cuts, "there is a real and genuine prospect of radical changes to Northwest's business operations" possibly including "substantial downsizing, massive layoffs or liquidation."