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May 25, 2005

Where Will Jobs Be In 3 Years?

Northwest to cut half of mechanics' jobs
Airline seeks to save $176 million a year

Reuters - Updated: 7:42 a.m. ET May 24, 2005

NEW YORK - Northwest Airlines Corp. has proposed firing 2,031, or nearly half of its mechanics, in a bid to save $176 million a year, their union said in a document posted in its Web site (PDF's) on Monday.

The Eagan, Minnesota-based airline also is asking the 2,381 mechanics who would remain to take a cut in their base pay of about 26 percent, the union said.

The fourth-largest U.S. airline is trying to renegotiate contracts with all its unions to trim costs to compensate for higher fuel prices and tough competition from low-cost carriers that have pushed it deeply into the red.

In March, Northwest raised its annual labor cost-saving target to $1.1 billion from $950 million.

The airline is also seeking to eliminate all but 73 of the jobs of its 882 ground operations cleaners, who are also represented by the mechanics' union, the Aircraft Mechanics Fraternal Association (AMFA).

With the cleaners included, Northwest is seeking to cut 2,840 jobs, or 53.6 percent of AMFA's membership of 5,294 at the carrier.

"It's basically just devastation for us," said Ted Ludwig, president of AMFA. "They want us to negotiate 53 percent of our membership away."

Northwest Airlines declined to comment.

"We asked the company if the targeted $176 million annual savings they were seeking from you was their initial extreme position that is typical of negotiations," the union said in a memo to its members dated May 20.

"We were informed that that $176 million in cost savings they have unilaterally imposed on you is neither an extreme nor modified position but the actual amount of money they want from you," the memo said.

Ludwig said the union had not yet responded to the proposal, which he said it views as a bid to intimidate members.

The proposed cuts are the latest piece of bad news for mechanics, pilots, flight attendants and other airline industry employees who have seen their living standards slide as leading carriers have slashed their pay and benefits to save money.

Mechanics have been a particular target for job cuts at many traditional airlines, which have found that they can save money by outsourcing maintenance to outside providers who can do the work for cheaper.

Northwest's pilots in November ratified a $265 million concession package that included 15 percent pay cuts.

The airline last year reported an 878 million net loss, part of an estimated $10 billion in industry losses, as surging fuel prices more than offset previous cost savings attempted by the carriers.

Posted by Dan at May 25, 2005 11:56 AM

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