Northwest Airlines seeks court approval of mechanics' union strike settlement, revised contract

By Caroline Salls

Pittsburgh, Nov. 13 - Northwest Airlines Corp. requested court approval of an agreement with the Aircraft Mechanics Fraternal Association that settles an AMFA employee strike and lets Northwest preserve necessary labor cost savings, according to a Monday filing with the U.S. Bankruptcy Court for the Southern District of New York.

AMFA represents Northwest's mechanic, cleaner and custodian employees.

According to the motion, AMFA's membership approved the strike settlement agreement on Nov. 6, with about 72% of the union's membership voting to approve the settlement.

Northwest said the pay rate and work rules imposed by Northwest on AMFA in August 2005, which prompted the strike, achieved the $203 million in cost savings that Northwest requires from this labor group in order to meet their overall labor cost savings requirements.

The new settlement agreement modifies the terms of employment imposed on AMFA in August 2005, but preserves the implemented cost savings and settles the AMFA strike, the motion said.

Strike settlement terms

Under the agreement:

• AMFA-represented employees whose employment status is currently "on strike" can elect to go on layoff status from the permanent positions they held at the time of the strike, without a right to exercise seniority for purposes of displacing any new hire permanent replacement employees or AMFA-represented employees who made unconditional offers to return to work and were reinstated before Oct. 9;

• Employees making the layoff election will be entitled to one week of severance pay for each year of service, with a maximum of five weeks, paid in a lump sum.

These employees will also be entitled to payment of any accrued vacation at the base rates of pay set plus the applicable number of license premiums each employee had been receiving at the time of the strike;

• Employees making the layoff election will be deemed to have a right of recall to the permanent positions without filing a request for recall for the calendar years 2006 and 2007 and will be allowed internet access to job bulletins in Northwest's electronic employee information system;

• Northwest agrees to withdraw immediately any pending appeals on any strike-related unemployment claims filed by AMFA-represented employees and will not thereafter contest payment of unemployment compensation benefits to any AMFA-represented employee whose status is converted to layoff status;

• Employees who are "on strike" from a permanent position and who elect to resign their employment with Northwest will be entitled to one week of separation pay for each year of service with a maximum of 10 weeks, paid in a lump sum and calculated at the base rates of pay.

These employees will also be entitled to payment of any accrued vacation at the base rates of pay plus the applicable number of license premiums each employee had been receiving at the time of the strike;

• Employees who elect to resign will be deemed to have voluntarily resigned from employment with Northwest and will be permanently ineligible for reemployment with Northwest;

• An employee who has a minimum of 10 years of vesting service and whose years of vesting service plus age is equal or greater than 60 will be considered eligible to apply for "Rule of 60" retiree boarding priority space for available lifetime pass privileges.

Pay, work rule and Chapter 11 changes

Compensation and work rule changes include:

• Overtime will be paid for hours worked in excess of eight hours in any one workday modifying the current term providing for overtime pay for hours worked in excess of 40 hours per work week;

• Some employees will not suffer loss of pay while investigating or handling complaints and grievances;

• The vacation bid procedures will be relaxed so that an employee is not required to bid his or her entire vacation accrual in the annual bid but may reserve up to 10 days;

• Sick leave pay will be increased to 75% from 70% of the employee's normal hourly pay rate for each of the first seven continuous and consecutive work days of illness or injury.

The eighth additional day and all subsequent continuous and consecutive work days of illness or injury will be paid at 100%;

• Across-the board base pay rate increases effective as follows: 1.5% increase, Jan. 1, 2007; 1.5% increase, Jan. 1; 2008; 1.5% increase, Jan. 1, 2009; 1.5% increase, Jan. 1, 2010; and 1.5% increase, Jan. 1, 2011; and

• A paid union leave program.

Changes under Northwest's Chapter 11 case include:

• Northwest is not assuming any liabilities or obligations under any previous agreement with AMFA or any claims which otherwise may be alleged to have arisen against Northwest at any time before execution of this agreement;

• Northwest's obligations under the AMFA agreement are not administrative costs and expenses of the Chapter 11 cases; and

• Northwest reserves all rights to seek rejection and modification of the terms and conditions of the AMFA agreement under sections 1113 and 1114 of the bankruptcy code.

Northwest, an Eagan, Minn.-based airline, filed for bankruptcy on Sept. 14, 2005. Its Chapter 11 case number is 05-17930.

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