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Northwest, Pilots Reach Tentative Pact

September 11, 1998|JAMES F. PELTZ | TIMES STAFF WRITER

Negotiators for Northwest Airlines and its pilots' union reached a tentative contract settlement to end a pilots' strike that has grounded the nation's fourth-largest airline for the last two weeks, President Clinton announced Thursday.

"I think the strike is over," said Clinton, adding that the two sides "reached terms that form the basis of an agreement." The president refused to directly intervene in the dispute but had dispatched Transportation Secretary Rodney Slater and White House advisor Bruce Lindsey to help broker a settlement.

Later in the day in Toronto, Air Canada and its 2,100 striking pilots announced a tentative end to a nine-day strike that has crippled Canada's largest airline.

For Northwest, the walkout isn't over yet. The pilots will stay off the job at least until Saturday, when the executive council of its union, the Air Line Pilots Assn., meets in Minneapolis to vote on the proposed contract, ALPA said.

The council's refusal to endorse an earlier proposal put the strike in motion Aug. 28, shutting down St. Paul, Minn.-based Northwest. Any deal also would be subject to approval by Northwest's 6,200 pilots.

And even before Clinton's announcement at the White House, Northwest had canceled its 1,700 daily flights through Sunday. So the airline still wouldn't be back to normal operations until next week at the earliest.

Northwest typically carries more than 100,000 people daily to 160 cities in 23 countries. Its busy hub cities besides Minneapolis/St. Paul are Detroit; Memphis, Tenn.; and Tokyo. It will take a few days for Northwest to resume full service because last week it laid off more than half of its 50,000 employees due to the strike.

For Northwest, the strike would go down as an expensive setback, but not a devastating one. Northwest still faces several major problems, however.

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The pilots' walkout cost the carrier an estimated $15 million a day, or more than $200 million overall. But Northwest had nearly $1 billion in available cash and equivalent investments on its books as of June 30. Even so, the new pilots' contract will add to Northwest's operating costs.

Terms of the new pilots' contract won't be disclosed until ALPA's executive council votes Saturday. The union had sought a 14% raise over three years, while the company had offered 9% over four years. ALPA says the pilots' current annual salaries average $120,000; Northwest says the figure is $133,000.

Whatever the final settlement, its improved terms likely will be the yardstick for new contracts that Northwest also is negotiating with its other major unions. And those unions have made it clear they, like the pilots, expect to be compensated for the huge concessions they made in the early 1990s when Northwest was close to bankruptcy.

Last year, Northwest earned $597 million on revenue of $10.2 billion--a record performance for the carrier.

History shows Northwest won't be severely harmed by a public backlash. Other carriers, notably AMR Corp.'s American Airlines, have incurred strikes in recent years but today are still flying record numbers of people.

Moreover, the hub system that Northwest (and others) operate means Northwest has 75% or more of the market at each of its U.S. hubs. Those cities have been hard-hit by Northwest's absence, and passengers in those areas will likely go back to Northwest.

But it's a different story in cities such as Los Angeles where travelers have more choices. Los Angeles International Airport suffered minimal turmoil due to the strike, even though LAX is a major gateway for Northwest's busy service to Japan and other Asian destinations.

Rivals such as UAL Corp.'s United Airlines, Japan Air Lines and others were able to fill much of Northwest's void, and Northwest will face a harder challenge in winning back passengers on those routes.

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Times wire services contributed to this report.

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