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A little more than a month removed from its exit from bankruptcy, Northwest Airlines Corp. is caught in the middle of a labor dispute that could leave it vulnerable to future financial difficulties. Eagan, Minn.-based Northwest has cancelled upwards of 10% of its mainline flying in recent days, with many of the flights impacted feeding traffic in and out of its large hubs in Detroit and Minneapolis. Northwest initially blamed weather and congestion for its troubles, however, that seems unlikely to be the whole story given that other airlines have not had similar problems. Rather, pilots and other Northwest employees say the real culprit is simmering unrest over management compensation and decision-making during and since the airline’s stay in Chapter 11.
Airline employees say that crews are simply refusing to work extra shifts to help Northwest make up for shortfalls, exasperating the company’s decision to use the bankruptcy court to trim its ranks to the lowest possible staffing levels. The situation is playing out much as the company’s pilots union predicted it would in a June 15 resolution, which stated that “all indications are that staffing is below what is required to properly fly the summer schedule.” The situation at Northwest is reminding many in the industry of what UAL Corp.’s United Airlines Inc. experienced in 2000 as part of its so-called Summer of Hell, as pilots protested the company’s proposed merger with US Airways Group Inc. Overall, 25,000 United flights were canceled that summer, raising tensions and consumer distrust and eventually helping the airline land in bankruptcy in 2002. Relief is on the way for Northwest passengers with the coming of a new month. On July 1, the clocks that govern how much time flight crews are allowed by regulation to spend in the air reset to zero, giving the airline more workers to fill in the gaps. A few weeks without stormy weather, which not only backs up the schedule but eats into the crews’ allotment of cockpit hours, would also help. But absent some sort of détente between labor and management, passengers could face similar cancellations at the end of each month through the busy summer travel season, and Northwest schedulers could have trouble come the December holidays if pilots are pushing up against yearly limits. Already some corporate travel agencies are cautioning clients to avoid Northwest, especially late in the month, and according to local media reports Northwest customers are starting to take their business elsewhere. Which could leave Northwest vulnerable to the same cut-throat competition and weakening revenue streams that helped land it in bankruptcy two years ago. See related story about Northwest's reorganization in The Deal.com Categories Deal Video
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