Sun, Aug 08, 2004
Pilot union leaders
want company to turn over nearly 20% of outstanding shares
The leaders of the Northwest Airlines' pilot's labor union have
rejected the latest company stock offer as "grossly inadequate."
They are also accusing the airline's management of delaying tactics
to stall negotiations for a new contract.
"Management has been saying that they want to have negotiations
completed by this fall. However, they are not acting like that at
the negotiating table," said union spokesperson Curt Kruse. "They
are not displaying any sense of urgency."
The disagreement stems from a proposal by the pilots in April to
cut their own salaries by $200 million per year to help the airline
get itself back on track to profitability. In return, the pilots
want 20.7 million shares of Northwest stock, which represents 19.4
percent of the company's outstanding shares. Two months later, the
airline countered with a proposal to cut $300 million in labor
costs, more than 25 percent less than their original proposal for
$442 million in cuts.
In return, the company
is offering the pilots 1 million stock options. "We don't consider
their current offer a serious one." In fact, Mark McClain, chairman
of the Northwest branch of ALPA, responded in the pilot newsletter,
stating that "NWA's top five senior executives were granted 625,000
options in 2004 alone. Management is now proposing that over 5,000
pilots share 1 million options."
Kruse said. Northwest management did not comment on the response
by the pilot's unions, but spokesperson Bill Mellon said that in
regards to alleged delaying tactics in the negotiations, "We are
working to reach an agreement by this fall." Several key members of
the airline management team did in fact receive options, but they
are restricted options given to key personnel that do not vest for
years and require them to stay with the airline in order to be able
to exercise them -- a common practice in and out of the
What ALPA is trying to do is negotiate a two year bridge
contract that would put the pilots in the position to reassess
their situation and that of the airline in two years, and open the
field for negotiations with the other labor unions at the airline.
The stock portion of the agreement is more than likely going to be
the biggest obstacle to an agreement with the pilots.
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