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Northwest union OKs pact
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May 9, 2001: 11:25 a.m. ET
Mechanics get immediate 24.4% raise, bonuses, future pay hikes
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NEW YORK (CNNfn) - Mechanics at Northwest Airlines ratified a new contract with the nation's No. 4 airline Wednesday, ending a labor dispute that has dragged on for more than four years.
The vote means the deal, reached last month between the Aircraft Mechanics Fraternal Organization and Northwest (NWAC: down $0.29 to $25.01, Research, Estimates) and covering more than 9,000 mechanics and ramp workers, takes effect Saturday.
Ratification occurred after President Bush intervened to keep the mechanics on the job at the Eagan, Minn.-based carrier after they had threatened to strike in March.
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Northwest Airlines planes will keep flying after mechanics ratified a new four-year deal Wednesday, but other major carriers face difficult labor issues ahead. (Source: Northwest Airlines) | |
But the agreement does not bring an end to all possible labor pains for the nation's air travelers. In fact, just about all major carriers other than Northwest and No. 5 Continental Airlines (CAL: down $0.02 to $50.80, Research, Estimates) face some kind of labor talks.
The union said the deal won the approval of 84 percent of rank and file members who voted, and that 94 percent of the 9,333 eligible members took part in the vote.
Under the four-year agreement, technicians get an immediate 24.4 percent raise, plus retroactive pay increases worth about 3.5 percent of their pay back to October 1996. It also includes a one-time signing bonus of $3,750. Cleaners and custodians receive a 13 percent raise plus the same retro pay increase and an $1,875 signing bonus.
All members will receive 3 percent raises for each of the next two years and an additional 4 percent raise the last year of the deal.
The airline previously had reached a deal with the International Association of Machinists for the mechanics unit in 1998, at the same time it was facing a strike by its pilots. But the rank-and-file rejected that deal, and then voted to replace the IAM with the independent AMFA.
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AMFA's demands were far greater until just before the deal was reached. Company officials said in March the union was seeking immediate raises of up to 40 percent and retroactive pay and signing bonuses equal to an average of $82,500 per member.
Union officials had not confirmed their demands at that point in negotiations, but they had earlier said they were seeking $40 an hour for mechanics by the end of the contract. Instead they settled for $32.53 as the top hourly pay at the end of the deal.
The deal will cost Northwest hundreds of millions of additional dollars under its own estimates, but will keep its planes flying in a highly competitive industry. The airline's pilots and flight attendants are working under contracts that run through 2002 and 2005, respectively.
Northwest's management released a statement calling the vote the start of a new era for the carrier, and thanking its customers for their patience during the various negotiations. The airline went to court last fall to win an order against mechanics improperly grounding aircraft as a way to gain leverage at the bargaining table.
The company did not release any estimates of the additional cost under the new labor pact, although in it's last earnings statement it took a $94 million charge for the expected cost of the retroactive pay portion of the contract.
Negotiations are under way involving mechanics and customer service employees at United Airlines, the world's largest carrier, and flight attendants at American Airlines, the main unit of AMR Corp. (AMR: down $0.47 to $37.37, Research, Estimates), which is the world's largest airline holding company. In addition, there are talks involving ramp workers at discount carrier Southwest Airlines (LUV: up $0.04 to $18.52, Research, Estimates) and pilots at America West Airlines Holdings Inc. (AWA: up $0.08 to $10.58, Research, Estimates).
In addition, flight attendants are threatening to strike United Airlines if its parent UAL Corp. (UAL: down $0.26 to $37.41, Research, Estimates) gets the approval to purchase US Airways Group Inc. (U: down $0.34 to $29.53, Research, Estimates) without reaching a new deal with that union. United officials, however, argue such a strike would be illegal and vow legal action if those union members attempt to walk out.
A tentative agreement by pilots at No. 3 Delta Air Lines (DAL: down $0.24 to $45.82, Research, Estimates) is faces a difficult ratification vote, and the airline's operations still are being disrupted by a pilots strike at its feeder airline unit Comair Inc., which now is in its seventh week. 
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