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Turbulence
Bankruptcy, labor negotiations and Minnesota Supreme Court Justices; Northwest Airlines’ Labor Consul Office attorney Greg Wilken talks to SD 41
 Joking that “it’s been quiet” in the airline industry, attorney Greg Wilken spoke to a capacity Senate District 41 crowd about the evolving condition of one of Minnesota’s chief employers, Northwest Airlines. Working out of the company’s Labor Consul Office, Wilken shared many of the details that led to the airline’s mechanics strike as well as the circumstances that forced the carrier to file for bankruptcy last September.
Introduced by his former employer, Doug Seaton of Seaton, Beck and Peters law firm, both Wilken and Seaton attempted to defuse any tension from the hot-button issue of Northwest’s recent relationship with its 7 different unions. “We have to set some ground rules. No bricks please,” Seaton joked. Wilken chimed in as well by way of making light of Senate Majority Leader Dean Johnson’s (DFL-Willmar) well-publicized comments by stating as he begun, “Just for the record, I don’t know any Minnesota Supreme Court Justices.”
Given the size and importance of Northwest Airlines in the community, Wilken remarked that most Minnesotans don’t have to look too far to find an employee from the company, a statement which proved accurate as several individuals professed either knowing people who worked for the airline or previously did themselves. And while the September 14th bankruptcy may have caught some by surprise, Wilken reminded his audience of the “turbulent times” of the airline industry after 9/11, pointing out that the bankruptcy filing occurred four years to the day that Northwest began cutting employees in response to the terrorist attacks.
Such a financial picture set the airline towards making necessary cuts in expenses, resulting two years ago in attempting to achieve $1.4 billion in savings in annual labor costs alone. Similar cuts in management occurred, proportional to employee salaries, but the cuts were difficult as the airline was, in Wilken’s view, “heavily unionized.” While the airline was able to reach a temporary agreement with pilots, the mechanic’s union rejected offers and took a “very strident” position with Northwest. The result is well known---a called for strike in August 2005 that continues today with replacement workers now employed by the airline. Of the outcome, Wilken noted “the real shame” was the union’s national representation which never relayed several of Northwest Airlines’ offers to the local affiliate. 
While Northwest has “significantly lowered” its non-labor costs, the airline must still contend with a pressing need for pension reform. The company’s current defined benefits package lost much of its value along with the airline’s stock, resulting in $3.75 billion in underfunded pension plans at end of 2003 alone. Northwest hopes to “freeze” the current defined benefits package for current workers and start a company-funded defined contribution plan which could help the airline reach its goal of cutting annual labor costs by $950 million.
Wilken’s report also contained good news. The U.S. Senate has recently passed legislation to help in freezing pension plans like Northwest’s and the airline believes it could come out of bankruptcy by 2007. By comparison, it took United Airlines 3 years to accomplish the same objective. The airline’s improving fortunes are in large part due to the fact that airline travel is the highest it’s been since 2000 in addition to the carrier finding more ways to generate revenue such as the recent “Coach Choice” plan that has passengers pay extra for better seats in coach and expanding in the growing Asian market.
But Northwest hasn’t forgotten its roots, adopting a “Heartland” strategy to improve its position in the Midwest market. “It’s our strength,” Wilken said, “It’s our history.” And from the looks of things, Northwest Airlines will continue to be a part of Minnesota’s history---past, present and future---for quite a while longer.
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