Last NWA union signs on -- by a whisker

Northwest Airlines flight attendants, who have been battling with the airline since it entered bankruptcy 20 months ago, narrowly agreed to concessions on Tuesday, just two days before the carrier will leave court protection.

By a 104-vote margin, the flight attendants became the last major work group at Northwest to agree to new contract terms. Their deal, approved by a vote of 2,966 to 2,862, provides the airline with $195 million in annual cuts through 2011, the same length of contract that Northwest negotiated with the other major unions.

"It is not a contract that any labor organization wants to pass to their members for a vote," said Andy Wisbacher, vice president of the Northwest branch of the Association of Flight Attendants (AFA).

But Wisbacher said the agreement -- the two sides' third attempt at a contract since 2006 -- passed partly because a rejection would mean the loss of a $182 million bankruptcy claim. He also said union leaders had run into legal roadblocks that prevented them from negotiating a better deal.

"We've been failed by the courts and failed by the National Mediation Board. That caused some flight attendants to vote yes," Wisbacher said.

During the balloting, union leaders said the defeat of this latest agreement could prompt the National Mediation Board to recess talks indefinitely.

The flight attendants were prevented from striking after they were blocked by the courts with an injunction and the mediation board refused to release them from bargaining and set a strike deadline.

Union leaders said that 90.5 percent of eligible voters cast ballots. The 8,200 flight attendants have been working under imposed pay cuts and work rules since July, when 55 percent of the voting members turned down a second agreement. The first deal was rejected by a 4-1 margin last June. All three deals met Northwest's target of saving $195 million a year, which attendants have argued is a greater sacrifice than Northwest needs to be profitable.

Wisbacher said pay scales would remain the same as they were under the imposed terms. Under the new agreement, a 15-year flight attendant who flies 75 hours a month will earn $35,433 a year.

Close vote expected

Union leaders expected the vote to be close. In the end, "a bare majority felt it was better to take this offer than nothing," John Remington, a labor expert at the University of Minnesota, said Tuesday night. The rest decided they were "not going to be coerced into this unfortunate agreement by a bankruptcy judge and Northwest Airlines," Remington said.

In a prepared statement, Northwest CEO Doug Steenland said the carrier was pleased that it now has deals with all of its unions as it prepares to exit Chapter 11 Thursday.

"In particular, we are pleased that the flight attendants will be able to share in the success of the restructuring by receiving a claim in the Northwest bankruptcy case," Steenland said.

That $182 million claim will be sold for cash, and the union estimated the pre-tax value would be $15,000 to $18,000 per flight attendant. Other labor unions at Northwest received claims as part of their concessionary agreements, too.

Previously, Northwest and other airlines have provided employees with stock in exchange for concessions, but those awards have done little to produce better labor-management relations.

In 1993, Northwest pilots, ground workers and flight attendants unions received stock and seats on the board of directors after agreeing to pay cuts.

Northwest was supposed to buy back the preferred shares of stock from its employees in 2003, but it failed to do so, citing financial distress.

Northwest's flight attendants, ground workers and mechanics still holding those preferred shares from 1993 will now get stock in the new Northwest, because they were entitled to a combined $277 million claim in the bankruptcy.

Jerry Glass, an airline consultant and former US Airways executive, said Tuesday that "in a perfect world" union members would financially benefit from the stock awards and find themselves with more in common, as equity holders, with airline board members.

He added, "There is an inherent conflict in labor representatives serving on boards of directors because there are [financial] circumstances in which labor interests are not aligned with corporate interests."

Greg Davidowitch, president of the Association of Flight Attendants at United Airlines, said the pilots and mechanics got board seats at United in the 1990s. In addition, he said, employees at United got stock in the bankruptcy that was completed in February 2006.

But Davidowitch said United's executives "were able to exploit the bankruptcy laws against workers." United's flight attendants, for example, took an average pay cut of 24 percent.

The value of the stock that United attendants received "could never compensate the flight attendants for what was taken from them," Davidowitch said, and employee morale plummeted after United CEO Glenn Tilton and other executives negotiated handsome compensation packages for themselves.

The $300 million or so in stock awards to the top 400 Northwest executives will be the focus of a rally at the Minnesota State Capitol today as union workers gather to protest what organizers describe as "executive greed." Labor-management tensions are escalating at Northwest, United and other big carriers as airlines return to profitability after employee cutbacks.

Liz Fedor • 612-673-7709 • lfedor@startribune.com