No Deal for Northwest, Mechanics

The airline says it will hire permanent replacement workers.
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Updated from 11:23 a.m. EDT

Northwest Airlines

(NWAC)

plans to start hiring permanent replacement mechanics this week after talks with its striking mechanics union broke down.

In a statement Sunday evening, Northwest said the Aircraft Mechanics Fraternal Association broke off the latest round of talks, which began last Thursday.

AMFA, in a letter to members posted on its Web site, said it abandoned the talks shortly after 12 a.m. Sunday, even though union negotiators agreed to several company demands, including an annual value on concessions of $203 million -- up from Northwest's prestrike target of $176 million -- and the elimination of 3,181 positions that existed before the strike. That would leave only 1,080 jobs.

According to the AMFA letter, the sticking point was severance pay for laid-off workers, with the union asking for 20 weeks of severance pay, while Northwest refused to offer more than 16 weeks.

Northwest said it offered the maximum amount of severance available to its contract employees.

About 4,400 workers represented by the AMFA walked off the job Aug. 20 after the union and Northwest failed to reach a consensual agreement on a new contract and a 30-day cooling-off period mandated by federal law had expired.

Before the strike, Northwest had been seeking $176 million in annual concessions from the union as part of labor cost-cutting efforts designed to save $1.1 billion a year and avert a potential bankruptcy filing. The union had said the airline refused to consider its own offers and wouldn't budge from demanding layoffs of about 53% of its mechanics and pay cuts of about 25% for the remaining workers.

With fuel costs skyrocketing, Northwest has said it will probably have to boost its overall labor savings target, and the union's letter says Northwest informed it that it's now seeking $1.4 billion in annual savings from all its employees.

Since the strike began, Northwest has permanently contracted out maintenance work at many domestic airports, as well as cleaning and custodial work that was performed by some AMFA members. It also hired about 1,500 temporary mechanics for its Detroit and Minneapolis hubs.

But it warned last week it would start hiring permanent replacements for the hubs this week if talks failed with the union.

Northwest says its operations continue to "reliably" meet the needs of its customers. However, the Federal Aviation Administration last week confirmed a report in

The Wall Street Journal

that the FAA was investigating Northwest's maintenance after an inspector raised concerns about the performance of replacement mechanics.

Northwest shares fell 10 cents, or 2.9%, to $3.38.