Board meets to discuss fate of Northwest Airlines Carrier still talking to pilots union

June 25, 1993|By New York Times News Service

MINNEAPOLIS -- The board of Northwest Airlines' parent company is scheduled to meet today in a special session to discuss two fateful issues: the terms of a final proposal to the Air Line Pilots Association and, if it is rejected, when the airline will file for bankruptcy protection.

The meeting of the NWA Inc. board will help set the stage for the brief, final act of the yearlong drama that has been played out by the fourth-largest U.S. airline and its many labor groups.

The events are being closely watched by the entire airline industry and, significantly, by members of the national commission that is meeting in Washington to determine how best to help the industry with its troubles. Among the issues the commission is studying are the role of bankruptcy protection in an industry with persistent overcapacity and whether the government needs to increase its regulatory role, a notion that many airlines have contended is ill-advised and unwarranted.

"The failure of labor and management to negotiate here will be widely viewed as their failure to solve their own problems in the industry," said Joseph R. Blasi, a professor at the Institute of Management and Labor Relations at Rutgers University in New Brunswick, N.J.

The Northwest talks may also set an industry precedent, given the concessions being discussed to help restructure NWA's formidable schedule of debt payments, which would rise to $1.09 billion next year from $170 million this year. With other carriers also signaling the need to cut labor costs, a settlement here could help others avoid bankruptcy courts in the future.

Foreign carriers have also scrutinized the progress at Northwest, as a bankruptcy filing would strain the airline's relations with its foreign partner and investor, KLM Royal Dutch Airlines, a pace-setter in the trend among carriers to build global networks.

All of this has come at a time when Northwest has steadily improved its performance, reduced the number of consumer complaints it receives and invested heavily in new marketing strategies and technological amenities to attract business travelers.

Although Chapter 11 protection would not affect the day-to-day operations of Northwest, a bankruptcy filing could create a dark cloud over the carrier, prompting many travel agents and passengers to book tickets elsewhere. That could weaken the momentum Northwest gained this week when it had some of its busiest booking days ever, after it announced discounts on Saturday and received widespread publicity.

Northwest executives and union officials said they knew the costs, both direct and indirect, of a bankruptcy filing.

"We've been pushing this boulder up the hill for several years," said John H. Dasburg, the chief executive of Northwest. "And the boulder is about to get either much bigger or much smaller."

Which is more likely? The momentum seems to be toward a settlement. Talks continued this week, and each side eagerly insisted that any breaks in the discussions were only temporary.

Still, each side remained adamant that it required significantly more than the other appeared willing to give. That had been the tone of the talks for several months, but now both sides have agreed that the rolling deadlines would roll no more.

The carrier has said it must carve at least $886 million out of its operating costs over three years, either outside or inside the courts.

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