The Star-Tribune article made it sound like it was a total concession, rather than annual. In any case, the contract only lasts until Jan 2010 (see http://www.amfa33.org/nwanegotiation...pdate%2027.pdf )

So that's almost $25 million per year of the contract that could have gone to the mechanics, rather than NW preparing for a strike. That's about 14% of what they're asking for in the $176 million of annual cuts. Had NW said upfront: Look, we can try to do this for $150 million of cuts because if we can avoid preparing for a strike, we'll save $100 million right there. They would have been a lot closer ($25 million) to a middle point than they are now - that 25 million represents over a 1/3 of the amount by which they differ. If each party had conceded another $25 million, they would have had an agreement.

Not factored in is the value of the bad will with the public that this strike will create for Northwest, nor the lost value in having a less loyal labor force (25% pay cuts is going to make any employee unhappy and unlikely to give 110% for the company). NW may get to pay mechanics a lot less, but some of that will be eaten up by lost productivity due to less experienced and less loyal employees.
I alone have not purchased 2 tickets on NW as a result of the strike. Depending on what happens in the next few weeks, I may decide that NW will not be the airline of choice for my travel.

I'd be extremely unhappy if I found out my employer was trying to cut my pay by 26%, and then found out the company was prepared to waste 14% annually of what I conceded.