Originally Posted by Lindisfarne
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.
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.
With the salaries lowered, the new lower base would continue on beyond 2010, or at least be a new starting point for future negotiations. In other words, the $176M annual cut was more or less indefinite.
Further, there is a cost to cutting or striking staff. Whether it's a firing, a layoff or a strike, it costs money to get rid of people (severance packages if a layoff, hiring and training replacements, moving expenses for a closed facility, whatever the circumstance may be). Had NW not spent the $100M preparing for this strike, then when they did not reach an agreement (as just happened), they would be stuck either cancelling flights, shutting down the airline, or giving in to whatever the mechanics wanted.
Basically it cost NW $100M to "bust" the union. Yes, it's a gamble, and nobody knew if it would work or not, but so far it looks like it's working...