Northwest lives up to tough image

[Kev3188]

The obvious reply here is, why weren't AMFA negotiators smart enough to figure out that the 2,500 jobs offer was generous under the given circumstances? Once AMFA rejected that "good faith" offer from NWA, then there was nowhere to negotiate to except for the elimination of AMFA. The most important part of negotiating is knowing exactly what chips you actually hold. AMFA overplayed their hand, which made traditional "good faith" meet at the middle bargaining non-applicable.

It's "beginning to and back again." Check out post #71 in response to your addressing this same topic last Winter.

How was NWA bargaining in "good faith?" Each successive offer's terms were worse than the previous one (even after AMFA offered concessions). To a man, there was no "meet in the middle" bargaining going on.

As for AMFA, I would have liked to see them push to "open up" DLH a little more (ie. better utilization of the facility, 3rd party work, etc.). I think this was a bargaining chip that was completely overlooked by both sides. The mechanic skill set, coupled with the first rate facility could have been win-win.

 

[jenny@nw]

They are going through the motion of "bargaining in good faith" but not doing it.

They can say they went to the bargaining table, sit and stare at each other.

-That is defined as attempting to bargain in good fatih. NW can claim they made an effort.
They could have sent two automotons and play a tape recording, and that would still be considered as an "effort"

All they have to do is send an agent that is a representative of the company. Nothing says they have to work anything out.

They did that with both - AMFA and PFAA (but the PFAA one was priceless, since the negotiator threatened the PFAA negotiator saying "You're NEXT!"

Classy!

 

[finman]

It's "beginning to and back again." Check out post #71 in response to your addressing this same topic last Winter.

Wow! I made some great points back then. Thanks for digging that back up. I put a lot more time into lengthy responses back then. I've yet to see a reasonable argument that shows "bad faith" bargaining, largely because it's a meaningless term, both legally and practically. If I in good faith need to reduce my labor costs by 50% to compete and be viable, but I only ask for a 25% cut, is that considered "bad faith"? If the 25% offer is rejected without even a vote, and knowing that the 25% was probably not going to be sustainable in the long-term, the employer naturally has no choice but to opt for drastic measures to ensure the viability of the entity. The 25% was the best offer NWA could make. When it was rejected without even a vote, NWA had no choice but to move to alternative options. Plain and simple.

The contingency measures taken prior to an during the negotiations were not a sign of "bad faith" but a sign that NWA knew that AMFA would likely reject their best offer, and NWA had to be ready to implement the only alternative options that remained. Employers have the right to prepare for a strike just the same as a union does, do they not?

 

[upsilon]

Finman, give it up. It was a UC matter and the MN decision will stand. The NW company UC future tax rate in MN will go up when the experience rating kicks in. But the top rate is capped (if it is not already so).

Be content with the achieved cost savings you have well documented. Any possible future cost in UC taxes as a result of this decision is minimal in comparison.

 

[Don Smith]

Wow! I made some great points back then. Thanks for digging that back up. I put a lot more time into lengthy responses back then. I've yet to see a reasonable argument that shows "bad faith" bargaining, largely because it's a meaningless term, both legally and practically. If I in good faith need to reduce my labor costs by 50% to compete and be viable, but I only ask for a 25% cut, is that considered "bad faith"? If the 25% offer is rejected without even a vote, and knowing that the 25% was probably not going to be sustainable in the long-term, the employer naturally has no choice but to opt for drastic measures to ensure the viability of the entity. The 25% was the best offer NWA could make. When it was rejected without even a vote, NWA had no choice but to move to alternative options. Plain and simple.

The contingency measures taken prior to an during the negotiations were not a sign of "bad faith" but a sign that NWA knew that AMFA would likely reject their best offer, and NWA had to be ready to implement the only alternative options that remained. Employers have the right to prepare for a strike just the same as a union does, do they not?

nwa had the wheels rolling on replacements long before the first offer enven appeared on the table. Theres a big diffenence between spending $100M on replacement contingency a year before negotiations and printing up a pile of strike signs. I would remind you that the first best offer was followed by two subsequent worse offers. Instead of trying to find a middle between AMFAs offer and the first nwa offer THEY chose to bring worse offers to the table. You are right about this however, they knew exactly what they were doing...as in not honestly "bargaining" at all. Didn't we already cover all of this?

 

[No other airline starts with NO]

Wow! I made some great points back then. Thanks for digging that back up. I put a lot more time into lengthy responses back then. I've yet to see a reasonable argument that shows "bad faith" bargaining, largely because it's a meaningless term, both legally and practically. If I in good faith need to reduce my labor costs by 50% to compete and be viable, but I only ask for a 25% cut, is that considered "bad faith"? If the 25% offer is rejected without even a vote, and knowing that the 25% was probably not going to be sustainable in the long-term, the employer naturally has no choice but to opt for drastic measures to ensure the viability of the entity. The 25% was the best offer NWA could make. When it was rejected without even a vote, NWA had no choice but to move to alternative options. Plain and simple.

The contingency measures taken prior to an during the negotiations were not a sign of "bad faith" but a sign that NWA knew that AMFA would likely reject their best offer, and NWA had to be ready to implement the only alternative options that remained. Employers have the right to prepare for a strike just the same as a union does, do they not?

What is this nonsense? Are they serving Kool Aide at work?

 

[dc3fanatic]

NW entered Ch.11 because its liabilities exceeded its assets.

NO. Companies enter bankruptcy because they don't have a viable business plan without massive restructuring that is only available in Bankruptcy.

This 'restructuring' includes rejections of contract (Union, Aircraft, Land Leases, etc . . .).

 

[Don Smith]

To anyone with any knowledge of airline finance, (or any kind of finance for that matter) you pretty much sound like an idiot. The cash on hand was made up entirely by operating loans. NWA was able to stay afloat while losing money by borrowing more money. I suppose it's easier to assume some evil propogation than to pick up a business journal or newspaper and educate yourself on the fundamentals at play.

So you're telling me that nwa didn't get any of the money available to legacy carriers after 9-11? They must be spiking the coffee up at HQ. If there were any strings attached to that money then nwa cut them with the BK filing. Remember...judge in pocket.

 

[Bear96]

NO. Companies enter bankruptcy because they don't have a viable business plan without massive restructuring that is only available in Bankruptcy.

Yes, and the business plan is not "viable" because . . .
liabilities greatly exceed assets.

 

[finman]

So you're telling me that nwa didn't get any of the money available to legacy carriers after 9-11? They must be spiking the coffee up at HQ. If there were any strings attached to that money then nwa cut them with the BK filing. Remember...judge in pocket.

No, NWA did not apply for the federal loan, due to the strings that were attached.

 

[ExAF]

So you're telling me that nwa didn't get any of the money available to legacy carriers after 9-11?

It's statements like this that show just how out of touch many were prior to the BK filing.

 

[Don Smith]

No, NWA did not apply for the federal loan, due to the strings that were attached.

Sorry Beanie but I remember reading it in Passages that nwa took the money. If only I'd have kept those copies instead of burning them to keep the house warm.

 

[dc3fanatic]

Yes, and the business plan is not "viable" because . . .
liabilities greatly exceed assets.

WRONG. Because cash-flow is unsustainable. Soon that company won't be able to pay their bills and restructuring available outside of B isn't enough to help.

Liabilities that exceed assets alone does not mandate filing for bankruptcy.

Use an individual as an example . . .
Someone graduates from college. Say they have $20K in college loans. What are their liabilities? 20K. How do you value their 'assets'? Many college graduates don't have much in assets. Do you see tons of college graduates declare because of this? nope.

 

[eolesen]

Tons of college graduates don't declare because student loans are not dischargeable in a personal bankruptcy proceeding.

There are exceptions for someone who is able to prove that paying the loan back will cause the debtor to be unable to maintain a minimum standard of living for the duration of the loan repayments, and that this situation is not going to improve over time. The only example I can think of where this would be the case is someone who is unable to work due to a permanently disabling injury...

Still, the example is still flawed because court won't calculate $20K in student loans as being the same as $20K in credit card or other unsecured debt, primarily because it's intended to be amortized over 10 years.

 

[PurduePete]

No, NWA did not apply for the federal loan, due to the strings that were attached.

Don, finman must have a selective memory. He also is not telling the truth. After a quick search on the internet, I came up with NWA's statement on their 2001 Q3 financial results...

http://ir.nwa.com/phoenix.zhtml?c=111021&a...&highlight=

Northwest Airlines Reports $19 Million Third Quarter Net Income Including the Government Stabilization Grant

ST PAUL, Minn., Oct. 25 /PRNewswire/ -- Northwest Airlines Corporation (Nasdaq: NWAC), the parent of Northwest Airlines, today reported a third quarter profit of $19 million or 20 cents per diluted common share. This compares to third quarter 2000 reported net income of $207 million or $2.23 per diluted common share. These results include the recognition of $249 million of a pre-tax grant from the U.S. Government under the Air Transportation Safety and System Stabilization Act (``Stabilization Act'') and $61 million in non-recurring pre-tax charges for aircraft write-downs and severance costs related to the terrorist acts of September 11. Excluding the federal grant and the non-recurring charges, Northwest reported a net loss of $100 million or $1.18 loss per share, which compares favorably to the First Call consensus estimates of $1.54 loss per share.

I also came up with their 2001 Q4 results...

http://ir.nwa.com/phoenix.zhtml?c=111021&a...&highlight=

Northwest Airlines Reports Fourth Quarter and Full Year Results

ST. PAUL, Minn., Jan. 17 /PRNewswire-FirstCall/ -- Northwest Airlines Corporation (Nasdaq: NWAC), the parent of Northwest Airlines, today reported a fourth quarter net loss of $216 million or $2.55 per common share. This compares to fourth quarter 2000 reported net loss of $69 million or 84 cents per common share. The fourth quarter 2001 results include the recognition of $212 million of a pre-tax grant as compensation from the U.S. Government under the Air Transportation Safety and System Stabilization Act ("Stabilization Act") and $149 million in non-recurring pre-tax charges principally related to aircraft write-downs and/or retirements.

So, NW received at least $461 million in compensation from the government. Funny, but I don't remember them ever giving the money back...

Care to clarify your previous comment about the government bailout now finman? :unsure: