Northwest Airlines increases annual savings target

Airline Industry Information, March 30, 2005

AIRLINE INDUSTRY INFORMATION-(C)1997-2005 M2 COMMUNICATIONS LTD

Northwest Airlines Corp has made an increase to the amount of money the airline wants to save on labour costs.

This change has reportedly been caused by the record high fuel prices, as well as fare restructuring in the industry and labour cost cuts carried out by other airlines. Northwest said that it has adjusted the labour cost savings target from USD950m annually to USD1.1bn and the aim is to ask unions to freeze the defined benefit pension programmes, replacing them with a defined contribution programme, The Associated Press reported.

According to the airline the USD1.1bn target would include USD265m in pilot concessions and USD35m in white-collar employee savings implemented in December. The pilots have said that they would not consider further cuts until other employee groups have approved their own cuts. The pilots have previously agreed to a 15% wage cut.

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