Northwest Airlines: Labor Relations in a Turbulent Industry

Northwest Airlines: Labor Relations in a Turbulent Industry

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Abstract

On September 14, 2005, Northwest Airlines filed for Chapter 11 bankruptcy. During the weeks leading up to the decision, Northwest was burning through $4 million in cash a day, carried $8.1 billion in long-term debt, and had pension plans underfunded by $3.8 billion. With fuel prices increasing at record rates, a shortage for demand in the airline industry, and a mechanics strike leaving unfruitful negotiations, something had to be done. Under the protection of bankruptcy, CEO Douglas Steenland, believes that Northwest can settle labor issues and reorganize the firm’s cost structure to compete with discount airlines. Steenland hopes Northwest can emerge from the bankruptcy stronger than ever. Critics wonder what tactics Northwest might employ to survive this turbulent industry.

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