Northwest Airlines adjusts Annual Labour Cost-Savings from US$950 Million to US$1.1 Billion

Northwest Airlines announced in January that it was reevaluating its annual labour cost-savings target of $950 million in light of record high fuel costs, revenue negative domestic fare restructuring initiatives undertaken by various airlines and labor cost reductions at its primary competitors.

The airline has since, after a review of these issues, decided to adjust its annual labour cost-savings goal from $950 million to $1.1 billion.

As such, the carrier will be asking its unions to agree to a freeze of the current defined benefit pension programs. Northwest has proposed a new defined contribution pension program to replace the current defined benefit plan.

The new $1.1 billion target includes $300 million in annual labour savings from Northwest pilots and salaried and management employees that went into effect in December 2004.

Airline officials are meeting with union representatives to discuss the new labour cost-savings and pension proposals with a goal of reaching agreements with all contract groups as soon as possible.

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