Northwest has secured the U.S. Bankruptcy judge’s approval to take its plan to creditors. The plan includes issue of $77.4 million in stock and cash to 4,000 salaried workers, excluding executives. The airline also plans to try get back pay to people from 1993. This seems generous and follows Delta's lead. But it is a chimera.

The plan is for the airline to exit Chapter 11 in the second quarter with a value of ~$7 billion. The disclosure statement drew more than a dozen objections from labor unions, government agencies and shareholders. And there lies the rub.

The airline is far from fixing its labor woes. The Association of Flight Attendants-CWA said the airline should provide more information about pay for executives and directors. The union for 9,000 flight attendants is fighting Northwest over wage and benefits cuts. The Air Line Pilots Association, representing 5,700 pilots, said Northwest didn't disclose enough about equity that managers would get under the plan. Unsecured creditors would receive from 66 percent to 83 percent of the value of their claims in new stock, and existing Northwest shares would be canceled. Northwest may exit Chapter 11, but its hands are back in the hot oil of unhappy flight crews. However, flight crews are now in a much stronger position than is generally thought.

Northwest has a long history of unhappy management/labor relations. No airline can withstand a combined and sustained fight with its two key flight crews. Northwest recently called back many of its laid off pilots, only to find a fraction accepted the call. Most will not come back – having either retired or moved overseas to the Gulf, where there are plenty jobs and plenty new planes.

The unpleasant surprise for all US airlines is that flight crews, particularly pilots, have discovered the true nature and value of their skills in globalization. Overseas, aviation has grown much faster than within the US. This rapid growth has created a huge demand for skilled pilots and this demand rose at the same time that US airlines were laying off thousands of pilots.

For example, Dubai’s Emirates Airways is taking delivery of a new 777-300ER every month. The airline is reportedly parking the planes for want of crews to fly them. Another Gulf carrier, Etihad, requires new 200 pilots and 800 flight attendants this year. Given that the planes being delivered to these airlines are for long haul flights, they require double the crews. Then there are the industry's two giant sucking sounds called India and China. Indonesia will soon be added to the list because of its poor local pilot skill pool; rather than lose operating licenses, the upstart airlines will hire foreign flight deck talent.

Northwest is therefore discovering firsthand what it is like to compete in the new world for crews in a global market. In the passenger side this is not news, but for staff it certainly is. Skilled workers can now make outsourcing work as well as corporations do. Being generous to employees is a new tactic at airlines; Delta has been just as generous to its people who have endured tough times. Continental and American are also taking care of their people better than before.

It is interesting to note that control of US airlines remains under federal protection. The Open Skies pact with Europe will still ensure that US airlines cannot have more than 25% control in “foreign” hands. Therefore poor performing airline executives have a protection not available to their people. And it is they who should take the most blame for their companies’ poor performance. They often do not deserve the protection. If skilled aviation labor now can outsource itself, protection of aviation executives is passé.

The goings on at Northwest is a harbinger of things to come. Let’s hope Congress sees this for what it is. But don’t bet on it. The airline executives control the upgrade policies for elected officials.

Northwest has secured the U.S. Bankruptcy judge’s approval to take its plan to creditors. The plan includes issue of $77.4 million in stock and cash to 4,000 salaried workers, excluding executives. The airline also plans to try get back pay to people from 1993. This seems generous and follows Delta's lead. But it is a chimera.

The plan is for the airline to exit Chapter 11 in the second quarter with a value of ~$7 billion. The disclosure statement drew more than a dozen objections from labor unions, government agencies and shareholders. And there lies the rub.

The airline is far from fixing its labor woes. The Association of Flight Attendants-CWA said the airline should provide more information about pay for executives and directors. The union for 9,000 flight attendants is fighting Northwest over wage and benefits cuts. The Air Line Pilots Association, representing 5,700 pilots, said Northwest didn't disclose enough about equity that managers would get under the plan. Unsecured creditors would receive from 66 percent to 83 percent of the value of their claims in new stock, and existing Northwest shares would be canceled. Northwest may exit Chapter 11, but its hands are back in the hot oil of unhappy flight crews. However, flight crews are now in a much stronger position than is generally thought.

Northwest has a long history of unhappy management/labor relations. No airline can withstand a combined and sustained fight with its two key flight crews. Northwest recently called back many of its laid off pilots, only to find a fraction accepted the call. Most will not come back – having either retired or moved overseas to the Gulf, where there are plenty jobs and plenty new planes.

The unpleasant surprise for all US airlines is that flight crews, particularly pilots, have discovered the true nature and value of their skills in globalization. Overseas, aviation has grown much faster than within the US. This rapid growth has created a huge demand for skilled pilots and this demand rose at the same time that US airlines were laying off thousands of pilots.

For example, Dubai’s Emirates Airways is taking delivery of a new 777-300ER every month. The airline is reportedly parking the planes for want of crews to fly them. Another Gulf carrier, Etihad, requires new 200 pilots and 800 flight attendants this year. Given that the planes being delivered to these airlines are for long haul flights, they require double the crews. Then there are the industry's two giant sucking sounds called India and China. Indonesia will soon be added to the list because of its poor local pilot skill pool; rather than lose operating licenses, the upstart airlines will hire foreign flight deck talent.

Northwest is therefore discovering firsthand what it is like to compete in the new world for crews in a global market. In the passenger side this is not news, but for staff it certainly is. Skilled workers can now make outsourcing work as well as corporations do. Being generous to employees is a new tactic at airlines; Delta has been just as generous to its people who have endured tough times. Continental and American are also taking care of their people better than before.

It is interesting to note that control of US airlines remains under federal protection. The Open Skies pact with Europe will still ensure that US airlines cannot have more than 25% control in “foreign” hands. Therefore poor performing airline executives have a protection not available to their people. And it is they who should take the most blame for their companies’ poor performance. They often do not deserve the protection. If skilled aviation labor now can outsource itself, protection of aviation executives is passé.

The goings on at Northwest is a harbinger of things to come. Let’s hope Congress sees this for what it is. But don’t bet on it. The airline executives control the upgrade policies for elected officials.