Airlines American and Northwest are reversing a decision not to provide severance to thousands of workers let go in the wake of the Sept. 11 terror attacks.
The two major airlines, which plan some 30,000 job cuts between then, faced criticism for not offering the separation package, particularly following rapid passage of a $15 billion airline bailout plan by Congress last week.
The Northwest package, offered to 5,500 furloughed contract employees, will include between one and six week's base pay, medical coverage and flight privileges, the company said. The airline said that managers whose positions will be eliminated also will receive relief packages. A total of 10,000 cuts are planned in all.
"After announcing our staff reductions last week, we continued to review our plan and have determined that this special relief package is appropriate to assist our employees who, under the current staffing reductions, have unexpectedly lost their positions at Northwest Airlines," said Richard Anderson, Northwest CEO. "We hope this will help them during this difficult period."
American Airlines also today said it would provide special pay, medical, travel privileges and other benefits to employees facing furloughs, but didn't say how many of the planned 20,000 layoffs the benefits would cover.
"Last Friday's passage of a federal aid bill, and the delivery of the first installment of aid to the airline this afternoon, will allow us to provide special pay and other benefits to employees who will leave us," said Donald J. Carty, chairman and CEO of American. "This is something we have wanted to do but were not sure we would be able to provide given our changing circumstances and the devastating impact of the terrorist attacks on our industry and our company."
He said the programs will be funded, in part, by a portion of the $900 million American received in federal aid after the terrorist attacks.
Airlines Invoked Emergency Clause
On Tuesday, Northwest and American said that they would invoke a so-called force majeure clause in their union contracts and would be firing employees without severance.
American Airlines Chairman and CEO Donald Carty had declared a "state of emergency." Spokesman Al Becker added: "We are fighting for our lives, for the survival of the company."
But following the Northwest and American announcements, union representatives said they planned to fight the companies' efforts to cut severance packages once the layoffs start taking effect, said Jim Gannon, director of communications for the Transport Workers Union of America.
Edward Wytkind, executive director of the transportation trades department at the AFL-CIO, charged the industry with practicing a kind of double standard. "At a time when they're calling on their employees to restore confidence in this industry, they slap them in the face by saying, 'By the way, the contract commitments we made to you, they're no good.' "
In contrast to Northwest and American, Continental Airlines said earlier this week it has offered employees severance, unpaid leave and early retirement, and would honor all union contracts. Continental also said it has managed to avert more than 1,000 of its 12,000 announced layoffs through voluntary leave of absence program.
The airline will honor all union contracts regarding severance at a cost of more than $60 million.
Jobs Cuts in Tens of Thousands