Saturday, August 20, 2005

Northwest Airlines employees strike

Shares of Northwest closed down 10 cents, or 1.8 percent, at $5.38 Friday on Nasdaq, as the Aircraft Mechanics Fraternal Association, representing 5,400 mechanics, cleaners and custodians, went on strike.

I have to confess my surprise at this. I thought a strike, particularly a really crippling strike, would have been just the thing to tip the struggling airline into bankruptcy. Although bankruptcy is usually viewed as a negative, in this case it would allow Northwest to dump their pensions on the PBGC and restructure all their labor contracts. Today, bankruptcy could be a competitive tool in the airline industry.

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