Alaska Airlines baggage handlers voted overwhelmingly to reject management's latest contract offer, creating a showdown that threatens the...

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Alaska Airlines baggage handlers voted overwhelmingly to reject management’s latest contract offer, creating a showdown that threatens the jobs of about 500 workers in Seattle.

In January, the company warned that it might hire an outside vendor to do the work in Seattle. Company executives now must decide whether to carry out that threat.

Management says the offer was the company’s final proposal before it decides whether to outsource the work.

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Voting ended Thursday night. The union that represents the baggage handlers, the International Association of Machinists (IAM) District 143, announced the outcome yesterday.

Eighty-five percent of those voting said no to the management offer. The union did not disclose the count but said 85 percent opposed the proposal.

“Our members are looking squarely in the face the possibility of losing their jobs,” said Bobby De Pace, president of IAM District 143. “But they are tired of being extorted by constantly holding this gun to our heads of farming out the work.”

The consequence of the vote won’t be clear until later this month.

In an e-mail to employees yesterday afternoon, Dennis Hamel, Alaska Airlines vice president of employee services, expressed disappointment and said the company “will now work to reach a decision by the end of May on subcontracting the Seattle ramp function.”

The “ramp” is the airline-industry term used for the baggage-handling operation.

Company spokeswoman Caroline Boren said that firing Seattle employees and hiring a vendor are “among the options under consideration.” The decision, she said, has not been made.

The IAM represents 952 baggage handlers in Seattle, Alaska and in other airports, such as Phoenix.

Whatever the company decides regarding the Seattle employees, it will continue contract talks for remaining employees in the summer. The talks will be with a federal mediator.

If the company and the union can’t agree, the mediator can declare a cooling-off period. After that, the union can call a strike. In the vote yesterday, 82 percent of those voting authorized a strike.

The union hopes the company will return to the table.

“We will ask the company to meet immediately,” De Pace said. “The IAM is prepared to immediately resume bargaining.”

However, De Pace was preparing for worse.

“We fully expect them to try to break us,” he said.

De Pace said that if management moves to fire the Seattle employees before contract talks resume, union lawyers will go to court to seek a temporary restraining order or to sue the company.

The rejected offer included a guarantee of four years without outsourcing. It also offered a voluntary severance package to those on the higher rungs of the pay scale.

However, it would have cut wages and benefits significantly, exacting about $13 million in concessions. The top-scale wage rate was cut 25 percent to $15.47 an hour, and high overtime rates were eliminated. It also would have steeply raised health-insurance contributions.

In January, Alaska asked Menzies Aviation Group, a United Kingdom-based subcontractor of air-terminal services, to evaluate possible savings from outsourcing the Seattle work.

Menzies then advertised baggage-handling jobs at Sea-Tac Airport for $8.75 an hour. The savings projected from such outsourcing was relayed to the union during the contract talks.

Alaska’s push to cut labor costs comes at a time of industry crisis as jet-fuel prices remain high and low-cost carriers keep fares low.

All the major U.S. airlines are losing money. In the first quarter, Alaska Air Group reported a net loss of $80.5 million, nearly twice its loss of the year-ago period.

Chief Executive Bill Ayers has cut the airline’s operational costs since 2003, leaving the toughest union talks until last.

“This will be the year of labor,” he told Airline Business magazine in this month’s issue.

Alaska management is in talks with all its unions and has asked for a total of $112 million in wage and benefit concessions. A week ago, a federal arbitrator decided the major terms of a new contract between the airline and its 1,500 pilots.

Effective May 1, pilot pay was slashed an average of 26 percent, with less-senior pilots taking a cut of as much as 34 percent, according to an analysis by John Steinbeck, who runs an informational Web site for pilots.

Based on a guaranteed minimum of 75 flying hours a month, most Alaska captains earn at least $135,000 a year.

Dominic Gates: 206-464-2963 or dgates@seattletimes.com