NWA says it will cut flights, ground planes

[737 Pylt]

http://twincities.bizjournals.com/twincities/stories/2008/03/31/daily38.html?ana=yfcpc

NWA says it will cut flights, ground planes

Northwest Airlines Corp. said Thursday that it would reduce its domestic flight schedule later this year and cut its fleet by 15 to 20 planes as a result of rising oil prices.
The moves, in addition with recent steps such adding fuel surcharges and reducing the number of bags that may be checked at no charge, are intended to help offset the rising price of oil.
"Over the past several months, the price of oil has risen dramatically to all time highs and there is no reasonable basis to conclude that oil prices will materially decline anytime soon," said CEO Douglas Steenland. "These increased costs are significant and call for a strong response from us."
The airline also said that it will reduce non-aircraft capital expenditures for 2008 by approximately $100 million and seek to improve profits by $100 million annually through cost reductions, productivity improvements and revenue enhancement.

As a previous poster stated, this boom was over before it even started!
737

 

[Jimmy C. Corn]

Man, one piece of bad news after another this week.

 

[~~~^~~~]

Superpilot92:

This is what I was making reference to a couple of days ago. Most of these airplanes will be DC9's.

 

[On Your Six]

Watch the hardball tactics beginning. Does not surprise me. Two reasons:

1. Economic (DC9s are gas guzzlers)
2. Steeland really wants to upgrade his lake home and he needs that merger bonus that expires in June

 

[GOULET!]

I'd be shocked if they would park anything but DC-9s.

 

[FmrFreightDog]

I'd be shocked if they would park anything but DC-9s.

10 DC-9s, the rest a mix of 319/320/757 as per the press release.

 

[Superpilot92]

Superpilot92:

This is what I was making reference to a couple of days ago. Most of these airplanes will be DC9's.

Does anyone have any info on whether these are the reductions that were already planned for? If they reduce more then it will probably be the dc9 30's. Who knows, i just fly them

 

[johnsonrod]

Tough time for everyone and I wish you all luck! MSP based airlines feeling the pinch.

 

[Redmeat]

Does anyone have any info on whether these are the reductions that were already planned for? If they reduce more then it will probably be the dc9 30's. Who knows, i just fly them

The reductions are planned for after the "busy summer season"

That is a lifetime in this business.

I wouldn't be surprised if this is part of the post merger reduction plan.

 

[~~~^~~~]

Super92,

My understanding is that these are additional and this number is smaller than the number I heard NWA came to the table with. It is likely a highly dynamic situation.

Hopefully NWA is still so understaffed from the bankruptcy staffing levels that getting the fleet adjusted will not result in any surplus staffing.

Furloughs at either airline right after folks got hired, suck.

Delta's still going to run another 100 or so new hires through May, I hope

As others have pointed out, September is off in the distance, things could change for the better.

 

[Superpilot92]

The reductions are planned for after the "busy summer season"

That is a lifetime in this business.

I wouldn't be surprised if this is part of the post merger reduction plan.

I agree. Setting up for the integration. We will see.

 

[737 Pylt]

I agree. Setting up for the integration. We will see.

This may have been why both sides were unable to come to an agreement.
Now we may not have a choice. Its time to get onboard or be left behind!

737

 

[~~~^~~~]

Just found this... sounds like NWA still training through June. No furloughs mentioned. This sounds better.

II. CAPACITY REDUCTIONS

Schedule Reductions

In September, after peak summer travel concludes, Northwest will reduce its scheduled domestic system capacity by approximately five percent versus the 2008 business plan. Full-year domestic available seat miles (ASMs) are expected to be flat to down slightly versus 2007.

Northwest is continuing to expand its international service with the addition of new flights between Detroit and London Heathrow; Minneapolis/St. Paul and London Heathrow; Seattle and London Heathrow; Minneapolis/St. Paul and Paris; Portland, Ore. and Amsterdam; and Dallas/Ft. Worth and Amsterdam, which will be operated by Northwest's joint venture partner, KLM Royal Dutch Airlines. Northwest will review whether any changes to the international schedule are needed after the peak summer travel season.

Fleet Reductions

As a result of the five percent domestic capacity reduction from planned levels, Northwest will remove an additional 15 to 20 aircraft from service. Two DC-9s will be removed in June and the remainder in the fall to coincide with the planned schedule reductions. These fleet reductions will include approximately 10 DC-9s and the balance being a mix of Boeing 757s and Airbus A320s and A319s.

III. LIQUIDITY ENHANCEMENTS

Northwest Airlines currently has the strongest liquidity position among U.S. network carriers and is committed to maintaining its industry-leading cash position. As of Dec. 31, 2007, Northwest's unrestricted cash on hand was $3 billion which equaled 24 percent of revenues for the full year.

"Challenging economic times require smart, but difficult, decisions by the management team," said Steenland. "We are pro-actively making those decisions now to maximize our liquidity position."

Capital Expenditures

Northwest is reducing non-aircraft capital expenditures for 2008 by approximately $100 million. The airline now intends to invest approximately $150 million in non-aircraft capital expenditures in 2008.

Improved Profit and Loss Statement

The airline will also seek to realize profit improvements of $100 million on an annual basis through cost reductions, productivity improvements and revenue enhancements. To the extent that the schedule changes will result in the need for fewer employees, every effort will be made to achieve these reductions through attrition.

With the reduced flying, Northwest has suspended its plans to hire additional pilots and flight attendants. The last training classes for both groups conclude in June.

 

[123]

Does anyone have any info on whether these are the reductions that were already planned for? If they reduce more then it will probably be the dc9 30's. Who knows, i just fly them

The reductions are in addition to the 2008 fleet plan.

 

[Occam's Razor]

2 "big lease" A320's, and 1 B757-200 due for heavy check. Another B757-200 put on "light duty" (as a system spare) to delay required heavy check.

DC-9's were originally slated to be parked at Cycle limit, but will most likely result in a loss of 25-30 DC-9 Captain positions system-wide through use of Variable Cap.

 

[123]

Just found this... sounds like NWA still training through June. No furloughs mentioned. This sounds better.

Actually, the we are still on schedule to hold the new-hire classes in April (2 I believe) and all positions will be the 747 FE. Others that have been offered a position will be put into a pool. Those who start training in April, should be completed and on-line sometime in June.

 

[Quack]

The reductions are in addition to the 2008 fleet plan.

How many were in the 2008 fleet reduction? As i understand it, add 15-20 on top of that

 

[Jimmy C. Corn]

any word on how this, coupled with age 60+ guys staying (when they were supposedly leaving promptly at 60), will affect "career expectations" with the arbitrator come merger time?

I would think this would have some impact on negotiating positions.

please don't resort to claims about the as-yet unpowered 787....

 

[123]

How many were in the 2008 fleet reduction? As i understand it, add 15-20 on top of that

Not sure, I just took the quote out of the press release. I am not sure which 2008 fleet plan it was refering to (a, b, or c...actually, I would guess we are on fleet plan zzzz.8889098, for as often as it changes with our economy).

My guess is that Occam has better intel.

 

[dtfl]

Super92,

My understanding is that these are additional and this number is smaller than the number I heard NWA came to the table with. It is likely a highly dynamic situation.

Hopefully NWA is still so understaffed from the bankruptcy staffing levels that getting the fleet adjusted will not result in any surplus staffing.

Furloughs at either airline right after folks got hired, suck.

Delta's still going to run another 100 or so new hires through May, I hope

As others have pointed out, September is off in the distance, things could change for the better.

A total of 100 with April and May classes for a seniority list max # of 7420 FYI

 

[Occam's Razor]

The actual plan is based on a ASM reduction against the original '08 plan. The aircraft that will be parked are "planned" for June...and September.

Other events will take place prior to September, to be announced well before June.

It'll all be OBE.

 

[WSurf]

http://twincities.bizjournals.com/twincities/stories/2008/03/31/daily38.html?ana=yfcpc

NWA says it will cut flights, ground planes

Northwest Airlines Corp. said Thursday that it would reduce its domestic flight schedule later this year and cut its fleet by 15 to 20 planes as a result of rising oil prices.
The moves, in addition with recent steps such adding fuel surcharges and reducing the number of bags that may be checked at no charge, are intended to help offset the rising price of oil.
"Over the past several months, the price of oil has risen dramatically to all time highs and there is no reasonable basis to conclude that oil prices will materially decline anytime soon," said CEO Douglas Steenland. "These increased costs are significant and call for a strong response from us."
The airline also said that it will reduce non-aircraft capital expenditures for 2008 by approximately $100 million and seek to improve profits by $100 million annually through cost reductions, productivity improvements and revenue enhancement.

As a previous poster stated, this boom was over before it even started!
737

Plyt,

I guess this is when MJ42 comes on and tells me how clueless I am about fuel rising and parking DC9's at a faster rate. Damn, To bad I don't have common sense!

 

[FmrFreightDog]

It'll all be OBE.

OBE???

 

[Draginass]

overcome by events

 

[ACL65PILOT]

Here we go. I bet things get hot in the next week between NWA and DL.....

 

[ACL65PILOT]

2 days of meetings at the dal g.o. managers meetings going on

FWIW

Just got this from a "good" buddy of mine

 

[clippyrip]

I am curious to see what comes from that meeting...

 

[USCtrojan]

Hot off the Press....

Cash Cushion Helps Big Airlines, for Now

AP
Posted: 2008-04-03 19:00:19
AP Photo CAPS102

By JOSHUA FREED

AP Business Writer

A slowing economy and high fuel prices appear to have killed off tiny ATA Airlines, Aloha Airlines, and Champion Air. A big pile of cash will keep the big airiring new pilots and fly 5 percent less than planned this fall because of high fuel prices. The carrier pointed out that its $3 billion in cash works out to 24 percent of its 2007 revenue. "We are pro-actively making those decisions now to maximize our liquidity position," President and Chief Executive Doug Steenland said in a written statement.

Northwest also said it would remove an additional 15 to 20 planes from service this year, including about 10 DC-9s. Those aging aircraft are financially easier cheaper to park because they're paid for.

Aviation consultant Michael Boyd said larger airlines such as Northwest and United can weather high fuel prices better because more of their fleet is already paid for.

"From that perspective, what happened with ATA is not a harbinger of things to come in the rest of the industry," he said. "Most big carriers have parts of their fleet they can park very cheaply."

Airline consultant Robert Mann said the collapse of ATA shows it's becoming harder than ever for carriers to secure adequate financing, even from nontraditional sources such as hedge funds.

"You really see that the airlines have the cash on their balance sheets, and that's it," he said. "When they're out of that, there may be no replacing it."

AP Business Writers Adam Schreck in New York and Tom Murphy in Indianapolis

 

[~~~^~~~]

A total of 100 with April and May classes for a seniority list max # of 7420 FYI

Thanks, I was just trying to figure that out.

 

[~~~^~~~]

"You really see that the airlines have the cash on their balance sheets, and that's it," he said. "When they're out of that, there may be no replacing it."

This fact, combined with the new bankruptcy code, means liquidation is nearly an inevitable result of bankruptcy.

Admittedly that having DAL/NWA as the World's largest has some appeal - at least from the angle of it being too big for the government to allow to fail.

Jeesh - and just a few months ago we were explaining that DAL/NWA's profits would exceed FedEx's.

Unfortunately unless we fix scope and concentrate on both the top and the bottom end of our flying a DAL/NWA combo is likely to lead to furloughs. Wish that we had done this deal with the job protections - maybe we could have pressured DAL management into actually operating DAL aircraft domestically.