Future of NWA cargo and loss of DHL contract

[propdog]

NWA just reported the loss of it's largest freight contract - with DHL. Here is the report:

MINNEAPOLIS (AP) ― Northwest Airlines is considering what to do with its cargo business after it loses its largest customer, DHL Express, next year.

Northwest's fleet of 747 freighters makes it the only U.S. carrier with dedicated cargo aircraft.

Chief financial officer Dave Davis told analysts on Tuesday that Northwest's flying for DHL will end late next year.

"It's fairly significant. DHL was our largest cargo customer," he said.

Davis said Northwest may have to shrink the cargo business, which was lagging even without the loss of DHL.

He said selling the business is unlikely to be an option because it relies on Northwest's freedom to fly to additional destinations from its Tokyo hub. That freedom, which only Northwest and United have among U.S. carriers, can't be divided between Northwest and a spun-off cargo operation, he said.

Davis also said Eagan-based Northwest is looking at the possibility of selling its frequent flier program.

"Our hypothesis is that there is possibly substantial value there," he said.

Speculation about airline mergers has been strong. Davis said Northwest is "very actively looking at" who the right partner would be if mergers were to happen.

Some have said airlines should merge soon because they would have a better chance of winning antitrust approval under the Bush administration, which ends in January 2009. Davis said Northwest believes that would depend on the particular merger. He said any merger would have to be begun by February at the latest to have hope of getting approval from antitrust authorities while Bush is still in office.

Anybody at NWA with any more info on the cargo future? As a new-hire ANC wannabe, should I be worried? Also, any more talks about mergers considering the CFO's latest statements?

 

[Max Powers]

Delta and NWA its a done deal......announced soon .....at least I predict this

 

[luckytohaveajob]

He said any merger would have to be begun by February at the latest to have hope of getting approval from antitrust authorities while Bush is still in office.[/i]

The deals will start taking off soon and then ALPA will have to start worrying about the future instead of this age 65 crap.

Once a majority of the national seniority list is threatened by merger, age 65 is off the table.

 

[RJAA]

NWA neglected its cargo business for a quite sometime while JAL and NCA gained much stregth in recent years buying new freighters and converting their pax B744s to BCFs that are less than 10 years old. These birds will fly NRT-westcoast non-stop with almost full payload, where NWA's 25 year old B747Fs would come nowhere near. Because of the improvement in the quipment that JAL and NCA use these days, these carriers have cut back on the ANC stop significantly. I wouldn't be surprised if they abandon ANC all together in the near future. There is also ABX flying B762s for ANA just started not too long ago, Cargo business is booming over there, so there is obviously something wrong here, but I guess when you don't compete, the business goes elsewhere. It's definitely something that NWA could have made into very profitable operation using their valuable NRT slots. That time may have come and gone. Don't they even hold rights to haul cargo from NRT to China, Hong Kong, and Singapore etc etc?? It's crazy with this doom and gloom.

 

[AC560]

Don't they even hold rights to haul cargo from NRT to China, Hong Kong, and Singapore etc etc?? It's crazy with this doom and gloom.

From my perspective as a freight forwarder (NW Cargo's primary customer base) they are the best cargo carrier in the market. While they have ********************ty equipment they have people on the ground (and have been on the ground in Asia for a long time) who know what they are doing and in my line of business that makes all the difference.

 

[Occam's Razor]

Some of the "A" slots NRT, access in KIX, and China authority are all "cargo specific". They weren't always, but the 1999 agreement that added the "B" slots changed the language.

East-bound freight is strong. West-bound is not.

We'll see how it plays out.

 

[General Lee]

I bet the 742s will be replaced with the 744s, and the 787s will takeover some 744 routes. The 742s and DC9s are gas guzzlers, and will be gone within a couple years I would think.

Bye Bye--General Lee

 

[AC560]

East-bound freight is strong. West-bound is not.

That is true for everyone though and east bound rates right now during peak are about 8x's that of the west bound rates.

 

[iaflyer]

I bet the 742s will be replaced with the 744s, and the 787s will takeover some 744 routes. The 742s and DC9s are gas guzzlers, and will be gone within a couple years I would think.

They are only gas guzzlers if you can't pass the fuel cost onto the shipper. We seem to make plenty of money with ours. That being said, Kalitta Air agreed to buy their first -400 (out of ten expected) the other day.