ImbracableCrunk
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Let the games begin . . . er, continue. . .
NWA plans low-cost airline New company would fly smaller jets to smaller markets; pilots threaten to strike bankrupt carrier.
Joel J. Smith / The Detroit News
*****
Embraer.com
The new carrier could fly Embraer 1770/190s.
See full image
What it means
Northwest plans to establish a new low-cost carrier, called NewCo for now, to help restore profits. How the move would affect service:
Northwest Airlines
Would continue to fly larger jets long distances and to popular destinations with heavy passenger demand.
NewCo
Would fly new 70- and 100-passenger jets to small and medium-sized markets now served by aircraft that are too big or too expensive to operate on those routes.
Mesaba and Pinnacle airlines
Would continue to serve small and medium-sized markets with aircraft that carry 50 or fewer passengers.
Source: Northwest Airlines
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Northwest Airlines is expected to detail plans today to launch a low-cost carrier in 2007 equipped with 70- to 100-seat jets and staffed by pilots and flights attendants paid at reduced wage scales.
The new airline would fly mainly out of Northwest's major hubs in Detroit, Minneapolis and Memphis to small and medium-sized markets across the United States and Canada, according to a newsletter that will be distributed today to Northwest's 34,000 employees.
Unlike Delta Air Line's Song and United Airline's Ted, which were created as low-cost airlines within an airline, Northwest's new carrier would be a separate company.
Unfettered by Northwest's Chapter 11 bankruptcy proceedings, the new airline would seek to finance the purchase or lease of 105 new aircraft. But Northwest could face significant hurdles in launching the new carrier, including a threatened strike by the union that represents its pilots.
Northwest, which is losing money and struggling to compete with discount airlines, said the new airline would allow it to efficiently fly to hundreds of destinations. The airline said it can no longer afford to use large jets -- often half empty -- or small regional jets on many routes. The new airline could open up new destinations for travelers in Detroit and other cities.
Northwest hopes to start the airline -- temporarily called NewCo -- next year, with all 105 planes operating by 2010. The airline said it may hold a contest to come up with a permanent name.
"We have an immediate need for aircraft of this size," Doug Steenland, CEO of Northwest, said in the newsletter. "Northwest has more of these small-to-medium-sized markets than any other airline, yet we rely on a fleet that is either too large or small to maximize revenues and profitability in such cities. To operate at a profit, we must invest in these aircraft and we must do so quickly."
Northwest said the new airline has the potential to serve hundreds of destinations across the United States and Canada, but no route schedules have been determined.
Executives said the new airline would not typically compete head-to-head against discount airlines like Spirit Airlines, AirTran or Jet Blue Airways but mostly against legacy carriers that operate on similar routes.
"Establishing a NewCo subsidiary to operate a fleet of new regional jets will generate new economic value for Northwest, lower costs, increase our load factors and provide new work opportunities for our employees," Steenland said.
With Northwest in bankruptcy, Steenland said the airline needed a stand-alone carrier able to borrow money to purchase or lease new aircraft. That would free up Northwest's credit to purchase large aircraft for its fleet.
The new carrier plans to purchase or lease about 60 70-seater and 45 100-seater aircraft. Northwest is looking at the Embraer 170/190 and the Bombardier CRJ700/900 models.
According to the newsletter, Northwest competitors are already using these new jets to fly some of Northwest's key domestic routes at significantly lower cost.
The new carrier would become a Northwest regional Airlink partner with Mesaba Airlines and Pinnacle Airlines, which operate 34- to 50-seat regional aircraft. It would take over some routes that require more capacity than the regional jets offer but less than the large jets in Northwest's fleet. Northwest said a good example would be the route between Detroit and El Paso, Texas.
The airline will seek approval to launch the carrier from its labor unions. It will also seek approval from the judge in U.S. Bankruptcy Court in New York handling the airline's Chapter 11 case.
If that happens, the pilots union said it would strike Northwest.
"Instead of trying to run away from the employees and having something crammed down our throats by the courts, they should be bargaining with us and doing something that makes sense," said Capt. Mark McClain, chairman of Northwest's pilots union. "We want to do that flying.
"If their view is to let the courts vacate our contract and impose this type of structure, we maintain we have a right to strike. We're making preparations for that now."
The new airline will need 800 pilots. Some of the new hires could be laid-off Northwest pilots. Northwest could also hire furloughed flight attendants or mechanics.
McClain said the union has offered to fly for the new airline if pilots receive the average salary paid by other regional carriers that fly 70- to 100-seat planes.
Airline analyst Michael Boyd of Evergreen, Colo., said a new airline makes sense financially. He expects Northwest and the pilots will reach a settlement.
"I don't think the pilots will strike," Boyd said. "They will find something in the middle. Neither side will get everything they want."
Boyd said that Northwest knows it will significantly lower its costs to get these new aircraft over the DC9s, so they don't want to give them up.
"Looking through the haze of battle," Boyd said, "Northwest is the carrier I'm least worried about. It will all work out."
You can reach Joel J. Smith at (313) 222-2556 or [email protected].
http://www.detnews.com/apps/pbcs.dll/article?AID=/20060105/BIZ/60105038
Embraer 1770? That thing must be HUGE!
NWA plans low-cost airline New company would fly smaller jets to smaller markets; pilots threaten to strike bankrupt carrier.
Joel J. Smith / The Detroit News
*****
The new carrier could fly Embraer 1770/190s.
What it means
Northwest plans to establish a new low-cost carrier, called NewCo for now, to help restore profits. How the move would affect service:
Northwest Airlines
Would continue to fly larger jets long distances and to popular destinations with heavy passenger demand.
NewCo
Would fly new 70- and 100-passenger jets to small and medium-sized markets now served by aircraft that are too big or too expensive to operate on those routes.
Mesaba and Pinnacle airlines
Would continue to serve small and medium-sized markets with aircraft that carry 50 or fewer passengers.
Source: Northwest Airlines
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Northwest Airlines is expected to detail plans today to launch a low-cost carrier in 2007 equipped with 70- to 100-seat jets and staffed by pilots and flights attendants paid at reduced wage scales.
The new airline would fly mainly out of Northwest's major hubs in Detroit, Minneapolis and Memphis to small and medium-sized markets across the United States and Canada, according to a newsletter that will be distributed today to Northwest's 34,000 employees.
Unlike Delta Air Line's Song and United Airline's Ted, which were created as low-cost airlines within an airline, Northwest's new carrier would be a separate company.
Unfettered by Northwest's Chapter 11 bankruptcy proceedings, the new airline would seek to finance the purchase or lease of 105 new aircraft. But Northwest could face significant hurdles in launching the new carrier, including a threatened strike by the union that represents its pilots.
Northwest, which is losing money and struggling to compete with discount airlines, said the new airline would allow it to efficiently fly to hundreds of destinations. The airline said it can no longer afford to use large jets -- often half empty -- or small regional jets on many routes. The new airline could open up new destinations for travelers in Detroit and other cities.
Northwest hopes to start the airline -- temporarily called NewCo -- next year, with all 105 planes operating by 2010. The airline said it may hold a contest to come up with a permanent name.
"We have an immediate need for aircraft of this size," Doug Steenland, CEO of Northwest, said in the newsletter. "Northwest has more of these small-to-medium-sized markets than any other airline, yet we rely on a fleet that is either too large or small to maximize revenues and profitability in such cities. To operate at a profit, we must invest in these aircraft and we must do so quickly."
Northwest said the new airline has the potential to serve hundreds of destinations across the United States and Canada, but no route schedules have been determined.
Executives said the new airline would not typically compete head-to-head against discount airlines like Spirit Airlines, AirTran or Jet Blue Airways but mostly against legacy carriers that operate on similar routes.
"Establishing a NewCo subsidiary to operate a fleet of new regional jets will generate new economic value for Northwest, lower costs, increase our load factors and provide new work opportunities for our employees," Steenland said.
With Northwest in bankruptcy, Steenland said the airline needed a stand-alone carrier able to borrow money to purchase or lease new aircraft. That would free up Northwest's credit to purchase large aircraft for its fleet.
The new carrier plans to purchase or lease about 60 70-seater and 45 100-seater aircraft. Northwest is looking at the Embraer 170/190 and the Bombardier CRJ700/900 models.
According to the newsletter, Northwest competitors are already using these new jets to fly some of Northwest's key domestic routes at significantly lower cost.
The new carrier would become a Northwest regional Airlink partner with Mesaba Airlines and Pinnacle Airlines, which operate 34- to 50-seat regional aircraft. It would take over some routes that require more capacity than the regional jets offer but less than the large jets in Northwest's fleet. Northwest said a good example would be the route between Detroit and El Paso, Texas.
The airline will seek approval to launch the carrier from its labor unions. It will also seek approval from the judge in U.S. Bankruptcy Court in New York handling the airline's Chapter 11 case.
If that happens, the pilots union said it would strike Northwest.
"Instead of trying to run away from the employees and having something crammed down our throats by the courts, they should be bargaining with us and doing something that makes sense," said Capt. Mark McClain, chairman of Northwest's pilots union. "We want to do that flying.
"If their view is to let the courts vacate our contract and impose this type of structure, we maintain we have a right to strike. We're making preparations for that now."
The new airline will need 800 pilots. Some of the new hires could be laid-off Northwest pilots. Northwest could also hire furloughed flight attendants or mechanics.
McClain said the union has offered to fly for the new airline if pilots receive the average salary paid by other regional carriers that fly 70- to 100-seat planes.
Airline analyst Michael Boyd of Evergreen, Colo., said a new airline makes sense financially. He expects Northwest and the pilots will reach a settlement.
"I don't think the pilots will strike," Boyd said. "They will find something in the middle. Neither side will get everything they want."
Boyd said that Northwest knows it will significantly lower its costs to get these new aircraft over the DC9s, so they don't want to give them up.
"Looking through the haze of battle," Boyd said, "Northwest is the carrier I'm least worried about. It will all work out."
You can reach Joel J. Smith at (313) 222-2556 or [email protected].
http://www.detnews.com/apps/pbcs.dll/article?AID=/20060105/BIZ/60105038
Embraer 1770? That thing must be HUGE!
