Northwest writes off Midwest investment

[Max Powers]

From the second quarter report

Sold two B737 aircraft in April and completed agreements to sell four additional B737 aircraft and an agreement in principle for a fifth.

Thats 7 B737 for the year. No mention of selling 717s. Replacing a few 737s with 717s would also reduce capacity without reducing airframs. The rumor is they are getting 10 mil for each new 73 and 8 mil for each used. That would buy a used 71 free and clear.

I think the 10 and 8 million is a bit high, especially now. If my memory serves we sold two brand new never used 737 (basically a paper sale) and recv'd 7.3 million for both. Or about half of what the market used to take.

Also I think it would make more sense for us to buy gate space from MEH not so much the airplanes, although that is possible if the price for the planes is next to nothing. That way we can pull ourselves out of our unprofitable markets and use the new gate space into LGA (or wherever) and put the current 717 onto those routes. In this market we don't really need new airplanes or any growth for that matter. I think the 8 percent reduction will hold fast. We need to break even or make a profit or in the long run we are toast! Growth and the belief that there will be no furloughs is a pipe dream. Hope it happens though, but I'm a realist.

 

[Jetjockey]

So much for saving the cookie. I guess that's how the cookie crumbles. The big guys get rich, and the employees are left holding the crumbs.

 

[CitationLover]

This is simply NWA adjusting the goodwill portion of its investment in Midwest airlines. They still own 47% of the airline. The sky is not falling (yet). Delta/NWA did the same thing for themselves and lopped off $10.5 BILLION in value in the first quarter. This Marisa Thompson, the "analyst" quoted in the article, is simply blabbering to get her name in a paper.

If you want the exact accounting standard it is in the NWA recent 10-Q page 28:

....and the impairment of its $213 million minority ownership interest in Midwest Air Partners, LLC in conjunction with Step 2 of the goodwill impairment test in the second quarter of 2008....

This is more about NWA crossing it's T's and dotting it's I's during a DoJ review of its merger than it is about the health of Midwest Airlines. This accounting write off further "shows their uninvolvement" within Midwest to the DoJ.

 

[Propsync]

The sky is not falling (yet).

"The write-off is the result of the application of accounting rules relating to the probability that we will recover our investment," Northwest spokeswoman Tammy Lee said in a statement. "It does not imply any judgment on our part on the viability of Midwest."


That probability would be zero. So, nope, no judgement at all. Which is true, because they knew the viability was zero from the start. If the sky isn't falling CL, where are the recalls? Reduced codeshare? New Airbii? 73NG's? New and exciting markets? Fast upgrades?

 

[Donsa320]

"The write-off is the result of the application of accounting rules relating to the probability that we will recover our investment," Northwest spokeswoman Tammy Lee said in a statement. "It does not imply any judgment on our part on the viability of Midwest."


That probability would be zero. So, nope, no judgement at all. Which is true, because they knew the viability was zero from the start. If the sky isn't falling CL, where are the recalls? Reduced codeshare? New Airbii? 73NG's? New and exciting markets? Fast upgrades?

Gone with the wind. Wrapped up in horrible business decisions ie; 88 seat 717s, hiring a fleet of 20+ 50 seat CRJs, refusing to adjust fares to reflect actual costs and a general lack of leadership, to name a few.

DC

 

[CitationLover]

That probability would be zero. So, nope, no judgement at all. Which is true, because they knew the viability was zero from the start. If the sky isn't falling CL, where are the recalls? Reduced codeshare? New Airbii? 73NG's? New and exciting markets? Fast upgrades?

Take into account the fact that you hate Midwest and that puts into context what you just said.

AAI buys MEH and there still would be in the same situation: furloughs, MD80's parked, no new and exciting markets, no fast upgrades, yadda yadda yadda. In fact every major airline can say that, but you ignore that.

AA still has 1,979 pilots on the street from 9/11. My situation could be a lot worse.

 

[Fly4hire]

Is it true that as MEH flights are being drawn down they are being replaced simultaneously with additional or new NWA flights?

 

[likeitis]

Is it true that as MEH flights are being drawn down they are being replaced simultaneously with additional or new NWA flights?

Yes....

 

[FlyWolf]

The sick calls amount is an indication that quite a few pilots and FAs wrote off Midwest as well.

 

[FlyWolf]

Is it true that as MEH flights are being drawn down they are being replaced simultaneously with additional or new NWA flights?

Yes, if you book a flight on the Midwest website your only indication that its not operated by Midwest is the type of equipment (B757, A320) and the flight number, even our employee non-rev website lists all the NWA flights, obviously you have to go through MSP to get to where you need to go.