General Lee
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- Aug 24, 2002
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AP
NWA CEO: $105 Oil Is a 'Budget-Breaker'
Monday March 10, 7:23 pm ET
By Joshua Freed, AP Business Writer Northwest CEO Calls $105 Oil a 'Serious Budget-Breaker'
MINNEAPOLIS (AP) -- Northwest Airlines CEO Doug Steenland called $105 oil a "serious budget-breaker" on Monday and warned that high fuel costs are a "difficult financial challenge" for the carrier that emerged from bankruptcy just nine months ago.
Oil jumped above $108 a barrel on Monday to an inflation-adjusted record. Fuel is now the biggest expense at Northwest Airlines Corp. and most other airlines.
Steenland said if oil remains above $100 a barrel, it will cost Northwest $1.7 billion more this year than it planned for.
"If fuel remains where it is today our increased fuel costs will again create a difficult financial challenge for the airline," he said on a hot line message for employees recorded on Monday. "This rapid increase in fuel costs is another reason why we continue to believe that consolidation in the industry is inevitable."
Steenland didn't mention Delta Air Lines Inc., but the two carriers have held detailed talks about joining their operations. Their pilots met last week in Washington, but there has been no word on their progress.
In a sign that some Northwest pilots may be frustrated by the lack of information about their union's talks, the union told them on Sunday that it is "ready to communicate any final details to you as soon as they are officially agreed upon."
"We are bound by SEC rules, NWA confidentiality, ALPA confidentiality, other unions and other air carriers," the message from the Northwest branch of the Air Line Pilots Association said.
Northwest shares fell 80 cents, or 6 percent, to $12.33 on Monday. Delta shares fell 91 cents, or 7 percent, to $11.98.
"We believe the window for these deals to be announced is closing and that, given the upward move in fuel prices, labor may want to view the current proposal in a more favorable light," UBS analyst Kevin Crissey wrote in a note to investors.
High fuel prices were a major factor in Northwest's and Delta's bankruptcy filings in September 2005.
Northwest made $244 million in the quarter that ended Sept. 30. But it lost $8 million in the next quarter. In January, Northwest said it hedged 15 percent of its first-quarter 2008 fuel, and 11 percent for the full year.
Will those fuel guzzling DC9s stay? What are the old geezers thinking at NWALPA? Are they prepared for ANYTHING? Are they still arguing about Greenbook/Redbook? Do they have enough Glycol to last the Winter? Are they all ice fishing? "Ah heck, let's just throw it to arbitration because we can't negotiate, we aren't ready anyway....."
Bye Bye--General Lee
NWA CEO: $105 Oil Is a 'Budget-Breaker'
Monday March 10, 7:23 pm ET
By Joshua Freed, AP Business Writer Northwest CEO Calls $105 Oil a 'Serious Budget-Breaker'
MINNEAPOLIS (AP) -- Northwest Airlines CEO Doug Steenland called $105 oil a "serious budget-breaker" on Monday and warned that high fuel costs are a "difficult financial challenge" for the carrier that emerged from bankruptcy just nine months ago.
Oil jumped above $108 a barrel on Monday to an inflation-adjusted record. Fuel is now the biggest expense at Northwest Airlines Corp. and most other airlines.
Steenland said if oil remains above $100 a barrel, it will cost Northwest $1.7 billion more this year than it planned for.
"If fuel remains where it is today our increased fuel costs will again create a difficult financial challenge for the airline," he said on a hot line message for employees recorded on Monday. "This rapid increase in fuel costs is another reason why we continue to believe that consolidation in the industry is inevitable."
Steenland didn't mention Delta Air Lines Inc., but the two carriers have held detailed talks about joining their operations. Their pilots met last week in Washington, but there has been no word on their progress.
In a sign that some Northwest pilots may be frustrated by the lack of information about their union's talks, the union told them on Sunday that it is "ready to communicate any final details to you as soon as they are officially agreed upon."
"We are bound by SEC rules, NWA confidentiality, ALPA confidentiality, other unions and other air carriers," the message from the Northwest branch of the Air Line Pilots Association said.
Northwest shares fell 80 cents, or 6 percent, to $12.33 on Monday. Delta shares fell 91 cents, or 7 percent, to $11.98.
"We believe the window for these deals to be announced is closing and that, given the upward move in fuel prices, labor may want to view the current proposal in a more favorable light," UBS analyst Kevin Crissey wrote in a note to investors.
High fuel prices were a major factor in Northwest's and Delta's bankruptcy filings in September 2005.
Northwest made $244 million in the quarter that ended Sept. 30. But it lost $8 million in the next quarter. In January, Northwest said it hedged 15 percent of its first-quarter 2008 fuel, and 11 percent for the full year.
Will those fuel guzzling DC9s stay? What are the old geezers thinking at NWALPA? Are they prepared for ANYTHING? Are they still arguing about Greenbook/Redbook? Do they have enough Glycol to last the Winter? Are they all ice fishing? "Ah heck, let's just throw it to arbitration because we can't negotiate, we aren't ready anyway....."
Bye Bye--General Lee
