Finally the Debate is officially over!!!!
Um, not really...
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, along 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 Eagan-based airline (NYSE: NWA) will cut its domestic schedule by 5 percent from its projected 2008 plan, beginning after the busy summer season. For the entire year, Northwest's domestic available-seat miles (one seat flown one mile, whether it's occupied or not) are expected to be flat to down slightly versus 2007. Northwest isn't planning any cuts for its international routes, which have been expanding lately.
As the result of the slower schedule, Northwest will remove 15 to 20 planes from service. Ten of those planes will be older DC-9s, the rest will be a mix of Boeing 757s and Airbus A320s and A319s.
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 enhancements.
The changes may result in staff cuts; Northwest said it would try to make any reductions through attrition. It's suspended plans to hire new pilots and flight attendants.
The airline apparently won't be looking for further labor savings from its current employees, as it did the last time oil prices spiked. "While we need to reduce costs in this difficult environment, we will not be going back to our employees for pay cuts," Steenland said.