NWA wants to trim 115 Planes

heywatchthis

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AIRLINE IN BANKRUPTCY: NWA wants to trim 115 planes to reduce costs
Judge could decide Friday on plan to renegotiate leases; creditors upset


October 6, 2005




http://www.freep.com/money/business/nwa6e_20051006.htm

BY JEWEL GOPWANI
[FONT=helvetica,arial]FREE PRESS BUSINESS WRITER[/FONT]


Banks that are owed money on planes in Northwest Airlines Corp.'s fleet don't want a bankruptcy court in New York to give the carrier the right to return 102 planes if lenders don't accept lower payments.

A judge could decide Friday whether Northwest may cut 13 planes right away and let the nation's fourth-largest airline decide the fate of another 102 planes after negotiating new terms with its lenders.


A Northwest spokesman declined to say how many planes the airline really wants to keep if it could pay less for them and reduce its monumental aircraft payments and fuel bills.
That's something a group of creditors wants to know. They say the airline shouldn't be asking to dump planes until it develops a more complete plan for fixing its financial woes to emerge from bankruptcy.

"The process proposed ... makes it impossible for this court ... to determine whether the debtors have, in fact, exercised their sound business judgment," said the ad hoc committee in an objection filed Monday.


By eliminating these planes Northwest wants bring its fleet size and mix of planes in line with what it can afford and the number of travelers it is expecting to serve, Northwest said in its request to abandon the planes.

Northwest leases 263 planes and owns another 350 planes, according to its Web site, not counting planes in storage. The airline has said that nearly all of its assets, including the planes it owns, have been pledged as collateral to its creditors.

Saving on fuel costs could also be a priority for Northwest, airline experts said.

Though a concern for more than a year, rising jet fuel prices have become a more urgent problem for airlines as fuel prices reached an all-time high this week. Hurricanes Rita and Katrina cut refining capacity so much that the cost to refine a barrel of jet fuel neared the cost for a barrel of oil.

In a message to employees Monday, Northwest CEO and President Doug Steenland said the airline paid $59 to refine a barrel of oil into jet fuel, on top of the going price for a barrel of oil. A year ago, he said, it cost the airline $13 to refine a barrel of oil into jet fuel.

Fuel is a likely factor in the company's decision to make what appears to be the most drastic change to its fleet by eliminating all 35 small Avro jets that Northwest leases to commuter carrier Mesaba Airlines. The 69-seat planes are powered by four engines and consume a lot of fuel, said Virginia-based airline consultant Darryl Jenkins. Northwest has told Mesaba that it plans to eliminate the aircraft in mid-December.

Another driver for dumping leases could be whether it would cost more to pay for major maintenance checks or just give the planes back, said Rick Kruger, a bankruptcy attorney with Southfield-based Jaffe Raitt Heuer & Weiss' aviation group, which is not working on Northwest's case.

The list of 115 planes that Northwest wants to renegotiate payments for or eliminate includes a dozen 747s, a dozen DC9s and DC10s, 28 Boeing 757 aircraft and 28 Airbus planes. The planes are used for a range of routes from long international flights to short domestic flights.

The Boeing aircraft are generally on the older side and less fuel-efficient than newer planes. Northwest's DC9s are an average of 35 years old, according to BACK Aviation Solutions.

But the Airbus selections hint that the airline is posturing for the first major wrangle in bankruptcy.

"This starts the game where you kind of indicate what you might want to get rid of and see how people react," Jenkins said.

Eagan, Minn.-based Northwest filed for Chapter 11 bankruptcy protection Sept. 14 in New York.

Some creditors argue that it's premature for Northwest to try to give up a bulk of those planes.

If Judge Allan L. Gropper allows Northwest to reject these leases, a sticking point could be how the planes would be returned. Northwest said it would make most of the planes available for their owners to retrieve, court documents show. But those owners argue that they shouldn't be the ones paying to collect the aircraft.

Contact JEWEL GOPWANI at 313-223-4550 or gopwani@freepress.com
 
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heywatchthis

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Aircraft Fleet.............

http://www.freep.com/pdf/2005/10/06/nwa.pdf


Northwest Airlines aircraft fleet​


Northwest has compiled two lists of planes it wants to
eliminate. List A shows 13 planes it wants to dump right
away. List B has the 102 planes Northwest wants to abandon
if it cannot negotiate lower lease and mortgage payments.

List A:

B747-200 - 1 AC
B757-200 - 6 AC
A320-200 - 1 AC
DC10-30 - 1 AC
DC-9-30 - 4 AC


LIST B
B747-400 3 of 16 AC
B747-200 8 of 19 AC
B757-200 22 of 56 AC
A320-200 21 of 78 AC
A319-100 6 of 74 AC
DC-10-30 7 of 20 AC
Avro RJ85 35 of 35 AC

Thats a hugh downsize!


 

sgu

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How many furloughs would that equate to for mainline NWA pilots? :(
 

PCL_128

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sgu said:
How many furloughs would that equate to for mainline NWA pilots? :(

They aren't really going to park 115 airplanes. This is just BK posturing to try for better lease terms with the lenders. As soon as the lenders give in on the lease terms, then the company will announce that they've "reconsidered" parking the airplanes. Nothing but politics.
 

Lear70

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Actually, the list includes 9 avros by next week, according to the info that Mesaba is putting out, the rest by Dec 1st.

Merry Christmas. :(
 

CarRamRod

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I think they are just parking them for now. No where does it say they are getting rid of those first 9, just not using them. As for the rest I believe they say they might be gone by Dec. Might is a grey term......"well how grey are we talking about?.....Charcoal..."

Iv'e got 3 Aces and 2 kings.....Is that good?
 

320AV8R

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What's really going on:

Furloughs

-500 already out
- 400 on the way out due to 13% reduction in flying
- 900 additional expected resulting from "new contract changes" in CH 11
- there could possibly be an additional 800-1000 if the "NEWCO" opertion for small jets is spun off with a seperate seniority list

Aircraft

-the 13 original aircraft were already parked, & will be returned
- the jury is out about the AVROs....
- the other aircraft have different lease rates.....some A320s cost $400,00 a month, with some at $150,000. They want to re-negotiate the higher lease rates. They may give back some aircraft to show the leasing companies they mean business. If the terms aren't suitable, the fleet will get smaller.

Ahhhh yes, another happy day at NWA......

320AV8R
 
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nwaredtail

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All of those furloughs are not counting the parked aircraft. I would say that NWA will go from 5400 pilots pre-BK to about 2800 post BK within a year.

500 furloughs already, 400 coming, 1200 with new contract, plus 500 + with parked aircraft. If NEWCO happens, 1000 may have jobs until they are sold to a regional and then the Mid-Atlantic thing happens.

1985 hires and up are gone. For 100/hour per hour to fly DC-9 captain, happy to go..........
 

Ex737Driver

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Are you sure 400 + 1200 more furloughs? I thought the 400 now were to be included with in the 1200 total.
 

Pedro

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nwaredtail said:
For 100/hour per hour to fly DC-9 captain, happy to go..........


Maybe you should go to the ATM machine and enter your PIN number.....
 

320AV8R

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Ex737Driver said:
Are you sure 400 + 1200 more furloughs? I thought the 400 now were to be included with in the 1200 total.

Furloughs

-500 already out
- 400 on the way out due to 13% reduction in flying
- 900 additional expected resulting from "new contract changes" in CH 11

My bad.

320AV8R
 
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