Pinnacle: Northwest shopping for bidders on Airlink fleet

[bomberbubba]

Memphis Business Journal - 5:33 PM CST Friday
Pinnacle: Northwest shopping for bidders on Airlink fleet

Northwest Airlines is shopping for the lowest bidder to operate a fleet of airplanes like the Northwest Airlink service operated by Pinnacle Airlines Corp.
In an 8-K report filed late Friday with the SEC, Pinnacle (NASDAQ: PNCL) reported that Northwest Airlines Inc. (PINK SHEETS: NWACQ) has sent a request for proposal to Pinnacle and other airlines asking for proposals to operate a number of 76-seat regional jets comparable to the number of aircraft currently comprising Pinnacle's fleet.
"It is unclear at this time what the intentions of Northwest might be as to the operation of its Airlink system, and as to Pinnacle in particular, in the context of its overall planning for emergence from bankruptcy," Pinnacle stated in the filing. "Pinnacle plans to seek more instructive communications with Northwest as to those plans."
Northwest filed for Chapter 11 bankruptcy in September.
Philip Reed, vice president of marketing for Pinnacle, said under bankrupty laws, Northwest "has the right to validate or invalidate all contracts and to go out and seek a lower bidder to decrease its cost structure."
Reed said the RFP sent out by Northwest is essentially a move "seeking competitive bids for our products."
Reed said Pinnacle is confident in its ability to effectively compete against other airlines.
"We know from our filings and the filings of other regional airliners that we not only offer some of the lowest costs, but also the highest level of quality in the regional airline industry," Reed said.

 

[YourPilotFriend]

The game continues.

 

[TinGoose1]

Have you guys settled your contract yet? This sounds like they want you to go backward in your contract, so that management can go forward. Tell management to go to He11.

 

[Tank Commander]

Hey Hero, if you read real close, You'll see not only are they asking 9E to bid on 76 seat flying but to bid on the flying that they are doing right now. They loose, they loose all.

 

[PCL_128]

Have you guys settled your contract yet? This sounds like they want you to go backward in your contract, so that management can go forward. Tell management to go to He11.

There won't be any concessionary bargaining. I can tell you that much. To answer your question though, no we haven't settled the contract. Lots of progress has been made, but we're still far from done.

 

[amcnd]

Can you say "Hello MESA" :-(

 

[ubpilot]

Between Mesa and Pinnacle, who do you think can offer the lower operation cost? Oh boy, this is the Survival of the Cheapest.

 

[The_Russian]

Mesa underbid Gulfstream, dude. Mesa will underbid Pinnacle. You will be underbid by a chimp.

 

[405]

Mesa underbid Gulfstream, dude. Mesa will underbid Pinnacle. You will be underbid by a chimp.

I don't know. Pinnacle squeezes grease out of pennies.

 

[Tank Commander]

Mesa is trying to figure out how will be wearing the grass shirts in the islands, pilots or F/A's. If I could afford another x-wife and figure out how to live on 22,000 in the Islands I would go! I look pretty good in a grass skirt.

 

[Workin'Stiff]

I've been told that the latest contract that was proposed at Mesaba, that we would be offically the lowest paid pilots in the industry... Sub Mesa, Chautauqua, and Pinnacle... So we've got that goin' for us....

 

[CapnVegetto]

Be interesting to see how this pans out. Man, this is sad.

 

[Tarzan]

Muck Fesa!!!!!!!!!

 

[Dr.Hwang]

Take it from me Mesaba and Pinnacle are F***ed. AWAC got fuc*ed by cheap junk carriers.

 

[PCL_128]

Between Mesa and Pinnacle, who do you think can offer the lower operation cost? Oh boy, this is the Survival of the Cheapest.

Pinnacle's block-hour costs are several hundred dollars less than Mesa's. The only way Mesa (or anyone) can underbid us at current costs is to operate at a loss. In the past, Northwest has refused to even accept bids from Mesa because their operational performance is so horrendous. I don't know if that will change now or not.

 

[Crash Pad]

Pinnacle's block-hour costs are several hundred dollars less than Mesa's. The only way Mesa (or anyone) can underbid us at current costs is to operate at a loss. In the past, Northwest has refused to even accept bids from Mesa because their operational performance is so horrendous. I don't know if that will change now or not.

Since when has operating at a profit ever been a concern for airlines. You know Skywest has told ASA to look for another code to fly just in case...

 

[SF340Guy]

76 seats??? Sounds like 175s with first class...

Republic maybe...Bedford has the history with NWA management.

 

[~~~^~~~]

There won't be any concessionary bargaining. I can tell you that much.

PCL: As your flying is being put out to bid, do you still think the RJDC's effort to achieve equal representational status is wrong? If your MEC was empowered to bind NWA in scope, this would not be happening. If ALPA did not block your MEC from negotiating flying within the brand, maybe this could be stopped.

I hope the best for you guys. All of us are in this boat together.

 

[PCL_128]

PCL: As your flying is being put out to bid, do you still think the RJDC's effort to achieve equal representational status is wrong?

Sorry Fins, but nothing has changed. I still don't own any of my own flying and I still fly the NW code. That flying is scoped by the NWA MEC and their contract, so it's up to them to decide how to handle their scope situation. I would certainly prefer for their MEC to focus on some sort of "brand scope" that would keep the flying at NWA, PCL, and MSA, but that's up to them.

 

[amcnd]

It will also come down to who can get the airplanes the fastest.

 

[TinGoose1]

And not bend them. I think that is going to be a consideration as well.

 

[amcnd]

I think Mesa , CHQ and SkyWest are in good postion. Look at Mesaba they have 3 CRJ's in the factory that wont be delivered, It doesnt look to good for them. It going to be a company that can get a large order of airplanes in a short time frame. Look for someone that already has options for airframes.

 

[FreezinginMN]

Things are very unpredictable right now. Mostly because it is a poker/chess game and you never know what NWA managment wants. Airline managment is directly motivated by politics and emotion and only indirectly by money. They are motivated to do what is in their own personal best interest and not NWAs. This is a fact of human nature and is the secret of any good salesman.

NWA managment is currently (and always has) been telling NWA ALPA NEWCO will be "76 to 100" seaters. Therefore any bidding on 76 seats or less is NOT NEWCO and nothing new. They want 76 and below to be bid on by regionals. Steenland said only a few weeks ago he sees Mesaba (specifically using their name) possibly flying 70 seaters and he also mentioned AVROS with 74 seats under new managment (I still haven't figured that one out). He said this to a group of NWA pilots. Maybe this is why Mesaba is trying so hard for pay cuts. Or maybe Steenland is trying to spread rumors.

NWA ALPA is strongly against the regionals flying 70 seaters and this is the biggest issue for negotiations. Maybe NWA managment is trying to get NWA ALPA to go as low as possible to maintain the 70+ seat flying and will use the regional bids from Mesa/Pinnacle/etc as leverage during negotions.

 

[blackbox]

I heard there is a 5 year waiting list for the E-170.

 

[Detroitpilot22]

dont they still have to get rid of scope clause before anything like this happens.

 

[FlyingFerris]

I heard there is a 5 year waiting list for the E-170.

After going behind the Brazilians back and secure a huge order for CRJ's from the Candanians, I don't think NWA can bargin for crazy Ed's rock bottom prices on Emb170's from a position of strength. Most likely the 76 seater would be CRJ900 with a first cabin ala the Avro.

 

[Jack-O-Lantern]

Why dont somebody just offer to fly them for free, and WIN that race!uke:

 

[tie1on]

Just remember you guys wanted to fly jets, and you have been willing to fly for nothing in the past. Just remember the past, if you do not learn from it you will repeat it. this is a comcessionary environment, not improvement. Management will use the mesa's of world because of price and stock price options for them. they don't care about you. I am not trying to piss you off, but this is the way it is.

The major airlines are shrinking not expanding, so you might want to think of other career options if you don't want to work for 35K for the rest of you of your life. Oh yea you must fund your own 401k on that.

Good luck on the race to the bottom

 

[PCL_128]

dont they still have to get rid of scope clause before anything like this happens.

Yes they do. I guess Northwest management just wants to get started early.

 

[YourPilotFriend]

Just remember you guys wanted to fly jets, and you have been willing to fly for nothing in the past. Just remember the past, if you do not learn from it you will repeat it. this is a comcessionary environment, not improvement. Management will use the mesa's of world because of price and stock price options for them. they don't care about you. I am not trying to piss you off, but this is the way it is.

The major airlines are shrinking not expanding, so you might want to think of other career options if you don't want to work for 35K for the rest of you of your life. Oh yea you must fund your own 401k on that.

Good luck on the race to the bottom

Hold on a second, these airplanes are out of the scope agreement. That hasn't been settled. This is just a way to screw pinnacle how they screwed mesaba. In 6 months, NWA is going to be a very different beast. NewCo is a company northwest is using as levelage to buy more aircraft and shed debt. They need companies with large amounts of cash on hand. Both 9E and XJ have this, although XJ is in a better position right now. Remember NewCo serves many purposes. Here is the list:

1. Get out of the scope agreement of NWA pilots to reduce labor costs.
2. Explore the LCC market to allow strong competion between NWA and the LCC's
3. Allow NewCo to take upon its self a huge amount of debt NWA does not have to pay.
4. The debt NWA will not incur as a result of NewCo will be used to expand the cargo operation at NWA two fold or more.
5. Replace aging DC-9 fleet in almost a 1.25 to 1 exchange(more airplanes).
6. Use NewCo low cost advantage, as a revenue generater to expand the international fleet.
7. Form GroundCo to allow for lower labor costs.
8. Allow the Hub and Spoke feeder model to remain viable.

This is the management wish list. It's an expansion plan, which will almost double the size of the NWA fleet. The $64,000 question is who are the pilots going to be. Since you guys are fighting amoungst youselves it really gives management the upper hand.