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Northwest Airlines Posts Q1 Loss Of US$396 Million  
User currently offlineSingapore_Air From United Kingdom, joined Nov 2000, 13742 posts, RR: 19
Posted (11 years 4 months 2 weeks 5 days 1 hour ago) and read 4694 times:

Northwest Airlines Corporation (Nasdaq: NWAC), the parent of Northwest
Airlines, today reported a first quarter net loss of $396 million or $4.62 per
common share. This compares to a first quarter 2002 net loss of $171 million
or $2.01 per common share.

Much more information at the PR Newswire website


Anyone can fly, only the best Soar.
17 replies: All unread, jump to last
 
User currently offlineDIA From United States of America, joined Jan 2001, 3273 posts, RR: 28
Reply 1, posted (11 years 4 months 2 weeks 5 days ago) and read 4688 times:

Is NWA headed down the UAL / A^A path?




Ding! You are now free to keep supporting Frontier.
User currently offlineBraniff727 From United States of America, joined Sep 2000, 686 posts, RR: 1
Reply 2, posted (11 years 4 months 2 weeks 5 days ago) and read 4659 times:

NWA, as well as all of the majors, is in a not too good position.

That being said, NW has a lot of liquidity and at last report, (a few weeks ago I believe, don't have the source, sorry) $2.1 Billion cash on hand.

If the current industry trends continue, NW as well as the rest of the bigger airlines are more likely to face Chapter 11. NW has, and continues to take steps to avoid it, such as the recent 12% capacity cut, 4900 furloughs and grounding of 20 aircraft.

Also, the new paint scheme which will result in lower painting costs. While not in great shape, NW is better off than AA and UA for now.



Climbing
User currently offlineBmacleod From Canada, joined Aug 2001, 2264 posts, RR: 0
Reply 3, posted (11 years 4 months 2 weeks 4 days 22 hours ago) and read 4614 times:

If NWA AND UAL collapses, there would be no North American operators of 747s. AC recently annouced it would be selling off its 747s as part of its restructuring plans. Mexico's airlines don't operate any 747s.


The engine is the heart of an airplane, but the pilot is its soul.
User currently offlineAirafrique From United States of America, joined Nov 2000, 139 posts, RR: 0
Reply 4, posted (11 years 4 months 2 weeks 4 days 22 hours ago) and read 4591 times:

Northwest is hard-hit by SARS and war. Someone told me Northwest revenue mostly from international flight.

User currently offlinePSU.DTW.SCE From United States of America, joined Jan 2002, 7565 posts, RR: 28
Reply 5, posted (11 years 4 months 2 weeks 4 days 19 hours ago) and read 4520 times:

Several factors could help NW return to profitability.

1) Fuel expenses. Look at the year-over-year fuel & tax expenses, they are up over 41%. With the government looking to suspend certain taxes over the summer months, this could reduce this line item. Fuel prices are on the way down, however very slowly. If the price would drop, this would help lower costs.

2) Employee Consessions: Anderson has said that NW is looking to reduce wages and benefits. As we all know this isn't as easy as it sounds. Lets just see what happens to AA in the next 24-48 hours. It is likely that in some shape or form wages will decrease at some point.

3) Revenue: A revenue increase would certainly help the financial picture. Air fare is likely to rise at some point, its just a matter of when.

Now I'm not trying to paint a rosy picture here, but NW isn't too terribly far off breaking even with the help of some other factors. Its all up to management, the employees, and passenger demand over the summer months. With some concessions, it is possible.


User currently offlineFlashmeister From United States of America, joined Apr 2000, 2900 posts, RR: 6
Reply 6, posted (11 years 4 months 2 weeks 4 days 10 hours ago) and read 4437 times:
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1) Fuel expenses. Look at the year-over-year fuel & tax expenses, they are up over 41%. With the government looking to suspend certain taxes over the summer months, this could reduce this line item. Fuel prices are on the way down, however very slowly. If the price would drop, this would help lower costs

Careful about looking to fuel as a costsaver here. Despite the market cost of oil, if NWA hedged (and I think they did) fuel for the 2nd/3rd quarters, their fuel cost is locked no matter what the market does. If they hedged at $33/barrel (and some airlines did lock there), they pay $33 even if market is $28 or $2 for that matter. That could be a money-losing proposition on an airline's biggest non-labor cost.


User currently offlineContinental From United States of America, joined Jun 2000, 5517 posts, RR: 18
Reply 7, posted (11 years 4 months 2 weeks 4 days 9 hours ago) and read 4421 times:

I just heard about that on the news as well. I guess every airline will have to become a "Southwest" or a "jetBlue." What about all the "main men" at NWA who do absolutly nothing but accept the huge ass paycheck, while the poor mechanic is gone for good!? NWA is corrupt!

co


User currently offlineClipperNo1 From Germany, joined May 1999, 672 posts, RR: 2
Reply 8, posted (11 years 4 months 2 weeks 4 days 8 hours ago) and read 4404 times:

With their services pretty much set to serve the asian market, NWA imo is currently in the worst situation of all US-Carriers. Worse than AA & UAL, but they have a more loyal labour force, which will help them to go through this.


"I really don't know one plane from the other. To me they are just marginal costs with wings."� Alfred Kahn, 1977
User currently offlineIndustrialPate From , joined Dec 1969, posts, RR:
Reply 9, posted (11 years 4 months 2 weeks 4 days 8 hours ago) and read 4397 times:

Quote: With their services pretty much set to serve the asian market, NWA imo is currently in the worst situation of all US-Carriers. Worse than AA & UAL, but they have a more loyal labour force, which will help them to go through this.

Absolutely not!!! According to Richard Anderson, NW’s loads to Asia haven’t suffered from SARS – in fact, some markets have seen an increase in traffic! The lone exception, of course, is HKG. But instead of canceling service to HKG, NW will ferry a fourth A320 to Japan to serve AA), Japan">NRT-HKG (beginning later this month). UA’s Asian network, which has a HKG mini-hub, has suffered far worse.


User currently offlineClipperNo1 From Germany, joined May 1999, 672 posts, RR: 2
Reply 10, posted (11 years 4 months 2 weeks 4 days 8 hours ago) and read 4381 times:

Okay, if you say so IndustrialPate. Let's just say it's damn hard to say anything about the airline industrie right now.
But with SARS spreading throughout Asia, NWA will suffer. No matter what smart biz-plan they come up with...



"I really don't know one plane from the other. To me they are just marginal costs with wings."� Alfred Kahn, 1977
User currently offlineIndustrialPate From , joined Dec 1969, posts, RR:
Reply 11, posted (11 years 4 months 2 weeks 4 days 7 hours ago) and read 4376 times:

ClipperNo1,

Before you decide to write something that’s intended to offend somebody, you should have your facts straight.
- Did you listen to Wednesday’s webcast? Richard Anderson clearly indicated that SARS has had minimal effect on NW’s Pacific network – loads have remained strong (in fact, loads to Manila and Seoul have increased) and cargo has remained steady. The lone exception is HKG. Instead of canceling NRT-HKG, NRT will ferry a fourth A320 to Japan. It will replace the B742 beginning 4/20.
- Do you read NW’s financial reports? NW has consistently tinkered with its Pacific network (e.g. killing the Seoul and, later, the Osaka hubs; eliminating most transpacific point-to-point flying like MSP/SEA-HKG) … the end result is that it has consistently remained profitable. Last year, the port crisis significantly helped NW’s cargo division, which made the Pacific network profitable overall. While I definitely agree that the effects of cargo are exageerated on a.net (e.g. US’s PHL-SNN will be profitable purely on cargo – yeah, right; I bet the route won’t return next summer).
- According to Richard Anderson, NW’s losses come from primarily its domestic and transatlantic network… and its reflected in its schedule cuts: the transpacific network saw very few frequency reductions, and the SEA-KIX will fly as scheduled. Meanwhile, the Atlantic network lost significantly more of its frequencies, and planned DTW-MAD (as well as seasonal DTW-FCO) service was cancelled.
- NW flies very few transpacific flights… most of the traffic is flown via NRT. In contrast, UA operates significantly more transpacific flights and about half as many flights via NRT. The end result is that NW is helped out greatly by ex-Japan traffic (especially since the fares are significantly more… one can fly to PEK ex-USA for about the same as somebody ex-Japan).
- Contrary to popular belief, PA lost a significant amount of money off its Pacific network whereas NW made a significant amount of money. After UA acquired PA’s network, things didn’t change much… although UA’s had a couple good years, the network (collectively) lost has lost a ton of money. NW, despite operating less-efficent aircraft in later years (B744, B742 and DC-10 vs. UA's B744, B777)


User currently offlineClipperNo1 From Germany, joined May 1999, 672 posts, RR: 2
Reply 12, posted (11 years 4 months 2 weeks 4 days 7 hours ago) and read 4363 times:

Jesus, no kind offense intended here in anyway. You've represented very good facts, but honestly a CEO won't stand up before the press and tell the press that basicly more loss is expected. In the wake of Enron,Worldcom,UAL etc. my confidence in CEOs statements has shrunken to a minimum. I.E. everybody says Chapter 11 is used for re-organisation, which sounds a hell lot better than 'We ran out of money, and hve to see how to go on'. The outcome of this SARS sh*t is not forseebale...and that's a fact. It could well spread to Japan/NRT as well.



"I really don't know one plane from the other. To me they are just marginal costs with wings."� Alfred Kahn, 1977
User currently offlineEssentialPowr From United States of America, joined Sep 2000, 1820 posts, RR: 2
Reply 13, posted (11 years 4 months 2 weeks 4 days 3 hours ago) and read 4325 times:

"Also, the new paint scheme which will result in lower painting costs."

How, exactly, is that, and what is your reference? Paint is paint


User currently offlineIndustrialPate From , joined Dec 1969, posts, RR:
Reply 14, posted (11 years 4 months 2 weeks 4 days 3 hours ago) and read 4324 times:

http://www.nwa.com/corpinfo/newsc/2003/pr040320031108.html

The paint scheme will save Northwest about 20 percent in future painting costs, based on several factors: fewer primary colors, simpler design and paint process, and greater durability.

The livery will allow Northwest to extend paint cycles for individual aircraft from five to six years. A clear coat paint finish makes the livery more durable and dark pigments, which fade faster, have been removed from the fuselage paint scheme. The application process will be five percent less expensive than that currently used. Fewer lines and stripes are involved, requiring less taping and masking. The fuselage paint has been reduced from four colors to one.

“This new livery design is part of our ongoing program of cost reduction in every area of the company,” said Doug Steenland, Northwest president.



User currently offlineMSYtristar From United States of America, joined Aug 2005, 6564 posts, RR: 51
Reply 15, posted (11 years 4 months 2 weeks 4 days 1 hour ago) and read 4298 times:

Actually,
Pan Am's Pacific operations were the real money-makers for Pan Am, according to the book Skygods, written by a former PA pilot. Acker would have been better off in selling the Atlantic operations, or at least keeping some prized routes and selling off the rest.


User currently offlineGigneil From United States of America, joined Nov 2002, 16347 posts, RR: 85
Reply 16, posted (11 years 4 months 2 weeks 4 days 1 hour ago) and read 4294 times:

"What about all the "main men" at NWA who do absolutly nothing but accept the huge ass paycheck, while the poor mechanic is gone for good!? NWA is corrupt!"

Its hardly corruption to hire and pay upper management. Airlines are multibillion dollar corporations, they have to pay in the $500k to $1mil range to retain an effective leader.

Granted, none of the leaders in the industry are doing so great, its a tough time. But to argue that they do nothing hardly contributes to an intelligent conversation.

N


User currently offlinePSU.DTW.SCE From United States of America, joined Jan 2002, 7565 posts, RR: 28
Reply 17, posted (11 years 4 months 2 weeks 3 days 18 hours ago) and read 4233 times:

Flashmeister,
Funny you mention hedging earlier, we just covered that topic in one of my classes today. I never really understood that its basically playing the futures markets. Hedging is good if prices are going to be going up, bad if they are going to be declining.

ClipperNo1,
CEO's to make true statements as much as you would like to not believe it. It it certainly possible for him to go and make such remarks when the facts are out there. Anderson has many times mentioned the negative impact and how loses have been greater than expected. Afterall, didn't they just post a LOSS yesterday? CEO's have to be a lot more careful today than they used to be. NW's pacific load factor is also showing that SARS hasn't had as much of a negative impact as everyone thinks.

IP--Nice comments man...I agree..
While I definitely agree that the effects of cargo are exageerated on a.net (e.g. US’s PHL-SNN will be profitable purely on cargo – yeah, right; I bet the route won’t return next summer).
True that. (aww, you mean they won't haul enough Guiness to make that profitable with a 37% load factor, lol).




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