I've been monitoring for a long time but haven't posted in a while. I'm doing some derivatives trading on Northwest stock. Here is what I and the markets know so far:
1) Bankruptcy is probably going to happen soon at the rate that Northwest is burning cash, whether or not the mechanics strike is successful or not. At the moment Northwest seems to have the upper hand but the overall picture is dim for them - saving $176 million doesn't come overly close to closing the $4 million a day hole they're digging for themselves.
2) Northwest seems to be running fine at the moment, although I've heard some reports of the new mechanics being undertrained on NW equipment. Some flights were delayed and two had to return Saturday.
The way I see it, the only uncertainty in the stock is (2) - whether Northwest can keep it up. I've gone into a "short" position because of what I've read here and on other bulletin boards Here is a summary:
1) Some of Northwest's new mechanics are only going through very abbreviated training to work on Northwest's aging fleet.
2) Northwest's MEL count is rising and there's no way that 1,900 people can do the work that 4,500 experienced people did before them.
3) While the pilots and flight attendants are sidelining this fight, they are capable of "work-to-rule" action - making more calls for MX than usual and running the new guys ragged. Pilots and flight attendants have little to lose since airline will go bankrupt anyway.
In a week we'll be certain whether the management was right.
What are your thoughts? Am I right to be short and question management's assertions?