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Your Thoughts On The NW Announcement

Wed Mar 21, 2001 11:45 am

I was just wondering what you all think about the NW announcement to try and cut spending. It appears it won't be affecting passenger service which is good, but this just seems scary to me that NW is going to lose so much money in the first quarter.

Are other airlines losing money too??

Any thoughts would be appreciated.
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RE: Your Thoughts On The NW Announcement

Wed Mar 21, 2001 11:59 am

Cutting loss making routes is just good business. This same strategy has been employed with great success at Continental. If you don't make a profit flying there, then why fly it? Bethune/Brenneman understood this, and look at the results: PROFITS!

NW is being proactive, which to me is a very good sign. Biggest does not equate to best business. Just look at UA. NW is showing that they take operating a for profit airline seriously.

It would appear that the DC-9 will be here even longer now.

Any speculation as to which routes will be dropped? Retiring the 4 DC-10s earlier gives some indication. Any ideas?

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Well, Didn't Hear About It BUT...

Wed Mar 21, 2001 12:24 pm

I must say that I did NOT hear the article or read it what have you. However, based on what I can infer from what has been said here, Northwest is doing three things:
1. Cutting routes.
2. Keeping DC-9s longer.
3. Retiring four DC-10s unexpectedly.

Is it me, or does this sound eerily reminiscent of Trans World's recent failure? Let's take a look:

1. Within the last six months, TWA cut many routes, for example much of Florida. This was a surprise to many.

2. Yeah, they decided to keep those DC-9s a while. Retire the Dc9-10 series, but keep the -30 -40 -50 series.

3. Here's one- they suddenly- shock to the world- announced, "Uh, okay folks, as of this Saturday we will no longer fly ANY 727 to ANY of our destinations."

I am certainly not saying NW is going bankrupt. I am not that short sighted. But I think that America in general is about to hit a significant recession. Look at the airlines we've lost recently. TWA is the biggest, that's certain. We also lost Legend. Some really old airline in Alaska went belly up. AND, let us not forget that National filed for Chapter 11 in late December. Airlines are blowing away fast, folks. And with the whole US-->UA and talks between Continental and Delta, things are looking shaky.

I think that Northwest and Continental should merge. Just think- they could revive the 'orient' part of Northwest's name and become "Continental Orient"!!!! Isn't that classy?? Or, even better, "Continental West" that's a good one.  Smile

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RE: Your Thoughts On The NW Announcement

Wed Mar 21, 2001 12:27 pm

My thoughts are that they will proabably scale back hub to hub DC10-40 flights to narrowbody flights. That would make the most sense as I doubt these aircraft are proftible at on very short routes.

I agree about Continental, I think NW is learning alot from them, which is good seeings how everyone loves CO and they are making lots of money.

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RE: Your Thoughts On The NW Announcement

Wed Mar 21, 2001 12:31 pm

Here's the NW press release:

Northwest Airlines Outlines Revenue-Enhancing Initiatives, Cost-Reduction Plans

CEO Richard Anderson Affirms Commitment to Basic Strategies, Product Quality

MINNEAPOLIS/ST. PAUL, Minn., March 20 /PRNewswire/ -- Affirming its
commitments to the company's proven operating strategies and product and
service quality, Northwest Airlines (Nasdaq: NWAC) today announced plans to
enhance revenues and reduce costs in the face of declining business travel
resulting from the slowing economy.
CEO Richard Anderson told a large gathering of employees at the company's
headquarters: "When I was named CEO, I said that one of our major initiatives
would be open and regular communications. Today I want to discuss what we
need to do together to secure our future in today's rapidly changing economic
climate of reduced business travel."
He emphasized that the company remained committed to its core operating
and customer strategies. These include maintaining its planned investment in
new aircraft; maintaining planned facilities investments in the new Detroit
terminal and its other hub airports in Minneapolis/St. Paul, Memphis and
Tokyo; and preserving the service quality advancements the company has
achieved, including its enhanced World Business Class product and WorldClub
airport lounges.
Anderson said the company would immediately act to offset the loss through
a combination of revenue-enhancing and cost-reduction initiatives totaling
more than $200 million, including:
-- Optimizing the company's flying schedule and fleet composition --
including reduction of non-profitable flying and the early retirement
of three DC10-40 aircraft in the fall;
-- Deferring advertising, management training and other discretionary
spending; and
-- Achieving a 5 percent reduction in overall management payroll expense,
and deferring officer and director merit salary increases until
February 2002.

"These are never easy things to do, but prudent management dictates that
we reduce the overhead of the airline," Anderson said. "We need to lead by
example. I will not take a pay increase this year for becoming CEO, and Doug
Steenland will not take an increase for becoming president. Our increases
will be deferred until February 2002, the same as for all officers and
Anderson said the company planned to achieve the 5 percent reduction in
management payroll expense without company-wide, across the board layoffs. He
added that the company would rely on the judgment of each department to
determine how the cost reductions will be achieved, and that these decisions
are expected by May 1.
Last week, Northwest announced an expected loss of between $130 million
and $150 million in the first quarter of 2001, or between $1.55 and $1.80 per
share due to decreased business travel, uncertainty in Asia, and a slowdown in
the cargo market.
Anderson emphasized that the company remains committed to its "Checklist
for the Future" -- running a great airline, putting customers first, focusing
on employees, building the company's network, and securing its future by
sustaining financial stability through a commitment to profitability and
shareholder value.
With annual revenues in excess of $11 billion and approximately 55,000
employees worldwide, Northwest Airlines is the world's fourth largest airline,
with hubs at Detroit, Minneapolis/St. Paul, Memphis, Tokyo and Amsterdam and
more than 2,700 daily departures. With its travel partners, Northwest serves
more than 785 cities in 120 countries on six continents. Based on statistics
compiled by the U.S. Department of Transportation, Northwest was the most
on-time U.S. airline among the seven largest network carriers for the period

SOURCE Northwest Airlines
Web Site: http://www.nwa.com


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RE: Your Thoughts On The NW Announcement

Wed Mar 21, 2001 12:44 pm

I am confused...where does it say the DC9s are staying for longer.

And no, I don't see the similarties to TWA at all. NW will be around for along time to come. It knows how to run a great airline and it has been doing for the last couple of years.

I think the money saving is agood idea based on the fact the economy is on the way down again.

Also, I think they might be saving some money so that when the new mechanic contract is brought in, they will have some reserves, because the new contract will be pretty expensive I think.


RE: Your Thoughts On The NW Announcement

Wed Mar 21, 2001 12:47 pm

"preserving the service quality advancements the company has achieved"

As long as they do this, they'll be fine. All they need to do is keep running the ontime, more passenger friendly airline they have become and they will keep making money. I think most airlines are losing money right now as the economy starts to slow down.

NW usually seems to make good business decisions, so I don't doubt this is just another good one for them to make.

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RE: Your Thoughts On The NW Announcement

Wed Mar 21, 2001 1:23 pm

There are no similarities w/ TWA for whoever said that. Remember, NWA made a crap load of money in the past decade so they have a huge cushion they are sitting on. United and DL are expecting losses for 1Q too. There is an economic slowdown, what is important to note now is how well NW prepared for it. CO has done a great job, they got rid of their DC-9s, 737-200s, 747s and 727s and are heading for a streamline fleet of just 737s, 757/767s and 777s. In addition they have built IAH and EWR into solid hubs, Bethune knew all along this would happen and has positioned CO well to get through the storm. I don't know how well UAL is positioned or even DL, they all still have multiple routes and huge infastructure. And, of course, NW, I don't know either how well they prepared, other than building up a bank of cash by not going wild in the 90s and snatching up every new plane that came around. Overall, TWA was in trouble 15 years ago, NWA will get through this.
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RE: Your Thoughts On The NW Announcement

Wed Mar 21, 2001 1:44 pm

Hmmmmmm... 5 years ago, NWA is in big trouble. They ask the mechanics to take a pay cut to help save the company. The mechanics do. Now, after 3 years of record profits, the mechanics say the time has come for us to get back what we deserve. Oh my God says management. We suddenly seem to be in dire financial straights again. Anyone else smell a rat here? I , for one, hope NWA folds like a house of cards.
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RE: Your Thoughts On The NW Announcement

Wed Mar 21, 2001 2:18 pm

Let's get the facts straight here... NW was in dire financial issues and asked for concession back in the early 90s... not 5 years ago.

NW wont fold like a deck of cards, lets not jump the gun people. This is just good business tactics. Concessions won't come from the regular employees, its coming from mgmt. Read the news release.

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RE: Your Thoughts On The NW Announcement

Wed Mar 21, 2001 4:16 pm

NW is sitting on the biggest pile of cash in the industry. Their liquidity is sufficient to buy out pretty much any of the other majors, with the possible exception of AMR and Southwest.

"The A340-300 may boast a long range, but the A340 is underpowered" -- Robert Milton, CEO - Air Canada
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RE: Your Thoughts On The NW Announcement

Wed Mar 21, 2001 4:17 pm

I have worked for airlines long enough (15+years) to know that when they say management is going to take concessions it is time to put on the hip boots cuz the shit is getting really deep. What he said was he was skipping a raise for a whole year. WOW! How much did he make in that year he skipped the raise? And how many years have the mechanics gone without a raise or a contract? The difference being, of course, is that the mechanics didn't have a choice. And they will continue to get screwed while management gets richer and fatter. Don't be suckered by the media spin of a press release. The management will also tell you Wubba ain't in their pocket. You don't believe that one too do you?
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RE: Your Thoughts On The NW Announcement

Wed Mar 21, 2001 9:51 pm


According to the Minneapolis Star-Tribune, the 3 DC-10 s scheduled for early retirement were due to undergo "scheduled overhauls". Their early retirement will avoid this.

As far as the DC-9 s remaining in service longer, that is just my speculation. No official announcement on this.

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RE: Your Thoughts On The NW Announcement

Wed Mar 21, 2001 10:33 pm

I thought they already agreed to purchase 757's and A330's to replace the DC-10 fleet. How big of a deal is it to go ahead with this a few months earlier by replacing three DC-10's that will be in maintenance anyway with 757's that they were going to use all along.

I agree with Totterwrench. NW is just trying to get the public back on the side of the overpaid management since eveyone now knows they are totally screwing over their mechanics. I hope investors don't fall for this crap. It's just another case of maximizing shareholders wealth and forgetting about the people who make the company what it is. How long have mechanics been taking cuts in raises? And just now they are proposing to do the same with management!!! The innefficiency and old school business tactics that are being used don't belong in today's industry. NW is digging there own grave and I hope Vanguard can take them out in court.

It's time for NW's monopoly over Minneapolis/Detroit to end!!!!

"How Many Assholes we got on this ship?" - Lord Helmet

RE: Your Thoughts On The NW Announcement

Thu Mar 22, 2001 12:13 am

Mechanics are not prevented from being shareholders.

Investors will fall for anything that maximizes their share value...that's the point. Uh, buy low, sell high.

And if NW's monopoly over MSP and Detroit ends, that's it for both airports. DTW becomes like Boston, a busy O&D airport and MSP becomes like Kansas City (no offense KC), an underused collection of runways on the prairie.

Vanguard is livin' on borrowed time anyway...they will never take out company 100 times its size
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RE: Your Thoughts On The NW Announcement

Thu Mar 22, 2001 12:35 am

Vanguard is just an example of another carrier shot down by unfair predatory pricing. I think Boston is a perfect example of the consistancy of an airport and operations. you can take direct flights pretty much anywhere you want to go you have tons of competition and fares remain relatively low.

I highly doubt Minneapolis would disapear and I said nothing of destroying NW's hub just allowing new entrants to enter the market and reduce obsurdly high fares. It's a great airport for Transfer pax who have other options but if its your o/d airport nothing could be worse as far as prices.

Mechanics don't make a living of investing in NW shares. Increasing the short term gain for investors is rarely good for long term operations. Everybody on wall street is so obsessed with making money now that they don't see the effects on the long term. You start putting a few wealthy investors in charge and employees become disposable and cutting wages only makes the bottom line look that much better. But what happens to service? company moral?

Companies like NW are the reasons why we have Unions and will always need unions.
"How Many Assholes we got on this ship?" - Lord Helmet

RE: Your Thoughts On The NW Announcement

Thu Mar 22, 2001 12:38 am

I will spare you, Croupier, from receiving the same smack-down from the fine people of MCI that I have received on this board for making a similar comparison to Kansas City. (for the record, mine was comparing post-TWA STL to MCI)

I am told that the people of MCI like being a mid-sized O&D airport and not a major hub. Southwest flies there as does every other major airline. Consequently, they have plenty of options for destinations (from Southwest for short and medium haul and one-stop service for long-haul and international service from TWA and AA) as well as low fares on short haul destinations, courtesy of WN. They seem to think that's a pretty good deal, and who am I to disagree.

Okay, there. I got it out and set the record straight so that the roving hoards of MCIstas do not need to come and go after Croupier's head.
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RE: Your Thoughts On The NW Announcement

Thu Mar 22, 2001 12:44 am

I don't know why I am reading so many posts on this thread authoritatively predicting (and some even hoping for) the demise of NWA. With the exception of CO, ALL of the large carriers are reporting first quarter losses. UA has even announced discreet cutbacks in some components of their service, and I wouldn't be surprised if DL and AA look for cost-saving measures as well. Are we gonna start spreading rumors about UA, AA, and DL going bankrupt and shutting down by next November too? Every large company does some financial strategizing or downsizing from time to time. No need to jump the gun, people.

Northwest has been doing well for the past few years, so rest assured that carrier be here for awhile. Sorry, but the above posts drawing parallels between NW and TWA are nonsense. NW may not have traditionally known (or cared) about employee relations. But they DO know how to run their business. Afterall, they've never been quite under the direction of criminals like Lorenzo or Icahn.

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RE: Your Thoughts On The NW Announcement

Thu Mar 22, 2001 12:50 am

Check the CAL SW post for further proof on employee importance over shareholders.

I'm a WN shareholder and I know that as long as they have people who love their jobs and care about the future of the airline they will continue to prosper. As soon as they put my interest to make money over their employees I will sell in a second.

In the case of CO you have one of the only airlines to be ranked in the top 50 for companies to work for (Fortune magazine?) and look how they have changed. Airlines are all about customer service so how are you going to succeed when your employees don't give a damn about the company and in turn the customers?

Further examples look at LH who is making record profits year after year and their employees continue to have some of the best standards of living in Germany. With the recent negotiations it will only get better for them.

And don't get me wrong I love NW and they have done some great things. But the management needs to work on some serious issues. Or follow the leader and go to Burger King and concentrate on employees who expect to be treated like crap.

"How Many Assholes we got on this ship?" - Lord Helmet
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RE: Your Thoughts On The NW Announcement

Thu Mar 22, 2001 2:05 am

Anyone know what routes are being cut/downsized??

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