Emerging from bankruptcy, leaner Northwest is cleared for takeoff

Joel J. Smith / The Detroit News

As Northwest Airlines emerges from bankruptcy today, questions loom about what the future will look like aboard Detroit Metro's largest carrier.

Industry analysts say passengers will see few, if any, changes.

Northwest officials are not divulging any plans, other than to say the carrier is looking to improve service and products following extensive customer surveys.

Northwest's course is expected to be low key and business as usual, even though other airlines -- most recently Delta -- launched major media campaigns to tout changes and promote improvements as they exited bankruptcy.

Mary Linder, a Northwest senior vice president for corporate affairs, would only say the airline is working on several product initiatives stemming from extensive research.

"Now that we have restructured the company successfully, one of our key focus areas is continuing to improve the customer travel experience by defining what our customers want and determining how best to deliver the products and services that meet their needs," she said.

Northwest will mark its first day without bankruptcy court supervision by ringing the opening bell at the New York Stock Exchange, signifying the trading of the carrier's new stock -- NWA -- and an afternoon press conference at its headquarters in Eagan, Minn.

After 20 months of bankruptcy protection, one thing is clear: Northwest is a leaner and more efficient airline.

The carrier shaved $2.2 billion in annual operating costs with the help of bankruptcy court. That belt-tightening will make the airline one of the most profitable in North America, industry officials predicted.

Analysts said Northwest's minimal fanfare about flying out of the red seemed appropriate.

"At Northwest, I don't see any value in yelling 'We're out of bankruptcy,' " said Michael Boyd, president of the Boyd Group, an Evergreen, Colo. aviation consulting company. "Why bother? It's not a new Northwest in terms of direction or strengths. It's only new in terms of the financial underpinnings."

Worker-exec relations sour

Northwest had lost nearly $4 billion when the carrier filed for Chapter 11 bankruptcy protection on Sept. 14, 2005. The losses were attributed to the Sept. 11 terrorist attacks, the Sudden Acute Respiratory Syndrome (SARS) outbreak in Asia, rising fuel costs and low-cost carriers forcing Northwest to lower its ticket prices to retain customers.

Under court supervision, Northwest was able to save $1.4 billion annually in wage, benefit and work-rule changes -- efforts that left a bitter taste with many of Northwest's 30,000 workers.

It didn't help when Northwest announced recently that its 400 top executives would divide a 4.9 percent equity in the company upon exiting bankruptcy. That amounts to nearly $300 million in stock. Doug Steenland, Northwest's president and CEO, will receive $26 million in stock over the next four years.

While management-employee relationships have been tenuous at best, the situation today is at a low point, something Northwest officials concede they must work on.

Wade Blaufuss, a first officer on Boeing 757 aircraft and an official in the 5,500-member Northwest Air Line Pilots Association, remains bitter over the concessions.

"Until the beatings stop, morale isn't going to improve from one day to the next," he said. "Just because Northwest exits bankruptcy one day, it's not going to resolve our issues. As long as this management stays in power and makes Northwest into its own cash ATM machine, we don't have any hope."

Northwest's 8,200 flight attendants also have been bitter about the labor agreements. They were stung when a bankruptcy judge gave the airline permission to impose $195 million in cutbacks in 2006. The Association of Flight Attendants approved the cost cuts -- by 104 votes -- two days ago.

The association said the agreement is not acceptable to its members.

"But considering the difficulties we encountered with the National Mediation Board, the White House, the courts and the impossible negotiating posture of Northwest Airlines, the majority of members have said that this agreement represents the best we could do under the anti-worker conditions we found ourselves negotiating in," said Jay Hong, president of the flight attendants union.

All of Northwest's unions said they would push the airline to improve pay and work conditions.

As it emerges from bankruptcy, Northwest has 30,787 employees, down by about 3,000 from September 2005. There are 7,682 Northwest workers at Detroit Metropolitan Airport.

Services improved

While navigating through bankruptcy, Northwest improved some services, including upgrading domestic first-class meals and snacks, initiating an open boarding process and expanding access to its Web site from hand-held devices, such as a BlackBerry, and cell phones.

Throughout the bankruptcy restructuring process, Northwest continued -- with court approval -- to update its fleet with new aircraft and technology. Those efforts included:

• Phasing out the older DC10 fleet for a more comfortable and fuel-efficient Airbus A330 plane. The Airbus has state-of-the-art entertainment units for all passengers.

• In summer 2008, Northwest will begin taking delivery of the Boeing 787, a fuel-efficient aircraft that can reach any destination in the world nonstop from Detroit.

• Ordered 72 regional jets that will seat 76 passengers.

• Add new service to various parts of the world.

"Come (today), Northwest customers won't notice any change just like the day after the company filed for bankruptcy," said Terry Trippler, an airline analyst who once worked for Northwest in Detroit. "When the dust settles, Northwest's low-key approach will be the one that works."

You can reach Joel J. Smith at (313) 222-2556 or jsmith@detnews.com.