Northwest Exits Bankruptcy Protection
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Northwest Airlines Corp. is emerging from Chapter 11 a little smaller, a lot more efficient, and with some of the lowest costs among the major carriers. Northwest shares were set to begin trading on the New York Stock Exchange Thursday morning, with CEO Doug Steenland ringing the opening bell, marking the end of a wave of airline bankruptcies that began after the Sept. 11 attacks. It cut labor costs by $1.4 billion a year, too, in a bruising four-year fight with its unions that did nothing to erase Northwest’s reputation for terrible labor relations. On Wednesday, flight attendants and pilots in St. Paul protested executive pay by rallying around a giant inflatable rat clutching bags of money in its paws. Northwest’s 400 top managers are set to get a collective 5 percent equity stake in the reorganized company worth an estimated $297 million. “They’re going to have dramatically different economics post-bankruptcy, which is the good news,” said Vaughn Cordle, who runs number-crunching firm Airline Forecasts and is an airline pilot. “The bad news is they’ve beaten down labor so much that they’ve got morale problems.” Like the rest of the airline industry, Northwest has been on a roller coaster the past decade. On Sept. 10, 2001, the airline industry was coming off the 1990s economic boom, as business travel rose and fuel prices stayed low. U.S. airlines raked in around $5 billion a year in profits from 1997 through 1999 and almost $2.5 billion in 2000, according to government statistics compiled by the Air Transport Association. But Sept. 11, the slowing economy, and the run-up to the Iraq war hurt business travel, and rising fuel prices hurt airline profitability. Northwest was also hurt by the SARS scare in Asia, where it and UAL Corp.’s United Airlines are the two largest U.S. carriers. Eagan-based Northwest and Delta Air Lines Inc. both filed for bankruptcy protection on Sept. 14, 2005, putting four of the nation’s seven largest carriers into Chapter 11. |