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Leaner Northwest Airlines set for bankruptcy exit
Reuters ^ | May 31, 2007

Posted on 05/31/2007 10:19:32 AM PDT by Zakeet

Northwest Airlines is set to exit bankruptcy on Thursday, marking the end of a 20-month spell in Chapter 11 for the No. 5 U.S. carrier, and the first time in almost five years that a major U.S. airline has not been in bankruptcy.

Northwest has spent the last year and a half hacking $2.4 billion off its annual costs, mostly from an aggrieved work force. Like other so-called "legacy' airlines, it has been forced to drastically slash its costs to keep pace with newer low-cost carriers and deal with wild spikes in fuel costs.

[Snip]

Despite major cost cuts, Northwest faces intense competition, soaring fuel prices and furious employees who resent forfeiting $1.4 billion annually only to see their bosses net enormous payouts from stock and options awards.

[Snip]

Northwest, which has cut its debt and leasing obligations by $4.2 billion, is not facing these challenges alone. Three of the big U.S. carriers --- Northwest, Delta Air Lines and UAL Corp's United Airlines -- have all been in Chapter 11 in the last five years.

US Airways Group also went bankrupt and was saved from liquidation only by a merger with America West Airlines. AMR Corps. American Airlines restructured without entering bankruptcy.

Without exception these airlines grappled with peeved workers, low-fare competition and soaring fuel prices.

The industry mounted a recovery in 2006 thanks to a string of revenue-boosting fare rises, but several failed fare increases in 2007 suggest rising fares are at an end.

Meanwhile, domestic competition is increasingly vigorous thanks to new entrants such as Virgin America Airlines and Skybus Airlines Inc. Consequently, top airlines have warned of excess domestic capacity, which could erode pricing power.

(Excerpt) Read more at news.moneycentral.msn.com ...


TOPICS: Business/Economy; News/Current Events; US: Minnesota
KEYWORDS: aerospace; airlines; bankruptcy; northwest
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1 posted on 05/31/2007 10:19:33 AM PDT by Zakeet
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To: Zakeet
Am I the only one who has problems with companies using bankruptcy for financial maneuvers? Dump some contracts, screw over some vendors and then go on like nothing happened while leaving your competitors who didn't go bankrupt at a competitive disadvantage. Maybe corporate bankruptcy should only be used as a method of liquidating and fairly dividing the assets of the bankrupt company.
2 posted on 05/31/2007 10:24:28 AM PDT by KarlInOhio (Parker v. DC: the best court decision of the year.)
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To: KarlInOhio
Northwest is a sad example of big business self-dealing itself into bankruptcy. Al Checci & Co looted this company and if it hadn’t been for the state of Minnesota, they wouldn’t have lasted long enough to enter bankruptcy court.
3 posted on 05/31/2007 10:31:16 AM PDT by Eric in the Ozarks (BTUs are my Beat.)
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To: KarlInOhio
Am I the only one who has problems with companies using bankruptcy for financial maneuvers? Dump some contracts, screw over some vendors and then go on like nothing happened while leaving your competitors who didn't go bankrupt at a competitive disadvantage.

Chapter 11 bankruptcy is a rather drastic measure - sort of like taking out your own appendix with a bottle of Scotch and a razor blade.

The company's old management is almost always sacked; the business is run by a trustee under the direct supervision of a federal judge. Collection actions are placed on hold along with nonessential cash payments while the court rewrites contracts and the business is streamlined. The idea is to try and salvage something for somebody where otherwise there would be almost nothing for anybody.

As with just about any other legal action, about the only persons certain to come out ahead at the conclusion of litigation are the lawyers.

4 posted on 05/31/2007 10:41:31 AM PDT by Zakeet (Be thankful we don't get all the government we pay for)
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To: Zakeet

For years, Northwest has avoided total financial collapse by treating the passengers like cattle. What is its plan to get out of bankruptcy - execute the passengers?


5 posted on 05/31/2007 10:58:16 AM PDT by BlazingArizona
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To: Zakeet

Ya gotta love it, management puts the company into chapter 11 then cuts everyones pay and gives themselves a raise to get out of it...


6 posted on 05/31/2007 11:00:44 AM PDT by N3WBI3 (Light travels faster than sound. This is why some people appear bright until you hear them speak....)
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To: Zakeet

I flew NWA last week - they oversold the flight - I made it onto the plane, but several of their other flights out of detroit were being cancelled. I really dislike the old oversold seats thing...I would’ve been pissed had I not gotten aboard.


7 posted on 05/31/2007 11:20:42 AM PDT by mallardx
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To: Zakeet

Are NWA flight attendants still going to be cranky?


8 posted on 05/31/2007 11:25:01 AM PDT by RowdyYates
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To: Zakeet

I have flown to Asia on both Northwest flights and on Cathay Pacific flights. I highly recommend Cathay Pacific, even if you are just flying economy.


9 posted on 05/31/2007 11:39:10 AM PDT by ikka
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To: KarlInOhio
All the problems after 9/11 made more than one airline insolvent. NW has sucked for a long time, but this was more than just a financial maneuver.

Maybe corporate bankruptcy should only be used as a method of liquidating and fairly dividing the assets of the bankrupt company.

Many companies that come out of bankruptcy are very successful. Look up the stock charts of NIHD or SHLD. Giving people and corporations a fresh start has been part of the American way since our beginning.

10 posted on 05/31/2007 12:00:32 PM PDT by Moonman62 (The issue of whether cheap labor makes America great should have been settled by the Civil War.)
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To: N3WBI3
Ya gotta love it, management puts the company into chapter 11 then cuts everyones pay and gives themselves a raise to get out of it...

The other option is for the workers to have no job at all. Plus they can always quit and work for someone else. And finding mangement for these companies and retaining them isn't easy.

11 posted on 05/31/2007 12:08:31 PM PDT by Moonman62 (The issue of whether cheap labor makes America great should have been settled by the Civil War.)
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To: Moonman62

I don’t think it would be too hard to find a quality management team who manages to drive you into bankruptcy...


12 posted on 05/31/2007 12:10:03 PM PDT by N3WBI3 (Light travels faster than sound. This is why some people appear bright until you hear them speak....)
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To: N3WBI3

Those guys are usually given the boot. It’s finding a replacement team that is difficult.


13 posted on 05/31/2007 12:11:39 PM PDT by Moonman62 (The issue of whether cheap labor makes America great should have been settled by the Civil War.)
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To: KarlInOhio
Dump some contracts, screw over some vendors and then go on like nothing happened while leaving your competitors who didn't go bankrupt at a competitive disadvantage.

While at the same time management rakes in huge bonuses for doing such a bang up job? Yep.

14 posted on 05/31/2007 12:13:47 PM PDT by Non-Sequitur (Save Fredericksburg. Support CVBT.)
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To: RowdyYates
Are NWA flight attendants still going to be cranky?

Short staffed, salaries cut, benefits slashed. If they are cranky can you blame them?

15 posted on 05/31/2007 12:15:53 PM PDT by Non-Sequitur (Save Fredericksburg. Support CVBT.)
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To: Moonman62
And finding mangement for these companies and retaining them isn't easy.

So what? The option for management is to have no job at all. And if they don't like the compensation they get at Northwest then they can always quit and go work for someone else.

16 posted on 05/31/2007 12:18:29 PM PDT by Non-Sequitur (Save Fredericksburg. Support CVBT.)
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To: Moonman62
Those guys are usually given the boot. It’s finding a replacement team that is difficult.

Heck, it must have been impossible for Northwest. Here's a link to the bios of Northwest's senior management. Look at the backgrounds. They're just about all long term Northwest employees. In other words, the same people who were on the management team that ran it into the ground in the first place are raking in big bucks at the cost of lenders, suppliers, and the rank and file.

17 posted on 05/31/2007 12:25:57 PM PDT by Non-Sequitur (Save Fredericksburg. Support CVBT.)
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To: Non-Sequitur

In this case it was industry conditions that put them into bankruptcy. They aren’t the only airline that’s been in bankruptcy since 9/11. If the creditors wanted to replace them they could have.


18 posted on 05/31/2007 12:28:23 PM PDT by Moonman62 (The issue of whether cheap labor makes America great should have been settled by the Civil War.)
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To: Non-Sequitur
Short staffed, salaries cut, benefits slashed. If they are cranky can you blame them?

Every other airline has experienced the same and NWA is by far the worst of the bunch.

19 posted on 05/31/2007 1:28:02 PM PDT by RowdyYates
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To: RowdyYates
Every other airline has experienced the same and NWA is by far the worst of the bunch.

I fly pretty frequently for work on Delta, NWA, United, TWA, and Frontier and it's been my experience that just about every airline is staffed with cranky employees these days. They're all stretched thin and trying to do more with fewer people, and paying those they do have less money.

20 posted on 05/31/2007 1:48:30 PM PDT by Non-Sequitur (Save Fredericksburg. Support CVBT.)
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