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 ...
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.
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?
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...
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.
Are NWA flight attendants still going to be cranky?
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.
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.
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.
I don’t think it would be too hard to find a quality management team who manages to drive you into bankruptcy...
Those guys are usually given the boot. It’s finding a replacement team that is difficult.
While at the same time management rakes in huge bonuses for doing such a bang up job? Yep.
Short staffed, salaries cut, benefits slashed. If they are cranky can you blame them?
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.
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.
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.
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.
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