NWA fixes problems - quietly; Airline focuses on flight cancellations, not PR

Byline: Bill Shea

Northwest Airlines Corp. is taking a quiet approach to repair public-relations damage in the wake of 4,000 canceled flights in June and July that cost the carrier millions of dollars and untold numbers of customers.

The Eagan, Minn.-based airline, whose largest hub is Detroit Metropolitan Airport with its 500 daily flights, has been working to fix the staffing issues that sparked the cancellations.

Passenger bookings typically increase every July over June, but this year's increase was down 14,000 bookings over 2006 for the airline. It's unknown how many can be linked to Northwest's flight troubles. August bookings are not yet available.

Northwest officials estimate the cancellations and passenger refunds cost the airline up to $50 million, which comes just three months after the company emerged from bankruptcy.

Airline executives initially blamed the cancellations on weather and pilot absenteeism. They now say a work rules agreement with pilots that exhausted some of them and used up their available flight hours before the end of the month is at fault.

"When you're faced with an absolute disaster of that magnitude, senior management has to drill down and find out what caused it,'' said Ben Hirst, head of Northwest's corporate communications.

Northwest agreed to trim its schedule, cut pilot flight hours and is offering them overtime and bonuses in addition to bringing back furloughed pilots and hiring new ones.

The strategy appears to have worked.

By noon Friday, just one of Northwest's 1,337 total daily flights had been canceled, according to flight stats.com, a consumer Web site that tracks commercial flight activity.

What the airline has not done is stage an advertising campaign to apologize for its problems and promise better service.

That was the approach taken by Queens, N.Y.-based discount carrier JetBlue Airways after a week of massive delays and cancellations in February. The company took out full-page advertisements in 20 newspapers in 15 cities to apologize for its problems.

"We made a conscientious effort not to do a public campaign'' to fix Northwest's image amid news stories about the flight problems, Hirst said, adding the company may revisit that decision.

Northwest's strategy is to make sure its jets get to where they're going with minimal fuss and hope that's enough to calm disgruntled fliers.

"The only way to fix this is to be credible,'' said Andrea Fischer Newman, the airline's senior vice president for government affairs. She also said the airline continues to receive letters from customers who report good experiences with Northwest.

Robert Mann, founder of Port Washington, N.Y.-based airline industry consultants R.W. Mann & Co., said Northwest should have been better prepared to deal with problems arising from running a leaner operation coming out of bankruptcy.

"I find it difficult to believe any of this came as any sort of surprise because they operate with reduced slack in all resource areas,'' he said. "Their resources planners were really out in left field on this thing.''

There were changes among the airline's corporate communications staff. Hirst, a former senior executive at the airline, was asked by Northwest President and CEO Douglas Steenland to come out of semiretirement to be the company's lead spokesman as it attempts to be more open with the media and public.

He replaces Mary Linder, who in June announced her retirement at the end of the summer. Bill Mellon, managing director of corporate communications, stepped down in July and will leave the company later this summer.

"We going to try to communicate with our audience better,'' said Dean Breest, a media-relations manager for the airline.

Northwest (NYSE: NWA) filed for Chapter 11 bankruptcy in September 2005 and emerged on May 31 of this year.

It's one-month post-bankruptcy second-quarter earnings report (June 1-June 30) showed $1.1 billion in revenue compared to $2 billion for the same 30 days in 2006. Northwest reported $3.3 billion in revenue for the full three-month quarter last year.

Northwest estimates its domestic flight revenue will remain flat the next four years, Hirst said, but expects international routes to grow 4 percent to 5 percent.

As part of its reorganization, the airline renegotiated four-year contracts with its seven unions. The pilot work rules that led to the staffing issues were part of those talks.

About 10,000 of its 31,000 employees work in Michigan.

Northwest trimmed its fleet by more than 100 aircraft during bankruptcy. It's phasing in 122 new jets over the next several years and another 10 current planes have been modified for international service.

As part of its $6 billion investment in modernizing its 515-plane fleet, the airline will introduce 18 new 223-passenger Boeing 787s into service first in Detroit in the fourth quarter of 2008. Northwest retains an option to order 50 more 787s, which are long-distance jets capable of reaching China.

The airline also is attempting to win federal approval for a coveted direct, nonstop route from Detroit to China, a decision Fischer Newman said may come from the U.S. Department of Transportation in the second half of September.

Northwest applied for a route to Shanghai for this year and to Beijing for 2009, attempting to tap the burgeoning China travel market.

The airline has received 135,000 letters or signatures on petitions in favor of its application and has garnered strong corporate and political support, as well, Fischer Newman said.

Northwest now operates a route to China from its hub in Tokyo. Its Detroit-China route was suspended in 2002 because of the Sept. 11 attacks.

Bill Shea: (313) 446-1626, bshea@crain.com

Copyright 2007 Crain Communications Inc.