Days Numbered for Northwest CEO?

Feb. 4 -- Will he stay or will he go?

That's the big question about Northwest Airlines CEO Doug Steenland as the carrier moves closer to emerging from bankruptcy.

The answer depends on whom you ask. One union official said Steenland is "tarnished" from labor conflicts. But others think Steenland will be rewarded for his cool determination and drive in achieving $2.2 billion in annual cost cuts the company said it needed to stay afloat.

In other recent legacy airline bankruptcies, the CEOs typically haven't kept jobs for long after the carrier got back its wings.

Delta Air Lines' CEO Gerald Grinstein, 74, plans to retire when the nation's third-largest carrier emerges from bankruptcy this spring. US Airways replaced two CEOs after exiting two bankruptcies in the past five years.

One theory is that the CEO who has talked tough with employees may not be the person to build bridges to help grow the company. Also, a company's needs often change, requiring an operations commander more than someone skilled in operating in crisis mode.

And what if it's the CEO who wants to move on? That's not the case at Eagan-based Northwest.

"My intent is to stay," Steenland said in an interview last week. "Obviously, I serve at the discretion of the board. Assuming that Northwest Airlines wants to have me stay on, I'll stay."

But Northwest's board of directors likely will include all or some new members who may want a change.

Beyond that, the CEO question "greatly depends on the new equity holders, which will be dominated by the old creditors and investors who came in when the firm was in distress, who typically make a cold-blooded decision on who's going to be the jockey for this horse," said Douglas Baird, a University of Chicago professor who specializes in bankruptcy law.

One source familiar with the situation says Northwest's creditors committee is satisfied with Steenland's performance. The airline has forecast a pretax profit of up to $270 million, excluding reorganization charges, for 2006.

"Where do you find the leader to take you to the promised land? This isn't an easy task," said Joel M. Koblentz, a senior partner at Morgan Howard Worldwide, an Atlanta-based executive-search firm that has worked with airlines.

The future of Northwest executives and directors likely will be spelled out in its disclosure statement, to be filed by Feb. 15 as part its reorganization plan.

Whoever is CEO must build credibility and win over employees, shareholders, customers, suppliers and the communities where they operate after the company comes out of bankruptcy, Koblentz said. Those skills may be different from those needed to deal with court, creditors and unions and to operate under financial constraints in bankruptcy, he said.

Despite what Steenland says, some observers predict he will leave soon after Northwest exits bankruptcy because they can't see him building a future with angry workers. Thousands of Northwest union workers saw wages, benefits and other cuts of up to 40 percent last year. Non-union workers also saw cuts.

Others say they've seen no indication Steenland is planning to leave.

"My gut feeling is that he'd stay," said Vaughn Cordle, chief analyst for AirlineForecasts in Washington, D.C. "These airlines still need to have continuity of management and seasoned airline managers who understand the industry."

It's happened before. United Airlines' CEO Glenn Tilton is still there a year after the carrier emerged from bankruptcy, but he took the job just three months before court protection was sought in 2002. Tiny Aloha Airlines and low-fare carrier ATA Airlines also have kept their CEOs after exiting bankruptcy early last year.

At Northwest, the CEO question is muddled by speculation about a merger between the airline and Atlanta-based Delta, which also is in bankruptcy, as well as overall industry consolidation.

In a merger, all bets are off.