'Fixed' NWA is Ready to Fly Solo, CEO says

Steenland is keeping an eye on industry consolidation as Northwest Airlines prepares to leave bankruptcy by June.


Northwest Airlines CEO Doug Steenland told Twin Cities business leaders Tuesday that "the airline is fixed" and poised to exit bankruptcy as a stand-alone carrier, but he acknowledged that mergers in the industry will occur "at some point."

Because of that uncertainty, Steenland avoided making blanket statements about Northwest's future.

However, Steenland said that if a US Airways-Delta Air Lines merger occurs, then "it certainly puts some pressure on the rest of the industry to think about what their options are."

The Wall Street Journal, citing anonymous sources, has reported that Northwest and Delta have held some preliminary merger discussions.

Northwest has refused to comment on those reports, and Steenland reiterated in his remarks at the Minneapolis Hilton that the airline won't "speculate or comment on any specific rumors."

But he pointed out that combining two airlines is a complex and difficult undertaking even when "everyone is working on a friendly basis." Since Delta is aggressively fighting US Airways' "hostile approach," that potential merger has become more daunting than most, he suggested.

In his remarks on a business panel, which was sponsored by the Minneapolis-St. Paul Business Journal, Steenland said the Twin Cities can count on remaining a hub city for Northwest, but he didn't talk about whether the carrier will keep its headquarters here.

Asked later by reporters, Steenland said, "Our intent is to keep the headquarters here." But he added: "We will be a publicly traded company [after exiting bankruptcy] and there are circumstances that are potentially out of our control."

Northwest plans to leave Chapter 11 in the second quarter of this year, and it intends to file plans that would provide Northwest management with stock in the new company. Steenland noted that Northwest unions have labor agreements that include claims in the Northwest bankruptcy, and those claims are "basically a proxy for ownership in the airline."

Steenland said the pilots and ground workers already have conducted sales of part of their claims, and he hopes that Northwest can reach agreement on a new contract with its flight attendants so those members can benefit as well.

The Association of Flight Attendants announced Tuesday that its negotiators will return to the bargaining table with Northwest on Friday. Six months ago, Northwest imposed work terms on the attendants after they rejected two tentative agreements.

Also Tuesday, U.S. Bankruptcy Judge Gregory Kishel approved a motion to proceed with Mesaba Airlines' sale of its claim in the Northwest bankruptcy. That claim is a key element in the deal to allow Northwest to acquire regional carrier Mesaba from its parent, MAIR Holdings.

Steenland explained Northwest's decision to purchase Mesaba this way: "In essence, the economics are a little better when you own them, because a separate company needs to earn a profit margin." By owning Mesaba, he added, "you basically own that margin."



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