NWA Gets Ready for Launch of Subsidiary

Northwest Airlines is gearing up to begin operating Compass Airlines, its new regional subsidiary that ultimately could be used to fly dozens of regional jets.

The new company was the subject of contentious contract negotiations between Northwest and the Air Line Pilots Association (ALPA) earlier this year. The union fought the establishment of the separate business because it wanted to preserve as many Northwest pilot jobs as possible.

Northwest now plans to allocate new 76-seat regional jets to Compass to fill a void in its fleet. The airline is phasing out the four-engine Avros, which seat 69 passengers, that Mesaba Airlines has been flying for it. Compass told the U.S. Department of Transportation that the larger regional jets also would be used to "upgrade service in markets currently served with 50-seat" aircraft.

Pinnacle Airlines, Northwest's other regional flying partner, now operates most of its 50-seat Canadair Regional Jets (CRJs).

Wade Blaufuss, a Northwest ALPA spokesman, said the union and executives for Northwest and Compass are in the early stages of developing a process for bringing back furloughed Northwest pilots to fly for Compass.

"The only reason Northwest must offer Compass jobs to furloughed Northwest pilots is because ALPA successfully negotiated this requirement in our contract," Blaufuss said.

Pay rates for Compass pilots were negotiated in relation to pay scales in Northwest's concessionary contract that was ratified by Northwest pilots in May. It lowered pilot compensation in all plane types. A second-year captain on the Compass pay scale would earn about $66,000 a year.

Northwest's chief financial officer, Neal Cohen, who has been a major architect of Northwest's bankruptcy restructuring plan, will serve as the chief executive of Compass. This week, the Department of Transportation gave preliminary approval for the granting of a flight certificate to Compass, and final approval is likely within 10 days.

According to the department, Compass plans to launch service in October by flying a 50-seat CRJ on a route between the Twin Cities and Dulles International Airport in the Washington area. Northwest shifted that plane from Mesaba to Compass.

Northwest said Thursday it has not yet set the start date for Compass.

Compass will have a fee-for-service contract with Northwest to fly the jets, much like Northwest now contracts with Mesaba and Pinnacle for regional flying. All three will be Northwest Airlink partners.

In its first year of operations, Compass is scheduled to operate only four regional jets. But its role is broadly defined in its certificate application to the federal government.

"Compass is expected to enhance Northwest's service in a variety of the small and medium-sized markets Northwest serves by providing convenient connections with new 76-seat regional jet aircraft to Northwest's hubs in Minneapolis-St. Paul, Detroit and Memphis," Compass said.

U.S. Rep. James Oberstar, D-Minn., said in a recent interview that he is concerned that Northwest is using Compass and existing regional airlines to play off against each other in competing for its business.

Oberstar described Mesaba, Pinnacle and Compass as participants in "a curious dance in which Northwest calls the tune for all of them."

Bankrupt Mesaba, which is running low on cash and still seeking labor concessions, last week portrayed Compass as a serious competitor for Northwest flying that Mesaba would like to capture.



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