NWA Seeks OK to Return More Planes

Northwest Airlines is seeking a bankruptcy judge's approval to return another 100 planes to leasing companies. That would be in addition to 115 leased planes that it has already been authorized to return.

Northwest won't ditch most of the aircraft, though, said Richard Aboulafia, director of aircraft consulting at the Virginia-based Teal Group, which follows the aerospace and defense industries.

"They will not return half the fleet," he said. "They will just threaten to do it until prices come down."

For the most part, Northwest will use the threat of returning planes to extract better deals from leasing firms, as well as aircraft manufacturers that work closely with them, Aboulafia says.

But the Eagan-based airline will dump some aircraft because it can find more efficient planes that better meet its needs.

The planes Northwest could return to lessors range from 34-seat Saab turbo-props to 403-seat Boeing 747-400s.

As of Sept. 1, Northwest had 699 planes in its fleet, including aircraft used by its regional partners. About half of them were leased.

Some planes, such as the four-engine, two-pilot Avro RJ85s are "unusual dogs" that the airline is unlikely to keep. "There's an awful lot of newer and cheaper planes that could take their place," says Aboulafia.

That's not the case with the Airbus A320s on Northwest's current return list, though. As of June 30, Northwest leased 35 148-seat A320s.

"You're not going to get a more modern, efficient design with fewer engines," Aboulafia said.

In a court filing last week, Northwest said it needed to adjust its fleet mix and size in light of current market conditions for aircraft, projected demand for air travel, changing flight schedules, maintenance requirements, labor costs, and other factors.

Northwest is confident aircraft leasing firms will give it better deals, saying in court filings that it expects to "ease the debt and lease burdens associated with many … aircraft" by renegotiating above-market leases.

In the end, Northwest has estimated that its fleet may shrink 15 percent.

Martin J. Moylan covers airlines and can be reached at mmoylan@pioneerpress.com or 651-228-5479.


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