Thunderstorms at LaGuardia Airport kept about 70 Northwest Airlines Corp. flight attendants from flying to New York City to demonstrate Thursday morning outside the company's annual shareholders meeting.
The flight attendants -- along with most of the company's unionized employees -- have resisted Northwest's calls for concessions as the airline seeks to cut costs. Northwest executives have said bankruptcy is a possibility unless they win those concessions.
A handful of flight attendants and shareholders who made it to Thursday's meeting asked Northwest's management how the airline plans to deal with record high oil prices and why chairman Gary Wilson sold a sizable chunk of his Northwest stock.
The meeting took place days after oil prices hit a record high Monday, peaking at $60.95 a barrel. Northwest has said that every dollar added to the price of oil costs the airline $50 million a year.
Hedging the price of oil, a practice that has helped keep Southwest Airlines Co. in the black, isn't an option when the price is so high, said Northwest President and CEO Doug Steenland.
"We don't have the balance sheet that allows us to make large purchases going into the future," Steenland told a crowd of about 40 shareholders, executives and board members at Equitable Center. At the end of March, Northwest had about $2 billion in cash.
When oil retreated in early January to about $40 a barrel, the company made significant purchases, he said. "It's something that we look at daily."
The price of oil and competition from low-cost carriers have forced major carriers like Northwest to cut costs dramatically. The carrier seeks $1.1 billion in concessions, which the company hopes to get from its unions this year.
"We're in a process of looking to transform ourselves," Steenland said. So far, the pilots are the only group with a deal, which saves the airline $265 million a year through concessions. The airline has also saved another $35 million a year through pay cuts for salaried employees.
The airline is doing whatever it can to avoid a bankruptcy, but it is something the airline is considering, Steenland said.
"We need to be realistic as to what the possibilities might be," he said, as more of Northwest's competitors convert to lower cost structures that resemble low-cost carriers. After the meeting, Steenland told reporters he could not say at what point the situation would become so bad that it would have to file for bankruptcy.
The airline rejected a proposal that offered $143.5 million in annual savings, more than $33 million short of what the airline is asking from its mechanics. The two sides are to go back to the negotiating table next week.
Meanwhile, the company continues to advertise online and in newspapers for flight attendants who would be hired in case of a labor dispute. The ads have frustrated flight attendants, Guy Meek, president of the Professional Flight Attendants Association, told Steenland.
"It definitely sends a clear message to our membership," Meek said.
Wilson, Northwest's chairman, was also asked why he is selling so much of his Northwest stock.
During the last two months, Wilson, who was part of the 1989 buyout of Northwest along with Alfred Checci, has shed 74% of his shares. Wilson's ownership has declined from 4.3 million shares in early May to 1.1 million shares in June. He is still the largest individual shareholder in the company, according to Northwest.
When asked about the sales, Wilson said the sales are based on personal decisions.
"In my case I wanted some more diversification," he said. "I wouldn't call it dumping. I would call it diversifying."
Northwest stock closed Thursday at $4.56, down 26 cents on the Nasdaq stock market.
