afish

NWA: Time running out to avoid bankruptcy
Joshua Freed, Associated Press
September 2, 2005

Northwest Airlines Corp. warned on Thursday that it is running out of time to avoid bankruptcy because of spiking fuel prices, and that it will lose as much as $400 million this quarter. Company pilots said they would negotiate a new round of pay cuts.

The carrier said in a filing with the Securities and Exchange Commission that its cash had fallen to $1.7 billion as of Wednesday, down from $2.1 billion on June 30. Some of the decrease was due to holdbacks required by the company that processes its credit card transactions, a situation that has also squeezed rival Delta Air Lines Inc. in recent weeks.

Northwest said that excluding unusual items, its third-quarter loss would be between $350 million and $400 million — or worse, depending on the impact of Hurricane Katrina.

Eagan-based Northwest has been seeking $1.1 billion in annual labor cost savings. It said it will probably increase that target, partially because of rising fuel prices, though the company didn't offer a new dollar figure.

Northwest said it expects to pay $1.90 to $1.95 per gallon of jet fuel, for a total of $900 million for the quarter. It expects to spend at least that much in the fourth quarter, for a total of $3.3 billion for all of 2005. That's a 50 percent increase over the $2.2 billion it spent on fuel in 2004.

Northwest mechanics are on strike, but the nation's fourth-largest carrier has continued to fly by using replacement workers. On Thursday, it said the strike has not had a significant impact on revenue.

Northwest said it has run out of collateral for additional loans.

Pilots said Northwest's financial troubles are driving them back to the bargaining table.

"We feel that the threat of bankruptcy is high,'' said Capt. Mark McClain, chairman of the Northwest branch of the Air Line Pilots Association. "If we can avoid bankruptcy, we feel that we can get a better settlement in negotiations voluntarily with Northwest management than we can get through the bankruptcy court.''

Northwest is in talks with flight attendants and ground workers. But only the pilots have agreed to pay cuts, accepting a 15 percent cut last fall that contributed $300 million in savings toward Northwest's $1.1 billion goal when combined with a cut for managers.

The pilot talks are voluntary; their pay-cut agreement last year called for Northwest to avoid asking for additional cuts until other unions had also agreed to concessions.

In the SEC filing, Northwest repeated its claim that it needs pension law changes and employee pay cuts to avoid a Chapter 11 filing.

"As a result of the recent spike in jet fuel prices, the time period for the Company to resolve these problems has been reduced,'' it said.

Northwest shares dropped $1.06, or 21 percent, to $3.97 on the Nasdaq Stock Market before its SEC filing. Its shares dropped another 37 cents, or 9.3 percent, to $3.60 in late trading.

more...

http://www.startribune.com/stories/535/5592143.html

[email protected]

Do you think nw miles can be lost if the carrier files bankruptcy? What can you do to protect the miles?

shedwannabe

#1 This thread is a common question. It is worth it to look thru the search function, you will find several previous threads on this topic

#2 In a run of the mill bankruptcy, no, miles will not be lost. A major asset for airlines is customers trying to get FF miles. No airline will voluntarily shoot itself in the foot in bannkruptcy by getting rid of or even curtailing FF miles

#3 In a "going out of business" bankruptcy, yet, its bye bye FF miles. Only UA and U are in danger of that at this point in time

#4 What can you do to protect your miles? Use them. If the airline has disappeared, then its too late. But NW is nowhere near disappearing.

civicmon

seriously, we had a thread about this last week, and the week prior.

wask

No you wil not. UA MP is an example.
This has already been discussed a lot of times. Please try the "search" feature.

cartmanqb

Welcome to Flyertalk, [email protected] !

The people here are full of very good and very detailed advice but, as you can see, sometimes get annoyed when people ask questions that have been asked before, particularly if they are frequently asked questions. The search feature (and especially the advanced feature) should always be crucial stop.

Incidentally, my gut is also that people are getting defensive because they fear their beloved airline (and mine) could possibly go down the tubes sooner than later, but that's just my normative statement for the day...

fromYXU

No! No! No! No!

mikey1003

Gee, what about my Delta miles??

Radiocycle

I would use them, there might be less availability on partner airlines after the DL Bankruptcy filing.

RC

p9142

http://www.flyertalk.com/forum/showt...7&page=1&pp=15

Mateo4321

It just seems like every airline is going bankrupt these days but the question is which ones will actually go all the way to Chapter 7? Maybe AW/US have the right idea by consolidating...

RustyC

Yeah, seems the only ones in (relatively) good shape besides LCCs are ones like Qantas with very limited competition on key routes. No doubt some of the legacy carriers see a thinning of the herd where they hope to be still standing and able to take over routes or hike fares.

With NW I think the history of bad labor relations is really coming home to roost. Past greed or missteps creating an atmosphere of mistrust and pushing the airline to the front of the line for the chopping block. A real potential example of paying in the long-term for things that must've generated executive bonuses in the short term.

Wall Street also has a tendency to reward numbers and ask too few questions about how they got them. ValuJet was a disgrace (though a real darling of Wall Street until the crash). But Wall Street oviously doesn't see a lot of shareholder value in where NW is now.

DL is also a sad case, as it used to be the #1 cooperative-sacrifice airline until they got some bad management of their own.