I hope to create an in-depth look at the Northwest Orient-Republic merger. What’s included below is a brief history, and the breakdown of the carriers’ fleet before and after the merger. Eventually I hope to include route maps, etc. Did you know that 95/113 DC-9s acquired from Republic remain in NW’s fleet today?

BRIEF HISTORY
Many airlines took the opportunity to expand their networks after the industry was deregulated. In 1979, Northwest Orient Airlines entered the trans-Atlantic market for the first time from Detroit, Minneapolis/St. Paul and New York-JFK. That same year, North Central Airlines acquired Southern Airlines and changed its name to Republic but kept its identity.

North Central was a small, Midwestern airline with large hubs at Minneapolis/St. Paul and Detroit. Southern was a small, single-class Southern airline offering the original “more room throughout coach product.” The carrier’s primary hubs were in Atlanta and Memphis. The merger made perfect sense: both carriers operated a DC-9 jet fleet and did not have a single overlapping route.

A year later, Republic acquired Hughes Airwest, adding a large, mostly point-to-point Western network with primary focus cities at Las Vegas and Phoenix. In addition, the B727 was introduced to Republic’s fleet. Republic’s advertising campaigned featured the unpeeling of Hughes’s banana-colored aircraft to reveal a Republic DC-9.

At first, things flourished for the young airline. The network continued to grow and at one point, Republic served more cities than any other airline. Innovative marketing strategies and the laid-back attitude were a major success with passengers. The airline continued to take delivery of new aircraft, including DC-9-50, B727 and MD-82 – the airline became the world-wide launch consumer for the latter.

However, quick expansion and an unfocused network took its toll on the airline and it was suddenly facing the strong possibility of bankruptcy. Stephen Wolf was hired to turn the company around, and he did so by introducing a new look and refocused network. Detroit replaced Minneapolis/St. Paul as the airline’s world headquarters and largest hub; hubs were also maintained and further developed at Memphis and Minneapolis/St. Paul; virtually all point-to-point flying was eliminated. The airline showed a signal of strong health when it purchased three B757 built for (but cancelled by) Indian Airlines; MD-82 deliveries also resumed. The turnaround had been a success; for the year 1985, Republic posted the second-highest profits of any airline and its stock became a favorite among investors.

The year 1985 posed some different challenges to Northwest Orient. United Airlines had shocked the world when it unexpectedly announced the acquisition of Pan American World Airway’s Pacific network. Northwest Orient felt threatened and realized the need for a domestic feeding network. In addition, Republic Airlines had grown into a pesky competitor, especially since its MSP and DTW hubs overlapped at NW’s, where NW was the largest carrier at the former and second-largest at the latter.

When Stephen Wolf called Northwest Orient, the company was willing to listen. On January 26, 1986, Northwest Orient announced the acquisition of Republic for $884 million. At the time, it was the largest merger in aviation history. The merger was completed on Northwest Orient’s 60 birthday, October 1, 1986; the company became known as simply Northwest and all traces of Republic Airlines were gone by Thanksgiving. Northwest became the nation’s fourth-largest carrier overnight and its employee ranks went from 17,000 to 35,000. It gained almost complete control over Minneapolis/St. Paul, including Republic’s Green Concourse (known as “C” today), Detroit and Memphis – the latter was a city in which it had not previously offered a single flight to.

On paper, the merger appeared to be a success; traffic was up 11% (compared to the combined networks of both carriers). Soon the airline placed orders for about 200 aircraft, including state-of-the-art A320 & A330/A340 and additional B757 and B744 (to be delivered after previous orders were completed). However, combining fourteen labor unions and 18,000 employees into a vastly different working culture (Republic had strong management-employee relations/laid-back attitude; Northwest Orient had a history of poor management-employee relations/a professional attitude) at NW proved to be difficult. In addition, the Republic employees had a lot of pride in their airline and were bitter at NW’s decision to remove all traces as quickly as possible. Things got worse on August 17, 1987 when Northwest Flight 255, an MD-82 headed for Phoenix/Orange County, crashed during takeoff, killing 154 of the 155 people aboard. The airline was quick to blame the former Republic crew for the accident, angering many of its employees.

Northwest had the strongest balance sheet of quite possibility any airline in the world, having posted a profit every year since 1950 (Republic was paid for in cash). That, combined with the tensions inside the company, made it ripe for a leveraged buyout. In mid-1989, Wings Associates – an investment group that included Al Checchi, Gary Wilson and KLM Royal Dutch Airlines - purchased NW for $3.5 billion, of which $3.45 billion was debt. The leveraged buyout, combined with the first Persian Gulf War and skyrocketing fuel costs, nearly forced NW into bankruptcy. However, the company was saved after employees agreed to wage concessions and the state of Minnesota provided a loan. But the damage was done: aircraft orders were cancelled, a planned merger with Midway Airlines called off (NW had also tried to merge with Pan Am in early 1991) and the network began to shrink. Sadly, Northwest was forced to lease out its assets acquired from Eastern (slots/operations at BOS and DCA) and was unable to acquire EA’s ATL hub and maintence hangers, despite a sweet offering by Hartsfield. NW’s network was overhauled to eliminate point-to-point flying and refocus on its hubs at Detroit, Memphis, Minneapolis/St. Paul and Tokyo, as well as the newly formed relationship with KLM.

It was later revealed that the company’s management had received millions of dollars in bonuses as a reward for getting its employees to accept pay cuts. Employees were outranged, and even though the company had began its road to recovery, employee-management relations would be strained for the years to come – this helped to promote the “Northworst” attitude the airline later became infamous for.

DID YOU KNOW...?

• When NW acquired RC, PHX-SNA was the sole remaining Hughes Airwest route.

FLEET
Northwest Orient Airlines
08 Boeing 727-100
56 Boeing 727-200
17 Boeing 757-200
20 McDonnell Douglas DC-10-40
12 Boeing 747-100
20 Boeing 747-200

Republic Airlines
14 Convair 580 (one was not acquired by NW)
35 McDonnell Douglas DC-9-10
65 McDonnell Douglas DC-9-30
28 McDonnell Douglas DC-9-50
18 Boeing 727-200 (three were not acquired by NW)
08 McDonnell Douglas MD-82
06 Boeing 757-200

Northwest Airlines (post-merger)
13 Convair 580
35 McDonnell Douglas DC-9-10
65 McDonnell Douglas DC-9-30
28 McDonnell Douglas DC-9-50
08 Boeing 727-100
71 Boeing 727-200
08 McDonnell Douglas MD-82
23 Boeing 757-200
20 McDonnell Douglas DC-10-40
12 Boeing 747-100
20 Boeing 747-200

FLEET FACTS

• DC-9-10: 7 remain in the fleet today; 13 were retired 1990-1993, 14 in 1997-2002
• DC-9-30: 60 remain in the fleet today; only 5 have been retired (1999-2002)
• DC-9-50: all 28 remain in the fleet today
• all 13 Convair 580 were retired by late 1988
• all 8 B727-100 were retired in 1991 & 1992
• all 7 B727 delivered to RC are now with Champion Air
• one more MD-82 was purchased from TransStar to replace the one w/o
• RC’s 6 B757 were sold to America West in 1988
• 16 more B757 were delivered to NW in 1986-1988, brining the fleet total to 33
• one more DC-10-40 rejoined the fleet in 1991
• 8 DC-10-30 were purchased from SwissAir in 1991

[This message has been edited by IndustrialPatent (edited 04-28-2003).]