WASHINGTON Northwest Airlines Corp NWA.N will
park aircraft and cut domestic capacity by an estimated 5
percent later this year and take other steps to counter
skyrocketing fuel costs, the company said on Thursday.
The airline said it hopes cost reductions and revenue
enhancements like previously announced fuel surcharges, higher
fares, and new fees for bags, will improve its bottom line by
$100 million on an annual basis.
"These increased costs are significant and call for a
strong response from us," said Northwest Chief Executive Doug
The move comes after Northwest and Delta Air Lines Inc
(DAL.N) failed to seal a merger deal last month after pilots
from both airlines failed to reach agreement on how they would
work together. The companies wanted labor support before
proposing a deal to shareholders.
Delta announced capacity cuts last month, including a
proposal to eliminate 2,000 jobs, mostly through buyouts and
Other airlines also have trimmed growth plans to stem the
impact on high oil prices. Industry finances are growing
steadily bleaker when fuel costs, sagging domestic travel
demand and a weakening economy are weighed.
Northwest shares lost about 2 percent to close at $9.21 on
the New York Exchange. Shares gained slightly in after hours
The biggest U.S. airlines have been hurt by soaring fuel
prices and low-fare competition that makes it hard for them to
raise fares to cover sharply rising costs. In response,
airlines have sought ways to bolster revenue and cut expenses.
Northwest, which will remove between 15 and 20 mostly older
aircraft from its fleet.
The company has suspended plans to hire more pilots and
The carrier, which emerged from Chapter 11 bankruptcy
protection last year during which it slashed employee pay and
benefits, said it has no plans to seek wage concessions with
these new moves.
Northwest is expanding international service to maximize
revenue from premium business customers, and will review
whether changes to that schedule are needed later this year.
Other airlines also are trimming growth plans with jet fuel
prices soaring on crude oil costs exceeding $100 per barrel.
After peak summer travel concludes in September, Northwest
will reduce its scheduled domestic system capacity by about 5
percent versus the 2008 business plan. Full-year available seat
miles, a measure of available seats, are expected to flatten or
drop slightly compared with 2007 on domestic flights, Northwest
The aircraft reductions will include DC-9s and a mix of
Boeing Co (BA.N) 757s and Airbus EAD.PA A320s and A319s.
Northwest also said it is reducing non-aircraft capital
expenditures for 2008 by about $100 million to $150 million.
As of December 31, 2007, Northwest's unrestricted cash on
hand was $3 billion.
(Reporting by John Crawley; Editing by Gary Hill and Carol