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Old 10-06-2006, 08:04 AM   #1  
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Default Northwest to buy 72 regional jets

This surprised me. They split the order 50/50 between Bombardier and Embraer. Read on...

MINNEAPOLIS (AP) - Northwest Airlines Corp. on Thursday said it would buy 72 new regional jets for its feeder carriers as it took another step toward resizing its fleet under bankruptcy protection.

Northwest said it would split the order between 36 Embraer 175 aircraft and 36 Bombardier CRJ900 aircraft. Northwest said it had options for another 96 Bombardiers and an additional 136 Embraers. The order would have to be approved by a bankruptcy judge.

The order was widely expected as Northwest has been looking to revamp the regional flying currently handled by Mesaba Aviation Inc. and Pinnacle Airlines Corp. Northwest is also seeking approval to start its own regional subsidiary, called Compass Airlines.

Eagan-based Northwest, the nation's fifth-largest airline, relies on regional carriers to feed passengers from smaller, mostly Midwestern cities into hubs in Detroit, Minneapolis, and Memphis.

Northwest said Compass would fly 36 Embraers, and that a partner to be determined later will operate the 36 Bombardiers. That sets up Pinnacle, Mesaba and the embryonic Compass to compete for those planes.

Pinnacle spokesman Phil Reed said it would compete to get the 36 Bombardiers, as well as 15 other regional jets that Northwest took away after it filed for bankruptcy protection. But he said Northwest has made it clear it won't award new jets until Pinnacle negotiates a new deal with its pilots. No new talks are scheduled.

Mesaba has also said new jets depend on winning a new contract with pilots, flight attendants and mechanics.

"One of our goals is to complete our cost restructuring as quickly as possible, so we will be in a position to compete aggressively for these jets," Mesaba spokeswoman Elizabeth Costello said.

Northwest said the new planes will have 76 seats -- its new contract with mainline pilots gives them the right to fly jets with 77 or more seats.

Northwest said Embraer would finance all 36 jets, including seven while Northwest is still operating under bankruptcy protection. Northwest said it expects to take its first deliveries of both aircraft in the second quarter of 2007. The values of the orders were not disclosed.

Northwest said the new jets will use less fuel and be cheaper to maintain than its current jets.

"This is one of the larger regional jet orders you'll see this year," said aerospace analyst Richard Aboulafia of the Teal Group.

Older airlines such as Northwest used smaller jets -- often with about 50 seats -- in the late 1990s and early 2000s, but they proved uneconomical, he said. Jets like the ones Northwest is buying are more economical because they spread similar costs among more passengers.

While the new jets will go to regional partners, Northwest's mainline fleet has been among the oldest in the world, partly because of its DC-9s, which carry roughly 100 passengers. Chief Executive and President Doug Steenland said Northwest is meeting with aircraft manufacturers to talk about a replacement.

Aboulafia predicted that some of the new regional jets would replace routes currently served by DC-9s.

"They have a lot of relatively thin Midwestern routes that are served by a large fleet of very thirsty DC-9s," he said.

Several years ago, Northwest overhauled the DC-9s rather than replace them.

"At the time it seemed brilliant, but if fuel is 60 or 70 dollars a barrel, well, not so much," he said. "And regional jets are an inexpensive way to take care of some of that."

2006 The Associated Press.
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