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Old 01-06-2006, 01:09 PM   #1  
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Default NWA management details NewCo

What is NewCo?

NewCo will be a separate airline, just like our other Airlink carriers are today. NewCo will operate a new generation of 70- to 100-seat regional jets, which are optimally designed for profitable operation in many of the company’s core markets.

Why is NewCo so important to the company?

NewCo is a vital part of Northwest’s restructuring, one goal of which is to align our fleet with the needs of our network. Northwest has more small-to-medium-sized markets – which are ideal for 70-to-100-seat planes – than any other legacy airline, yet we currently rely on a fleet of aircraft that are either too large or small to maximize revenues in such cities. Meanwhile, many of our competitors are already employing these new jets, flying on some of our key domestic routes at costs substantially less than our own.

Isn’t NewCo an “airline within an airline,” and haven’t we always said that we wouldn’t create such an entity?

NewCo would not be an “airline within an airline” such as United’s Ted or Delta’s Song. It will have its own operational certificate, and it will be an independent company, operating regional aircraft. Ted and Song were created to operate aircraft seating 150-190 passengers, with costs virtually the same as other airlines operating jets of that size.

Once we create NewCo, what happens to Airlink partners Pinnacle and Mesaba?

Once NewCo is launched, we will continue to work with our Airlink partners. Some of the routes currently flown by Pinnacle and Mesaba will be operated in the future by NewCo, but on routes where planes with fewer than 70 seats make economic sense, we will continue to work with Airlink. In some instances, Mesaba and Pinnacle may also compete for this business.

Will NewCo be a subsidiary like Pinnacle was before being spun off, or will it be like Mesaba, in which Northwest holds a minority interest?

As we move forward with restructuring NWA, decisions on ownership and the structure of NewCo will be made to best take advantage of market opportunities.

Is there a plan to spin off NewCo, as we did with Pinnacle? If so, how can pilots retain the promise of flow-through?

The company is certain that proper contract language will protect a flow-through commitment regardless of ownership of NewCo.

How long will it take to determine if NewCo is a success?

The company is confident that NewCo will be a success in its early stages due to a strong business plan and market acceptance of the new 70- to 100-seat aircraft.

If our competitors are already in our markets with 70- to 100-seat aircraft, and NewCo is the best way to create value for Northwest and preserve ALPA jobs, why hasn’t Northwest already created such an entity?

Our ALPA contracts do not let us implement NewCo at this time. We are negotiating with ALPA, and seeking relief in the bankruptcy court, that would allow Northwest to implement this aspect of its reorganization plan.

Why go to the added cost of establishing a new infrastructure and overhead for a subsidiary, when ALPA has presented the company with a proposal for wage and work rule parity with existing regional carriers?

With the costs of a regional airline and use of the industry’s best practices, NewCo would generate new economic value for Northwest. As a stand-alone carrier, moreover, NewCo will be able to acquire capital through third parties, which would be difficult for Northwest, given the company’s current need to strengthen its wide-body international fleet and cargo freighters. Financing the new 70- to 100-seat jets through a separate company would also reduce the burden of those jets on Northwest’s balance sheet. Long term, NewCo also offers the potential for growth – by providing flights to other companies that need regional services, much as Republic and SkyWest do now.

If NewCo flies for other carriers, how do we protect Northwest’s interests?

Through well-drafted Airline Services Agreements and attention to their enforcement.

Aren’t we really just outsourcing our DC9 flying?

Many, but not all, of our DC9s are aging and need to be replaced. We will continue to operate DC9s – primarily DC9-40s and DC9-50s – well into the future (2015 and beyond). But for those planes that will be replaced, the question is – will they be replaced by jets flown by third-party vendors only, or also by a subsidiary in which NWA has majority ownership? Northwest prefers the latter.

Is an objective of NewCo to reduce substantially the pilot count at Northwest so that the airline’s labor costs are slashed as much as possible?

In fact, the opposite is true. Like every other legacy airline, Northwest is investing in next-generation 70-seat jets. Unlike any legacy airline, Northwest would prefer not to turn all the jobs of flying those jets over to third party employers outside the company’s control, but to work with furloughed Northwest employees. This could ultimately result in jobs for more than 800 pilots.

In addition to the 800 jobs for pilots, what about jobs for other NWA personnel? How many flight attendants will be employed by NewCo? How many mechanics? How many other ground workers?

At this time, that is yet to be determined. Certain responsibilities, such as administration, would be NewCo’s responsibility. Other jobs might be handled by Northwest employees, NewCo employees, third-party vendors or a combination of all three.

What about the organization that will handle ground duties at the spokes and gateways. Have you defined that organization yet?

That remains subject to negotiations and has not been determined at this time.

Would pilots be transferred to NewCo prior to Northwest’s emergence from bankruptcy?

The company intends to have NewCo operating at the earliest feasible opportunity, and this issue will be discussed closely with ALPA. It is intended that many NewCo jobs go to furloughed Northwest pilots.

Do we have a preference for the Bombardier or Embraer aircraft?

At this point, we do not. We are working with both companies to make the best choice, both economically and strategically.

Are we thinking of putting all domestic mainline and regional flying into NewCo (or third-party flying if NewCo doesn’t happen) and having NWA mainline fly only international routes?

No. NewCo would operate 70- to 100-seat jets to markets ideally served by jets of that size. Northwest serves many other markets not ideally served by jets in the 70- to 100-seat range.

How would NewCo be handled during the bankruptcy process?

That is yet to be determined.

When and how will we create a permanent name for NewCo?

There may be a contest; further details are forthcoming.
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Old 01-06-2006, 07:57 PM   #2  
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Quote:
Originally Posted by Gordon C
Are we thinking of putting all domestic mainline and regional flying into NewCo (or third-party flying if NewCo doesn’t happen) and having NWA mainline fly only international routes?

No. NewCo would operate 70- to 100-seat jets to markets ideally served by jets of that size. Northwest serves many other markets not ideally served by jets in the 70- to 100-seat range.

.
They forgot to add that in 5-10 years NewCo2 will be started to fly the remaining domestic routes.
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Old 01-07-2006, 05:01 AM   #3  
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It appears that all of the "Legacy" airlines are jumping on the "Alter Ego" LCC wagon. It didn't work out so well at DAL/Song. How is TED? What happened to US Airway's alter ego Potomic? or something of that sort. It appears the "Big" guys want to save their carriers and will force their pilots to fly for "Regional" wages. This industry is second only to Actors when it comes to back stabbing and name calling. Pity.
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Old 01-07-2006, 10:51 AM   #4  
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I wish you guys had the barf icon. Seeing stuff like this just makes me sick.


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Old 01-07-2006, 11:34 AM   #5  
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And the race to the bottom will continue......
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Old 11-20-2018, 11:58 PM   #6  
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Hmmmm. Wonder how this worked out? :sarcasm:
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