Again Republic Sinks Nw Ship
03-23-2008, 02:17 PM
#12
Gets Weekends Off
Joined APC: Feb 2008
Posts: 2,323
Here is an interesting article.....
NWA progress hits turbulence
Merger isn't key, but hurdles persist
BY KATHERINE YUNG • FREE PRESS BUSINESS WRITER • March 23, 2008
Nearly a year after emerging from bankruptcy, Northwest Airlines is running into some unexpected turbulence.
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In recent weeks, the carrier's stock price has tumbled as a highly anticipated merger with Delta Air Lines looks increasingly uncertain. At the same time, it's flying into two dangerous headwinds: sky-high oil prices and a slowing economy.
But don't expect its management to hit the panic button.
Even if a deal with Delta falls apart, Northwest doesn't need to rush to find another merger partner, industry experts said. Even flying solo, the airline can prosper.
"Northwest can survive just fine on its own," said Stuart Klaskin, a partner at KKC Aviation Consulting in Coral Gables, Fla.
Like other airlines, however, it will need to continue to raise fares, eliminate unprofitable routes, park or sell some of its planes and lower its operating costs even further.
"It's the only thing they can do," said Vaughn Cordle, chief analyst at the consulting firm Airline Forecasts.
Even though it is based in Minnesota, Northwest's largest hub is Detroit Metropolitan Airport, where its planes carry three out of every four departing passengers.
Business remains strong
At an industry conference on Tuesday, David Davis, Northwest's executive vice president and chief financial officer, reassured investors that the airline's business remains strong. Bookings have held up quite well, and the airline expects to enjoy a strong summer, he said.
But with oil prices at more than $100 a barrel, the airline is looking at reducing its non-aircraft capital expenditures, the number of seats it flies and its operating costs.
It's also examining ways to increase its revenue other than simply raising fares. And it may shrink its aging fleet of DC9s, which are less fuel-efficient than newer aircraft, even more than it had planned.
"We're in the process of aggressively responding," Davis told investors and analysts.
Northwest's would-be partner, Delta, already has announced plans to cut 2,000 jobs, eliminate some domestic flights and increase productivity, among other measures.
Although Delta seemed to be the perfect match for Northwest, the two carriers haven't yet made it to the altar because their pilot groups can't agree on a way to merge their seniority lists.
For now, no one is saying the deal is dead. The airlines face intense pressure from their hedge fund investors to do something to boost their ailing stock prices.
So they could opt to merge without their pilots resolving the seniority issue, though that likely would lead to labor unrest at the combined carrier. Or Northwest could seek another merger partner.
But doing a deal is not crucial to Northwest's survival. And that's why talks between Northwest and Delta pilots dragged on for weeks without any deadlines.
Northwest enjoyed its second consecutive year of profitability in 2007. Excluding bankruptcy-related items, it earned a pretax profit of $764 million, the third-highest in its history. It also had a pretax profit margin of 6.2%, second only to industry leader Southwest Airlines.
To reward its workers for this achievement, it is distributing $125 million in profit sharing, performance incentives and reliability payments -- the highest employee incentives payout in its history.
"We think Northwest is probably the best-positioned, certainly legacy carrier, if not carrier, out there right now," Davis said.
Many of the industry's previous mergers involved at least one ailing carrier that desperately needed to find a partner to stay afloat. But that isn't the case with Northwest and Delta.
Delta, Northwest are stable
Last year, both emerged stronger from their time in bankruptcy protection, which enabled them to slash costs and reorganize their operations.
Today, Northwest has $3.3 billion in unrestricted cash, as well as the lowest costs and strongest balance sheet among nondiscount airlines, Davis said.
Northwest's pilots "believe this is an airline that can make it as is," said Terry Trippler, an industry expert in Minneapolis. "I believe both" Northwest and Delta "can be very successful as stand-alone airlines."
Even before this year's merger mania made headlines, airlines already were achieving some of the benefits of consolidation on their own.
They have been steadily reducing the number of seats they sell and raising their fares. As a result, though the industry lost $35 billion from 2001 to 2005, the past two years are expected to generate the airlines' first back-to-back net profits since the decade began, according to the Air Transport Association.
NWA progress hits turbulence
Merger isn't key, but hurdles persist
BY KATHERINE YUNG • FREE PRESS BUSINESS WRITER • March 23, 2008
Nearly a year after emerging from bankruptcy, Northwest Airlines is running into some unexpected turbulence.
Advertisement
In recent weeks, the carrier's stock price has tumbled as a highly anticipated merger with Delta Air Lines looks increasingly uncertain. At the same time, it's flying into two dangerous headwinds: sky-high oil prices and a slowing economy.
But don't expect its management to hit the panic button.
Even if a deal with Delta falls apart, Northwest doesn't need to rush to find another merger partner, industry experts said. Even flying solo, the airline can prosper.
"Northwest can survive just fine on its own," said Stuart Klaskin, a partner at KKC Aviation Consulting in Coral Gables, Fla.
Like other airlines, however, it will need to continue to raise fares, eliminate unprofitable routes, park or sell some of its planes and lower its operating costs even further.
"It's the only thing they can do," said Vaughn Cordle, chief analyst at the consulting firm Airline Forecasts.
Even though it is based in Minnesota, Northwest's largest hub is Detroit Metropolitan Airport, where its planes carry three out of every four departing passengers.
Business remains strong
At an industry conference on Tuesday, David Davis, Northwest's executive vice president and chief financial officer, reassured investors that the airline's business remains strong. Bookings have held up quite well, and the airline expects to enjoy a strong summer, he said.
But with oil prices at more than $100 a barrel, the airline is looking at reducing its non-aircraft capital expenditures, the number of seats it flies and its operating costs.
It's also examining ways to increase its revenue other than simply raising fares. And it may shrink its aging fleet of DC9s, which are less fuel-efficient than newer aircraft, even more than it had planned.
"We're in the process of aggressively responding," Davis told investors and analysts.
Northwest's would-be partner, Delta, already has announced plans to cut 2,000 jobs, eliminate some domestic flights and increase productivity, among other measures.
Although Delta seemed to be the perfect match for Northwest, the two carriers haven't yet made it to the altar because their pilot groups can't agree on a way to merge their seniority lists.
For now, no one is saying the deal is dead. The airlines face intense pressure from their hedge fund investors to do something to boost their ailing stock prices.
So they could opt to merge without their pilots resolving the seniority issue, though that likely would lead to labor unrest at the combined carrier. Or Northwest could seek another merger partner.
But doing a deal is not crucial to Northwest's survival. And that's why talks between Northwest and Delta pilots dragged on for weeks without any deadlines.
Northwest enjoyed its second consecutive year of profitability in 2007. Excluding bankruptcy-related items, it earned a pretax profit of $764 million, the third-highest in its history. It also had a pretax profit margin of 6.2%, second only to industry leader Southwest Airlines.
To reward its workers for this achievement, it is distributing $125 million in profit sharing, performance incentives and reliability payments -- the highest employee incentives payout in its history.
"We think Northwest is probably the best-positioned, certainly legacy carrier, if not carrier, out there right now," Davis said.
Many of the industry's previous mergers involved at least one ailing carrier that desperately needed to find a partner to stay afloat. But that isn't the case with Northwest and Delta.
Delta, Northwest are stable
Last year, both emerged stronger from their time in bankruptcy protection, which enabled them to slash costs and reorganize their operations.
Today, Northwest has $3.3 billion in unrestricted cash, as well as the lowest costs and strongest balance sheet among nondiscount airlines, Davis said.
Northwest's pilots "believe this is an airline that can make it as is," said Terry Trippler, an industry expert in Minneapolis. "I believe both" Northwest and Delta "can be very successful as stand-alone airlines."
Even before this year's merger mania made headlines, airlines already were achieving some of the benefits of consolidation on their own.
They have been steadily reducing the number of seats they sell and raising their fares. As a result, though the industry lost $35 billion from 2001 to 2005, the past two years are expected to generate the airlines' first back-to-back net profits since the decade began, according to the Air Transport Association.
03-23-2008, 02:35 PM
#13
Gets Weekends Off
Joined APC: Mar 2008
Posts: 3,838
Heyas,
This doesn't even pass the sniff test. The question in my mind is what would a greenbook guy gain from holding up the process?
A-fund, Prudential annuity, already in the top 200 of the list holding a large WB, and would likely benefit significantly more than the 2 BB guys from any equity received (assuming a W2 distribution). Exactly what would there be for him to gain? If anything, he'd be MORE likey to signoff on a deal, all things being equal.
Sounds like phoney baloney to me. Sounds like an angry DAL guy or one of those RBers who like to pull on ladders.
Nu
This doesn't even pass the sniff test. The question in my mind is what would a greenbook guy gain from holding up the process?
A-fund, Prudential annuity, already in the top 200 of the list holding a large WB, and would likely benefit significantly more than the 2 BB guys from any equity received (assuming a W2 distribution). Exactly what would there be for him to gain? If anything, he'd be MORE likey to signoff on a deal, all things being equal.
Sounds like phoney baloney to me. Sounds like an angry DAL guy or one of those RBers who like to pull on ladders.
Nu
Happy Easter!
03-23-2008, 03:50 PM
#16
Gets Weekends Off
Joined APC: Feb 2008
Posts: 19,273
[quote=newKnow;346674]Sailing,
How do you know any of the points you just made?
The only thing you wrote that I can verify is that a Greenbook pilot was the head of the merger committee and I work at NWA and know people on the merger committee and the MEC.
I'm not saying that I got any information from them, but where did you get your info from?
Agreement would have been made if it weren't for the Greenbook chairman?
Infigting between the LEC's?
Name calling?
I'm sure people making stuff up and spreading false rumors didn't help the SLI process and if your recent post are any indication of how you operate, maybe you should take a small part of the blame as to why the deal didn't get done.
I know you didn't have anything to do with the failure of the SLI, but you read my post that say's the deal was rejected unanimously by a group that was composed of a majority of Bluebook pilots and you assert the same nonsense as "fact" in your very next post.
My info came straight from people involved in the process from the Delta side and from two NWA pilots who have worked for ALPA there and had many dealings with the greenbook pilot we are discussing. Any NWA pilot can talk with their reps and confirm what I have said. This pilot has been known to be very difficult for a long time at NWA. It is a fact he never successfully concluded a single negotiation while there. Everything he touched went to arbitraition. He wanted to drive this to arbitration also and felt management would go through with the merger regardless. In fact that was probably not a bad strategy. Had oil not jumped to 110 dollars a barrel he might have worked out as planned and he would have done a very good job for the NWA pilots. The merger is now dead with current oil prices and not likely to return from the dead even if oil drops. Delta management now believes the window for a merger is closed. I personally am glad that we will not be merging because of where I sit on the Delta list. I had nothing to gain and a lot to lose. More junior pilots at Delta and NWA I think will be the long term losers. I think the combined airlines would have grown faster then the individual airlines will and the merger would have provided long term stability.
How do you know any of the points you just made?
The only thing you wrote that I can verify is that a Greenbook pilot was the head of the merger committee and I work at NWA and know people on the merger committee and the MEC.
I'm not saying that I got any information from them, but where did you get your info from?
Agreement would have been made if it weren't for the Greenbook chairman?
Infigting between the LEC's?
Name calling?
I'm sure people making stuff up and spreading false rumors didn't help the SLI process and if your recent post are any indication of how you operate, maybe you should take a small part of the blame as to why the deal didn't get done.
I know you didn't have anything to do with the failure of the SLI, but you read my post that say's the deal was rejected unanimously by a group that was composed of a majority of Bluebook pilots and you assert the same nonsense as "fact" in your very next post.
My info came straight from people involved in the process from the Delta side and from two NWA pilots who have worked for ALPA there and had many dealings with the greenbook pilot we are discussing. Any NWA pilot can talk with their reps and confirm what I have said. This pilot has been known to be very difficult for a long time at NWA. It is a fact he never successfully concluded a single negotiation while there. Everything he touched went to arbitraition. He wanted to drive this to arbitration also and felt management would go through with the merger regardless. In fact that was probably not a bad strategy. Had oil not jumped to 110 dollars a barrel he might have worked out as planned and he would have done a very good job for the NWA pilots. The merger is now dead with current oil prices and not likely to return from the dead even if oil drops. Delta management now believes the window for a merger is closed. I personally am glad that we will not be merging because of where I sit on the Delta list. I had nothing to gain and a lot to lose. More junior pilots at Delta and NWA I think will be the long term losers. I think the combined airlines would have grown faster then the individual airlines will and the merger would have provided long term stability.
03-23-2008, 04:20 PM
#17
Line Holder
Joined APC: Sep 2007
Posts: 75
[QUOTE=sailingfun;346725]
I called my rep and he did not confirm it.
IM
Originally Posted by newKnow
Sailing,
How do you know any of the points you just made?
The only thing you wrote that I can verify is that a Greenbook pilot was the head of the merger committee and I work at NWA and know people on the merger committee and the MEC.
I'm not saying that I got any information from them, but where did you get your info from?
Agreement would have been made if it weren't for the Greenbook chairman?
Infigting between the LEC's?
Name calling?
I'm sure people making stuff up and spreading false rumors didn't help the SLI process and if your recent post are any indication of how you operate, maybe you should take a small part of the blame as to why the deal didn't get done.
I know you didn't have anything to do with the failure of the SLI, but you read my post that say's the deal was rejected unanimously by a group that was composed of a majority of Bluebook pilots and you assert the same nonsense as "fact" in your very next post.
My info came straight from people involved in the process from the Delta side and from two NWA pilots who have worked for ALPA there and had many dealings with the greenbook pilot we are discussing. Any NWA pilot can talk with their reps and confirm what I have said. This pilot has been known to be very difficult for a long time at NWA. It is a fact he never successfully concluded a single negotiation while there. Everything he touched went to arbitraition. He wanted to drive this to arbitration also and felt management would go through with the merger regardless. In fact that was probably not a bad strategy. Had oil not jumped to 110 dollars a barrel he might have worked out as planned and he would have done a very good job for the NWA pilots. The merger is now dead with current oil prices and not likely to return from the dead even if oil drops. Delta management now believes the window for a merger is closed. I personally am glad that we will not be merging because of where I sit on the Delta list. I had nothing to gain and a lot to lose. More junior pilots at Delta and NWA I think will be the long term losers. I think the combined airlines would have grown faster then the individual airlines will and the merger would have provided long term stability.
How do you know any of the points you just made?
The only thing you wrote that I can verify is that a Greenbook pilot was the head of the merger committee and I work at NWA and know people on the merger committee and the MEC.
I'm not saying that I got any information from them, but where did you get your info from?
Agreement would have been made if it weren't for the Greenbook chairman?
Infigting between the LEC's?
Name calling?
I'm sure people making stuff up and spreading false rumors didn't help the SLI process and if your recent post are any indication of how you operate, maybe you should take a small part of the blame as to why the deal didn't get done.
I know you didn't have anything to do with the failure of the SLI, but you read my post that say's the deal was rejected unanimously by a group that was composed of a majority of Bluebook pilots and you assert the same nonsense as "fact" in your very next post.
My info came straight from people involved in the process from the Delta side and from two NWA pilots who have worked for ALPA there and had many dealings with the greenbook pilot we are discussing. Any NWA pilot can talk with their reps and confirm what I have said. This pilot has been known to be very difficult for a long time at NWA. It is a fact he never successfully concluded a single negotiation while there. Everything he touched went to arbitraition. He wanted to drive this to arbitration also and felt management would go through with the merger regardless. In fact that was probably not a bad strategy. Had oil not jumped to 110 dollars a barrel he might have worked out as planned and he would have done a very good job for the NWA pilots. The merger is now dead with current oil prices and not likely to return from the dead even if oil drops. Delta management now believes the window for a merger is closed. I personally am glad that we will not be merging because of where I sit on the Delta list. I had nothing to gain and a lot to lose. More junior pilots at Delta and NWA I think will be the long term losers. I think the combined airlines would have grown faster then the individual airlines will and the merger would have provided long term stability.
IM
03-23-2008, 04:30 PM
#18
Gets Weekends Off
Joined APC: Feb 2008
Posts: 19,273
[quote=NuGuy;346693]Heyas,
This doesn't even pass the sniff test. The question in my mind is what would a greenbook guy gain from holding up the process?
A-fund, Prudential annuity, already in the top 200 of the list holding a large WB, and would likely benefit significantly more than the 2 BB guys from any equity received (assuming a W2 distribution). Exactly what would there be for him to gain? If anything, he'd be MORE likey to signoff on a deal, all things being equal.
Sounds like phoney baloney to me. Sounds like an angry DAL guy or one of those RBers who like to pull on ladders.
The Green Book guys at NWA wanted this merger more then the Redbook side. There are several reasons for this but the fence and the no bump no flush provisions are the main point. Very senior Republic pilots are blocked from bidding the wide bodies. Most Greenbook pilots are over 50 and many are nearing 60. They viewed this merger as a chance to get out from under the NWA fence they have always viewed as very unfair. Even with the fence down they can't get to the widebodies because of the no bump no flush provisions. How the merger with Delta was structured was critical to the greenbook guys. A long term fence off Delta's widebodies would mean a retirement off domestic narrow body aircraft for many of them. Younger greenbook pilot have the 787 to look forward to however it will probably slot in below the A330 in pay. There is a reason they refer to the 787 as the "Greenliner" at NWA. The merger committee at NWA was well aware of the size of the 777 order that would have come with this merger. The potential pay increases for a Greenbook pilot trapped on a narrow body were well in excess of 100,000 a year. How the list was structured was more critical to them then any other pilots at Delta or NWA. The Delt a proposel includes protections for both sides International Wide body flying. Those protections were very bad for a Green book pilot. He would have found himself locked out of both the Delta aircraft and NWA widebodies. There is a lot more involved in all this but thats a simple version of why a greenbook pilot would have preferred arbitration to what was on the table.
This doesn't even pass the sniff test. The question in my mind is what would a greenbook guy gain from holding up the process?
A-fund, Prudential annuity, already in the top 200 of the list holding a large WB, and would likely benefit significantly more than the 2 BB guys from any equity received (assuming a W2 distribution). Exactly what would there be for him to gain? If anything, he'd be MORE likey to signoff on a deal, all things being equal.
Sounds like phoney baloney to me. Sounds like an angry DAL guy or one of those RBers who like to pull on ladders.
The Green Book guys at NWA wanted this merger more then the Redbook side. There are several reasons for this but the fence and the no bump no flush provisions are the main point. Very senior Republic pilots are blocked from bidding the wide bodies. Most Greenbook pilots are over 50 and many are nearing 60. They viewed this merger as a chance to get out from under the NWA fence they have always viewed as very unfair. Even with the fence down they can't get to the widebodies because of the no bump no flush provisions. How the merger with Delta was structured was critical to the greenbook guys. A long term fence off Delta's widebodies would mean a retirement off domestic narrow body aircraft for many of them. Younger greenbook pilot have the 787 to look forward to however it will probably slot in below the A330 in pay. There is a reason they refer to the 787 as the "Greenliner" at NWA. The merger committee at NWA was well aware of the size of the 777 order that would have come with this merger. The potential pay increases for a Greenbook pilot trapped on a narrow body were well in excess of 100,000 a year. How the list was structured was more critical to them then any other pilots at Delta or NWA. The Delt a proposel includes protections for both sides International Wide body flying. Those protections were very bad for a Green book pilot. He would have found himself locked out of both the Delta aircraft and NWA widebodies. There is a lot more involved in all this but thats a simple version of why a greenbook pilot would have preferred arbitration to what was on the table.
03-23-2008, 05:01 PM
#20
Gets Weekends Off
Joined APC: Feb 2007
Position: 765-A
Posts: 6,844
Originally Posted by sailingfun
Which part did he not confirm? That he was difficult or that he had been to arbitration 26 times. Please tell us what your rep stated.
Sailing,
For the Greenbook and Redbook guys to go to arbitration 26 times is not a surprise and not an indication of one persons ability to negotiate in good faith.
Both sides negotiators, Red and Green, would be thrown under the bus if they ever gave any ground to the other.
None of the issues involved SLI. Our list has been integrated since the arbitrator ruling.
The 26 disputes that went to arbitration involved replacement aircraft and who would fly them. Ie. NWA gets 330's, are those replacement aircraft for the DC-10? Red Book Guys say, yes. Green book Guys say, no. Because Redbook guys have preference for the DC-10.
Not to take sides, but if you were a Greenbook pilot, you would be 0 for 26 too.
So, that 0 for 26 statistic is comparing apples to oranges. Please stop using it.
I can't tell you if he was difficult or not. But I can tell you that the other members of the committee and the alternates are their own men and not easily swayed by anyone. We had some very smart people on there.
Our letter from our MEC indicated that there were some problems with the seniority list that we proposed, mainly for two reasons:
1. The ratios that the DAL side wanted to start from; which would have put us (especially the junior pilots) too far behind the 8 ball.
2. The fact that the "company" withdrew it's no furlough provision.
So, basically I'm trying to tell you that one person did not kill this deal. The other people on the respecitve committees were no pushovers. If it were a good deal, they would have pushed it through.
Your premise that the Greenbook guy held up the deal is also flawed because Greenbook guys generally are older and very close to retirement. The very type of pilot who cares little about seniority and a lot about payout and equity. If it were a Greenbook group voting on their issues, the deal would have gone through. With any ratios, they are at the top of this list.
Anything else?
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