Pilot’s agreement could save Northwest
A desperately needed new compromise with Northwest Airlines pilots that saves $358 million a year may lead to the resurgence of the troubled airline, according to analysts.
It “should help give the carrier a fighting chance of restructuring itself,” said USA Today.
The tentative agreement teamed with prior givebacks could save $625 million a year, which is about half of what the carrier said it needs.
Analyst Vaughn Cordie of Airline Forecasts told USA Today the labor cuts and debt reduction through reorganization should be enough to get them out of Chapter 11. But he added that a potential problem was giving lenders and investors adequate returns.
To survive, Northwest will also have to attract new investors. The company has hired Seabury Group, which helped Air Canada emerge from bankruptcy protection. That group also helped America West acquire US Airways.
Experts say Northwest will also have to find some way to cut back its $22 billion in debt due to the Chapter 11 process.
Northwest has historically had one of the worst labor-management situations of any airline. Experts say management will need to find a way to restore morale.
Northwest’s pension plan is also under-funded. The airline and its unions are urging Congress to help in that area.
The pilot’s governing council has agreed on the measure but it will have to be approved at a regular meeting on 14 March.
Report by David Wilkening
David
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