NWA May Go Bankrupt Without Labor Concessions

Malko

Malko

ughhh
Staff member
wcco article

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Minneapolis Northwest Airlines Corp. shares sank further on Tuesday, as its chief executive said the airline must get labor concessions by the end of 2005 or face the possibility of bankruptcy.


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this wont help much either:

NWA Mechanics Ask For Release From Talks - click Here

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Mechanics at Northwest Airlines Corp. said they asked to be released from negotiations on Tuesday after the nation's fourth-largest carrier rejected their pay-cut offer. Northwest has said it wants $176 million in concessions from mechanics. Mechanics said they've offered $143.5 million -- but Northwest says it really only amounts to $87 million, because mechanics count money saved from earlier layoffs.



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Management will get their concessions one way or the other.

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Don't forget their training scab mechanics and F/A's. The company knows and/or thinks they're going to strike, and are preparing for the worst (or best depending on whose side your on).

~wheelsup
 
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Management will get their concessions one way or the other.

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Don't forget their training scab mechanics and F/A's. The company knows and/or thinks they're going to strike, and are preparing for the worst (or best depending on whose side your on).

~wheelsup

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Well both the mechanics and the flight attendents are union. So if and when they do strike don't the pilots have to strike in support of their fellow union brothers and sisters!

-Matthew
 
If memory serves, NWA last pilot contract was in '98. I'm sure it was industry leading at the time, but since then the bar has been raised (and lowered) substantially. I think NWA is right where they need to be and I hope they don't give concessions. Management has gone to the well to often. If oil goes to $100 a barrel as some are suggesting, no amount of labor concessions will restore profitability. It's time to start passing the cost of doing business on to the customer, not the employee.
 
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It's time to start passing the cost of doing business on to the customer, not the employee.

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He shoots, he scores.

People will pay $5 for a cup of coffee but want to run kicking and screaming to their congressman when LAX to LGA isn't $80 and their friends don't fly free.
 
On top of that, with load factors in the high 70s to low 80s, the airlines have the ability to raise prices!

If you lose some of the Air Greyhound types, so be it. You weren't making money on them anyway. With demand for travel so high, raise the fares!

It's economics 101. If the demand for your product is high, raise the price so you make more money on each sale.
 
As long as we have hoardes of people saying "w00t! I'll work for HALF that!" there'll be no ability to maintain a standard of living.

Lots of scabs signed up for the NWA replacement jobs but I guarantee they'll be b*tching about scab benefits in another year.
 
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On top of that, with load factors in the high 70s to low 80s, the airlines have the ability to raise prices!

If you lose some of the Air Greyhound types, so be it. You weren't making money on them anyway. With demand for travel so high, raise the fares!

It's economics 101. If the demand for your product is high, raise the price so you make more money on each sale.

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Right On! Enough of this $29 one-way crap.
 
I think the fuel hedgin' is a gamble. Shouldnt be legal. Just b/c one company gambles right they get to survive for the next 5 years.
 
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I think the fuel hedgin' is a gamble. Shouldnt be legal. Just b/c one company gambles right they get to survive for the next 5 years.

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That is what business is...a gamble. That is the fun and misery of it all. Hedging is just smart.
 
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I think the fuel hedgin' is a gamble. Shouldnt be legal. Just b/c one company gambles right they get to survive for the next 5 years.

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Just remember, fuel hedging could have went against Southwest and fuel could have went down to $18 a barrell.
 
Do you think that load factors in the high 70's low 80's is enough? I'm not arguing with you as I don't know. But, I thought that as a general rule, a plane is not profitable until at least 85% of the seats are filled in addition to any cargo revenue (mail contracts, currier packages etc) that is booked for the flight. Seems to me that high 70's and low 80's isn't enough to justify higher prices.

Admittingly, I've read a few books on airline economics but I doubt I will ever understand their pricing structures. $380 to go from MHT to CLT on USAir but $149 to MHT-FLL is farther and costs less?

banghead.gif
 
I believe that in the late 90s, loads were in the 60 percent range and what were the airlines doing? Making money hand over fist.

And what the airlines are doing with their fares is pricing them the way Adam Smith would have liked -- charging what the market will bear.

The 80 percent load factors we are seeing right now are putting a big strain on the system. Raise fares, get rid of some demand, and not only will you remove some of that strain, but you will make money on the tickets.

Seems logical to me. Which is why they won't do it.
 
Southwest over the years, on average, has had one the lowest load factors, on average and has been profitable.

The price that Southwest charges for a ticket, matches its business plan.

Problem with the legacy carriers is that the ticket prices do not match the business plan anymore.

There was a period of time where if United had a 90% load factor it would have not turned a profit.

Raising ticket prices without improving the product will simply push passengers away to other airlines.

US Air just removed pretzels off of their flights & then they are going to raise ticket prices, over & beyond the fuel surcharge, don't think so..

Before the airlines raise ticket prices, they need to do something about the product, which is how they got into trouble in the first place.
 
One has to wonder how companies can justify paying "top dollar for top managerial talent"--this is the best that "top managerial talent" can do???
 
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One has to wonder how companies can justify paying "top dollar for top managerial talent"--this is the best that "top managerial talent" can do???

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Right on, aloft!
 
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I think the fuel hedgin' is a gamble. Shouldnt be legal. Just b/c one company gambles right they get to survive for the next 5 years.

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It's not a gamble at all. It's simply securing set prices into the future. Making your costs predictable and being willing to pay more than other airlines if the price goes down. It's good business.

What you're really saying is the commodity futures market shoud be illegal. Good luck with that.
 
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