Northwest feels pinch and works on Plan B
While a merger with Delta remains on hold, the airline is taking steps to survive on its own with $100-plus-a-barrel oil.
By LIZ FEDOR, Star Tribune
A new era of belt-tightening is beginning for Northwest Airlines, as its executives respond to abnormally high fuel costs and craft a future that in the short run isn't predicated on a merger.
The company's planned combination with Delta Air Lines was envisioned as a way to create a global airline that would be a long-term survivor in an intensely competitive industry. Their networks are compatible, with Northwest dominant in Asia and Delta strong in Europe.
But now that merger looks to be on indefinite hold, and with it the vision of building a larger company that could grow its way to greater profits while also being better insulated against cyclical downturns.
Now some analysts are forecasting that most major U.S. airlines will lose money this year, and additional cost savings are tougher to find because a number of carriers -- including Northwest and Delta -- already have restructured themselves in bankruptcy.
While Northwest has the ability to survive on its own, a number of analysts believe it remains a matter of time before a merger is again on the horizon.
And given Northwest's relative size -- No. 5 of the six largest U.S. carriers -- it remains more likely to be acquired than to be the buyer in a merger deal.
Story
While a merger with Delta remains on hold, the airline is taking steps to survive on its own with $100-plus-a-barrel oil.
By LIZ FEDOR, Star Tribune
A new era of belt-tightening is beginning for Northwest Airlines, as its executives respond to abnormally high fuel costs and craft a future that in the short run isn't predicated on a merger.
The company's planned combination with Delta Air Lines was envisioned as a way to create a global airline that would be a long-term survivor in an intensely competitive industry. Their networks are compatible, with Northwest dominant in Asia and Delta strong in Europe.
But now that merger looks to be on indefinite hold, and with it the vision of building a larger company that could grow its way to greater profits while also being better insulated against cyclical downturns.
Now some analysts are forecasting that most major U.S. airlines will lose money this year, and additional cost savings are tougher to find because a number of carriers -- including Northwest and Delta -- already have restructured themselves in bankruptcy.
While Northwest has the ability to survive on its own, a number of analysts believe it remains a matter of time before a merger is again on the horizon.
And given Northwest's relative size -- No. 5 of the six largest U.S. carriers -- it remains more likely to be acquired than to be the buyer in a merger deal.
Story
