Blueskies/400 UpperDeck
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- Aug 22, 2002
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[BR]Northwest Airlines may benefit from the prolonged labor dispute that has shut down 29 US West Coast ports since last Monday, according to Salomon Smith Barney's Brian Harris. That is because [STRONG]NWA is the only US Major passenger airline to operate pure freighters--12 747-200Fs[/STRONG]. Should the dispute drag on, a portion of the cargo that formerly moved across the Pacific on ships could wind up as airfreight instead. [BR][BR]Passenger traffic might be lagging, but Northwest Airlines Corp. is offsetting some of the problem with a rejuvenated cargo-hauling business. [BR][BR]While the Eagan-based carrier's second-quarter freight revenue was down 3 percent compared with the same quarter a year earlier, the cargo operations at all but one of the other major domestic passenger carriers were still battling double-digit year-over-year declines, according to quarterly filings with the Securities and Exchange Commission. [BR]Northwest, the only major carrier with planes dedicated to just hauling freight, had been 20 percent off its 2001 cargo revenue for the first quarter of 2002. Its cargo revenue is up 19 percent since the first quarter. [BR]The resurgence is important, airline officials and industry observers say. Northwest cargo operations' second-quarter revenue of $176 million represents only about 7 percent of the company's $2.4 billion in revenue for the same period. But it's a high-margin segment that can fill some of the gap, especially on passenger flights where fixed costs already are covered and cargo carried in the planes' underbellies is almost pure profit. [BR][BR]In addition to the freight on passenger planes, the firm has 12 Boeing 747s dedicated to flying Asian freight routes. Two-thirds of its cargo flights depart from or arrive in that region. [BR][BR][!--EMBED RELATED LINKS/ADVERTISEMENTS--][!--EMBED RELATED LINKS/ADVERTISEMENTS--]We are the most focused on the Pacific, and the Pacific has had the best [ECONOMIC]recovery, said Jim Friedel, vice president and general manager with Northwest's cargo division. That's important money. [BR][BR]Citing SEC regulations prohibiting forward-looking statements, Friedel declined to predict a further comeback. He did say that industry forecasters expect this year's peak season, which includes the months preceding the Christmas holiday, to be better than last year [BR]It's pretty easy to beat zero, he said. [BR]Industry observers say second-quarter freight numbers that improved vs. the first quarter for the Big Seven doesn't mean the economy is rebounding. Still, it can only help Northwest to have this segment of its business come back. [BR][BR]Contentious labor negotiations in Los Angeles and Long Beach between shipping and terminal companies and longshoremen are driving some cargo to the air, said Paul Page, editor of Washington, D.C.-based Air Cargo World. But many foreign and domestic dedicated air-freight carriers, such as Singapore-based Air Freight Asia and Polar Air Cargo Inc., Long Beach, Calif., also serve the market. [BR]Additionally, the recovery of the Asian market looks increasingly fragile, said Page, and it could slide again if the U.S. market doesn't pick up at least somewhat. [BR][BR][BR][BR][BR][BR][!--story options--]