NEW YORK (Dow Jones)--Northwest Airlines Corp. (NWAC) executives will revisit their goal to cut labor costs this year by $950 million, and may set a new, higher target in coming weeks.
Still, Northwest executives plan to implement the cost savings this year, without filing for - or even threatening - bankruptcy, Chief Financial Officer Bernie Han said in a presentation Tuesday.
But so far, the Eagen, Minn., airline has only inked a cheaper labor deal with pilots.
"In light of what's happened with labor costs in other airlines, what's happened with fuel costs, I think everyone understands there is an urgency to getting labor costs reduced," Han said at an airline investment conference organized by Goldman Sachs, which was Webcast. "We will probably have a new target announced sometime in the upcoming weeks."
Meanwhile, Northwest executives are stumping for more time to make payments to its defined benefit pension plan, which is underfunded by $3.8 billion. Han said the idea proposed to the U.S. Congress to allow companies to freeze a pension plan and pay off the underfunded portion over time makes sense, and reduces the temptation for airline executives to terminate pension plans altogether.
Han further said that while the current state of the airline industry isn't sustainable, he doesn't envision Northwest Airlines taking part in mergers or acquisitions any time soon.
"We have our own challenges to deal with, and looking at spending a lot of resources and time looking at integrating companies ... given the amount of challenges we have ourselves, doesn't make sense," he said.
Still, Northwest executives plan to implement the cost savings this year, without filing for - or even threatening - bankruptcy, Chief Financial Officer Bernie Han said in a presentation Tuesday.
But so far, the Eagen, Minn., airline has only inked a cheaper labor deal with pilots.
"In light of what's happened with labor costs in other airlines, what's happened with fuel costs, I think everyone understands there is an urgency to getting labor costs reduced," Han said at an airline investment conference organized by Goldman Sachs, which was Webcast. "We will probably have a new target announced sometime in the upcoming weeks."
Meanwhile, Northwest executives are stumping for more time to make payments to its defined benefit pension plan, which is underfunded by $3.8 billion. Han said the idea proposed to the U.S. Congress to allow companies to freeze a pension plan and pay off the underfunded portion over time makes sense, and reduces the temptation for airline executives to terminate pension plans altogether.
Han further said that while the current state of the airline industry isn't sustainable, he doesn't envision Northwest Airlines taking part in mergers or acquisitions any time soon.
"We have our own challenges to deal with, and looking at spending a lot of resources and time looking at integrating companies ... given the amount of challenges we have ourselves, doesn't make sense," he said.
