NWA on-time record back upkeeptheodds said:
Airline says its performance had fallen below 50%
August 27, 2005
BY JOHN GALLAGHER
FREE PRESS BUSINESS WRITER
Northwest Airlines acknowledged Friday that its on-time performance slipped below 50% when the mechanics strike started last Saturday. But it has built that back up to the 70% range, although Friday's performance suffered due to thunderstorms in the Midwest.
Andy Roberts, the airline's executive vice president of operations, said at a media conference that cancellations, delays and the sidelining of aircraft for maintenance problems all rose just before or at the start of the strike. But things quickly got back closer to normal.
"We're in very, very good shape," he said. "We're confident it's business as usual."
One week into a mechanics strike, Northwest Airlines appears to be winning the battle. But will it lose the war?
Even as Northwest proclaimed close-to-normal operations this week, Detroit's most-important air carrier still faces high fuel prices, low-cost competitors, contract talks with its other unions, and the operational challenges of using replacement mechanics for the indefinite future.
The airline also needs to decide before Oct. 17 whether to file for Chapter 11 reorganization under the more lenient bankruptcy laws now in effect, or gamble that it can avoid a filing under the stricter code to come on that date.
Some aviation industry experts are withholding final judgment on the strike to see if maintenance issues pile up, as striking members of the Aircraft Mechanics Fraternal Association have predicted.
AMFA believes problems will emerge as a combination of deferred maintenance coming due and fatigue or inexperience on the part of replacement workers.
"Next Friday we'll have a much, much better idea of how things are going," said Terry Trippler, a consultant with the Web site www.cheapseats.com. "I want to give AMFA 14 days because there's a chance AMFA may be right."
But Michael Boyd, an Evergreen, Colo.-based aviation consultant, said Northwest's burden in the strike will get lighter after the first week.
"The worst is over now unless something very weird happens," he said Friday. Northwest said this week it has already seen some savings by using cheaper replacement mechanics. But an internal Northwest document prepared for its board of directors in late June and obtained by the Free Press showed Northwest budgeted $107 million to hire, train, house and protect replacement workers and otherwise prepare for the strike.
The cost was estimated at $19 million a month.
With Northwest losing $683 million in the first six months of this year, strike-related costs could delay the airline's return to profitability even with the savings from using replacements factored in. Northwest declined to discuss its financial results Friday.
Ray Neidl, an analyst with the New York office of Calyon Securities Inc., told Bloomberg this week that even if Northwest gets the full $1.1 billion in concessions it wants from its unions, high oil prices will require higher revenue from somewhere.
"They probably will be continuing ticket-price increases going into the winter," he said, adding that Northwest may have to raise investment capital somehow to get through the winter months.
Other unions, meanwhile, showed little inclination Friday to give Northwest the deep cuts that sent AMFA members out on strike. Flight attendants, ticket agents and other airline workers may balk just as the airline's mechanics did, although negotiations with other unions are months away from a crisis point.
Stephen Gordon, president of Local 141 of the International Association of Machinists, which represents 2,700 ramp workers, ticket agents and others at Detroit Metro Airport, said Northwest has proposed cutting the ranks in half and outsourcing the work.
"That most certainly will be a strike issue with our members," Gordon said.
But to Northwest's benefit, the other unions have declined to honor AMFA's picket line.
Contact JOHN GALLAGHER at 313-222-5173 or gallagher@freepress.com.
