Northwest prepared to deal with challenges
By Karren Mills
Associated Press
MINNEAPOLIS — Northwest Airlines recently announced plans to bring Delta Air Lines into its alliance with Continental Airlines, effectively adding at least 650 daily domestic flights to each carrier's schedule.
The move, aimed at protecting revenue from a proposed rival alliance between United Airlines and US Airways, comes as major carriers struggle to return to profitability in an economy that turned south early last year, then tanked for airlines after the Sept. 11 terrorist attacks.
Northwest president Doug Steenland talked about the challenges facing Northwest, and what the carrier is doing to meet them.
Q. Have you ever seen such a serious challenge to the airline industry as carriers were hit first with the economic slowdown, and then the Sept. 11 terrorist attacks?
A: No. I think this is the most serious challenge the airline industry has faced, certainly in all of my both Northwest career and private experiences in dealing with the nation's airlines. It certainly is a more serious challenge than the industry faced in the early 1990s.
Q: Business travel isn't snapping back, and some believe it may never rebound to the levels enjoyed by airlines before 2001. What is Northwest doing to bring these higher-paying travelers back or to recoup revenue when they buy cheaper tickets?
A. First, we're trying to make service on Northwest as convenient as possible. We've spent a lot of time and we've invested a lot of money in our airport facilities, in the ability to use automation and the Internet to check in for our particular flights and to minimize the hassle effect at the airports where we are the primary operators. Second, we've tried to introduce flexibility in the fare structure to create additional options for corporate travelers. We have in place our BizFlex fare, which is in between the leisure fare and the walk-up fare and does not require a Saturday night stay. We have over 1,000 corporate contracts in place where we negotiate volume discounts.
Q. What are some of those things you've done to cut costs?
A. They range from reducing the capacity of the airline; unfortunately, they include reductions in the number of employees necessary to operate a smaller airline. For some of our economy customers, we've reduced our meal services, for example. We've basically gone through the airline and identified as many things as we possibly can where we can reduce costs without impacting reliability and safety and to minimize the impact on the customer.
Q. When will Northwest become profitable again? What steps have you taken, or are in the works, to return to profitability?
A. We, as a matter of policy, don't make future projections with respect to profit and loss. If you look at industry analysts, they're forecasting the industry as a whole will experience a sizable loss for calendar year 2002 and that the industry will also be in the red for calendar year 2003. On an industrywide basis, we wouldn't say those forecasts are wrong.
Q. After you are again profitable, where will you look for growth?
A. For starters, we still are operating an airline that's not as big as what we flew in 1999 and 2000. In 2002, Northwest is basically operating at about the same size that it was back in 1997. So the first step is to look to get back to the levels that we previously were at. We will be making those growth decisions very judiciously because overall the industry today has too much capacity out there. We will be adding capacity only where we conclude that that is the profit maximizing and appropriate thing to do.
Q. Northwest reports that it now has about 45,000 employees worldwide. What was the airline's employment at its peak?
A. At our peak, we were at about 55,000 employees.
