Northwest Raises Fares, Freezes Hiring

MINNEAPOLIS — Fuel isn't getting any cheaper, so Northwest Airlines Corp. is going to make flying a little more expensive.

Northwest has raised prices on international flights, plans to freeze new hiring of pilots and flight attendants, and will cut its domestic schedule by 5 percent beginning in September.

Northwest President and Chief Executive Doug Steenland said in a statement that in recent months "the price of oil has risen dramatically to all-time highs and there is no reasonable basis to conclude that oil prices will materially decline anytime soon. These increased costs are significant and call for a strong response from us."

The news came on the same day ATA Airlines shut down after an unexpected loss of key charter flights and persistently high fuel prices. And Aloha Airlines made its last flight Tuesday. Minnesota-based charter operator Champion Air said it will stop flying by May 31.

Aviation consultant Michael Boyd said expensive fuel was only one problem among many plaguing ATA, Aloha and Champion.

"The airline industry is always a lousy place to put your money, but these events in the industry, there isn't one consistent thread you can point to, especially with ATA," he said. "Fuel prices could be 10 cents a gallon, and they'd still go down.

"The only real common denominator here is they all had airplanes."

Northwest said it wanted to move quickly to preserve cash, which stood at a hefty $3 billion at the end of 2007.

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The nation's fifth-largest airline said that on March 18 it raised fuel surcharges generally by $10 or $20 each way for flights from North America to Europe, India, Japan and most other destinations in Asia. That brings the surcharges to between $115 and $155. The surcharge on flights from Japan to North America will rise by $20 to $160 beginning May 1.

Northwest emerged from Chapter 11 protection on May 31 and like most other carriers it earned money in 2007 _ $746 million in Northwest's case, not counting bankruptcy items.

But the price of jet fuel has risen sharply this year, and the slowing economy has led airlines to fear that demand is about to drop.

The airline said it would try to save $100 million a year through "cost reductions, productivity improvements and revenue enhancements." If reduced flying means it needs fewer workers, "every effort will be made to achieve these reductions through attrition," the airline said. It said it would not seek pay cuts.

Northwest had been adding pilots and flight attendants but said it has suspended those plans. The last training classes for both groups will wrap up in June.

The Air Line Pilots Association called the moves "practical given the current economic environment."

"While we are never happy about flight schedule reductions, we understand the need for prudent economic decisions to be made in order to maintain the financial viability of Northwest Airlines," the union said in a statement.

Northwest's shares slipped 19 cents, or 2 percent, to $9.21 Thursday.

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AP Business Writer Tom Murphy in Indianapolis contributed to this report.

Comments

[mediamarv]

And passengers go elsewhere...
How do these clowns come up with such breathtakingly daring business models???

Correct me if I'm wrong, but income is derived from putting people in seats on planes... so anything done that would thwart that, like, oh... say, price increases would seem to indicate that someone high up in glass tower (pun there i think) land is making strange decisions.
Here's a plan. Fire everyone who doesn't actually come into contact with a passenger either live or by phone.
Lots of savings there, especially the dead weight hanging around corporate offices.

[MajorKong]

The only way to become a millionaire in the airline business is to start out as a billionaire.

[VivaZapata]

North Worst Airlines is so poorly run that they should go bankrupt, but the welfare capitalists should find a way to give them handouts.

[MajorKong]

This is not a good sign. Delta has also stopped hiring recently.

It's only been fairly recently that Northwest called back all the pilots they had on furlough from the last downturn.