This article from NYTimes.com has been sent to you by psa188@xxxxxxxxx /-------------------- advertisement -----------------------\ Explore more of Starbucks at Starbucks.com. http://www.starbucks.com/default.asp?ci=1015 \----------------------------------------------------------/ Northwest Chief Says Airline Will Not File for Bankruptcy August 7, 2003 By MICHELINE MAYNARD ROMULUS, Mich., Aug. 6 - Northwest Airlines, which warned unions in the spring that it would have to seek Chapter 11 bankruptcy protection if workers did not grant nearly $1 billion in wage and benefit concessions, said today that a bankruptcy filing would not be necessary. That does not mean the airline has given up on obtaining cutbacks. Indeed, company executives reiterated their need to reduce wages and benefits to levels achieved at other large carriers like United Airlines, American Airlines and US Airways. United and US Airways obtained concessions from their employees after filing for bankruptcy protection last year, while American's unions granted wage and benefit cuts in the face of the airline's threat to do so. US Airways has since emerged from bankruptcy, and United is preparing a revamping plan. However, Richard H. Anderson, the chief executive of Northwest, said in an interview today that the airline was not headed toward a bankruptcy filing. "We're going to continue to manage the airline," he said, "and get it restructured appropriately without a Chapter 11." Mr. Anderson's comments came as Northwest unveiled the first of a new fleet of Airbus A330 jets at Detroit Metropolitan Wayne County Airport, one of its major hubs. The planes, which will eventually replace the McDonnell-Douglas DC-10 and join the Boeing 747 on international flights, are up to 40 percent more efficient than those planes and can carry more passengers, executives said. Mr. Anderson rankled Northwest's unions in April, when he said the airline would be forced to join United, a unit of the UAL Corporation, and US Airways in seeking bankruptcy protection unless workers granted $950 million in wage and benefit cuts by July 1. At the time, analysts questioned Mr. Anderson's contention, citing Northwest's relatively healthy cash position, which it has maintained despite steep declines in traffic to Asia, where it has a significant presence along with United. Unions refused to grant the cuts, and the deadline passed without any comment from the airline about a bankruptcy filing. Indeed, Mr. Anderson acknowledged today that the airline had been able to maintain its liquidity in the face of many challenges, from the Sept. 11 attacks to the outbreak of severe acute respiratory syndrome, or SARS. Since 2000, Northwest has cut its annual costs by $1.4 billion and reduced its operations by 15 percent. "In the last two and a half years, we've been the most aggressive in the industry in terms of getting out in front of the problems that we faced," Mr. Anderson said. "It's necessitated some very hard decisions." Northwest lost $160 million in the second quarter, before one-time government reimbursements for security fees. Nonetheless, it ended the second quarter with $2.9 billion in cash, which translated to 30 percent of the last 12 months of revenue, said the airline's president, Douglas M. Steenland. Even with labor concessions, Mr. Steenland estimated that United's cash was equal to 12 percent of its revenue, while American's cash translated to 11 percent of revenue. Mr. Steenland said the airline was continuing to discuss the proposed cuts with union officials but declined to say when he thought the discussions might yield results. Both he and Mr. Anderson were pessimistic about the immediate future for the major airlines, which have been buffeted by the weak economy and challenged by competition from low-fare carriers. "We don't see any end in sight," Mr. Steenland said. "We don't see any light at the end of the tunnel yet." Mr. Anderson, in the interview, said traffic to Asia in August would continue to be down in the double-digit range because of the after-effects of the SARS outbreak. "I hope we don't have a wave of locusts," he said he recently told employees. "We've had war, and we've had plague, I guess," he added, referring to SARS, "and terrorism, and we seem to have sort of one event after another." In fact, the airline had two more issues to contend with today. Mr. Anderson said the airline would be hurt by the government's decision to suspend two programs that allowed passengers to connect through American airports on the way to other countries without visas. He said that would primarily affect Northwest's flights from Minneapolis and Detroit to destinations in Canada. The cost of lost business from visa-less passengers who are forced to cancel flights would be in the millions of dollars, he said, declining to be more specific. Also today, the International Association of Machinists and Aerospace Workers filed suit over Northwest's refusal to buy back 4.8 million shares of preferred stock that were issued to workers a decade ago in return for contract concessions. The airline was supposed to repurchase the shares, worth $225 million, by Aug. 1, and said in June that it would pay for them in cash. But last week, Northwest said it was not permitted to buy the shares under the law in Delaware, where it is incorporated, and would instead pay dividends on the stock. In the suit, filed in New York State Supreme Court, the union, which represents customer service and reservations agents at the airline, sought immediate repayment of at least $100 million. "Our members fulfilled all their obligations under the agreement," said Robert Roach, the union's general vice president for transportation. "Northwest Airlines must live up to its commitments and provide what rightfully belongs to our members. This is a bill that is due, and a bill that must be paid." Northwest said it would not comment on the suit. http://www.nytimes.com/2003/08/07/business/07AIR.html?ex=1061266802&ei=1&en=74dbd74076a08a76 --------------------------------- Get Home Delivery of The New York Times Newspaper. Imagine reading The New York Times any time & anywhere you like! Leisurely catch up on events & expand your horizons. Enjoy now for 50% off Home Delivery! Click here: http://www.nytimes.com/ads/nytcirc/index.html HOW TO ADVERTISE --------------------------------- For information on advertising in e-mail newsletters or other creative advertising opportunities with The New York Times on the Web, please contact onlinesales@xxxxxxxxxxx or visit our online media kit at http://www.nytimes.com/adinfo For general information about NYTimes.com, write to help@xxxxxxxxxxxx Copyright 2003 The New York Times Company