Northwest Airlines, which has been in bankruptcy for the last 20 months, finally received approval from a bankruptcy judge on Friday to exit Chapter 11 bankruptcy on May 31. Northwest is the last US major carrier in bankruptcy, and like many of its competitors, it used the process to significantly cut costs - about $2.5 billion. In Northwest's case, the airline has become a lot more competitive by retiring older planes (the entire DC-10 fleet and some DC-9s), moving domestic capacity to international routes, and getting concessions from labor unions.
"I want to thank our employees for their hard work and sacrifices that helped Northwest attain its goal of repositioning the airline for long-term success," said the airline's CEO, Doug Steenland, in a statement. Many believe that even though Northwest's stock will probably not fare well on Wall Street (it will being trading under the symbol NWA), the airline has a better outlook. Airline consultant Mike Boyd said, "They're going to be in a very strong position. They have a strong vision of what they want to do. If you're going to bet on an airline, I'd bet on them." Northwest will, next year, be the first North American airline to fly the new Boeing 787.
But the bankruptcy was no doubt hard on employees. Some interesting figures from the Detroit Free Press: Northwest had 33,755 workers when it filed for bankruptcy in September 2005; it now has 30,787. During the same time, the annual salary for a 15-year flight attendant fell from $44,184 to $35,433, and CEO pay fell from $571,354 to $516,384 (although the CEO also gets $26.6 million in stock and options over four years, so don't feel too sorry for him).
Northwest has evidently used the process of Chapter 11 to its advantage; it has unloaded a lot of costs and trimmed the airline down to a more competitive size. Yet it also has to contend with renewed competition from other airlines that have gone through the same process.