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Northwest Airlines files for bankruptcy

Northwest Airlines Corp., pummeled by high labor costs and soaring fuel prices, filed for bankruptcy protection Wednesday, entering Chapter 11 on the same day as its larger rival, Delta Air Lines Inc. The filings put three of the nation’s four largest airlines in bankruptcy court.
/ Source: The Associated Press

Northwest Airlines Corp., pummeled by high labor costs and soaring fuel prices, filed for bankruptcy protection Wednesday, entering Chapter 11 on the same day as its larger rival, Delta Air Lines Inc. The filings put three of the nation’s four largest airlines in bankruptcy court.

The company said in a news release it would continue to fly its normal schedule while reorganizing.

Like other airlines, Northwest has been hit by meteoric increases in jet fuel prices. But the fourth-largest airline also has the highest labor costs in the industry and has been losing money at the rate of $4 million a day.

“We had developed a plan to restructure Northwest outside of Chapter 11 and have been implementing that plan,” Doug Steenland, Northwest president and CEO, said in a statement. “Unfortunately, in addition to an uncompetitive cost structure, our efforts have been overtaken by skyrocketing fuel costs.”

The airline has sought more than $1.1 billion in union concessions for months, warning that bankruptcy was a possibility, but only pilots agreed. Mechanics went on strike in August rather than accept deep layoffs and pay cuts, and though the airline stayed aloft with replacements, it switched to a reduced fall schedule early and saw more delays and cancellations than usual.

Northwest also faces $2.5 billion in payments due to its underfunded pensions in the next couple of years, and has so far unsuccessfully pursued a change to federal law that would allow it to spread the payments over a longer term.

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