Northwest Air Scouting to Buy a Rival or Hotel Chain
One year after winning a bidding war for Northwest Airlines and one day after naming a new president for the airline, deal maker Alfred A. Checchi said Wednesday that the company is looking at expansion, perhaps by acquiring all or part of another airline or a hotel chain.
Checchi did not name any targets, but the rumor mill has put him in negotiations with Pan American World Airways, taking a close look at Eastern Airlines and even eyeing the Trump Shuttle. Checchi confirmed that he had “serious discussions” with Barron Hilton before the hotelier decided recently that the Hilton chain was not up for sale.
“We wouldn’t be doing our job if we weren’t looking,” said Checchi, whose investment group bought NWA Inc., parent of the airline, last year for $3.65 billion. But the Eagan, Minn.-based company is “not even remotely close to concluding anything with anyone,” Checchi said after a speech Wednesday before more than 700 travel industry executives attending the annual meeting of the Los Angeles Convention & Visitors Bureau.
Checchi, NWA’s chairman, told the group that the industry must work harder to sell Los Angeles as a tourist destination because the city’s image has become tarnished.
“We will pay an enormous price in this city if we fail to define” and broadcast a new image for Los Angeles to replace outsiders’ view of the town as a crime-ridden cultural wasteland filled with “plastic, vacuous people,” the Los Angeles resident said. “No longer can a city like L.A. take visitors for granted.”
Tourism in Los Angeles has been slumping in recent years. No year has matched the 12.09 million visitors--defined as people sleeping in county hotels--that Los Angeles recorded in 1986. And local hotels expect a 3% to 4% decline in business this year, bureau spokesman Michael Collins said.
On the convention side, Los Angeles has only 24 conventions of national associations booked through 1994, compared to 142 lined up by Anaheim, Collins said. “We’re having our clock cleaned,” he said.
Checchi’s NWA has had its own image problems to overcome, particularly among business travelers who sometimes call the nation’s fourth-largest air carrier “North-worst.” But the airline, which is now privately held, reported a 39% increase in operating profits last year. And, at a news conference Tuesday introducing new President and Chief Executive Frederick B. Rentschler, Checchi said that cash flows have exceeded expectations and that the company is “substantially ahead” on repaying its takeover debt.
Checchi noted Wednesday that the hotel business would be a natural for NWA because many of the airline company’s executives, including Checchi himself, once worked for Marriott Corp.
