Northwest to rise from Chapter 11 protection

The wave of airline Bankruptcy Court filings that followed 9/11 ends today when Northwest Airlines Corp. wraps up its reorganization.

Northwest will exit Chapter 11 a little smaller, a lot more efficient and with some of the lowest costs among the major carriers. It has slashed debt by $4.2 billion, cut $400 million a year in the cost of its fleet and trimmed unprofitable routes.

It also cut labor costs by $1.4 billion a year after a bruising four-year fight with its unions that did nothing to erase Northwest’s reputation as a company with labor discord.

On Wednesday, flight attendants and pilots in St. Paul, Minn., protested Northwest’s executive pay by rallying around a giant inflatable rat clutching bags of money in its paws. The airline’s 400 top managers are set to get a collective 5% equity stake in the reorganized company worth an estimated $297 million.

“They’re going to have dramatically different economics post-bankruptcy, which is the good news,” said Vaughn Cordle, who runs number-crunching firm Airline Forecasts and is an airline pilot. “The bad news is they’ve beaten down labor so much that they’ve got morale problems.”

Like the rest of the airline industry, Northwest has been on a roller coaster the last decade.

On Sept. 10, 2001, the airline industry was coming off the 1990s economic boom, as business travel rose and fuel prices stayed low. U.S. airlines raked in about $5 billion a year in profits from 1997 through 1999 and almost $2.5 billion in 2000, according to the Air Transport Assn.

But the terrorist attacks, the slowing economy and the run-up to the war in Iraq reduced business travel and rising fuel prices cut into profits. Northwest also was hurt by the SARS scare in Asia.