Things in the Sky

Today marked the beginning Merrill Lynch Global Transportation Conference, where basically all of the majors make big presentations to investors. At this event Northwest CEO Doug Steenland announced how they were planning to cut capacity.

First, Northwest is not imposing a $15 fee for the first checked bag like many of the airlines, which is actually a bit refreshing. While this could just be coincidence, I’d also like to point out that right now that the Skyteam carriers in the US don’t have the first checked bag fee (yet), while the Star Alliance and Oneworld carriers do.

Northwest is also announcing some fleet changes, and they aren’t as drastic as I originally thought. After United announced its plan to drop the 737 fleet, I figured it was a done deal Northwest would dump all of its DC-9 fleet. It will be shedding 33 of them by the end of year, but will still have 66 DC-9s in the fleet. A combination of 757s and A320-family aircraft, for a total of 14, will be shed off. Northwest operates both the 757-300 and 757-200, and the A320 and A319, but didn’t say what specific types will be sold, so I can’t analyze this move that much. I can guess, though, that some 757s will be on the way out because Northwest plans to have the 787 by next year (the airline is the North American launch customer).

But like Continental, Northwest has some deliveries to offset these cuts somewhat. They still have about 33 CRJ-900s (operated by Mesaba) and E-175s (operated by Compass) on the way. These newer jets are most likely good on the fuel bill, and since they are flown by regional airlines it will probably mean lower labor costs. Northwest also has 18 787 orders. The aircraft were supposed to arrive in August this year, but the deliveries have been pushed back to November 2009.

As expected, a case was made for the Delta-Northwest merger. Basically, the merger looks fantastic on the international side. Northwest has been close with KLM for years, and Delta has had a good relationship with Air France. A merger here would be great in terms of the transatlantic market for these carriers and Skyteam as a whole. The international fleet was discussed as well, and the combination of the fleets can definitely make sense in some areas. One example that was given was that a Northwest 747-400 can be used during the peak season for a market, and a Delta 767-300 could be used for the low season. The domestic fleet doesn’t look as promising. All Northwest had to say in its slide presentation was the use of small narrowbodies to replace regional jets in some markets, and “the optimization of mission capable aircraft across the combined network,” which sounds gorgeous but is quite vague.

You can see the slides and listen to Doug Steenland’s remarks here.