OPINION: Northwest Airlines Competitive Bankruptcy

Northwest Airlines filing for bankruptcy is old news but I think the reasons offered mask the underlying goal. The airline tells a tale of soaring fuel prices, unmanageable overhead and increased competition from low fare competitors as the reason for the bankruptcy...you know, that old chestnut (thanks Dr. Evil). To be sure, these are certainly contributors but buried in that story is what I believe to be a larger truth. Northwest covets the massive cost cutting, debt restructuring and pension dumping done by United and US Airways in their bankruptcy thrashings. Furthermore, Northwest feels they are left at a competitive disadvantage with these airlines since they cannot, via normal business process, create the same opportunities for themselves. Thus is born the idea of a "competitive bankruptcy". Click Read More!

A competitive bankruptcy is a cold calculated entry into bankruptcy for the sole purpose of extracting that which they could not create themselves. It is not pretty. Bankruptcy sends out a shockwave that impacts employees and sends sister companies into a tailspin (ahem...Mesaba Airlines any one). Bankruptcy invokes a load of overhead in the form of control processes administrated by the legal system. But the potential pay off for Northwest is just too great not to make the move. Massive reductions in wages and benefit costs. Major debt restructuring and relief from immediate debt burden. Fleet house cleaning via forced returns of leased aircraft and equipment. On paper a successfully executed competitive bankruptcy will have Northwest exiting a renewed airline with the ability to compete with low cost airlines.

But this gambit walks heavily on the shoulders of those who toil in the pits to make the Northwest machine run. In human terms, I wonder if those left behind, the horsepower of the airline (you know...not upper management), have the heart to start all over again building this new-old airline.