Big Move Towards Launching Subsidiary

Northwest Airlines announced last week it has purchased the operating certificate of Flyi, Inc., the former parent company of now-defunct Independence Air. Northwest says it hopes the move will "accelerate the development" of a new low-cost regional subsidiary.

Flyi disclosed Northwest will pay $2 million for the certificate, according to bankruptcy filing by the now-defunct carrier. In its move towards starting a regional subsidiary, Northwest saves time purchasing Flyi's certificate, instead of starting from scratch with one of its own.

Northwest had also asked regional carriers for proposals of their own for flying routes with jets with 76 of fewer passengers -- including current Northwest feeders Mesaba Airlines and Pinnacle Airlines.

Spokespeople for both companies declined to comment on Northwest's decision to purchase the Flyi ticket. The Associated Press reports Pinnacle acknowledged bidding on such a proposal.

The announcement comes one week after Northwest reached a tentative deal with pilots, forestalling a possible ruling by the US Bankruptcy Court that would have allowed the carrier to toss out its current contract with its pilots.

As part of that agreement, Northwest will give its 700 laid-off pilots first option for any jobs at the subsidiary. The agreement also caps the maximum fleet size of the new regional carrier to 90 aircraft. Any additional jets would need to be matched one-for-one by new jets flown by mainline Northwest pilots -- concessions seen as necessary to getting the pilots' blessing on the subsidiary.

Northwest's pilots still have to vote on the new agreement -- but Mark McClain, chairman of the Northwest pilot's union, is recommending that pilots approve it.

"While this tentative agreement will bring hardship to pilots and their families, there are no reasonable alternatives," he wrote in a message to members this week.

Flyi said it had other bidders for the certificate, but that Northwest's was the highest. The bid still needs to be approved by the company's bankruptcy judge in Delaware.

FMI: www.nwa.com