Will New Regional Subsidiary Help NWA Find Its Bearings?

Northwest Airlines has high hopes for its new regional jet subsidiary, which is expecting to begin flying as early as June under the name Compass Airlines -- formerly the name of an Australian low-cost carrier that went belly-up not once... but twice, in the early 1990s.

According to a filing with the Department of Transportation, Northwest's Compass could have as many as 36 regional jets flying within the next five years. Northwest is currently mulling over two possible choices for those planes: the Embraer 175, and Bombardier's CRJ-900.

Northwest representatives told the Associated Press it hopes Compass will begin flights twice daily between Dulles and Minneapolis-St. Paul International using a single 50-seat RJ, and hopes to add the 76-seater aircraft by the end of the year.

"The expansion of Northwest's regional flying through the proposed Compass Airlines operation is an essential part of Northwest's restructuring plan," the company said in a statement on Wednesday.

Northwest's chief financial officer, Neal Cohen, will be CEO of Compass --  but five other Compass managers will be from Independence Air.

Aiding the fast start for the new subsidiary is the FAA operating certificate Northwest was able to purchase from Flyi, the bankrupt parent company of the former Independence Air, earlier this year. Northwest's chief financial officer, Neal Cohen, will be CEO of Compass --  but the AP reports five other Compass managers will be from Independence Air.

Before it starts operations under that certificate, however, Northwest will need approval from the DOT. And that won't come soon enough for Northwest, which relies on regional flights more than some of its competitors due to its network of smaller Midwestern cities.

Northwest's regional flights are currently flown by Mesaba Airlines (above) and Pinnacle Airlines, which were also invited to bid for the regional contract. Even with Compass in the air, Northwest still expects to need the services of at least one additional regional operator, as the size of Compass's fleet is capped by Northwest's current contract with its pilots.

The push for a homegrown regional operation is one of the key strategies in Northwest's plan to exit Chapter 11 bankruptcy.

FMI: www.nwa.com