Will Cut 2,500 Workers To Coincide With Capacity Cuts

You had to see this coming. On Wednesday, Northwest Airlines announced it will reduce its frontline and management employees by 2,500 as a result of capacity reductions taken to address the unprecedented run-up in oil prices. In addition, NWA will match competitors American Airlines, United Airlines and US Airways in charging fees for the first checked bag and for frequent flier award tickets, and increase the fees for ticket changes.

"Our fuel costs have more than doubled in the past year," said Northwest CEO Doug Steenland to justify the new charges. "In order to manage through this unprecedented fuel challenge, we have to take action to both control costs and increase our revenue."

As ANN reported, in June Northwest announced plans to reduce its domestic and international mainline capacity in the fourth quarter of 2008 by 8.5% - 9.5% versus the fourth quarter of 2007. As a result of those cuts, Northwest will reduce its frontline and management personnel by 2,500. All NWA employee groups will be affected by the move.

The reductions will be first achieved through a variety of voluntary programs including early-out programs, voluntary leaves, work rule modifications and attrition. Furloughs will be employed only if voluntary means fail to achieve the targeted reductions.

"These reductions are the direct result of our extraordinary fuel costs and the necessary actions we must take to right-size our airline and eliminate unprofitable flying," said Steenland.

Northwest will start charging $15 for the customer's first checked bag, effective for tickets sold on or after July 10 for travel starting August 28 throughout the United States as well as travel between the US and Canada.

NWA already charges $25 for a second checked bag and $100 for three or more checked bags. Frequent flier elites will be exempt from the policy, along with full-fare coach passengers.

Mirroring a scheme already underway at Delta Air Lines -- which Northwest plans to merge with by the end of this year -- NWA will also implement a service fee for award tickets. For WorldPerks Award tickets issued in North America on or after September 15, 2008, NWA will charge $25 for domestic tickets, $50 for Trans-Atlantic tickets, and $100 for Trans-Pacific travel.

Steenland called the charge for "free" travel "a temporary service fee to partially offset our fuel costs. As fuel comes down, we will re-visit this decision," he said.

"In addition to helping offset our extraordinary fuel prices, these fee increases also better align our costs with providing these services," Steenland added. "We expect these three incremental revenue enhancing measures to generate $250 million to $300 million a year, which will help ease the burden of these record high oil prices."

FMI: www.nwa.com