In a departure from the contract ratified last year by its pilots, Northwest (NWACQ) presented a fleet plan that relies increasingly on regional jet flying which is expected to grow 16.9 percent per year between now and 2010, compared to a 4.3 percent growth in international flying and a 2.7 percent decline in domestic capacity. The airline, which hopes to emerge from bankruptcy this Spring, is focusing on increasing its international operations rather than its hotly competitive domestic services.
It created Compass Airlines as a subsidiary to operate domestic service with 36 Embraer (ERJ) 175 76-seat jets, creating problems with its mainline pilot corps. Related Story  Northwest Airlink Mesaba, which Northwest recent acquired, will operate the 36 Bombardier (BBD) CRJ 900s, also at 76 seats. Related Story  At the time of its order, Northwest also optioned an additional 96 Bombardier and 36 Embraer 76-seat aircraft. They both will be configured with 12 seats in first class and 64 seats in coach class. Both new aircraft types will lower Northwest's operating costs over the aircraft they replace, including the Avro Regional Jet (ARJ) 85 through a combination of significantly lower fuel consumption along with inherent maintenance cost advantages.
Northwest’s new fleet plan, part of a document distributed to pilots, who took a 15 percent pay cut in 2005 and an additional 23.9 percent cut in a contract ratified last year, calls for it to reduce its mainline fleet of 100+ seaters from 375 to 337 next year and increase regional aircraft from 226 to 262 aircraft between now and 2008. One third of the airline’s 115-unit DC-9 fleet will go, dropping to 75 through 2011. The airline expects aircraft for international routes to grow from 61 to 74 by 2011
Pinnacle (PNCL) also flies as a Northwest Airlink and in the closing days of 2006, cut a new, 10-year deal to provide regional feed to its major partner. Related Story However, the new deal calls for Pinnacle to receive half the pay of its previous contract but keeps the 124 50-seat regional jets it now flies on loan from its major partner. During 2007, Pinnacle also receives 17 76-seat CRJs this year. It must resolve its labor problems with pilots and reach a deal by March 31. Failing that, Northwest may remove the larger equipment at a rate of three per month. Assuming it can reach an agreement, Pinnacle expects the deal will provide $50 million in operating income in the first year, excluding earnings from other carriers or earnings it might receive from the sale of its unsecured claim against Northwest.