By Kyle Peterson
CHICAGO (Reuters) - Northwest Airlines Corp
"We don't have any significant other moves pending," Steenland told Reuters in an interview. "But, if need be, we certainly are flexible enough to take additional steps if the external economic forces warrant."
Some industry leaders have expressed concern that a weak economy could take a toll on airline bookings. So far, however, the industry has managed to soften the blow through downsizing.
Although careful not to say what impact the economic downturn might have on Northwest, Steenland's comments reflect confidence in the steps Northwest has taken since emerging from bankruptcy last year.
The carrier said in June that it would cut its mainline capacity -- the number of seats for sale -- by 8.5 percent to 9.5 percent in the fourth quarter.
The airline also intends to merge with Delta Air Lines
The merger would create the world's largest airline by traffic and see more than $35 billion in annual revenues. The new carrier would be based in Atlanta and adopt the Delta name.
Delta CEO Richard Anderson would lead the merged airline, and Steenland would take a seat on the board.
The deal won shareholder approval last month, and Steenland said the merger is on track to receive clearance from the Department of Justice by the end of the year.
"We remain confident that they'll see the consumer benefits of the transaction and give it the green light to go forward," he said.
SURVIVAL IN A HOSTILE ENVIRONMENT
Delta and Northwest announced their merger plans in April as the price of jet fuel rallied toward a record high alongside crude oil. The airlines said their merger would create a company better positioned to survive in a high-cost environment.
NYMEX crude futures notched an all-time high of $147.27 a barrel in July, but have since fallen some 50 percent.
"If you think about it in Northwest terms, the gap between $147 and $70 (oil) is over $3 billion a year in expense. And on an industry basis, it's probably $35 billion a year in expense," Steenland said. "And so that decline -- and cost reduction -- is obviously material."
The decline is welcome relief for airlines. But, unconvinced that a lasting trend is in place, airlines remain poised to go forward with their capacity cuts.
Upon completion of the Delta/Northwest merger, Steenland will conclude a dramatic four-year tenure as CEO of the fifth largest U.S. airline by revenue.
During that time, he presided over a 20-month bankruptcy that cut $2.4 billion from the company's annual costs and made him the target of rage by employees who sacrificed to keep the airline in business.
Steenland said the current economic crisis, which airlines are weathering well, is giving other businesses -- especially the financial services industry -- a taste of the challenges airlines have faced for years.
"Airlines have historically been viewed as a very volatile, very challenging business and not for the faint of heart," he said. "But I think an awful lot of other businesses in today's day and age are falling into that same category." (Editing by Phil Berlowitz)
