Northwest turns a profit in third quarter
Northwest Airlines on Monday said it swung to a profit in the third quarter, as it kept fuel and other costs under control and moved on from its bankruptcy restructuring.
Net income for the three months ended Sept. 30 was $244 million, or 93 cents per share, compared with a loss of $1.18 billion, or $13.50 per share, during the same period a year earlier. The performance easily beat analysts' expectations.
Northwest CEO Doug Steenland said Monday the company will be weighing opportunities to combine with another big carrier.
During a conference call with investors, Steenland indicated he believes there are too many major airlines flying in the United States today. And Steenland says consolidation in the airline industry seems inevitable.
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"If it were possible to start with a clean slate today, one would likely conclude that six major domestic carriers are too many," said Steenland. "This level of fragmentation has contributed to the historic underperformance of the airline industry, and the destructive boom-and-bust cycles that serve no one, least of all our employees, customers and shareholders."
But Steenland warned regulators can veto mergers and combining workforces can be a nightmare.
There's been a flurry of speculation lately about Northwest combining with Delta Air Lines. Delta CEO Richard Anderson once led Northwest and worked closely with Steenland.
Steenland said the airline is also looking at ways to further boost its profits, including a possible sale of its World Perks frequent flier program.
Steenland said Northwest may spin off the program if two conditions can be met. The World Perks operations would have to fetch a compelling price. And the airline's frequent flier program would have to be attractive to the airline's customers, even if someone else owns it.
"You would only spin it off if you came to the conclusion it would not hurt the airline, and the airline would have a competitive meaningful program to attract and retain its most loyal frequent flier," said Steenland.
Steenland says Air Canada has spun off its frequent flier program, and Australia's Quantas Airlines is considering a similar move.
Northwest won't say how many members are in its World Perks program. But the airline estimates it owes World Perks members about about $270 million worth of travel.
(The Associated Press contributed to this report)
