Cheery Steenland sees better service, planes, labor relations at NWA

Northwest Airlines CEO Doug Steenland sees a brighter future for post-bankruptcy Northwest.
MPR Photo/Marty Moylan

Employees at Northwest's headquarters thronged the building's lobby wearing red shirts to cheer the "red tailed" carrier, and some ringed the balcony overlooking the podium where CEO Doug Steenland spoke.

Surrounded by those workers, Steenland looked the benevolent leader --sometimes cracking jokes, but mostly listing off the company's big successes.

"We opened up and our stock started trading at $25 a share. That meant the market thought we were worth almost $7 billion," he said. "That's the largest and highest valuation that Northwest has ever had in its history."

The new Boeing 787s, called Dreamliners, are being added to the Northwest Airlines fleet. Northwest has ordered 18 of the planes, which will be used on long international flights.
Photo courtesy of Boeing

Steenland said by the end of Northwest's first day out of bankruptcy, the carrier had raised $750 million though the sale of stock. He said that gives Northwest $3.2 billion in cash on hand--the most the airline has ever had.

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Steenland compared those high points to the dark days before bankruptcy, when Northwest was hemorrhaging $4 million to $5 million a day.

"We took a company that was on the road to a very bleak and not very attractive future, and made it as well-positioned an airline as there exists today," he said.

Steenland spelled out some ways customers might enjoy the new Northwest. The company is pouring about $6 billion into its fleet. That will mean 100 or so shiny new planes.

There will be 18 new Boeing 787 Dreamliner aircraft that could fly non-stop to China from the Twin Cities. And Steenland noted that new regional jets will have the comfort and feel of mainline planes. He also elaborated on a plan to spend $50 million annually on efforts to better serve customers.

"A piece of it is going to training. A piece is going to employee recognition, so that when employees do a good job, we recognize them," said Steenland. "We're spending money on technology, and on information systems, to try to make sure that our luggage performance is an industry-leading one. We're spending dollars on extra cleaning of our aircraft."

It's not very often that we get applause at our news conferences at Northwest.

The airline is also spending a chunk of change on its executives. Steenland himself has been awarded nearly $27 million in stock and stock options.

Steenland emphasized that the company's board decided on the pay for top brass -- he said management had nothing to do with the decision. And Steenland said it was significant that shareholders signed off on the compensation proposals.

"Our shareholders ratified and supported and wanted a compensation package to be in place, to make sure the existing management team was going to be here for the four years that that package provides, to make sure that the business plan is implemented successfully," he said.

Steenland's compensation has been a major sticking point for Northwest's unions. Union workers made concessions totaling $1.4 billion annually. For some, that means having their take-home pay sliced by 40 percent.

When asked about the continued rancor among union workers and how he intends to solve it, Steenland pointed to efforts the airline has already taken, offering a profit-sharing program to employees. It's also starting employee involvement teams throughout the company. Those teams tap workers' knowledge and experience to figure out ways to offer better service.

Whether those measures are enough to quell the worker dissatisfaction remains to be seen. Unions have already scoffed at the profit-sharing program.

But by the end of the press conference, employees at headquarters were applauding -- a dramatic change from the gloom of bankruptcy, as public relations representative Bill Mellon noted.

"It's not very often that we get applause at our news conferences at Northwest," Mellon said.

After the news conference, Steenland suggested union workers' attitudes might also change, now that Northwest is profitable and the bankruptcy process is over.

"You're not going home at night wondering if the company is going to survive or not, and you're part of a winner. And that has a very positive psychology that I think I can really detect at the airline. And I can feel a very positive momentum that's developing among our employees," Steenland said.

The positive momentum of profitability could serve the airline well in other ways, Steenland noted. He said if there are mergers and acquisitions in the industry, Northwest is in a good position should the industry consolidate. But Steenland wouldn't speculate on whether mergers will happen for Northwest or other carriers.