Northwest Airlines CEO Doug Steenland says rising fuel costs are increasing financial pressure on the airline.
With oil reaching a record $105 a barrel last week, Steenland said fuel is a serious budget-breaker. He says the rapid increase in fuel costs is another reason Northwest officials believe mergers in the industry are inevitable.
"If fuel continues to be above $100 a barrel, we're looking at an additional $1.7 billion in costs over what we had planned for," Steenland said. "If fuel remains where it is today our increased fuel costs will again create a difficult financial challenge for the airline."
Steenland said the airline won't participate in a merger unless the deal serves the interests of all Northwest stakeholders.
"Every one dollar increase in fuel equates to 42 million dollars per year in added costs," Steenland said.
Steenland made the comments on a hot line message recorded for employees. He says oil prices are one reason he feels consolidation is inevitable.
While he did not mention Delta Air Lines specifically, the two carriers have held detailed talks about joining their operations. Their pilots met last week in Washington to discuss merging seniority lists, but there has been no word on their progress.
Delta officials have said they will not agree to a merger unless it protects employee's seniority, which plays a key role in determining pay.
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