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Wed, Mar 19, 2008

Northwest Matches United, CO Rate Hike

CEO Hints At Job Cuts, Other Measures

Last week's $50 hike in airfares looks like it's going to stick. Following in the steps of United and Continental, this week Northwest Airlines also increased fares across the board.

As ANN reported, United and Continental announced their fare increases March 14. Trips under 500 miles will cost fliers about $10 more round-trip, with journeys longer than 1,500 miles costing as much as $50 more, especially on less-competitive routes.

Like those carriers before it, Northwest pointed the finger at record high prices for fuel, and a slumping economy.

"Airfares have to go up, and our passengers will need to pay more. Airlines simply cannot absorb these cost increases," Northwest CEO Doug Steenland told employees, reports The Associated Press.

Furthermore, the worst may be yet to come... for travelers, and airline employees. Like other carriers, Northwest has seen its fortunates plummet in recent weeks due to the above economic travails; on Monday, Northwest stock prices dropped 82 cents, closing at $8.69... less than half their value one month ago.

Airlines are becoming increasingly desperate to stop the bleeding... and in his message, Steenland strongly hinted his airline may have to take drastic measures, though he stopped short of mentioning job cuts.

"First we have to tighten our belt. We need to find ways to preserve cash by reducing capital expenditures and operating costs," he said. "Fortunately, we have over $3 billion of cash on hand."

A Northwest spokeswoman declined to comment further... but it's likely the CEO's underlying message was lost on no one.

FMI: www.nwa.com

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