Northwest Airlines Cuts Capacity Further - TheStreet

Northwest Airlines Cuts Capacity Further

Surging fuel costs take their toll.
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Northwest Airlines

(NWA)

(NYSE: NWA - News) plans further cuts to capacity in the fourth quarter as a result of higher fuel costs.

The airline said it will reduce total capacity by 8.5% to 9.5%; that figure includes a capacity downsizing that was announced in April.

"In response to these extraordinary fuel costs, we are taking prudent actions to reduce our capacity and right-size the airline. This will allow us to better match our capacity to customer demand as airfares, by necessity, must increase," said Northwest CEO Doug Steenland in a press release.

Steenland added, "No domestic station closures are planned as a result of these capacity reductions. Instead, we will pare unprofitable flying while maintaining the scope and presence of our network."

The airline hasn't finalized how many jobs will be lost because of the cuts, but it said it will first look to "voluntary separation programs."

As a result of the shrinkage, Northwest is removing a combination of 14 B757s and Airbus narrow-body aircraft from the fleet.

In addition, the DC-9 fleet will be reduced from 94 aircraft at the start of 2008 to 61 aircraft (20 DC9-30s and 41 DC9-40s/50s) by the end of the year.

Northwest also accelerated the retirement of three freighter aircraft from its cargo operation.

The carrier is also continuing to take actions to improve revenue with added fuel surcharges, fare and fee increases, it said. In May, Northwest began collecting fees for two or more checked bags.

Northwest agreed in April to merge with Delta Air Lines, but the stocks of both companies have slumped in the wake of surging fuel costs.

This article was written by a staff member of TheStreet.com.