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Northwest to exit bankruptcy next week

Northwest plans to emerge from bankruptcy protection on May 31, after a federal judge OK’d its reorganization plan on Friday. The nation’s fifth-largest airline successfully cut its annual operating costs by $2.4 billion, reduced debt and lease expenses by $4.2 billion per year, and shrank the overall size of its business, reports the Associated Press. “They’re going to be in a very strong position. They have a strong vision of what they want to do. If you’re going to bet on an airline, I’d bet on them,” said airline industry consultant Mike Boyd, via the AP.

Northwest first entered bankruptcy in September 2005, on the same date Delta announced its bankruptcy. Since then, times have been tumultuous for Northwest, with its various labor unions threatening strikes and walkouts. Employees were ultimately forced to take pay cuts in order for Northwest to emerge from bankruptcy.

Over the years, industry analysts speculated Northwest might not survive its bankruptcy, but it has finally proved them wrong. Northwest’s resurgance means no U.S. airlines will be in bankruptcy, down from a time when four of the major legacy lines (Northwest, Delta, United, and US Airways) were all bankrupt. But, airlines will continue to struggle with high fuel costs and many markets saturated with competition, so I wouldn’t be surprised to see another round of bankruptcies in the future.

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