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Northwest Management Shuffle Fuels Merger Speculation
By Bill Catlin
February 20, 2001
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Airline industry analysts say they don't expect major changes in the direction of Northwest Airlines. The Twin Cities-based carrier announced Monday that Chief Operating Officer Richard Anderson will replace CEO John Dasburg, who is leaving to head Burger King. Northwest said Chief Corporate Officer Doug Steenland will take the title of president previously held by Dasburg. Anderson and Steenland have been deeply involved in Northwest's response to labor conflict and airline industry consolidation.

The new CEO of Northwest Airlines, Richard Anderson, and new board president Douglas Steenland, spoke with reporters on a conference call Tuesday morning. Hear their comments.
IN A CONFERENCE CALL with securities analysts, Northwest officials stressed stability in the succession plan. The airline industry is awaiting the government's verdict on merger plans that would make industry leaders United and American Airlines even larger. If approved, the two carriers would account for about half of all U.S. air traffic.

Northwest's new president, Doug Steenland, says the change in the cockpit of Northwest - the number four carrier - sends two messages.

"One is that it clearly signals an orderly and seamless succession here at the company. Two, it sends a strong signal that the company will remain on its current strategic plan. That strategic plan was formed on a consensual basis by a core management team that will remain in leadership positions here at the airline," Steeland says.

In the past, Northwest officials have indicated they felt the company's marketing alliance with number-five Continental Airlines provided enough heft to compete with bulked-up versions of United and American Asked if they planned to join in the consolidation, Anderson said the current strategy of keeping Northwest independent remains in place, but he left the door open to a change.

"In the event that the government sees fit to go and allow any combination between United, U.S. Airways and American, and the fragmentation of U.S. Air, we, of course, would re-evaluate our strategic positioning," Anderson said.

There have been reports of preliminary talks about industry consolidation between number-three Delta and both Northwest and Continental.

Securities analysts varied in their understanding of Anderson's comments.

Kevin Earley follows the airline industry analyst for First American Asset Management in the Twin Cities. Based on hearing an excerpt of the conference call, Earley says the company's tone might have changed, but if so, it's subtle.

"I guess if you go back a little ways, they had maintained a position that they were in decent competitive position in a consolidating industry. But now it seems like they're re-evaluating their options, assuming the US Air and American deals get done," according to Earley. 

Ray Neidl of ING Barings, who participated in the conference call with analysts, says at most Anderson seemed to indicate company leaders took the issue of industry consolidation more seriously.

"I didn't see any major indication of changes in that area," he said afterward.

Northwest still faces a bitter labor dispute with the company's mechanics' union. The National Mediation Board has declared the talks at an impasse, with some 20 days left on a 30-day clock before a strike can occur.

Steenland, who remains in charge of labor negotiations, told analysts there's little question President Bush will forestall a strike for an additional 60 days by declaring a presidential emergency board to study the situation and recommend a settlement.

"The president has unequivocally stated that he will accept the recommendation of the National Mediation Board and appoint a presidential emergency board at the conclusion of the 30-day period," Steeland said.

Steenland also says the company will abide by whatever recommendation comes from a presidential emergency board.

Richard Anderson says improving labor relations is one of the company's top priorities, as is improving Northwest's service.

Bill Catlin covers business issues for Minnesota Public Radio. Reach him via e-mail at