MPR: Merger Not Necessary for NWA, Dasburg Says

Merger Not Necessary for NWA, Dasburg Says
By Bill Catlin
February 22, 2001

Northwest Airlines' departing CEO and president John Dasburg says he's leaving the airline after more than a decade because a number of important personal and professional factors came together. In an interview with Minnesota Public Radio, Dasburg also outlined his conviction that Northwest does not have to merge with another carrier to thrive in a consolidating industry.

John H. Dasburg was named president and chief executive officer of NWA Inc. and its principal subsidiary, Northwest Airlines, in November 1990. Before his airline career, he served as president of Marriott's Lodging Group and executive vice president of Marriott Corp. In this post, he was responsible for the full range of Marriott's lodging products. He joined Marriott in 1980. Prior to his tenure at Marriott, he was a partner with KPMG Peat Marwick, an international CPA firm. Dasburg received a bachelor's degree in engineering, a master's degree in business administration and a law degree, all from the University of Florida.

DASBURG JOINED NORTHWEST in 1989, and took the titles of president and CEO the next year. He's leaving the airline on April 1 to run Burger King. The move returns Dasburg to Miami, which he considers home and to an industry the former Marriott executive says he enjoys.

"It's Miami, it's the restaurant industry, it's a major brand, succession was in place at Northwest Airlines, and it all just came together," Dasburg told Minnesota Public Radio..

Dasburg leaves the number-four airline amid two prominent challenges, a major contract dispute with its mechanics union and the prospect of two rivals, United and American Airlines, dwarfing other airlines through mergers, if regulators approve.

Under Dasburg, Northwest became an industry leader in marketing alliances, partnerships with other airlines to boost sales, and geographic reach. Dasburg remains convinced that alliances, not mergers, are the way to fly.

"It is clear that the customer wants a broad scope in the airline that it chooses, that the customer wants to be able to get to all the markets in the world, and no one airline can serves all the markets in the world and so therefore it's necessary to form relationships," he said.

Dasburg says the aftermath of Northwest's disruptive merger with Republic Airlines three years before he joined the company shaped his view that mergers are too difficult and expensive.

"It was clear in the early 1990s that the merger of Republic and Northwest was still in process, if you will, and early on I had to contend with any number of challenges that resulted from that merger and we were six and seven years into it."

"Antagonism contaminates both parties; for the most part, there's a slow erosion, and it's unfortunate."

- John Dasburg

Dasburg says Northwest will add more alliances. There have been reports that Delta Airlines has had preliminary talks with both Northwest and its alliance partner Continental Airlines on the topic of industry consolidation. Asked if Delta would be among Northwest's new alliances, Dasburg would only say he could not answer the question.

In the early 1990s, Dasburg won concessionary contracts from Northwest's pilots, flight attendants, and mechanics that saved the airline from bankruptcy. He won praise from labor leaders for giving back a $750,000 bonus as a goodwill gesture during that period, but he wasn't able to prevent a costly pilots strike in 1998.

Earlier that year Dasburg and other executives fueled union resentment by selling millions of dollars in stock. Published reports say Dasburg's total reached some $17 million.

Dasburg says anytime anyone makes money it can be used against them. But he also says the stock sales did not change his priorities.

"I didn't go through any type of a cerebral transplant; my interest in harmony and in providing the customer with a good product, and in working closely with the unions to improve working conditions and certainly to share the profits in terms of wages and benefits remained the same," Dasburg said.

Dasburg says labor relations turned difficult in the last few years because once the airline returned to financial health, contract negotiations returned to the traditional, often lengthy, process federal law requires for airlines and railroads.

"If you look at it at not only at Northwest but in other airlines, over time the antagonism contaminates both parties; for the most part, there's a slow erosion, and it's unfortunate."

Dasburg leaves at a sensitive time. Fewer than three weeks remain in a countdown to a possible mechanics' strike, though presidential intervention and a further 60-day delay are expected. Regardless, Dasburg says Northwest is in good shape. He points out the airline has a larger market share and work force - 55,000, up from 35,000 - plus higher productivity and strong alliances.

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

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