MPR: Anderson putting his imprint on Northwest Airlines

Anderson putting his imprint on Northwest Airlines
By Mark Zdechlik, MPR News
June 18, 2001

Northwest Airlines new CEO. says management and unions need to find a better way to handle contract negotiations to improve relations. Richard Anderson, who took the top job in April, says with employee support, Northwest will be strongly positioned for growth over the next several years.

One of Richard Anderson's first actions as CEO of Northwest Airlines was to order cost cutting. But Anderson projects nearly two-fold increase in demand for air travel over the next decade, for which he says Northwest is prepared. (MPR Photo/Mark Zdechlik)

NORTHWEST CEO RICHARD ANDERSON is pledging the nation's fourth-largest airline will become a better place to work and a better choice for travelers.

In a video sent recently to all employees, Anderson acknowledges labor problems have hurt the business over the past several years and that without the support of its work force, Northwest can't improve customer service and continue to grow.

In an interview at the Minneapolis St. Paul Airport with Minnesota Public Radio, Anderson talked the bottom line business rationale for repairing worker-management relations.

"I do believe that if we have solid employee morale, we'll provide better customer service. Better customer service translates into better share and more passengers, more revenue, the ability to invest and grow the airline," Anderson said.

Anderson arrived at Northwest as deputy general council in 1990. Formerly a prosecutor in Texas, he's worked in numerous areas of the airline, most recently as chief operating officer. Anderson bore the responsibility for maintaining the flight schedule. Now in command and reaching out to the workforce, Anderson is also making it clear the workers too are have major responsibilities.

"I have a proven track record of delivering results at the airline and will continue to earn the respect of everyone. And in return, all the employees have to contribute. This is everyone's career. So we all have a vested interest in making the enterprise successful," he said.

Anderson took control of Northwest to the general applause of Wall Street. Many analysts credit predecessor John Dasburg with saving the airline from bankruptcy and for developing profitable alliances with KLM Royal Dutch and Continental Airlines. Some of the same people, though, say toward the end of his time at Northwest, Dasburg became aloof. Employees accused him and other top managers - Richard Anderson among them - of corporate greed for failing to share profits after the airline recovered.

"Dasburg was not engaged, I thought, for several years," according to Glenn Engel of Goldman Sachs. He says Northwest, imaged battered from years of labor disputes and accompanying customer service problems, needs a CEO like Anderson. "He's just a much more hands-on person than Dasburg was and I think an organization as big as airlines need that hands-on support. And he's also probably more of a cheerleader type. I think he's better able to mix it up with the troops."

Labor relations aside, Anderson's first year as CEO is shaping up to be a tough one. In recent months Wall Street observers have repeatedly downgraded earnings expectations for all the major carriers. The weakening economy has hit high-revenue business travel hard. The most recent analyst survey conducted by FirstCall has Northwest doing just a bit better than breaking even this year, compared to last year's nearly $300 million profit. And some analysts are projecting a loss.

One of Anderson's first actions as CEO was to order cost cutting. But more than most, the airline industry is cyclical, and Anderson is looking ahead to better times - a projected nearly two-fold increase in demand for air travel over the next decade, which he says Northwest is prepared for.

"The large airports in the United States like Chicago, the New York-area airports, Atlanta, Boston are congested, very congested; congested to the point at the peak times of the day when people what to travel, there's no capacity," he says.

With the notable exception, according to Anderson, of Northwest's hubs in Detroit, in the Twin Cities, and in Memphis; all of which have or will soon open new runways. Detroit, the largest hub, has a brand new terminal coming online early next year. Facilities in Minneapolis St. Paul and in Memphis have undergone major upgrades. Anderson says the changes will make Northwest a more efficient and a more comfortable alternative to the competition.

"We foresaw the need to add capacity. So we are better positioned from an airport standpoint, strategically than any other airline. And the same is true internationally."

Anderson is talking about major improvements to its Tokyo hub and to KLM's hub in Amsterdam. Anderson won't comment on how Northwest would respond if federal regulators allow United Airlines to take over US Airways. Many analysts have said that would force Northwest and other major carriers to seek merger partners.

Northwest is urging federal regulators not to allow the deal it says would hurt competition. But Anderson says Northwest must grow to be successful. He says that growth will come from expanded and new alliances, and, internally, around the newly refurbished hubs.

In the last year Northwest has reached contract settlements with its flight attendants and mechanics. Anderson's goal of mending employee relations, gets its first major test early next year when the new round of contract negotiations with the airline's most powerful union begin. The last time Northwest and the Airline Pilots' Association were up for talks in 1998, the pilots walked out on strike.

"We're cautiously optimistic about the future and we're hopeful there will be a change," says pilots' union leader, Mark McClain, a 727 captain. He says Anderson is saying all the right things. "But the proof will be over time as to whether the plans envisioned become an action plan that actually moves the airline forward and it's too early to tell," according to McClain.

"We have to go down the road today of building relationships and you have to build those relationship while you're not in negotiations so that when we do get to negotiations the employees understand what we have to accomplish strategically in order for them to have prosperity and job security," Anderson says.

Anderson is beginning the task of visiting employees around the country to promote his priority of repairing relationships with his workforce and his customers.

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