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“Before bankruptcy, Northwest was losing maybe $5 million a day,” Smith said. Smith added, “We’re trying to compete with startup airlines that have considerably lower cost structures. All these startup airlines generally are not union; they are the ‘Wal-Marts’ of the industry, and they’re forcing the other airlines to lower their fares. Legacy airlines [major airlines started in the 1920s and 1930s] are very expensive to run.” Smith said that the only airline deemed to be a “legacy airline” not currently in bankruptcy is American Airlines.

Smith also said the average consumer will not be affected by the airline’s bankruptcy and may even benefit from it, as the reorganization will allow the airline to continue offering competitive pricing. “People don’t want to be wined and dined in first class anymore. They want to sit in coach and fly to Las Vegas for 50 bucks,” Smith said.

Smith did state that one effect consumers might see is a reduction in the number of flights, but not the number of locations. “Northwest just announced that it was going to chop 13 percent of its flight schedule. Instead of 10 flights to Chicago,” said Smith, “we might do five.” Smith said “an overcapacity of seats in the air” as another main problem Northwest aims to fix.

Smith predicted that the biggest effects of the airline’s bankruptcy will be felt by the employees. The conditions under Chapter 11 of the U.S. Bankruptcy Code will allow the corporation time to restructure the company while allowing it to continue doing business. Essentially, Smith said, “Chapter 11 allows the company protection from creditors as they reorganize their business to make it more profitable, usually by
shedding jobs, cutting paychecks, and minimizing pension obligations.”

Hamline Legal Studies professor Jerry Krause said “One of the reasons you have organizations filing for Chapter 11 bankruptcy is that they’re not able to meet their obligations.” Krause went on to explain that
“Northwest is grossly ‘underwater’ in funding their pension obligations.”

Certain federal programs such as the Pension Benefit Guarantee Corporation can help protect workers
from losing their pensions should Northwest decide to cut or reduce them during their reorganization. This does not automatically eliminate the problem, however. The process is complicated and there are not necessarily any guarantees about maintaining current dollar amounts. Smith said “The pensions might be reduced to, say, 30 cents on the dollar.”

Things may not be all bad for people who just want to continue flying Northwest. Information on
Northwest’s website seeks to assure the company’s patrons that the airline’s service will remain unchanged. Members of World Perks, the company’s frequent flyer club, should still be able to redeem and accumulate miles as usual. All partnerships with other corporations will remain the same, and all existing bookings will continue to be honored. Requests for comment from upper management officials of Northwest Airlines were denied due to confidentiality agreements.