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Northwest Cuts Fares 30 Percent

May 7, 1993

NEW YORK (AP) _ Northwest Airlines announced summer fare discounts of up to 33 percent late Thursday in hopes of leaving rival carriers with higher prices, at least until the morning.

Major airlines routinely match fare sales by competitors, but Northwest’s late announcement appeared intended to get a few hours in reservation computers as the only carrier with the discounted fares.

Northwest took a similar strategy last month, announcing a 35 percent discount on a Sunday. Other major carriers weren’t able to match the cuts until Monday.

The sale on North American and some trans-Atlantic flights ends at midnight on May 18. Sample round-trip fares for travel between July 1 and Sept. 15 include Boston-New Orleans for $298 and Detroit-Atlanta for $218.

Under the sale, travel must begin on or after May 27 and be completed by Sept. 15. The airline said it would offer bigger discounts for travel completed by June 30.

The non-refundable tickets require 14-day advance purchase and other restrictions apply, Northwest said.

The discounts are not expected to be as devastating to airline finances as last summer’s 50 percent sale. The chief financial officer for American Airlines, the nation’s largest carrier, has said that a 35 percent sale would be good for the industry even if it lasted through the summer.

Summertime fare sales are common as airlines scramble over attracting leisure travelers at a time when business travel typically drops off. While Northwest may be conceding that fares will be cut eventually and moving to take the advantage, its persistent discounting has prompted some concerns that it needs cash.

Phil Brannon, airline bond analyst at Mabon Securities Corp., has said Northwest’s fare cutting is a sign that it needs to bring money in so it can pay its operating costs.

Northwest’s parent company, NWA Inc., lost $106.9 million in the first quarter before the effect of an accounting rule change.

Northwest has reached a tentative agreement with unions representing its mechanics and flight attendants under which the workers would trade concessions for an ownership stake in the airline.

Northwest’s pilots, however, are still negotiating and the deal depends on bankers agreeing to renegotiate terms of the airline’s loans.

In December, Northwest got a $250 million loan from part-owner KLM Royal Dutch Airlines, banks and suppliers to keep it flying through the winter season.

Northwest said that for each ticket sold in the promotion announced Thursday, it would donate $1 to four charities involved in its Aircares Charitable Support Program. The four are the Make-A-Wish Foundation, International Guiding Eyes, Big Brothers/Big Sisters and Kids for Saving Earth.

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