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Northwest Fare Cut Seen as Urgent Effort to Raise Cash

June 21, 1993

NEW YORK (AP) _ The nation’s three largest airlines cut fares Monday by as much as 30 percent on certain domestic routes, matching a discount by financially troubled Northwest Airlines.

United, American and Delta cut their fares on the routes where they compete with the Minnesota-based airline, which reduced its prices Saturday. In Detroit and Minneapolis, where Northwest is dominant, the discounts are smaller - closer to 20 percent.

That good news for summer travelers reflects Northwest’s desperate effort to raise money in case it has to file for bankruptcy.

″This is further evidence they are scrounging for all the cash flow they can get,″ said Phil Brannon, an analyst at the New York investment firm of Mabon Securities Corp.

Higher fares would help the airline’s outlook, but the company needs lots of quick cash to pay its bills and provide a cushion if it does seek court protection from creditors while reorganizing its finances.

The Northwest ticket sale, its third since the spring, gives passengers until Friday to buy tickets for travel that must be completed by Sept. 15. The discounts apply to tickets bought seven to 14 days in advance, depending on which days of the week the passenger flies.

United, American and Delta responded with the same deal.

Sources familiar with Northwest’s plans have said it might file for bankruptcy by the middle of next week.

Aiming to quell customers’ fears about any imminent bankruptcy, a recorded message for employees offers possible responses to passenger questions, stressing the airline is considering nothing that would disrupt flight schedules or cancel tickets bought in advance.

Northwest’s candor about its financial travails is a sign that the possibility of bankruptcy has lost some of its stigma in recent years, particularly among big airlines that have sought that kind of refuge.

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