Newsgroups: sci.aeronautics.airliners Path: news From: hoyme@src.honeywell.com (Ken Hoyme) Subject: Northwest cancels Airbus X-Submission-Date: Tue, 8 Dec 92 09:51:54 CST References: Message-ID: Approved: kls@ohare.Chicago.COM X-Submission-Message-Id: <9212081551.AA03298@schrodinger.src.honeywell.com> Sender: kls@ohare.Chicago.COM Date: 08 Dec 92 15:51:20 PST In article mumble mumble Pete Mellor writes: > BBC Radio 4 news, 0700 GMT today:- > Northwest Airlines has cancelled orders for 50 A320s and 14 A340s in > a cost-cutting exercise. This was described as a serious blow to the > European aircraft industry. According to this mornings Minneapolis Star-Tribune (the home paper of NWA), that was 24 A340's canceled - 74 plane cancellations worth $3.4B. According to what I can find, they had 24 firm and 6 options for the A340. The 50 canceled A320s were the options, I believe. (Their original order was 50 firm and 50 options, if I recall correctly.) Their 16 A330s were not affected, but they aren't scheduled to receive any of those until 1997, so they felt no need to address that plane in this agreement. An additional 16 A320s will be delivered in 1993 (they currently have 34) along with two more B747-400s. With these cancellations and the delay of additional 747 and 757 deliveries, NWA currently is not scheduled to receive any new planes in 1994. (It is interesting to note that no Boeing planes were cancelled, but were slipped out instead.) Along with the cancellations, NWA announced $250M in new financing -- including financing from Airbus for the additional A320s! The analysts considered it quite remarkable that Airbus offered financing while at the same time getting a $3.4B cancellation. (But then, NWA is already deeply in debt to Airbus, since they decided to buy A320s based on a dynamite financing package that Boeing could not match.) This, combined with $900M worth of labor concessions (over three years) makes it unlikely that NWA will declare Chapter 11 in 1993. One local note of interest. The big buzz in Minnesota is whether this dooms the Airbus maintenance bases planned for the northern part of the state. About 18 months ago, NWA drove a deal with the state for an operating loan plus financing for the building of two maintenance bases - one for engines, the other for the larger structural checks (C/D). The construction of the bases has been held up in legal wrangling (over whether it is constitutional to use taxpayer money for such a purpose). With these cancellations, it is suspected that the bases will not be built, and NWA will fly their planes to Europe for C/D checks. Of course, they already have received and spent the operating loan.... Ken Ken Hoyme Honeywell Systems and Research Center (612)951-7354 3660 Technology Dr., Minneapolis, MN 55418 Internet: hoyme@src.honeywell.com