Site Admin

Joined: 15 Jun 2005
Posts: 2316
Location: Indianapolis, IN

I had no idea it would happen this fast but it looks as if NW plans on having "Newco" or Compass Air off the ground in June with a single jet running between MSP and Washington Dulles. It will be a 50 seater with at least 36 of the 76 seat plans coming in the next 5 years.

The source of this information comes from a WCCO.com report.

http://wcco.com/topstories/local_story_088202230.html

Your thoughts? Is this fast? Is at least 36 planes in 5 years aggressive? I wonder if any of these will come here?

Site Admin

Joined: 17 Jun 2005
Posts: 949
Location: Carmel, IN

I'm not really surprised at this. I don't think it's happening fast, for these reasons:

1. NW can actually operate with a little more freedom whilst in bankruptcy. I can move much more quickly, because it doesn't need buy-in from as many parties, namely its unions and its financiers. It can do all this with the parties holding their debt under the cover of their restructuring plan, and presumably Compass' assets will be part of the collateral for the DIP financing they'll have to emerge from Chapt. 11.

2. By buying the operating certificate from FlyI, they don't have to go through all of the FAA and DOT hoops they'd normally have to.

3. I'm guessing the 50-seat jet that Compass is starting out with is formerly FlyI's. Because the RJ's that are flown under the NW banner are all 44 seaters due to the contract with the mainline pilots. And they don't own any of those anyway. So they probably got a FlyI CRJ on the cheap, since Indepedence went tits up, and there are still dozens of CRJs on the market cheap as well.

4. 36 jets in 5 years is not at all overly aggressive. Embraer could have a little difficulty meeting that order timetable on the 175, but the Canadair big birds are still just trying to get orders - Bombardier would be happy to get a 36-plane order from NW.

5. NW has GOT to retire the DC9s, and soon. They're at a tremendous cost disadvantage to just about every other airline with those things. Lots of demand for them in pax charter and regional air cargo, btw, so they shouldn't have trouble finding takers. But Compass will in part take over the business that's now served by mainline DC9s, I think. So moving quickly on Compass gets them in better shape with dumping DC9s, which they probably need to do (or be well on their way to doing) to get their DIP financing to exit bankruptcy.

It's for reason 5 that I definitely think we'll see these flights at IND. Since we're located in the middle of the triangle of large hubs, we have a lot of flights to those hubs on DC9s. They'll be able to switch a lot of that traffic to the 75-pax RJs and offer better, maybe more frequent, service ex-IND to MSP, DTW, and MEM.