TPG DEAL GIVES NORTHWEST OPTION TO ACQUIRE MIDWEST

Northwest's involvement as a passive investor in TPG Capital's acquisition of Midwest includes the option for Northwest to acquire Midwest outright within the next few years, TPG Capital partner Richard Schifter said Aug. 17.

Schifter, however, emphasized an eventual Northwest acquisition is far from a certainty.

"To the extent that it is contemplated, it is contemplated several years out," Schifter said. He said the agreement between TPG and Northwest, giving the carrier the right to acquire Midwest, is of "limited duration," for a time period he did not specify, and after that TPG could sell Midwest to anybody.

Northwest, in a statement, said only that its agreement with TPG "gives Northwest the right but not the obligation to acquire TPG's interest in [Midwest] in certain circumstances."

Although selling Midwest to Northwest a few years from now would be one option for TPG to cash in on its investment, Schifter said it is not the only one.

He noted TPG's has exited its investments in other airlines incrementally. Also, Midwest is going private if TPG's acquisition goes through, so an eventual initial public offering for a Midwest return to the stock market also is a possible way for TPG to turn a profit, he said.

"At this stage, we do see various exit options," he said. "One of the possibilities could be a sale to Northwest, but it's not the exclusive one."

For now, Northwest is a passive minority investor that will have no participation in Midwest management, no control of the airline and no right to designate any members of Midwest's board of directors, both airlines and TPG said.

Neither Northwest nor TPG are revealing the size or share of Northwest's stake as a passive investor.

FORMER NORTHWEST CEO TO TAKE DELTA'S HELM

Delta's board chose Richard Anderson, Northwest's CEO from 2001 to October 2004, to become the carrier's next CEO Sept. 1.

Anderson, 52, will replace Gerald Grinstein, who took over as CEO in 2004 when Leo Mullin left, and guided Delta into, through and out of bankruptcy. But Grinstein, 75, let it be known he planned to retire soon after Delta's emergence from Chapter 11.

Anderson will become the eighth CEO in Delta's 78-year history.

Anderson left Northwest in October 2004 to become executive vice president of UnitedHealth Group. Northwest was not doing well when he left, having lost $458 million through the first three quarters of 2004, and about a year after he left the airline filed for Chapter 11 bankruptcy protection.

But all of the major network carriers were racking up big losses at the time, and Delta said it is confident in Anderson's experience and leadership. Anderson has been serving on Delta's board, and, before going to Northwest, was staff vice president and deputy general counsel at Continental.

"After a thorough search, the board concluded that Richard Anderson possesses the right blend of seasoned leadership, strategic skills, international experience and airline knowledge the company needs to navigate the industry's challenges and capitalize on its opportunities," board chairman Daniel Carp said.

"Well-qualified with a proven track record in this highly competitive industry, Richard has a demonstrated ability to master the competitive pressures of today's marketplace with innovation and an unwavering focus on the customer," he added.

Anderson's appointment is sure to revive speculation about an eventual Northwest-Delta merger -- talk that previously reached a fever pitch when Northwest and Delta filed for bankruptcy in the same court on the same day. But that's solely speculation at this point.

In addition to Anderson's appointment, Delta's board promoted CFO Edward Bastian to president and CFO. Bastian had been considered a front-runner for the CEO spot.

Grinstein had seemed to favor Bastian or COO Jim Whitehurst to take over when he left, but he praised Anderson after the board's selection.

"He is a ferocious competitor, thoroughly knowledgeable about airline operations, and understands the link between passenger satisfaction and living up to our service commitments," Grinstein said. "He has an extensive background in the Far East and Asia, which are among Delta's next growth opportunities."

The global airlines body IATA said on Monday it had placed its last order for paper tickets, clearing the way for air travel to be based entirely on electronic ticketing from June 1 next year.

"In just 278 more days, the paper ticket will become a collector's item," said Giovanni Bisignani, director general of the International Air Transport Association.

The changeover from paper would not only cut airlines' costs by $9 for every traveler but would also mean the industry -- criticized by environmentalists for its part in global warming -- would save 50,000 mature trees a year, he added.

Bisignani did not say whether the $9 in cost savings would or should be passed on to passengers.

Based in Geneva, IATA represents more than 240 airlines which operate 94 percent of scheduled international flights.

Non-IATA airlines, mainly low-cost carriers like the Irish Ryanair and the British Easyjet, already have a paper-free ticket system where travelers are registered in computers and present only an identity document at check-in.

IATA launched its drive for so called "e-ticketing" just over three years ago and now 84 percent of travelers on IATA carriers fly without paper tickets.

The airlines body says China, one of the fastest-growing markets for air travel and host to next year's Olympic Games, is heading to be the first country in the world to operate an entirely paper-free ticketing system by the end of this year.

In this season of rampant flight cancellations and long delays, many travelers have had to spend hours cooling their heels in cramped -- and grimy -- airport terminal gates. But these days, fliers can buy their way into the plusher lounges once reserved for first-class passengers and elite frequent fliers.

In the past couple of years, many carriers have begun offering day passes to their lounges for travelers who want to enjoy a drink at the bar or do some work before their flight without having to become a member of the club -- or buying a first-class or business-class ticket. Some airlines see the day passes as a way to lure potential new members. And, aiming to build customer loyalty, airlines are in the process of building more of these spaces. AMR Corp.'s American Airlines has opened three new Admirals Club facilities this year at Tokyo Narita, Nashville, Tenn., and at John F. Kennedy International Airport in New York. Delta Air Lines Inc. is adding a new club in Jacksonville, Fla., and is renovating lounges in Miami and Philadelphia.

To see if it is worth spending up to $50 a day for access to a lounge, we checked out the facilities of four major airlines at four airports around the country. In theory, the lounges can be great oases for hopping online, grabbing a snack and relaxing before your flight -- especially if you've been delayed. But some of the ones we visited were far from lavish -- and we often went hungry.

Indeed, U.S. lounges are often no match for those of foreign carriers in overseas airports. Lufthansa's first-class lounge in Frankfurt has a cigar room and passengers are driven to their planes in a Mercedes or Porsche. Virgin Atlantic's "Clubhouse" at London's Heathrow Airport has a Jacuzzi and its own movie theater. There's also usually plenty of free food and drink. But many foreign carriers restrict access to first-class passengers and don't offer day passes.

We tried Continental Airlines Inc.'s lounges -- called the Presidents Club -- at San Francisco International, La Guardia International in New York and Hartsfield-Jackson Atlanta International Airport. We paid $45 a person, and the pass is good for 24 hours at any Presidents Club.

Continental's lounges have perks that are absent at some other airlines' lounges: Every Presidents Club has free Wi-Fi Internet access and free alcoholic drinks. The lounges also offer some snacks gratis -- bags of chips, pretzels, peanuts, crackers and cheese. But they don't allow food from outside.

American's Admirals Club Lounges tend to have plush furnishings.
In San Francisco, the lounge had very few seats and the lack of windows gave the space a claustrophobic feel. At La Guardia, the men's bathroom was dingy -- the tiles on the floor were cracked and the walls were scuffed. In Atlanta, the Presidents Club was bright and airy upon entry, but there's one big downside: Guests have to leave the lounge to hit the bathroom, located a few gates down the terminal concourse.

We bought day passes ($50 for one person, $75 for two) to American Airlines' Admirals Clubs at La Guardia, San Francisco, Atlanta and Los Angeles. The lounges were spacious and plush -- but only if you didn't look too closely. Besides Atlanta, all of the Admirals Clubs we visited had serious cleanliness issues. At La Guardia, crumbs and other unidentifiable detritus were scattered on the carpet, on tables and on chairs. In the ladies' room, there was a large puddle on the floor and toilet paper was strewn around. At LAX, several seat cushions had huge gashes, and the bar area was sullied by crumbs and orange peels.

American spokeswoman September Wade said vacuuming is done after hours and bathrooms are cleaned every hour. Regarding the damaged chairs, she said, "We have identified areas that need updating and are in the process of finalizing refurbishment plans now."

The Admirals Clubs do have some nice touches. At LAX, you could use massage chairs (for a fee). There was also a private shower, with complimentary shampoo and soap. Lounges also offered Wi-Fi access for a fee. But don't plan to use the Atlanta club if you have a late connection: It closes at 8 p.m. And be prepared to pay to eat. There's hardly any free food. At La Guardia and Atlanta, the only complimentary snack was a large, communal bowl of pretzels. The clubs did sell food -- including sandwiches and salads -- and booze. But at La Guardia, about half the menu was unavailable.

Delta's Crown Room Club had the cheapest entrance fee: Only $25 for a one-time visit at La Guardia and its Atlanta hub. And when we told the hostess at La Guardia we were planning to use the lounge only for about an hour, she let us in free. In Atlanta, the spread was pretty lavish for the low price tag: Complimentary drinks flowed freely from a well-run bar. There was also plentiful snack food (also free) including trays of olives, celery and carrots, as well as cookies, pretzels and nuts. We scored a free Corona (with lime) at La Guardia.

At La Guardia, the lobby was spacious and comfortable. There were two big-screen TVs and conference rooms available for private meetings. The business center was outfitted with a copier, two fax machines and a half-dozen computers.

We visited four of UAL Corp.'s United Airlines' lounges -- dubbed United Red Carpet Clubs. Our experiences were wildly variable. The lounge in San Francisco was more charming than most we had visited: It felt less like a corporate waiting room and more like a lush hotel lounge, decorated with tugboat models and black-and-white photos of San Francisco. But the lounge in Atlanta was abysmal: Fluorescent lights and dust-covered ivy gave it the feel of a motel cafeteria. The one bathroom opened right into the doorway of the small business center. It also closed at 7 p.m. "We need to make some improvement to that lounge," said Robin Urbanski, a spokeswoman for United. She said that Atlanta is one of their smaller lounges and doesn't receive much traffic.

Details:

AIRLINE/CLUB	COST	SERVICES	COMMENT
American/ Admirals Club	$50 for one person; $75 for two; $100 for three. A day pass can be used at any other Admirals Club within a 24-hour period after buying it.	Vary per airport. Free but limited snack selection, alcoholic drinks for a charge, food for purchase, conference rooms, free use of showers and PCs with Internet access.	Hit or miss depending on airport. Some of the lounges we visited were pretty grimy.
Continental/ Presidents Club	$45 per person. A day pass can be used at any other Presidents Club within a 24-hour period after buying it	Free Wi-Fi Internet access, complimentary alcoholic drinks, free light snacks and beverages, and conference rooms.	The lounges that we tested tended to be cramped and unglamorous. But free Wi-Fi Internet access and complimentary bar service make up for their lack of space and ambiance.
United/ Red Carpet Lounge	$50 per person.	Limited free snack selection, complimentary non-alcoholic beverage, Wi-Fi Internet access for a fee, alcoholic drinks for a fee and conference rooms.	Most of lounges we visited were roomy and pleasant places to spend a couple of hours in before a flight -- with the exception of the tiny Atlanta lounge. But the lack of free Internet access, meals and paying for a beer make buying a day pass hard to justify.
Delta/ Crown Room Club	$25 per person for a one-time visit.	Wi-Fi Internet access for a fee, free booze, free snacks and non-alcoholic drinks.	Pretty decent amenities and pleasant service for the price.

It's the summer of lost luggage for anyone traveling in Europe.

Such is the magnitude of the problem that travelers were advised last month by the Association of European Airlines, which includes the major national carriers, to avoid checking bags altogether if possible and to take carry-on luggage instead.

The association released figures showing that an average of 10 passengers per flight lost bags between April and June. British Airways was cited as the worst among Europe's major airlines, and is on track to lose a record 1.3 million bags this year.

Fans of the syndicated TV talk show "Live With Regis and Kelly" heard co-host Regis Philbin rant in July about how BA lost two of his wife's bags. When he got them back, one of her favorite dresses had been ruined by water damage.

After a luggage "mountain" of some 22,000 lost bags piled up in London, BA was forced to use freighters at least twice in the past eight months to reunite passengers in the United States with their belongings, said Laura Goodes, a spokeswoman.

"Our baggage performance has not been as good as we would have liked and we fully apologize to those customers who have been affected by delayed baggage in the past few months," Goodes said.

Compounding the problem is a shortage of baggage handlers at London's Heathrow airport, the world's third-busiest airport, where dozens of workers are being taken off duty each day to be trained on a new baggage system at a terminal set to open next year.

The troubles aren't limited to Britain. Italian travelers faced similar luggage horrors this month at Rome's main Fiumicino airport. And even in the United States, reports of lost luggage soared by about 26 percent in June compared with a year earlier.

"It is statistics like these that should make all airlines look at their current procedures and determine their own adequacy," said Josh Holm, director of the Coalition for Luggage Security in New York, a group of business people and companies that study safety issues surrounding luggage. "All airlines should look for alternate means of luggage transportation to ease the congestion in airports and the daily loss rate."

Delta Air Lines requires outside identification on all checked baggage and recommends placing identification inside bags as well, in case the outside ID gets lost, said spokeswoman Katie Hulme. "And remember to never lock your luggage," she said.

Robert Mann, an aviation consultant at RW Mann & Co. in Port Washington, N.Y., said several factors are contributing to the baggage breakdown.

A spike in delayed flights means there is less time to correctly transfer baggage to connecting flights. Increased security screening of baggage and restrictions on carry-on bags also play a part, he said.

Henry Harteveldt, a travel analyst at Forrester Research in San Francisco, warned that the situation was not likely to improve any time soon.

"The simple fact is that there are more people flying by air," he said. "And the growth of budget airlines, most of which don't transfer bags between airlines, requires passengers to check and recheck bags."

Protection, for a price
Chris Truelove of North Yorkshire, England, was so frustrated after losing his luggage on a trip to Australia in 2000 that he founded www.globalbagtags.com.

The service sells a pair of metal luggage tags embossed with a unique serial number for $19. After you register your tags, your travel itinerary and your contact information online, the company works with airlines to locate your lost bags as quickly as possible. "The fact is that most lost luggage is not actually lost. It is just not identifiable," Truelove said.

LUGGAGE TIPS

As fall approaches and loads dip a bit, Passageways observes it's time for each carrier to review their staffing and their baggage procedures. Also, check with your Passageways Travel professional on options for sending your vital baggage in advance of your travels.

Compass Airlines, a wholly-owned subsidiary of Northwest Airlines operating under the Northwest Airlink banner, today completed its first revenue flight with the new dual-class 76-seat Embraer E-175 regional jet aircraft.

The E-175 offers dual-class service with 12 seats in first class and 64 seats in coach class. The first class seats, arranged in a one seat-aisle-two seat configuration, offer 36 inches of pitch, or space between rows. Coach class, arranged in a two seat-aisle-two seat configuration, provides pitch comparable to other aircraft in Northwest’s current mainline fleet.

The E-175 is designed to provide customers with best-in-class comfort, including leather seating with adjustable headrests, and more room throughout the cabin than traditional regional jets. The aircraft features 6’ 7” of headroom in the aisle and increased shoulder room when seated. Sidewall-mounted seats are designed to maximize under-seat space, improving passenger comfort and stowage capacity, and overhead compartments offer more storage compared to traditional regional jets and can accommodate 24” x 16” x 10” roll-on bags.

Compass introduced its first two E-175 aircraft into revenue service between Minneapolis/St. Paul International Airport (MSP) and Omaha’s Eppley Airfield (OMA). In addition to serving the MSP-OMA route, the first two aircraft will serve Dallas-Ft. Worth (DFW), Missoula, Mont. (MSO) and Nashville, Tenn. (BNA) from Minneapolis/St. Paul. Compass anticipates operating a fleet of 10 E-175 aircraft by the end of 2007 and a fleet of 36 by the end of 2008.

Northwest Adds New York - Heartland Service

Northwest Airlines announced new daily nonstop Northwest Airlink regional jet service to New York’s LaGuardia International Airport (LGA) from Heartland markets Des Moines, Iowa; Flint, Mich.; and Madison, Wis., beginning Nov. 4, 2007.

The new year-round services will be served by 50-seat Bombardier CRJ200 regional jets operated by Northwest’s Airlink partner Pinnacle Airlines.

NW Enhances On-Time Performance In August

Northwest pilots have a new Agreement with the airline. Northwest instituted a new recruitment program and focused on avoiding a repeat of significant cancellations that plagued them and their customers in late June and late July. They succeeded. August went quite well for Northwest in terms of cancellations.

The new pilot agreement ratified August 4th implements contractual changes on work rules pertaining to international flying, as well as the settlement of an outstanding grievance, in exchange for the reinstatement of premium pay of 50 percent for all pilots flying more than 80 hours a month, effective Aug. 1, 2007. The agreement is economically neutral per Northwest, with the cost to Northwest of the premium-pay element offset by the value of the work-rule changes and grievance settlement. The recruitment of new pilots also produced results with more than 1400 applications to the 24JUL posting for pilot hiring. Northwest also recalled nearly 400 furloughed pilots with at least 230 of those accepting the call and more expected in September. Complete completion percentages on scheduled flights for August are not available as we post this, but Northwest delivered at least two days of 100% completion (not a single cancellation systemwide) on both August 14th and 15th. A 1-3 percent cancellation factor is usual.