Air Transport World

Rothmeier making significant changes at Northwest Airlines. (Steven G. Rothmeier)

Minneapolis-St. Paul--In some reassuring ways, Northwest Airlines is the same company it has always been. It has earned a profit for 34 years in a row, and 1985 not only will be the 35th moneymaker but a barn-burner to boot. It retains its dedication to a conservative aircraft depreciation policy. The balance sheet, despite a recent $175-million convertible debenture offering, has its normally healthy debt/equity profile (31.0.69.0). Northwest even continues to operate its own meteorology department, reflecting the resources it willingly devotes to maintaining an admirable safety record.

That said, the company is going through what for it is a dizzying series of changes. They began, slowly, when now-retired Chairman joseph Lapensky took over as CEO in 1979 from longtime chief Donald Nyrop, a one-man band who had maintained tight control over even the smallest of decisions. The pace has accelerated since Steven G. Rothmeier became president (in October 1983) and then also CEO (on Jan. 1 of this year). Many of the impatient younger managers inside the company, as well as outsiders, think the changes are coming none too soon.

Next year, employes at Northwest's executive offices will move into a new, windowed headquarters. Announcement of that structure was as sure a sign as any that things are changing. The present windowless edifice was built with the ultimate goal of using it for maintenance, workshops and other utilitarian purposes when it no longer served as a headquarters. Energy savings were an important byproduct. What employes thought about working in quarters without a view was not important.

Northwest isn't moving to new quarters just for the view; it is growing and needs more space. The new regime obviously thinks employes could use a morale boost from working in more civilized conditions.

Historically, Northwest's internal cash machine has been sufficient to fudn significant percentages of its new-plane purchases. Now some of that cash, in addition to a portion of debt proceeds, is being used for non-aircraft corporate purposes such as the new headquarters. Over the last six years, the airline has spent $125 million on facilities and equipment. There are new cargo buildings at Boston, Los Angeles, San Francisco and Chicago. Passenger gates were added at Tampa, New York's LaGuardia, Chicago's O'Hare, Detroit and Minneapolis-St. Paul airports. Upgrading computer capacity from what one manager calls "abacus-level" has cost $30 million so far, with more spending to come.

Additionally, the attitude toward communicating has shifted 180 degrees. The company now cooperates with requests for interviews. Like other modern managers, Rothmeier knows that public contact can help, and is not always an enemy of, corporate goals. In campaigning against United's purchase of Pan Am's Pacific Division, Northwest is going out of its way to argue its case publicly.

Even the organization is changing. There are two more vice presidents than in 1978 (Nyrop had a chart showing the inverse relationship between numbers of vice presidents and profits). For the first time there are executive vice presidents--four of them, for finance and administration, marketing, operations, and corporate planning and international matters. Modern managers don't make all decisions; they delegate some authority.

Rothmeier apparently is not finished with Northwest's reorganization. …

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