Checchi's Checkered Record

Megamillionaire Al Checchi thinks he piloted Northwest Airlines so well that you should elect him governor. Actually, he sucked in public subsidies, strong-armed unions, reneged on promises -- and still almost flew the firm into the ground.

Northwest hired bankruptcy attorneys, and set July 6 as the date it would seek court protection if the unions would give no ground. The airline reportedly had attorneys and a public relations expert at the ready -- bivouacked at a hotel room in Delaware where the bankruptcy was to be filed -- as the deadline approached.

Just hours before the deadline, the unions gave in. At 3 a.m. on bankruptcy day, union leaders approved a package of pay cuts and work rule changes that would save Northwest $886 million over three years.

As the state of Minnesota had before them, Northwest's unions pulled the airline back from the brink.

"The employees saved this airline," says Rolnick.

The union givebacks staved off crisis, but it was the invisible hand of the marketplace that ultimately kept Northwest aloft.

As the economy improved after 1994, people started flying again. There were fewer major airlines left, and Northwest's ticket sales picked up. The airline is making money again.

Last year, Northwest's unions began getting back most of the concessions they made in 1993. The airline's stock has been trading at about $45 a share, and the company posted a healthy profit in 1996. Checchi's Northwest stock is worth upward of a half-billion dollars. Now he can afford to run for governor of California.

"They made a lot of money risking other people's money," says Merriam, the Minnesota state senator. "But I guess that makes them pretty shrewd."

If you look at Northwest Airlines now, Checchi says, you can see the wonder of what his takeover wrought. "We've accomplished a great transformation of a huge American company under very difficult circumstances that were made more difficult by a lot of local sniping," he says.

But as the conversation with Checchi approaches its conclusion, fundamental questions linger -- how does shuffling debt and risking other people's money make him a business wizard? Did Northwest survive because of crafty management or luck? What did Checchi even have on the line?

"I think I had my reputation on the line," he says. "I think I had responsibility for the success of this transaction which weighed enormously on me. In fact, all of us associated with this will never forget the experience. And I met all my responsibilities."

Northwest's years after the Checchi takeover are often likened to a gut-wrenching roller coaster ride. Certainly, it was a wild trip for the airline's employees, the state of Minnesota, and the lenders who kept shoveling money into Northwest. But Checchi? He was back at the ticket booth, smoothing his cuffs and counting the take.

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