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The facilities couldn't be built right away, Checchi says, because in 1992 Northwest plunged into even more desperate straits.
As the state's financial aid package was being finalized, Northwest and the rest of the airline industry were hit by another shock. American Airlines embarked on a round of fare cuts it called Value Pricing, and drove down ticket prices across the land.
The fare wars brutalized Northwest's already bloody bottom line, exacting an even heavier toll than the Gulf War, rising fuel prices, and recessions had a year before, Checchi says.
"We had started to see a real turnaround in the early part of 1992," Checchi says. But when American started cutting fares, "that produced a breathtaking drop in yield for the industry that was instantaneous."
For Northwest, the fare war was more bad news piled onto an already shaky company. In order to survive, Northwest determined that it would have to win major concessions from its 38,000 employees, including the three big unions -- the Airline Pilots Association, the International Association of Machinists, and the Teamsters.
In the spring of 1992, Northwest began talking pay cuts with its unions. At first labor leaders resisted, but it soon became clear that the talk wasn't just a management ploy -- Northwest was rapidly approaching bankruptcy.
Starting in late June, the company furloughed about 800 pilots, managers, reservation agents, and mechanics. The wolf was now at Northwest's door.
"In the fall of 1992, Northwest Airlines faced crises everywhere it looked," says the Harvard Business School case study of the airline. "The airline's cash position had dwindled to near zero ... as if this weren't bad enough, Northwest still owed $1.8 billion to the banks that had financed the 1989 buyout."
Ever since the takeover, Checchi's own company -- Checchi & Associates -- had been paid $10 million a year to provide management consulting advice to Northwest, but in late 1992 the situation was so grim that Checchi agreed to forgo those fees.
The airline again scrambled to borrow money, and negotiations with its unions over wage concessions continued into 1993. In January, the company laid off another 1,043 employees.
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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