Rut ro.

The Northwest Airlines’ flight attendants have voted down the latest tentative agreement that was negotiated between its new union representative, AFA-CWA, and the company.

The vote was 2637 for and 3266 against.

All you good airline industry watchers know what this means. The bankruptcy court handling the Northwest bankruptcy gave the airline the right to impose new terms on the flight attendants in June. But both sides continued to negotiate on another tentative agreement, and after the flight attendants voted to change union representation.

The company said today it is moving forward with plans to implement contract terms that go back to the March 1 tentative agreement with the PFAA that was not approved.

AFA, for its part, says on its website today that it will attempt to go back to the negotiating table. In the meantime, it also says it is “preparing for CHAOS.”

CHAOS is the acronym for “Create Havoc Around Our System,” the union’s method of using targeted unannounced work actions. AFA also could call for an all-out strike.

Stay tuned.

Friday Frontier Airlines reported earnings. The airline reported net earnings of $4 million, or $0.10 a share, which was a considerable improvement over last year’s loss of $2.7 million or $0.08 a share.

However, looking at the airline’s operating statistics, while the airline’s CASM excluding fuel and special items was down 6.1% — a nice number — the airline’s PRASM, which was up 8.5%, lagged the industry 15.9% increase average for the quarter significantly. This is a direct reflection of the increased competition at Frontier’s home base of DIA.

Think United Airlines out of bankruptcy protection. Think Southwest building up its new service out of DIA.

Biggest negative from the airline’s call last week? The airline said that we should expect to see “similar” profitability in the airline’s second quarter (quarter ending Sept. 30.)

This was not good news, although it was also not unexpected. Considering consensus for the quarter, at the time of the call, was for the airline to report profits in the $0.19 a share range, essentially this means net earnings for the current quarter are now expected to be about half what analysts had forecast.

As a result, look for further reductions in earnings estimates here.

As we have written in PBB, with the airline generating about 90% of its revenue out of the Denver market — and with the airline now facing a full-frontal assault from Southwest (which will increase flights in Denver by 60% in the next two months), it would certainly seem that this revenue deterioration is only going to continue.

Our take this spring, when we very reluctantly put Frontier Airlines on our resurrected Titanic Watch is this — while the airline has enough cash for now ($296 million), the airline can’t continue doing what’s it’s doing. Or it’s going to be a slow and certain unhappy landing. Let’s just say the revenue trend is not the airline’s friend in this case. Something’s got to change.

The guidance for next quarter last week reaffirmed my reasons for putting the airline on our Watch list.

Signs of life this morning from both Delta Air Lines and United Airlines.

First United Airlines has agreed to transfer its route authorities between New York’s JFK International and London’s Gatwick Airport to Delta Air Lines. While United has not flown this route since 2000, the move more or less shows that someone at United has finally admitted the obvious: New York is not where United can make the most money with its airplanes.

For that matter, United has been reducing its service between JFK and Heathrow for the last five years. The airline did not say today whether it plans to drop its one remaining flight or not to Heathrow, but you have to believe this is probably going to happen.

When it does, it just won’t be headlined in a press release.

While Gatwick is certainly not Heathrow, this move will give Delta more credibility in its efforts to actually establish a hub of sorts at JFK and boy does this route structure ever start to look more and more like the old Pan Am.

But, United had other news as well. The airline is also shifting its New York to Tokyo flights to Dulles, starting in October.

Remember that ANA recently began daily service from Dulles to Narita with their new Boeing 777s, although ANA has served the route since 1986. United has a codeshare agreement with ANA. So those who want to fly Narita from New York and get UAL miles will still be able to fly ANA out of JFK and do so.

United also announced the reinstatement of San Francisco-Taipei nonstop flights, it is adding three weekly San Francisco-Hong Kong flights, and it is expanding service from San Francisco to Seoul to a yearly basis.

We like this news from United. I only wish we had heard more news like it the last four years.

As we said in June when this rather strange thing called the “Wright Agreement” first became public — getting the said agreement signed, sealed, and delivered intact by Congress before the end of the year looked like a tall order to me.

Last week the House bill on the agreement was not even scheduled, and this week it’s still not scheduled. As a result, it increasingly looks like nothing is going to happen here until after Congress returns from its summer vacation.

Opposition has cropped up on the Senate side as well.

This afternoon, the Associated Press reported that the Justice Department had weighed in on the deal.

According to the AP, the Justice Department’s antitrust division told lawmakers in a letter that restrictions in the agreement to repeal the Wright Amendment would be “hard-core, per se violations of the Sherman Act.”

According to the AP,

“The Justice Department said the gates to be torn down could be used by other airlines to enter and compete there. Razing them “is the very kind of collusive output reduction that the antitrust laws are designed to prevent.”

Southwest is also limited to 16 gates in the deal, which the Justice Department said is a hard cap on Southwest service from Dallas for more than eight years and would not allow Southwest to expand its operations once the Wright Amendment is lifted without leaving cities it now serves or facing penalties for starting up service at another Dallas area airport.

The department said the parties to the local agreement are aware of the antitrust violations because they have sought blanket immunity for the agreement, instead of including an “antitrust savings clause,” which the agency said is commonly done to preserve competition under antitrust laws.”

However, stop the anti-trust press.

Just as this news was being digested Tuesday afternoon, officials with the Justice Department apparently told Sen. Kay Bailey Hutchison, R-Texas, that they had not taken a position on the legislation.

Hutchison released a letter late Tuesday in which William Moshella, the assistant attorney general for legislative affairs of the Justice Department told her, “It has come to my attention that some believe the (Justice) department opposes … the Wright Amendment bill. To the contrary, DOJ and the (Bush) Administration have not taken a position on the bill. In fact, we see laudatory elements in the bill including the phaseout of the Wright Amendment restrictions. We share your concern about fixing this several decades old issue and of course want to foster the maximum amount of competition in the airline industry which will be a benefit to consumers.”

According to the Ft. Worth Star-Telegram Tuesday night, the Justice Department did not, however, specifically disavow the earlier “unsigned” Justice Department memo.

I’ve forgotten what round we’re on in this one. I think we may be approaching the triple digits.