Northwest Airlines Corp., which has been operating under bankruptcy protection, on Monday posted a wider second-quarter loss as its restructuring costs mount. But its executives pointed to promising developments in their plans to cut labor and pension costs.
After paying dividends on preferred stock, losses totaled $285 million, or $3.27 per share, for the three months ended June 30 compared with $234 million, or $2.69 per share, in the prior-year quarter.
Excluding the cost of restructuring and other one-time items, Northwest, the nation's fifth-largest airline, said it earned $179 million versus a loss of $288 million last year.
Revenue edged higher to $3.29 billion from $3.2 billion in the prior-year period. Operating expenses fell 12 percent to $3 billion.
The airline industry has been suffering the effect of higher fuel costs. Northwest said its fuel averaged $2.10 per gallon, excluding taxes - up 28 percent from a year ago.
The company offset higher fuel prices by cutting capacity, reducing the number of gallons consumed by 12 percent.
Northwest president and CEO Doug Steenland noted that Congress last week passed a bill long sought by the airline which will give it more time to pay off a debt to its defined pension plans. The airline also imposed a wage-cutting contract on its flight attendants, the last union without such a deal.
"Notwithstanding these accomplishments, we still have work ahead of us to ensure that the airline is positioned for long-term success," he said.
On Aug. 1, the airline imposed terms on its flight attendants after they rejected a negotiated tentative agreement. The airline's deals with its pilots and ground workers didn't kick in until there was a new contract for flight attendants, too.
"With the August 1 implementation of permanent labor cost reductions with all of our contract employees, we have realized $1.4 billion of the $2.6 billion in annual business improvements that we have targeted to achieve through the restructuring process," Steenland said.
The flight attendants have announced plans for limited, random strikes starting Aug. 15 if Northwest doesn't back down from the terms it imposed.
Northwest has filed a motion with bankruptcy Judge Allan Gropper in New York asking him to prohibit the flight attendants from striking. A hearing on the matter is scheduled for Wednesday.
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