MINNEAPOLIS (AP) -- Northwest Airlines Corp. is predicting a pretax loss of $1.7 billion (euro1.42 billion) for the year -- its largest in history -- due to many factors including high fuel costs, weak pricing power, and high labor costs.
The estimate is ''additional confirmation as to why Northwest filed for Chapter 11,'' said Joel Denney, an airline analyst for Piper Jaffray & Co.
Neal Cohen, Northwest's chief financial officer, made the projection Tuesday in New York City to the airline's bankers. A copy of the slide show that accompanied the presentation was available on the airline's Web site on Wednesday.
Northwest's cash balance dropped from $2.46 billion at the end of 2004 to $1.5 billion (euro1.26 billion) on Sept. 14, when the airline filed for bankruptcy protection.
Northwest's pretax losses were $3.6 billion (euro3.02 billion) from 2001 through the first half of 2005, excluding unusual items. The $1.7 billion (euro1.42 billion) projected loss for all of 2005 is more than double last year's pretax loss of $696 million.
In July, Northwest Chief Executive Doug Steenland reported the airline had a second-quarter net loss of $225 million (euro188.5 million), which he characterized as ''clearly unacceptable.''
Northwest will announce its third-quarter results next week.
Normally, the third quarter is an airline's best because of heavy summer travel, but high fuel prices affected most carriers.
In the second quarter, Northwest paid $1.64 per gallon for fuel, 52 percent more than it paid a year earlier. In July, Northwest estimated that it would pay $1.70 to $1.80 per gallon in the third quarter -- and that was before hurricanes Katrina and Rita.
Recently, Northwest said it paid $125 (euro104.72) per barrel for jet fuel.
Northwest management is trying to improve profits by seeking annual labor savings of $1.4 billion (euro1.17 billion). The airline also said it will reduce the seat miles it flies by 7 to 8 percent in the fourth quarter. The airline's capacity will be 11 to 13 percent less in the first quarter of 2006.
The airline also is seeking to renegotiate leases or reject 100 or more aircraft in its fleet.
''They are trying to lower costs as fuel is going in the opposite direction,'' Denney said. ''There has been too much capacity nationwide, so the airlines can't raise their prices.''
