Northwest Airlines Posts $1.3 Billion Quarterly Loss

March 1, 2006
Most of the loss stemmed from bankruptcy proceedings. The airline lost $2.6 billion for the full year.

MINNEAPOLIS_Northwest Airlines Corp. reported a $1.3 billion (€1.1 billion) fourth-quarter loss on Tuesday, much of it stemming from bankruptcy proceedings, even as its revenue grew.

The nation's fourth-largest carrier said it lost $2.6 billion (€2.2 billion) for the full year.

The quarterly loss of $15.01 per share was more than triple its loss of $434 million (€365.47 million), or $5 per share, during the same period last year. The most recent quarter included $922 million (€776.4 million) of bankruptcy-related charges. Northwest filed for bankruptcy protection on Sept. 14.

Revenue was $2.91 billion (€2.5 billion), up 5.9 percent from $2.75 billion during the same period a year ago.

Northwest said it reduced capacity by 8.2 percent from the same period a year ago, cutting domestic capacity 9.2 percent and international capacity 6.7 percent. Most of the international cut came from the suspension of its daily New York-Tokyo flight and seasonal reductions in trans-Atlantic flying.

Northwest also said it is aiming to save $400 million (€336.8 million) a year on its fleet. It has rejected or abandoned 51 mainline and regional aircraft, and renegotiated leases or financing on 140 more.

The airline said it saved $155 million (€130.5 million) on payroll expenses after it replaced mechanics who struck in August. But it also said it spent $72 million (€60.6 million) more on maintenance because it hired contractors to do work that had been done by the striking mechanics.

Northwest said it spent $1.98 per gallon on fuel, excluding taxes. That was up 42 percent over the same period last year.

It said it ended the year with $1.26 billion (€1.1 billion) in unrestricted cash and short-term investments.

Also Tuesday, the IRS dropped a $38.1 million (€32.1 million) claim against Northwest for unpaid taxes and interest. In a filing in bankruptcy court, the IRS said Northwest "was not liable for the amount." It didn't say why.

"It's our understanding that it was a claim that was filed in error," said Northwest spokesman Kurt Ebenhoch. IRS spokeswoman Carrie Resch said she couldn't comment on individual taxpayer matters.