Northwest Airlines Announces Fourth Quarter Capacity Reductions in Response to Continued Fuel Crisis

Business Editors/Airline Writers

EAGAN, Minn.--(BUSINESS WIRE)--June 17, 2008-- Northwest Airlines (NYSE: NWA) today announced further capacity reductions for the fourth quarter of 2008 in response to the high cost of fuel.

At the Merrill Lynch Global Transportation Conference, Northwest CEO Doug Steenland plans to detail how Northwest Airlines is responding to the industry's oil shock. He will also explain to industry analysts why -- with high fuel prices being the industry's greatest threat since 9/11 - the planned merger with Delta Air Lines, and resulting synergy benefits, make the case for the merger stronger than ever.

Steenland said, "In response to these extraordinary fuel costs, we are taking prudent actions to reduce our capacity and right-size the airline. This will allow us to better match our capacity to customer demand as airfares, by necessity, must increase."

4th Quarter '08 Capacity Reductions

Northwest will reduce its system mainline capacity (domestic and international) in the fourth quarter of 2008 by 8.5% - 9.5% versus the fourth quarter of 2007. This includes the reductions previously announced in April.

Steenland added, "No domestic station closures are planned as a result of these capacity reductions. Instead, we will pare unprofitable flying while maintaining the scope and presence of our network."

The airline has not yet finalized the specific employee impacts related to the reduced flying. However, for the resulting headcount reductions, NWA will first look to voluntary separation programs such as early-outs.

Q4 Capacity (ASMs) % change vs. Q4 '07 ---------------------------------------------- ----------------------- System mainline capacity (domestic and international) (8.5%) - (9.5%) Domestic consolidated (includes regionals) (7%) - (8%) System consolidated (includes regionals and international) (3%) - (4%)

Fleet reductions

As a result of the reduced capacity, Northwest is removing a combination of 14 B757s and Airbus narrowbody aircraft from the fleet.

In addition, the DC-9 fleet will be reduced from 94 aircraft at the start of 2008 to 61 aircraft (20 DC9-30s and 41 DC9-40s/50s) by year-end.

Northwest also accelerated the retirement of three freighter aircraft from its cargo operation.

Revenue Enhancements

On the revenue side, Steenland said the carrier is also continuing to take actions to improve revenues with added fuel surcharges, fare and fee increases. In May, Northwest began collecting fees for two or more checked bags.

The Case for the Merger is Stronger than Ever

"When we first contemplated a merger with Delta, as oil was approaching $100 a barrel, we knew this was the right deal with the right partner. Now, with oil above $130 a barrel, the case for the merger, with its resulting synergies, is stronger than ever," said Steenland, as he detailed the unique advantages of the Northwest-Delta merger in the context of record breaking oil prices.

-- The merger-related synergies will improve the financial ability of Northwest and Delta to meet the challenge presented by the fuel crisis and better position the combined carrier for long-term strength and profitability.

-- This is a transaction that is facilitated by best-in-class cost structures; one that will create an industry-leading balance sheet in any operating environment.

-- The transaction will create a worldwide, geographically balanced network - which will enhance customer preference and make the combined carrier more competitive.

-- This is a merger of choice by the two strongest network carriers. The two carriers have already begun planning for a smooth and rapid integration in order to promptly capture and potentially exceed the synergies projected when the two carriers announced the deal.

Northwest Airlines is one of the world's largest airlines with hubs at Detroit, Minneapolis/St. Paul, Memphis, Tokyo and Amsterdam, and approximately 1,400 daily departures. Northwest is a member of SkyTeam, an airline alliance that offers customers one of the world's most extensive global networks. Northwest and its travel partners serve more than 1,000 cities in excess of 160 countries on six continents.

Northwest Airlines

State Keywords: MinnesotaIndustry Keywords: Source: Northwest Airlines