October 31, 2006
Northwest Airlines on Tuesday posted a large quarterly net loss due to reorganization and other one-time items.
Northwest, which has been in bankruptcy for more than a year, said its third-quarter loss totaled USD$1.2 billion, compared with a loss of USD$475 million a year earlier.
The loss was due to USD$1.4 billion in restructuring and bankruptcy-related charges, partly related to curtailing employees' pension plans.
Northwest has now lost more than USD$3.89 billion since filing for Chapter 11 bankruptcy protection in September 2005 according to the company's quarterly reports.
The carrier, like many traditional rivals, has been suffering from low-cost competition and more recently from high fuel costs. Airlines like Northwest have lately been fighting back by cutting costs and selling fewer seats at higher prices to maximize profit margins.
Northwest is in the process of cutting its costs by USD$2.5 billion a year and has already met its labor cost savings goal of USD$1.4 billion by renegotiating its union contracts. The airline is expecting to emerge from bankruptcy in the first half of next year.
Excluding the one-time and restructuring charges Northwest reported a third quarter net profit of USD$252 million versus a net loss of USD$234 million in the year-ago quarter.
Northwest's operating revenue rose 1 percent to USD$3.4 billion, helped by higher ticket prices. Operating expenses fell 12 percent, excluding unusual items, to USD$3 billion, spurred by cuts in labor costs.
During the quarter Northwest's fuel averaged USD$2.18 per gallon, excluding taxes, up 18 percent from a year ago. The higher prices were partly offset by lower capacity -- the number of seats for sale -- Northwest said.
The airline repeated its forecast of a loss, excluding reorganization items, for the last four months of this year.
(Reuters)