Loss Worsens for Northwest
Northwest Airlines (NWACQ), one of three large U.S. carriers operating in bankruptcy, said its third-quarter loss widened as a result of its higher fuel bill and Chapter 11 expenses.
Management at the Eagan, Minn.-based airline, which filed for Chapter 11 bankruptcy protection last month, said the results bolster the case for a dramatic restructuring aimed at restoring Northwest's competitiveness in an era of expensive fuel and low-cost rivals.
Northwest, the nation's fourth-biggest carrier by passenger traffic, said late Thursday it lost $475 million, or $5.45 a share in the latest quarter, vs. $46 million, or 54 cents a share, a year before.
Results included $82 million in pension curtailment charges and $159 million in reorganization items related to the bankruptcy. Without those items, Northwest lost $234 million, or $2.69 a share.Revenue rose 10.7% year over year to $3.38 billion from $3.05 billion. "Our third quarter results clearly demonstrate the need for Northwest to restructure expeditiously," said Doug Steenland, the company's CEO. "We now are focusing on achieving a competitive labor and nonlabor cost structure, strengthening our balance sheet, achieving market-level lease rates on our aircraft, developing a more efficient business model and returning to profitability." Northwest's labor costs are high relative to competitors, some of whom have already used the bankruptcy process to slash wages and benefits and terminate pension obligations. Northwest wants the court overseeing its bankruptcy to terminate its union contracts if employees don't agree to significant concessions. The airline's fuel expense rose 47.6% to $893 million in the latest quarter from a year before. Hurricane Katrina knocked out refineries around the Gulf Coast, causing prices for highly refined jet kerosene to soar in the last month of the quarter from already high levels.
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