Northwest Air Makes Progress

The airline narrows its quarterly loss.
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Northwest Airlines

(NWACQ)

reported a pretax loss of $7 million in the fourth quarter, a major improvement from a year earlier, and said it expects further advancements in 2007.

The fifth-largest airline, which is operating under bankruptcy court protection, had a pretax loss of $386 million in the same quarter of 2005. Including reorganization items, Northwest lost $267 million in the quarter, compared with a $1.3 billion loss a year earlier. Fourth-quarter revenue was $2.98 billion, up 2.2%.

During the quarter, passenger revenue per available seat mile rose 5.9%, as capacity grew by 2% and system passenger revenue climbed 8% to $2.2 billion. Consolidated passenger RASM grew by 4.4%.

Meanwhile, mainline cost per available seat mile declined by 14%, primarily as a result of reduced costs for labor and aircraft rentals.

For the full year, excluding reorganization items, Northwest reported a pretax profit of $301 million, marking its first profitable year since 2000. The carrier lost $1.38 billion in 2005. Including reorganization items, Northwest lost $2.8 billion in 2006, compared with $2.56 billion a year earlier.

At year-end, Northwest had $2.1 billion in unrestricted cash and short-term investments.

"Clearly, the work we have done to reposition Northwest for the long term is showing tangible results," said CEO Doug Steenland in a prepared statement. "To report an annual pretax profit is another major milestone in Northwest's restructuring efforts."