Northwest Airlines

(NWAC)

has formulated plans for a combination of revenue-enhancing and cost-reduction initiatives totaling more than $200 million -- a move that comes a week after the company issued a

profit warning for the first quarter.

The company said Tuesday that it will undertake a number of cost-cutting and revenue-building steps to achieve the savings. The airline plans to optimize its flying schedule and fleet composition, including the early retirement of three DC10-40 aircrafts in the fall. Northwest will also defer advertising, management training and other "discretionary spending."

The carrier will also lower management payroll expenses by 5% and defer officer and director merit salary increases until February of 2002. "These are never easy things to do, but prudent management dictates that we reduce the overhead of the airline," the company said in a statement. Northwest said it doesn't plan to achieve the reduction in management payroll expense with company-wide, across-the-board layoffs, but will leave each department in charge of how the cost reductions will be reached.

Last week, the company said it expected a first-quarter loss of $130 million to $150 million, or $1.55 to $1.80 a share, because of decreased business travel, uncertainty in Asia, and a slowdown in the cargo market. At the time, Wall Street was expecting the company to post a 59-cent loss for the quarter.

Shares of Northwest, which is based in Eagan, Minn., gained 31 cents, or 1.6%, to $20.25 in regular-session

Nasdaq

trading.