12% Pre-Tax Margin Best Among U.S. Network Carriers
EAGAN, Minn.–(BUSINESS WIRE)–Oct. 29, 2007–Northwest Airlines
Corporation (NYSE:NWA) today reported a third quarter pre-tax profit
of $405 million, a 57 percent improvement versus the third quarter of
2006, excluding reorganization items. For the first nine months of
2007, Northwest reported a $778 million pre-tax profit, a 153 percent
improvement versus the first nine months of 2006, also excluding
reorganization items.
Northwest Airlines reported net income for the third quarter of
$244 million, or $0.93 per diluted share.
Doug Steenland, president and chief executive officer, said, “Our
third quarter pre-tax margin was 12 percent, the highest among U.S.
network carriers. Our pre-tax profit of $405 million was the airline’s
highest quarterly pre-tax profit in 10 years and the third highest in
Company history. Our year-to-date pre-tax margin of 8.2 percent,
excluding reorganization items, is also the highest among the network
carriers.”
Steenland added, “These results are consistent with our five-year
business plan, when adjusted for higher fuel prices. This strong
performance makes it possible for us to continue to invest in the
airline so that we can enhance shareholder value, remain competitive,
and preserve and enhance the jobs of our co-workers.”
Steenland praised employees for helping the airline achieve
industry-leading financial results, saying, “This remarkable
turnaround reflects the hard work and commitment of our employees and
demonstrates, once again, that we are all squarely focused on making
the new Northwest Airlines a world-class employer and our customers’
preferred choice for air travel.”
As part of fulfilling its commitments to employees, the airline
has accrued $72 million in profit sharing and performance incentive
payments for the first nine months of the year.
OPERATIONS
The third quarter also marked the return to Northwest’s historical
position of leadership in operational reliability.
“Since late July, the airline has successfully implemented actions
that resulted in improved operating performance during August,
September and October. Northwest’s system-wide completion factor
improved from 97 percent in July to 99.2 percent in August; 99.7
percent in September; and 99.4 percent month-to-date in October,”
Steenland said.
FINANCIAL RESULTS SUMMARY
Operating revenues for the third quarter were $3.4 billion, down
0.9 percent from last year. Excluding fresh-start accounting impacts,
consolidated passenger revenue per available seat mile (RASM)
increased 3.5 percent on a 0.8 percent decrease in available seat
miles (ASMs). The RASM performance was driven by a 2.1 percent
improvement in yield on a 1.2 percentage point improvement in load
factor during the quarter.
Third quarter operating expenses were down $122 million, or four
percent, year-over-year to $2.9 billion. At the same time, the
airline’s mainline unit costs excluding fuel were flat versus last
year.
Fuel expenses in the third quarter averaged $2.11 per gallon,
excluding taxes and before out of period hedge gains, and were down
1.5 percent versus the third quarter of 2006. Northwest had previously
hedged 40 percent of its fuel exposure for the quarter using a
combination of collars and swaps. These hedges generated $23 million
in fuel cost-savings for the quarter.
Dave Davis, executive vice president and chief financial officer,
said, “The third quarter again illustrated the continued strengthening
of our financial position. Third quarter EBITDAR was $674 million, a
20 percent EBITDAR margin, which was the highest among network
carriers.”
Davis added, “Today we have one of the strongest balance sheets in
the industry and we ended the quarter with $3.1 billion in
unrestricted cash.”
EBITDAR is defined as operating income excluding depreciation,
amortization and aircraft rents.
KEY INITIATIVES
Discussing developments since the carrier emerged from bankruptcy,
Steenland noted, “Northwest continues to forge ahead with key
initiatives that will generate further earnings improvements, enhance
shareholder value, strengthen our competitive position, and benefit
our employees.”
Update on Key Initiatives:
A. Profitability-enhancing Re-fleeting
— Northwest is halfway through its $6 billion re-fleeting
program. The program has added thirty-two Airbus A330s to the
airline’s fleet, and will involve the acquisition of
seventy-two 76-seat regional jets manufactured by Embraer and
Bombardier, and eighteen Boeing 787s.
— On Oct. 17, Northwest took delivery of its 32nd A330. In
addition to being the operator of the world’s largest A330
fleet, Northwest operates the youngest international fleet of
any U.S. carrier, with the retirement of its 747-200s and
DC10s from scheduled service.
— Earlier this year Northwest began taking delivery of
state-of-the-art 76-seat dual-class Embraer 175s and
Bombardier CRJ900s. Two of each of these aircraft types will
enter Northwest’s fleet every month through the end of 2008 at
which time Northwest will operate thirty-six E-175s and
thirty-six CRJ900s.
— Northwest is the North American launch customer for the Boeing
787 Dreamliner with eighteen firm orders and fifty options.
Together with the Boeing 747-400, the 787 is expected to
become the mainstay of Northwest’s Pacific fleet. The Company
expects the aircraft to be in service in the first quarter
2009 – well ahead of the peak summer season in the Pacific.
B. New Routes
— On Sept. 25, the U.S. Department of Transportation awarded
Northwest the authority to operate Detroit-Shanghai daily
nonstop service starting March 25, 2009.
— On June 6, Northwest began nonstop service from Detroit to
Dusseldorf, and on July 1 daily nonstop service from Hartford,
Conn. to Amsterdam started. These new routes use Boeing 757
aircraft equipped for transatlantic service.
— Earlier this month, Northwest announced that it will
inaugurate two new routes to Europe in the spring of 2008:
Minneapolis/St. Paul to Paris, and Portland, Ore. to
Amsterdam. In addition, in September, KLM Royal Dutch Airlines
announced that it will operate, as part of the NWA/KLM joint
venture, daily nonstop service between Amsterdam and
Dallas/Fort Worth beginning in 2008. This year marks the 10th
Anniversary of Northwest’s joint venture agreement with KLM.
C. Customer Service Enhancements
— Northwest continues to invest in facilities and equipment,
information technology, and numerous other initiatives to
improve its customers’ experience, including:
— Systems to provide a more convenient experience at the
airport, such as the ability to use a hand-held device to
check-in for flights.
— New Customer Relationship Management (CRM) tools and
programs to attract and reward high value customers.
— New equipment and information technology to build on
Northwest’s leadership in luggage handling.
— Improvements to Northwest’s WorldClubs.
D. Employee Focus
— The airline has launched the “Northwest Experience” for
front-line employees – the largest employee collaboration
initiative in more than a decade – as well as a newly
redesigned Captain Leadership program for Northwest pilots.
Both are designed to better equip employees to work together
as a team in delivering best-in-class customer service.
— Since the beginning of 2007, Northwest has contributed $95
million to its employee pension plans.
— Northwest has established over sixty employee involvement
teams. As part of this initiative, the Company is
collaborating with employees to implement their ideas to
improve the customer experience as well as make Northwest
Airlines a better place to work.
Steenland said, “Today’s solid performance is indicative of the
bright future ahead for Northwest Airlines. The ultimate beneficiaries
of our success will be the shareholders, customers, employees and the
communities we serve.”
FRESH-START REPORTING
Upon emergence from bankruptcy on May 31, 2007, the company
adopted fresh-start reporting. Under fresh-start reporting, Northwest
revalued its assets and liabilities to estimated market values. In
addition to these fair value adjustments, the company changed its
presentation of certain regional carrier-related revenue and expense
items, acquired Mesaba Aviation, and changed its policies pertaining
to the accounting for frequent flyer obligations and breakage of
passenger tickets.
These non-cash adjustments affected Northwest’s balance sheet,
statement of operations, and statement of cash flows. As a result of
the fresh-start reporting adjustments, Northwest’s financial
statements on and after June 1, 2007, are not comparable to its
previously issued financial statements.
FORWARD-LOOKING STATEMENTS
Statements in this news release that are not purely historical
facts, including statements regarding our beliefs, expectations,
intentions or strategies for the future, may be “forward-looking
statements” under the Private Securities Litigation Reform Act of
1995. All forward-looking statements involve a number of risks and
uncertainties that could cause actual results to differ materially
from the plans, intentions and expectations reflected in or suggested
by the forward-looking statements. Such risks and uncertainties
include, among others, the ability of the company to operate pursuant
to the terms of its financing facilities (particularly the related
financial covenants), the ability of the company to attract, motivate
and/or retain key executives and associates, the future level of air
travel demand, the company’s future passenger traffic and yields, the
airline industry pricing environment, increased costs for security,
the cost and availability of aviation insurance coverage and war risk
coverage, the general economic condition of the U.S. and other regions
of the world, the price and availability of jet fuel, the war in Iraq,
the possibility of additional terrorist attacks or the fear of such
attacks, concerns about Severe Acute Respiratory Syndrome (SARS) and
other influenza or contagious illnesses, labor strikes, work
disruptions, labor negotiations both at other carriers and the
company, low cost carrier expansion, capacity decisions of other
carriers, actions of the U.S. and foreign governments, foreign
currency exchange rate fluctuations and inflation. Additional
information with respect to the factors and events that could cause
differences between forward-looking statements and future actual
results is contained in the company’s Securities and Exchange
Commission filings, including the company’s Annual Reports on Form
10-K for the year ended December 31, 2006 and subsequent quarterly
reports on Form 10-Q and current reports on Form 8-K. We undertake no
obligation to update any forward-looking statements to reflect events
or circumstances that may arise after the date of this release.
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 CORPORATION
———————————————————————-
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
———————————————————————-
(Unaudited, in millions except per share amounts)
————- ————-
Successor (a) Predecessor
————- ————-
Three Months Three Months
Ended Ended %
September 30, September 30, Incr
2007 2006 (Decr)
————- ————- ——
OPERATING REVENUES
Passenger $ 2,577 $ 2,554 0.9
Regional carrier revenues 379 358 5.9
Cargo 212 254 (16.5)
Other 210 241 (12.9)
————- ————-
Total operating revenues 3,378 3,407 (0.9)
OPERATING EXPENSES
Aircraft fuel and taxes (b) 873 948 (7.9)
Salaries, wages and benefits
(c) 660 678 (2.7)
Aircraft maintenance materials
and repairs 210 170 23.5
Selling and marketing 185 199 (7.0)
Other rentals and landing fees 142 151 (6.0)
Depreciation and amortization 122 122 0.0
Aircraft rentals 93 52 78.8
Regional carrier expenses 192 356 (46.1)
Other 442 365 21.1
————- ————-
Total operating expenses 2,919 3,041 (4.0)
OPERATING INCOME (LOSS) 459 366 25.4
Operating margin 13.6% 10.7% 2.9 pts.
OTHER INCOME (EXPENSE)
Interest expense, net (107) (137) 21.9
Investment income 52 30 73.3
Foreign currency gain (loss) (2) (3) 33.3
Other 3 2 50.0
————- ————-
Total other income (expense) (54) (108) 50.0
————- ————-
INCOME (LOSS) BEFORE
REORGANIZATION
ITEMS AND INCOME TAXES 405 258
Reorganization items, net (d) – (1,431)
————- ————-
INCOME (LOSS) BEFORE INCOME
TAXES 405 (1,173)
Income tax expense (benefit) 161 6
————- ————-
NET INCOME (LOSS) APPLICABLE TO
COMMON STOCKHOLDERS $ 244 $ (1,179)
============= =============
Earnings (Loss) per common
share: (e)
Basic $ 0.93 $ (13.50)
Diluted $ 0.93 $ (13.50)
Average shares used in
computation:
Basic 262 87
Diluted 262 87
See accompanying consolidated notes.
NORTHWEST AIRLINES CORPORATION
———————————————————————-
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
———————————————————————-
(Unaudited, in millions except per share amounts)
——— ———– ——— ———–
Combined
Successor Predecessor (a) Predecessor
——— ———– ——— ———–
Period Nine
From Period From Months Nine Months
June 1 to January 1 Ended Ended
September to September September %
30, May 31, 30, 30, Incr
2007 2007 2007 2006 (Decr)
——— ———– ——— ———– ——
OPERATING
REVENUES
Passenger $ 3,438 $ 3,768 $ 7,206 $ 7,028 2.5
Regional
carrier
revenues 514 521 1,035 1,093 (5.3)
Cargo 281 318 599 704 (14.9)
Other 275 317 592 763 (22.4)
——— ———– ——— ———–
Total
operating
revenues 4,508 4,924 9,432 9,588 (1.6)
OPERATING
EXPENSES
Aircraft fuel
and taxes (b) 1,140 1,286 2,426 2,578 (5.9)
Salaries, wages
and benefits
(c) 865 1,027 1,892 2,029 (6.8)
Aircraft
maintenance
materials and
repairs 274 303 577 542 6.5
Selling and
marketing 250 315 565 583 (3.1)
Other rentals
and landing
fees 188 235 423 436 (3.0)
Depreciation
and
amortization 161 206 367 390 (5.9)
Aircraft
rentals 124 160 284 174 63.2
Regional
carrier
expenses 255 345 600 1,088 (44.9)
Other 597 684 1,281 1,122 14.2
——— ———– ——— ———–
Total
operating
expenses 3,854 4,561 8,415 8,942 (5.9)
OPERATING INCOME
(LOSS) 654 363 1,017 646 57.4
Operating
margin 14.5% 7.4% 10.8% 6.7% 4.1 pts.
OTHER INCOME
(EXPENSE)
Interest
expense, net (147) (219) (366) (413) 11.4
Investment
income 69 56 125 73 71.2
Foreign
currency gain
(loss) (1) – (1) (4) 75.0
Other 5 (2) 3 6 (50.0)
——— ———– ——— ———–
Total other
income
(expense) (74) (165) (239) (338) 29.3
——— ———– ——— ———–
INCOME (LOSS)
BEFORE
REORGANIZATION
ITEMS AND
INCOME TAXES 580 198 778 308
Reorganization
items, net (d) – 1,551 1,551 (2,870)
——— ———– ——— ———–
INCOME (LOSS)
BEFORE INCOME
TAXES 580 1,749 2,329 (2,562)
Income tax
expense
(benefit) 230 (2) 228 6
——— ———– ——— ———–
NET INCOME
(LOSS)
APPLICABLE TO
COMMON
STOCKHOLDERS $ 350 $ 1,751 $ 2,101 $ (2,568)
========= =========== ========= ===========
Earnings (Loss)
per common
share: (e)
Basic $ 1.33 $ 20.03 $ (29.42)
Diluted $ 1.33 $ 14.28 $ (29.42)
Average shares
used in
computation:
Basic 262 87 87
Diluted 262 113 87
See accompanying consolidated notes.
NORTHWEST AIRLINES CORPORATION
CONSOLIDATED NOTES:
———————————————————————-
(Unaudited)
(a) Northwest Airlines Corporation (“NWA Corp.” or the “Company”) is
a holding company whose operating subsidiary is Northwest
Airlines, Inc. (“Northwest”). In September 2005, NWA Corp. and
Northwest, along with certain direct and indirect subsidiaries
filed Chapter 11 petitions for relief in the U.S. Bankruptcy
Court for the Southern District of New York. On May 31, 2007,
the Company and its debtor subsidiaries emerged from Chapter 11.
In connection with its emergence from Chapter 11, the Company
adopted fresh-start reporting in accordance with American
Institute of Certified Public Accountants’ Statement of Position
90-7, Financial Reporting by Entities in Reorganization under
the Bankruptcy Code (“SOP 90-7”). References to “Successor”
refer to NWA Corp. on or after June 1, 2007, after giving effect
to the application of fresh-start reporting. References to
“Predecessor” refer to NWA Corp. prior to June 1, 2007. Thus,
the consolidated financial statements prior to June 1, 2007
reflect results based upon the historical cost basis of the
Company while the post-emergence consolidated financial
statements reflect the new basis of accounting incorporating the
fair value adjustments made in recording the effects of fresh-
start reporting. Therefore, the post-emergence periods are not
comparable to the pre-emergence periods. However, for
discussions on the results of operations, the Company has
compared the Successor Company’s results for the three months
ended September 30, 2007 to the Predecessor Company’s results
for the three months ended September 30, 2006, as well as
combined the results for the five months ended May 31, 2007 and
the four months ended September 30, 2007 to compare with the
Predecessor Company’s results for the nine months ended
September 30, 2006.
In addition to the fair value adjustments required for fresh-
start reporting, the Company changed its presentation of certain
regional carrier related revenue and expense items, acquired
Mesaba Aviation, Inc. and changed its policies pertaining to the
accounting for frequent flyer obligations and breakage of
passenger tickets. See the table of year-over-year variance
reconciliations for further details.
(b) During the three and nine months ended September 30, 2007, the
Company recorded $12 million and $34 million in mark-to-market
gains, respectively, related to fuel derivative contracts that
will settle in future periods. During the three and nine months
ended September 30, 2006, the Company recorded $16 million and
$15 million in mark-to-market losses, respectively, related to
fuel derivative contracts that settled during the fourth quarter
of 2006.
(c) During the quarter ended September 30, 2007, the Company recorded
an additional expense of $12 million for the summer reliability
incentive program.
(d) In connection with its bankruptcy proceedings and adoption of
fresh-start reporting, the Company recorded largely non-cash
reorganization income (expense) and, in accordance with GAAP,
these items are separately classified in the Condensed
Consolidated Statements of Operations.
(e) Successor EPS. The Company’s Plan of Reorganization contemplates
Reorganized NWA Corp. issuing approximately 277 million shares
out of the 400 million shares of new common stock authorized
under its amended and restated certificate of incorporation. The
new common stock was listed on the New York Stock Exchange and
began trading under the symbol “NWA” on May 31, 2007. The
distributions of Reorganized NWA Corp. common stock, subject to
certain holdbacks as described in the Plan of Reorganization,
were generally made as follows:
–234.4 million shares of common stock were issuable to holders
of certain general unsecured claims and holders of guaranty
claims;
–27.8 million shares of common stock issued in the Rights
Offering and Equity Commitment Agreement; and
–15.2 million shares of common stock are subject to awards
under a management equity plan.
In accordance with Statement of Financial Accounting Standards
No. 128, Earnings per Share (“SFAS No. 128”), basic and diluted
earnings per share were computed by dividing the Successor
Company’s net income by the weighted average number of shares of
common stock outstanding for the applicable reporting period
presented. SFAS No. 128 requires that the entire 234.4 million
shares issued to holders of unsecured and guaranty claims be
considered outstanding for purposes of calculating earnings per
share as these shares will ultimately be issued to unsecured
creditors once the resolution of disputed unsecured claims is
completed. The 15.2 million shares subject to awards under the
management equity plan were excluded from the computation of
diluted earnings per share because the effect of including the
shares would have been anti-dilutive.
Predecessor EPS. Predecessor basic earnings per share was
computed based on the Predecessor’s final weighted average
shares outstanding. Diluted earnings per share included
approximately 25.3 million dilutive securities related to the
Company’s Series C Preferred Stock and convertible debt.
NORTHWEST AIRLINES CORPORATION
———————————————————————-
RECONCILIATION OF YEAR-OVER-YEAR VARIANCES:
———————————————————————-
(Unaudited, in millions)
As a result of the adoption of fresh-start reporting, the Company’s
financial statements on or after June 1, 2007 are not comparable
with its pre-emergence financial statements because they are, in
effect, those of a new entity. In addition to the fair value
adjustments required for fresh-start reporting, the Company changed
its policies pertaining to the accounting for frequent flyer
obligations and breakage of passenger tickets. The effects of fresh-
start reporting, the policy changes and the impact of exit-related
stock compensation expense on the Company’s Condensed Consolidated
Statement of Operations are itemized below in column (A).
On April 24, 2007, Mesaba Aviation, Inc. was acquired by the Company
and became a wholly-owned consolidated subsidiary. The impact on the
Company’s year-over-year variance as a result of this consolidation
is itemized in column (B).
In conjunction with the Amended Airline Services Agreement with
Pinnacle Airlines, Inc. and the Stock Purchase and Reorganization
Agreement with Mesaba Aviation, Inc., the Company changed its
presentation of certain regional carrier related revenue and expense
items effective January 1, 2007. This change in presentation had no
impact on the Company’s operating income for the three months and
nine months ended September 30, 2007 and is itemized in column (C).
Excluding the items listed above, the comparable year-over-year
operating performance variances are itemized in column (D). System
passenger revenue increased 2.7 percent due primarily to a 3.5
percent improvement on unit revenue. Cargo revenue decreased on a
10.3 percent reduction in cargo traffic and a 7.3 percent reduction
in yield. Operating expenses are lower year-over-year due to the
successful implementation of the Company’s objectives to achieve
both labor and non-labor cost savings.
Successor Predecessor
————- ————–
Three Months Three Months
Ended Ended Total
September 30, September 30, Incr
2007 2006 (Decr)
————- ————- ——
OPERATING REVENUES
Passenger $ 2,577 $ 2,554 $ 23
Regional carrier revenues 379 358 21
Cargo 212 254 (42)
Other 210 241 (31)
————- ————- ——
Total operating revenues 3,378 3,407 (29)
OPERATING EXPENSES
Aircraft fuel and taxes 873 948 (75)
Salaries, wages and benefits 660 678 (18)
Aircraft maintenance materials
and repairs 210 170 40
Selling and marketing 185 199 (14)
Other rentals and landing fees 142 151 (9)
Depreciation and amortization 122 122 –
Aircraft rentals 93 52 41
Regional carrier expenses 192 356 (164)
Other 442 365 77
————- ————- ——
Total operating expenses 2,919 3,041 (122)
OPERATING INCOME (LOSS) 459 366 93
Operating margin 13.6% 10.7% 2.9 pts.
(A) (B) (C) (D)
—————————————-
Increase (Decrease) Due To:
—————————————-
Fresh-Start/ Mesaba Rgnl Total
Exit-Related Net of Carrier Incr
Stk Comp. Exp. Elim Reclass Operations (Decr)
—————————————- ——
OPERATING REVENUES
Passenger $ (39) $ – $ – $ 62 $ 23
Regional carrier
revenues 5 – – 16 21
Cargo – – – (42) (42)
Other 23 5 (55) (4) (31)
—————————————- ——
Total operating
revenues (11) 5 (55) 32 (29)
OPERATING EXPENSES
Aircraft fuel and
taxes – 4 – (79) (75)
Salaries, wages and
benefits 7 27 – (52) (18)
Aircraft maintenance
materials and repairs – 7 – 33 40
Selling and marketing (7) – – (7) (14)
Other rentals and
landing fees – 3 – (12) (9)
Depreciation and
amortization (2) 2 1 (1) –
Aircraft rentals – – 43 (2) 41
Regional carrier
expenses – (53) (99) (12) (164)
Other – 12 – 65 77
—————————————- ——
Total operating
expenses (2) 2 (55) (67) (122)
OPERATING INCOME (LOSS) (9) 3 – 99 93
Operating margin
———————————————————————-
EBITDAR CALCULATION:
———————————————————————-
(Unaudited, in millions)
Successor
————-
Three Months
Ended
September 30,
2007
————-
Operating income (loss) $ 459
Depreciation and amortization 122
Aircraft rentals 93
————-
EBITDAR (1) 674
EBITDAR margin 20.0%
(1) EDITDAR is defined as operating income excluding depreciation,
amortization and aircraft rents. The Company believes that
EDITDAR is a useful financial measure when comparing the
Company’s financial results to those of the industry.
NORTHWEST AIRLINES CORPORATION
———————————————————————-
PASSENGER AND REGIONAL CARRIER REVENUES AND STATISTICAL RESULTS
———————————————————————-
(Unaudited)
Three Months Ended
September 30,
————————— Percent
2007 2006 Change
————- ————- ——-
Scheduled Service –
Consolidated: (1)
Available seat miles (ASM)
(millions) 23,889 24,073 (0.8)
Revenue passenger miles (RPM)
(millions) 20,644 20,521 0.6
Passenger load factor 86.4 % 85.2 % 1.2 pts.
Revenue passengers (millions) 17.3 17.6 (1.7)
Passenger revenue per RPM
(yield) 14.32 cents 14.19 cents 0.9
Passenger revenue per RPM
(yield)
excluding fresh-start 14.49 cents 14.19 cents 2.1
Passenger revenue per ASM
(RASM) 12.38 cents 12.10 cents 2.3
Passenger revenue per ASM
(RASM)
excluding fresh-start 12.52 cents 12.10 cents 3.5
Scheduled Service – Mainline:
(2)
Available seat miles (ASM)
(millions) 22,030 22,237 (0.9)
Revenue passenger miles (RPM)
(millions) 19,215 19,160 0.3
Passenger load factor 87.2 % 86.2 % 1.0 pts.
Revenue passengers (millions) 13.9 14.3 (2.8)
Passenger revenue per RPM
(yield) 13.41 cents 13.33 cents 0.6
Passenger revenue per RPM
(yield)
excluding fresh-start 13.61 cents 13.33 cents 2.1
Passenger revenue per ASM
(RASM) 11.70 cents 11.48 cents 1.9
Passenger revenue per ASM
(RASM)
excluding fresh-start 11.87 cents 11.48 cents 3.4
Nine Months Ended
September 30,
—————————
Percent
2007 2006 Change
————- ————- ———–
Scheduled Service –
Consolidated: (1)
Available seat miles (ASM)
(millions) 70,438 69,713 1.0
Revenue passenger miles (RPM)
(millions) 59,453 59,053 0.7
Passenger load factor 84.4 % 84.7 % (0.3)pts.
Revenue passengers (millions) 50.3 51.1 (1.6)
Passenger revenue per RPM
(yield) 13.86 cents 13.75 cents 0.8
Passenger revenue per RPM
(yield)
excluding fresh-start 13.97 cents 13.75 cents 1.6
Passenger revenue per ASM
(RASM) 11.70 cents 11.65 cents 0.4
Passenger revenue per ASM
(RASM)
excluding fresh-start 11.80 cents 11.65 cents 1.3
Scheduled Service – Mainline:
(2)
Available seat miles (ASM)
(millions) 65,178 64,098 1.7
Revenue passenger miles (RPM)
(millions) 55,518 54,871 1.2
Passenger load factor 85.2 % 85.6 % (0.4)pts.
Revenue passengers (millions) 40.9 41.2 (0.7)
Passenger revenue per RPM
(yield) 12.98 cents 12.81 cents 1.3
Passenger revenue per RPM
(yield)
excluding fresh-start 13.11 cents 12.81 cents 2.3
Passenger revenue per ASM
(RASM) 11.06 cents 10.96 cents 0.9
Passenger revenue per ASM
(RASM)
excluding fresh-start 11.17 cents 10.96 cents 1.9
———————————————————————-
PASSENGER AND REGIONAL CARRIER REVENUES
———————————————————————-
(Unaudited)
Domestic Pacific Atlantic
——– ——- ——–
As reported:
——————————–
Third Quarter 2007
Passenger revenues (in
millions) $ 1,531 $ 626 $ 420
Increase (Decrease) from 2006:
Passenger revenues (4.2)% 3.1% 20.3 %
Scheduled service ASMs
(capacity) (5.5)% 0.3% 15.5 %
Scheduled service RPMs
(traffic) (3.3)% 0.9% 12.9 %
Passenger load factor 1.9 pts. 0.5pts. (2.0)pts.
Yield (0.9)% 2.3% 6.7 %
Passenger RASM 1.3 % 2.9% 4.3 %
Excluding fresh-start:
——————————–
Third Quarter 2007
Passenger revenues (in
millions) $ 1,566 $ 636 $ 414
Increase (Decrease) from 2006:
Passenger revenues (2.0)% 4.8% 18.6 %
Yield 1.3 % 3.9% 5.0 %
Passenger RASM 3.7 % 4.6% 2.7 %
Mainline Consolidated
——– ————
As reported:
——————————–
Third Quarter 2007
Passenger revenues (in
millions) $ 2,577 $ 2,956
Increase (Decrease) from 2006:
Passenger revenues 0.9 % 1.5 %
Scheduled service ASMs
(capacity) (0.9)% (0.8)%
Scheduled service RPMs
(traffic) 0.3 % 0.6 %
Passenger load factor 1.0 pts. 1.2 pts.
Yield 0.6 % 0.9 %
Passenger RASM 1.9 % 2.3 %
Excluding fresh-start:
——————————–
Third Quarter 2007
Passenger revenues (in
millions) $ 2,616 $ 2,990
Increase (Decrease) from 2006:
Passenger revenues 2.4 % 2.7 %
Yield 2.1 % 2.1 %
Passenger RASM 3.4 % 3.5 %
(1) Consolidated statistics include Northwest Airlink regional
carriers.
(2) Mainline statistics exclude Northwest Airlink regional carriers,
which is consistent with how the Company reports statistics to
the Department of Transportation (“DOT”).
NORTHWEST AIRLINES CORPORATION
———————————————————————-
MAINLINE OPERATING STATISTICAL RESULTS (1)
———————————————————————-
(Unaudited)
Three Months Ended
September 30,
————————— Percent
2007 2006 Change
————- ————- ——-
Total operating ASM (millions) 22,059 22,289 (1.0)
Passenger service operating
expense per total ASM (2) (3) 10.76 cents 10.98 cents (2.0)
Summer Reliability Incentive
Program expense per total ASM 0.05 cents – cents n/m
Mainline fuel expense per total
ASM 3.47 cents 3.71 cents (6.5)
Mainline fuel expense per total
ASM, excluding mark-to-market
adjustments related to fuel
derivative contracts that
settle in future periods 3.52 cents 3.65 cents (3.6)
Cargo ton miles (CTM) (millions) 529 590 (10.3)
Cargo revenue per ton mile 40.00 cents 43.17 cents (7.3)
Fuel gallons consumed (millions) 398 417 (4.6)
Average fuel cost per gallon,
excluding fuel taxes 208.17 cents 217.78 cents (4.4)
Average fuel cost per gallon,
excluding fuel taxes and mark-
to-market adjustments related
to fuel derivative contracts
that settle in future periods 210.89 cents 214.06 cents (1.5)
Number of operating aircraft at
end of period
Full-time equivalent employees
at end of period
Nine Months Ended
September 30,
————————— Percent
2007 2006 Change
————- ————- ——-
Total operating ASM (millions) 65,248 64,187 1.7
Passenger service operating
expense per total ASM (2) (3) 10.52 cents 11.04 cents (4.7)
Summer Reliability Incentive
Program expense per total ASM 0.02 cents – cents n/m
Mainline fuel expense per total
ASM 3.29 cents 3.49 cents (5.7)
Mainline fuel expense per total
ASM, excluding mark-to-market
adjustments related to fuel
derivative contracts that
settle in future periods 3.34 cents 3.47 cents (3.7)
Cargo ton miles (CTM) (millions) 1,491 1,703 (12.4)
Cargo revenue per ton mile 40.16 cents 41.36 cents (2.9)
Fuel gallons consumed (millions) 1,167 1,196 (2.4)
Average fuel cost per gallon,
excluding fuel taxes 197.35 cents 205.31 cents (3.9)
Average fuel cost per gallon,
excluding fuel taxes and mark-
to-market adjustments related
to fuel derivative contracts
that settle in future periods 200.06 cents 204.05 cents (2.0)
Number of operating aircraft at
end of period 364 373 (2.4)
Full-time equivalent employees
at end of period 29,579 31,084 (4.8)
(1) Mainline statistics exclude Northwest Airlink regional carriers,
which is consistent with how the Company reports statistics to
the Department of Transportation (“DOT”).
(2) This financial measure excludes non-passenger service expenses.
The Company believes that providing financial measures directly
related to passenger service operations allows investors to
evaluate and compare the Company’s core operating results to
those of the industry.
(3) Passenger service operating expense excludes the following items
unrelated to passenger service operations:
Three Months Ended Nine Months Ended
September 30, September 30,
—————— —————–
(In millions) 2007 2006 2007 2006
——– ——- ——- ——-
Regional carrier
expenses $ 320 $ 356 $ 899 $ 1,088
Freighter operations 173 194 460 582
MLT Inc. – net of
intercompany
eliminations 40 41 145 157
Other 14 2 48 29
NORTHWEST AIRLINES CORPORATION
———————————————————————-
SELECTED BALANCE SHEET DATA
———————————————————————-
(Unaudited, in millions)
Successor Predecessor
————- ————
September 30, December 31,
2007 2006
————- ————
Cash and cash equivalents $ 2,559 $ 1,461
Unrestricted short-term
investments 572 597
Restricted cash, cash equivalents
and short-term investments 739 424
Total assets 24,393 13,215
Total debt and capital leases,
including current maturities 6,914 8,899 (1)
Total liabilities 16,839 20,929
Total common stockholders’ equity
(deficit) 7,554 (7,991)
(1) Includes certain debt and capital
lease obligations classified as
subject to compromise as of
December 31, 2006.
———————————————————————-
FOURTH QUARTER 2007 AND 2007 FULL YEAR GUIDANCE
———————————————————————-
4Q 2007 Forecast 2007 Forecast
(year-over-year change) (year-over-year change)
———————– ———————–
Scheduled
service ASMs
(capacity)
Domestic (1) (6%) – (7%) (2%) – (3%)
International 2% – 3% 4% – 5%
Mainline (1) (2%) – (3%) 0% – 1%
Regional 14% – 15% (1%) – (2%)
Consolidated
(2) (1%) – (2%) 0% – 1%
Passenger
service
operating
expense per
total ASM
excluding
fuel (1) 2.5% – 3.5% (2%) – (3%)
4Q 2007 Forecast 2007 Forecast
———————– ———————–
Average fuel
cost per
gallon,
excluding
fuel taxes
(1) $2.40 $2.06
Fuel gallons
consumed
(millions) 374 1,541
(1) Mainline statistics exclude Northwest Airlink regional carriers,
which is consistent with how the Company reports statistics to
the Department of Transportation (“DOT”).
(2) Consolidated statistics include Northwest Airlink regional
carriers.
———————————————————————-
ESTIMATED FRESH-START AND EXIT-RELATED STOCK COMPENSATION EXPENSE
———————————————————————-
(In millions)
Inc (Decr)
———-
4Q 2007
Estimate
———-
OPERATING REVENUES
Passenger and regional carrier revenues $ (26)
Other 23
———-
Total operating revenues (3)
OPERATING EXPENSES
Salaries, wages and benefits 9
Selling and marketing (4)
Depreciation and amortization (2)
———-
Total operating expenses 3
OPERATING INCOME (LOSS) $ (6)
–30–
CONTACT: Northwest Airlines
Northwest Media Relations, 612-726-2331
www.nwa.com
