NWA Reports $285 Million Quarterly Loss
By Aaron Karp, Air Transportation World | Aug. 08, 2006
Northwest Airlines reported a second-quarter net loss of $285 million, widened from $234 million in the year-ago period, but insisted it is making "steady progress" as it works toward emerging from bankruptcy protection.Excluding reorganization-related items, the carrier said it earned $179 million in the period, improved from a net loss of $288 million excluding unusual items last year.
President and CEO Doug Steenland said yesterday that NWA received a boost when Congress passed pension reform legislation that "will enable [it] to preserve its frozen defined benefit pension plans" (ATWOnline, Aug. 7) and that NWA has achieved $1.4 billion in annual savings, more than halfway to the targeted $2.5 billion.
Operating revenues increased 3% to $3.3 billion while expenses decreased 11.5% to $3 billion. Operating income was $295 million, reversing an operating loss of $190 million a year-ago quarter. Yield grew 12% to 13.93 cents as RPMs fell 6.3% to 20.25 billion. With capacity down 9.9% to 23.45 billion ASMs, load factor rose 3.3 points to 86.4%, pushing up RASM 16.1% to 11.41 cents while CASM excluding fuel costs fell 13.1% to 7.44 cents.
"We are pleased to have made progress in both revenues and costs during the quarter as evidenced by double-digit improvements in both RASM and CASM, excluding fuel, which marks the first such time during the company's restructuring that this has been achieved," CFO Neal Cohen said.
NWA cited several areas of progress, including finalizing concessionary agreements with nearly all of its labor unions. Its flight attendants, however, twice have rejected tentative accords and are threatening a strike (ATWOnline, Aug. 3). The company also said it has either rejected or entered into "new, more favorable lease or debt arrangements" covering 243 aircraft. It is targeting $400 million in annual fleet ownership cost savings.
"Notwithstanding these accomplishments, we still have work ahead of us to ensure that the airline is positioned for long-term success," Steenland said. "Going forward, with fuel costs forecasted to remain at record levels, we must maintain our relentless focus on all elements of our [restructuring] plan."