UPDATE 1-Northwest to cut capacity to counter high fuel

(recasts, adds details of plan)

WASHINGTON, April 3 (Reuters) - Northwest Airlines Corp (NWA.N: Quote, Profile, Research) will park aircraft and cut domestic capacity by an estimated 5 percent later this year and take other steps to counter skyrocketing fuel costs, the company said on Thursday.

The airline said it hopes cost reductions and revenue enhancements like previously announced fuel surcharges, higher fares, and new fees for bags, will improve its bottom line by $100 million on an annual basis.

"These increased costs are significant and call for a strong response from us," said Northwest Chief Executive Doug Steenland.

The move comes after Northwest and Delta Air Lines Inc (DAL.N: Quote, Profile, Research) failed to seal a merger deal last month after pilots from both airlines failed to reach agreement on how they would work together. The companies wanted labor support before proposing a deal to shareholders.

Delta announced capacity cuts last month, including a proposal to eliminate 2,000 jobs, mostly through buyouts and attrition.

Other airlines also have trimmed growth plans to stem the impact on high oil prices. Industry finances are growing steadily bleaker when fuel costs, sagging domestic travel demand and a weakening economy are weighed.

Northwest shares lost about 2 percent to close at $9.21 on the New York Exchange. Shares gained slightly in after hours trading.

The biggest U.S. airlines have been hurt by soaring fuel prices and low-fare competition that makes it hard for them to raise fares to cover sharply rising costs. In response, airlines have sought ways to bolster revenue and cut expenses.