6.1 Percent Pre-Tax Margin Best among U.S. Network Carriers
EAGAN, Minn.--(Business Wire)--Northwest Airlines Corporation (NYSE: NWA) today reported a 2007
pre-tax profit of $764 million before reorganization items, a 154
percent improvement over its 2006 pre-tax income of $301 million
before reorganization items.
For the fourth quarter 2007, Northwest reported a net loss of $8
million, or $0.03 cents per diluted share. Results for the fourth
quarter include a $14 million pre-tax loss associated with the sale of
its remaining equity interest in Pinnacle Airlines. Excluding this
item, Northwest's results were break-even for the fourth quarter of
2007. In the fourth quarter of 2006, Northwest reported a $267 million
net loss, or $3.06 per diluted share.
Doug Steenland, Northwest Airlines' president and chief executive
officer, said, "This marks our second consecutive year of
profitability and the third highest pre-tax profit in Company history.
Excluding reorganization items, Northwest's 2007 results improved by
$463 million over 2006 and over $2.1 billion when compared to 2005.
Our 2007 pre-tax margin of 6.1 percent is also the highest among the
network carriers. I want to recognize the hard work of our employees
and management team for delivering these industry-leading results."
Steenland added, "Our front-line employees and flight crews
deserve great credit for running a very reliable airline during the
peak travel periods in November and December, despite the significant
winter weather challenges. As a result of our employees' efforts and
commitment over the course of the year, the Company will have paid out
to them $125 million in profit sharing, performance incentives and
reliability payments. This will be the highest employee incentives
payout in Company history, nearly a 175 percent improvement over
2006."
REVENUE IMPROVEMENTS
Northwest's operating revenues for the fourth quarter rose to $3.1
billion, up 3.9 percent from last year.
Consolidated passenger revenue per available seat mile (RASM)
increased by 4.8 percent versus the fourth quarter of 2006. Excluding
the impact of fresh-start accounting, consolidated RASM increased 5.9
percent on a 1.5 percent decrease in available seat miles (ASMs). The
RASM performance was driven by a 5.1 percent improvement in yield on a
0.6 percentage point improvement in load factor during the quarter.
"We saw unit revenue accelerate throughout the year as we
continued to make disciplined capacity decisions. We are confident
that we can build on this solid performance in 2008. In fact, our
bookings remain strong across the system and we have seen no evidence
of slowing demand," said Tim Griffin, Northwest's executive vice
president marketing and distribution.
COST DRIVERS
Fourth quarter operating expenses were up $123 million, or 4.3
percent, year-over-year to $3.0 billion. Excluding fuel costs,
operating expenses were down by $6 million year-over-year. Also,
excluding fuel costs and unusual items, Northwest's fourth quarter
unit costs per available seat mile (CASM) increased 5.1 percent versus
the fourth quarter of 2006 primarily due to significantly reduced
capacity, as well as higher profit sharing, employee incentive
programs and certain non-cash emergence-related items.
For the full year 2007, CASM excluding fuel costs and unusual
items decreased 2 percent versus 2006.
Northwest's single largest expense continues to be fuel. For the
quarter, Northwest paid $2.35 per gallon of jet fuel, excluding taxes
and before out of period hedge gains. This was nearly 42 cents, or
21.7 percent, higher than fourth quarter of 2006.
Northwest had previously hedged approximately 50 percent of its
fuel exposure for the quarter using a combination of collars and
swaps.
Northwest ended the quarter with $3.0 billion in unrestricted cash
and $725 million in restricted cash. This restricted cash balance
includes $213 million placed in escrow to fund the pending acquisition
of a minority position in Midwest Airlines. Northwest's 2006 year-end
unrestricted cash was $2.1 billion.
Dave Davis, executive vice president and chief financial officer
said, "The fact that Northwest delivered full-year pre-tax income of
$764 million, and ended the year with $3.0 billion in unrestricted
cash despite the highest fuel prices in history, illustrates the
earnings power of the Northwest Airlines franchise."
NORTHWEST HIGHLIGHTS
In discussing the airline's achievements for the fourth quarter,
Steenland noted, "Northwest continues to establish itself as an
industry leader with investments in our employees, our fleet and the
communities we serve. All of these initiatives contribute to making
Northwest a world-class airline."
A. Employee Investments
-- Northwest accrued $22 million in profit sharing payments to
employees for the fourth quarter and nearly $80 million for
the full year.
-- Northwest also accrued $4 million in performance incentive
plan payouts during the quarter and $19 million for the full
year.
-- Northwest will pay out $14 million as part of its fourth
quarter holiday reliability plan, of which $12 million was
accrued in the fourth quarter. Northwest had previously paid
out $12 million as part of the summer reliability initiative.
-- Northwest made $127 million in employee pension and retirement
plan payments in 2007.
B. Operational Excellence
-- In November, Northwest announced its "20 Point Holiday Travel
Reliability Plan" as part of the airline's commitment to
provide the best possible service to our customers. For
example, during the peak five day Thanksgiving travel period,
the plan helped Northwest achieve three 100 percent completion
factor days with only three flight cancellations.
C. New Routes
-- Northwest and its joint venture partner KLM Royal Dutch
Airlines will inaugurate six new routes to Europe in the
spring of 2008:
-- Portland, Ore. - Amsterdam beginning March 29
-- Minneapolis/St. Paul - London Heathrow beginning March 29
-- Dallas/Fort Worth - Amsterdam beginning March 30
-- Minneapolis/St. Paul - Paris beginning April 8
-- Detroit - London Heathrow beginning May 1
-- Seattle - London Heathrow beginning June 1
D. Anniversary of Northwest/KLM Joint Venture
-- Northwest and its joint venture partner, KLM Royal Dutch
Airlines, celebrated the 10th Anniversary of the joint venture
in the fourth quarter - marking a major milestone for one of
the most successful partnerships in the history of the airline
industry.
E. Fleet renewal
-- As part of its $6 billion re-fleeting program, in the fourth
quarter, Northwest took delivery of its 32nd A330 aircraft.
Northwest now operates the world's largest A330 fleet, the
youngest international fleet and youngest transatlantic fleet
of any U.S. carrier.
-- Northwest's regional jet fleet also grew in the fourth quarter
with the delivery of six Bombardier CRJ-900s and five Embraer
EMB-175s, bringing the airline's year-end total to 13 CRJ-900s
and nine EMB-175s.
-- In the first quarter 2008, Northwest plans to take delivery of
six additional CRJ-900s and eight more EMB-175s.
-- By the end of 2008, Northwest's scheduled deliveries will
bring its regional jet fleet to 36 EMB-175s and 36 CRJ-900s.
-- Northwest's 2008 flying plan includes a reduction of its DC9
fleet over the course of the year, with the largest reduction
coming after the peak summer travel months. By the end of
2008, Northwest intends to operate a fleet of 68 DC9 aircraft,
including 34 DC9-50s, 12 DC9-40s and 22 DC9-30s.
F. New Environmental Initiatives
-- In December 2007, Northwest launched its EarthCares
environmental program with a $1 million gift on behalf of the
airline's employees and customers to its founding partner, The
Nature Conservancy.
-- Later this year, Northwest customers will have the option of
contributing to wildlife and land conservation projects around
Northwest's hubs in Minneapolis/St. Paul, Detroit, and Memphis
as well as China's First National Park. Customers will also be
able to purchase carbon offset credits when they book their
travel online.
-- Northwest has reduced its own carbon emissions by 25 percent
since the year 2000 through its transition to newer, more
fuel-efficient aircraft.
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 Report 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.
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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
----------------------------------------------------------------------
(Unaudited, in millions except per share amounts)
Successor (a) Predecessor
------------- ------------
Three Months Three Months
Ended Ended %
December 31, December 31, Incr
2007 2006 (Decr)
------------- ------------ -------
OPERATING REVENUES
Passenger $2,222 $2,202 0.9
Regional carrier revenues 370 306 20.9
Cargo 241 242 (0.4)
Other 263 230 14.3
------------- ------------
Total operating revenues 3,096 2,980 3.9
OPERATING EXPENSES
Aircraft fuel and taxes (b) 937 808 16.0
Salaries, wages and benefits 676 610 10.8
Aircraft maintenance
materials and repairs 234 254 (7.9)
Selling and marketing 186 176 5.7
Other rentals and landing
fees 116 126 (7.9)
Depreciation and
amortization 128 129 (0.8)
Aircraft rentals 94 52 80.8
Regional carrier expenses 193 318 (39.3)
Other unusual items (c) - 23 (100.0)
Other 445 390 14.1
------------- ------------
Total operating expenses 3,009 2,886 4.3
OPERATING INCOME (LOSS) 87 94 (7.4)
Operating margin 2.8% 3.2% (0.4) pts.
OTHER INCOME (EXPENSE)
Interest expense, net (126) (142) (11.3)
Investment income 36 36 0.0
Foreign currency gain (loss) (4) (3) 33.3
Other unusual items (d) (14) - n/m
Other 7 8 (12.5)
------------- ------------
Total other income
(expense) (101) (101) 0.0
------------- ------------
INCOME (LOSS) BEFORE
REORGANIZATION ITEMS AND
INCOME TAXES (14) (7)
Reorganization items, net
(e) - (295)
------------- ------------
INCOME (LOSS) BEFORE INCOME
TAXES (14) (302)
Income tax expense (benefit) (6) (35)
------------- ------------
NET INCOME (LOSS) APPLICABLE
TO COMMON STOCKHOLDERS $ (8) $ (267)
============= ============
Earnings (Loss) per common
share: (f)
Basic $(0.03) $(3.06)
Diluted $(0.03) $(3.06)
Average shares used in
computation:
Basic 262 87
Diluted 262 87
See accompanying consolidated notes.
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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
----------------------------------------------------------------------
(Unaudited, in millions except per share amounts)
Successor Predecessor
------------ ------------
Period From Period From
June 1 to January 1 to
December 31, May 31,
2007 2007
------------ ------------
OPERATING REVENUES
Passenger $5,660 $3,768
Regional carrier revenues 884 521
Cargo 522 318
Other 538 317
------------ ------------
Total operating revenues 7,604 4,924
OPERATING EXPENSES
Aircraft fuel and taxes (b) 2,089 1,289
Salaries, wages and benefits 1,541 1,027
Aircraft maintenance materials and repairs 508 303
Selling and marketing 436 315
Other rentals and landing fees 304 235
Depreciation and amortization 289 206
Aircraft rentals 218 160
Regional carrier expenses 434 342
Other unusual items (c) - -
Other 1,044 684
------------ ------------
Total operating expenses 6,863 4,561
OPERATING INCOME (LOSS) 741 363
Operating margin 9.7% 7.4%
OTHER INCOME (EXPENSE)
Interest expense, net (273) (219)
Investment income 105 56
Foreign currency gain (loss) (5) -
Other unusual items (d) (14) -
Other 12 (2)
------------ ------------
Total other income (expense) (175) (165)
------------ ------------
INCOME (LOSS) BEFORE REORGANIZATION ITEMS
AND INCOME TAXES 566 198
Reorganization items, net (e) - 1,551
------------ ------------
INCOME (LOSS) BEFORE INCOME TAXES 566 1,749
Income tax expense (benefit) 224 (2)
------------ ------------
NET INCOME (LOSS) APPLICABLE TO COMMON
STOCKHOLDERS $ 342 $1,751
============ ============
Earnings (Loss) per common share: (f)
Basic $ 1.30 $20.03
Diluted $ 1.30 $14.28
Average shares used in computation:
Basic 262 87
Diluted 262 113
Combined (a) Predecessor
------------- -------------
Twelve Months Twelve Months
Ended Ended %
December 31, December 31, Incr
2007 2006 (Decr)
------------- ------------- -------
OPERATING REVENUES
Passenger $ 9,428 $ 9,230 2.1
Regional carrier revenues 1,405 1,399 0.4
Cargo 840 946 (11.2)
Other 855 993 (13.9)
------------- -------------
Total operating revenues 12,528 12,568 (0.3)
OPERATING EXPENSES
Aircraft fuel and taxes (b) 3,378 3,386 (0.2)
Salaries, wages and benefits 2,568 2,639 (2.7)
Aircraft maintenance
materials and repairs 811 796 1.9
Selling and marketing 751 759 (1.1)
Other rentals and landing
fees 539 562 (4.1)
Depreciation and
amortization 495 519 (4.6)
Aircraft rentals 378 226 67.3
Regional carrier expenses 776 1,406 (44.8)
Other unusual items (c) - 23 (100.0)
Other 1,728 1,512 14.3
------------- -------------
Total operating expenses 11,424 11,828 (3.4)
OPERATING INCOME (LOSS) 1,104 740 49.2
Operating margin 8.8% 5.9% 2.9 pts.
OTHER INCOME (EXPENSE)
Interest expense, net (492) (555) (11.4)
Investment income 161 109 47.7
Foreign currency gain (loss) (5) (7) (28.6)
Other unusual items (d) (14) - n/m
Other 10 14 (28.6)
------------- -------------
Total other income
(expense) (340) (439) (22.6)
------------- -------------
INCOME (LOSS) BEFORE
REORGANIZATION ITEMS AND
INCOME TAXES 764 301
Reorganization items, net
(e) 1,551 (3,165)
------------- -------------
INCOME (LOSS) BEFORE INCOME
TAXES 2,315 (2,864)
Income tax expense (benefit) 222 (29)
------------- -------------
NET INCOME (LOSS) APPLICABLE
TO COMMON STOCKHOLDERS $ 2,093 $(2,835)
============= =============
Earnings (Loss) per common
share: (f)
Basic $(32.48)
Diluted $(32.48)
Average shares used in
computation:
Basic 87
Diluted 87
See accompanying consolidated notes.
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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
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 December 31, 2007 to the Predecessor Company's
results for the three months ended December 31, 2006, as well as
combined the results for the five months ended May 31, 2007 and
the seven months ended December 31, 2007 to compare with the
Predecessor Company's results for the twelve months ended
December 31, 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 both the three and twelve months ended December 31, 2007,
the Company recorded $20.4 million in mark-to-market gains
related to fuel derivative contracts that will settle in future
periods. During both the three and twelve months ended December
31, 2006, the Company recorded $2.7 million in mark-to-market
losses related to fuel derivative contracts that settled in 2007.
(c) During the quarter ended December 31, 2006, the Company recorded
$23 million in severance charges related to its November 6, 2006
ratified contract agreement with the Aircraft Mechanics Fraternal
Association ("AMFA").
(d) During the quarter ended December 31, 2007, the Company sold its
entire interest in Pinnacle Airlines Corp. common stock for $32.9
million, resulting in a loss of $14.2 million.
(e) 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.
(f) Successor EPS. The Plan contemplated the issuance of approximately
277 million shares of new common stock by the Successor Company
(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
("NYSE") and began trading under the symbol "NWA" on May 31,
2007. The distributions of the Successor Company's common stock,
subject to certain holdbacks as described in the Plan, 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 were 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 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 to be 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 allocation
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. Dilutive earnings per share included approximately
25.3 million dilutive securities related to the Company's Series
C Preferred Stock and convertible debt.
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NORTHWEST AIRLINES CORPORATION
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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
twelve months ended December 31, 2007 and is itemized in column (C).
During the quarter ended December 31, 2006, the Company recorded $23
million in severance charges related to its November 6, 2006 ratified
contract agreement with the AMFA. See column (D).
Excluding the items listed above, the comparable year-over-year
operating performance variances are itemized in column (E). System
passenger revenue increased 4.4 percent due primarily to a 5.9
percent improvement on unit revenue. Other revenue increased
primarily due to favorable partner and charter revenues.
Successor Predecessor
--------- -----------
Three Three
Months Months
Ended Ended Total
December December Incr
31, 2007 31, 2006 (Decr)
--------- ----------- ------
OPERATING REVENUES
Passenger $ 2,222 $ 2,202 $ 20
Regional carrier revenues 370 306 64
Cargo 241 242 (1)
Other 263 230 33
--------- ----------- ------
Total operating revenues 3,096 2,980 116
OPERATING EXPENSES
Aircraft fuel and taxes 937 808 129
Salaries, wages and benefits 676 610 66
Aircraft maintenance materials and
repairs 234 254 (20)
Selling and marketing 186 176 10
Other rentals and landing fees 116 126 (10)
Depreciation and amortization 128 129 (1)
Aircraft rentals 94 52 42
Regional carrier expenses 193 318 (125)
Other unusual items - 23 (23)
Other 445 390 55
--------- ----------- ------
Total operating expenses 3,009 2,886 123
OPERATING INCOME (LOSS) 87 94 (7)
Operating margin 2.8% 3.2% (0.4)pts.
(A) (B) (C) (D) (E)
----------------------------------------------
Increase (Decrease) Due To:
----------------------------------------------
Fresh-
Start/
Exit-
Related Mesaba
Stk Net Rgnl Total
Comp. of Carrier AMFA Incr
Exp. Elim Reclass Severance Operations (Decr)
---------------------------------------------- -------
OPERATING
REVENUES
Passenger $ (30) $ - $ - $ - $ 50 $ 20
Regional
carrier
revenues 3 - - - 61 64
Cargo - - - - (1) (1)
Other 23 5 (50) - 55 33
------------------------------------------------------
Total
operating
revenues (4) 5 (50) - 165 116
OPERATING
EXPENSES
Aircraft fuel
and taxes - 4 - - 125 129
Salaries,
wages and
benefits 11 32 - - 23 66
Aircraft
maintenance
materials and
repairs - 8 - - (28) (20)
Selling and
marketing (4) - - - 14 10
Other rentals
and landing
fees - 4 - - (14) (10)
Depreciation
and
amortization (2) 3 - - (2) (1)
Aircraft
rentals - - 46 - (4) 42
Regional
carrier
expenses - (53) (96) - 24 (125)
Other unusual
items - - - (23) - (23)
Other - 13 - - 42 55
------------------------------------------------------
Total
operating
expenses 5 11 (50) (23) 180 123
OPERATING
INCOME (LOSS) (9) (6) - 23 (15) (7)
Operating
margin
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EBITDAR CALCULATION
----------------------------------------------------------------------
(Unaudited, in millions)
Successor Combined
------------ -------------
Three Months Twelve Months
Ended Ended
December 31, December 31,
2007 2007
------------ -------------
Operating income (loss) $ 87 $ 1,104
Depreciation and amortization 128 495
Aircraft rentals 94 378
------------ -------------
EBITDAR (1) 309 1,977
EBITDAR margin 10.0% 15.8%
(1) EBITDAR is defined as operating income excluding depreciation,
amortization and aircraft rents. The Company believes that EBITDAR
is a useful financial measure when comparing the Company's
financial results to those of the industry.
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PASSENGER AND REGIONAL CARRIER REVENUES AND STATISTICAL RESULTS
----------------------------------------------------------------------
(Unaudited)
Three Months Ended Percent
December 31, Change
------------------------ -------
2007 2006
-------- --------
Scheduled Service -
Consolidated: (1)
Available seat miles
(ASM) (millions) 22,890 23,231 (1.5)
Revenue passenger miles
(RPM) (millions) 18,866 18,992 (0.7)
Passenger load factor 82.4 % 81.8 % 0.6 pts.
Revenue passengers
(millions) 16.1 16.6 (3.0)
Passenger revenue per
RPM (yield) 13.74 (cents) 13.21 (cents) 4.0
Passenger revenue per
RPM (yield) excluding
fresh-start 13.88 (cents) 13.21 (cents) 5.1
Passenger revenue per
ASM (RASM) 11.32 (cents) 10.80 (cents) 4.8
Passenger revenue per
ASM (RASM) excluding
fresh-start 11.44 (cents) 10.80 (cents) 5.9
Scheduled Service -
Mainline: (2)
Available seat miles
(ASM) (millions) 20,964 21,505 (2.5)
Revenue passenger miles
(RPM) (millions) 17,406 17,735 (1.9)
Passenger load factor 83.0 % 82.5 % 0.5 pts.
Revenue passengers
(millions) 12.7 13.6 (6.6)
Passenger revenue per
RPM (yield) 12.77 (cents) 12.42 (cents) 2.8
Passenger revenue per
RPM (yield) excluding
fresh-start 12.94 (cents) 12.42 (cents) 4.2
Passenger revenue per
ASM (RASM) 10.60 (cents) 10.24 (cents) 3.5
Passenger revenue per
ASM (RASM) excluding
fresh-start 10.74 (cents) 10.24 (cents) 4.9
Twelve Months Ended Percent
December 31, Change
------------------------ -------
2007 2006
-------- --------
Scheduled Service -
Consolidated: (1)
Available seat miles
(ASM) (millions) 93,328 92,944 0.4
Revenue passenger miles
(RPM) (millions) 78,320 78,044 0.4
Passenger load factor 83.9 % 84.0 % (0.1)pts.
Revenue passengers
(millions) 66.4 67.6 (1.8)
Passenger revenue per
RPM (yield) 13.83 (cents) 13.62 (cents) 1.5
Passenger revenue per
RPM (yield) excluding
fresh-start 13.95 (cents) 13.62 (cents) 2.4
Passenger revenue per
ASM (RASM) 11.61 (cents) 11.44 (cents) 1.5
Passenger revenue per
ASM (RASM) excluding
fresh-start 11.71 (cents) 11.44 (cents) 2.4
Scheduled Service -
Mainline: (2)
Available seat miles
(ASM) (millions) 86,142 85,603 0.6
Revenue passenger miles
(RPM) (millions) 72,924 72,606 0.4
Passenger load factor 84.7 % 84.8 % (0.1)pts.
Revenue passengers
(millions) 53.7 54.8 (2.0)
Passenger revenue per
RPM (yield) 12.93 (cents) 12.71 (cents) 1.7
Passenger revenue per
RPM (yield) excluding
fresh-start 13.07 (cents) 12.71 (cents) 2.8
Passenger revenue per
ASM (RASM) 10.94 (cents) 10.78 (cents) 1.5
Passenger revenue per
ASM (RASM) excluding
fresh-start 11.06 (cents) 10.78 (cents) 2.6
----------------------------------------------------------------------
PASSENGER AND REGIONAL CARRIER REVENUES
----------------------------------------------------------------------
(Unaudited)
Domestic Pacific Atlantic
-------- ------- --------
As reported:
--------------------------------
Fourth Quarter 2007
Passenger revenues (in
millions) $1,373 $ 520 $ 329
Increase (Decrease) from 2006:
Passenger revenues (2.6)% 3.2 % 14.2 %
Scheduled service ASMs
(capacity) (6.3)% (4.2)% 16.8 %
Scheduled service RPMs
(traffic) (4.6)% (3.3)% 11.7 %
Passenger load factor 1.5 pts. 0.8 pts. (3.8)pts.
Yield 2.0 % 6.8 % 2.2 %
Passenger RASM 3.9 % 7.8 % (2.3)%
Excluding fresh-start:
--------------------------------
Fourth Quarter 2007
Passenger revenues (in
millions) $1,392 $ 532 $ 328
Increase (Decrease) from 2006:
Passenger revenues (1.3)% 5.6 % 13.9 %
Yield 3.4 % 9.2 % 2.2 %
Passenger RASM 5.3 % 10.2 % (2.3)%
Mainline Consolidated
-------- ------------
As reported:
-------------------------------------
Fourth Quarter 2007
Passenger revenues (in millions) $2,222 $2,592
Increase (Decrease) from 2006:
Passenger revenues 0.9 % 3.4 %
Scheduled service ASMs (capacity) (2.5)% (1.5)%
Scheduled service RPMs (traffic) (1.9)% (0.7)%
Passenger load factor 0.5 pts. 0.6 pts.
Yield 2.8 % 4.0 %
Passenger RASM 3.5 % 4.8 %
Excluding fresh-start:
-------------------------------------
Fourth Quarter 2007
Passenger revenues (in millions) $2,252 $2,619
Increase (Decrease) from 2006:
Passenger revenues 2.3 % 4.4 %
Yield 4.2 % 5.1 %
Passenger RASM 4.9 % 5.9 %
(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").
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NORTHWEST AIRLINES CORPORATION
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MAINLINE OPERATING STATISTICAL RESULTS (1)
----------------------------------------------------------------------
(Unaudited)
Three Months Ended Percent
December 31, Change
----------------------- -------
2007 2006
------- -------
Total operating ASM (millions) 21,062 21,551 (2.3)
Passenger service operating
expense per total ASM (2) (3) 11.47 (cents) 10.66 (cents) 7.6
Unusual items per total ASM
(4) - (cents) 0.11 (cents) n/m
Mainline fuel expense per
total ASM 3.81 (cents) 3.26 (cents) 16.9
Mainline fuel expense per
total ASM excluding mark-to-
market adjustments related to
fuel derivative contracts
that settle in future periods 3.88 (cents) 3.25 (cents) 19.4
Cargo ton miles (CTM)
(millions) 577 566 1.9
Cargo revenue per ton mile 41.92 (cents) 42.77 (cents) (2.0)
Fuel gallons consumed
(millions) 378 397 (4.8)
Average fuel cost per gallon,
excluding fuel taxes 230.29 (cents) 193.92 (cents) 18.8
Average fuel cost per gallon,
excluding fuel taxes and
mark-to-market adjustments
related to fuel derivative
contracts that settle in
future periods 235.10 (cents) 193.25 (cents) 21.7
Number of operating aircraft
at end of period
Full-time equivalent employees
at end of period
Twelve Months Ended Percent
December 31, Change
----------------------- -------
2007 2006
------- -------
Total operating ASM (millions) 86,310 85,738 0.7
Passenger service operating
expense per total ASM (2) (3) 10.75 (cents) 10.95 (cents) (1.8)
Unusual items per total ASM
(4) - (cents) 0.03 (cents) n/m
Mainline fuel expense per
total ASM 3.41 (cents) 3.43 (cents) (0.6)
Mainline fuel expense per
total ASM excluding mark-to-
market adjustments related to
fuel derivative contracts
that settle in future periods 3.43 (cents) 3.43 (cents) 0.0
Cargo ton miles (CTM)
(millions) 2,067 2,269 (8.9)
Cargo revenue per ton mile 40.65 (cents) 41.71 (cents) (2.5)
Fuel gallons consumed
(millions) 1,545 1,593 (3.0)
Average fuel cost per gallon,
excluding fuel taxes 205.41 (cents) 202.47 (cents) 1.5
Average fuel cost per gallon,
excluding fuel taxes and
mark-to-market adjustments
related to fuel derivative
contracts that settle in
future periods 206.59 (cents) 202.30 (cents) 2.1
Number of operating aircraft
at end of period 356 371 (4.0)
Full-time equivalent employees
at end of period 30,306 30,484 (0.6)
(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 Twelve Months Ended
December 31, December 31,
------------------ -------------------
(In millions) 2007 2006 2007 2006
-------- --------- ---------- --------
Regional carrier expenses $ 360 $ 318 $ 1,259 $ 1,406
Freighter operations 194 222 654 804
MLT Inc. - net of
intercompany
eliminations 31 36 177 193
Other 8 14 56 43
(4) During the quarter ended December 31, 2006, the Company recorded
$23 million in severance charges related to its November 6, 2006
ratified contract agreement with the AMFA.
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NORTHWEST AIRLINES CORPORATION
----------------------------------------------------------------------
SELECTED BALANCE SHEET DATA
----------------------------------------------------------------------
(Unaudited, in millions)
Successor Predecessor
---------------- ---------------
December 31, December 31,
2007 2006
---------------- ---------------
Cash and cash equivalents $ 2,939 $ 1,461
Unrestricted short-term
investments 95 597
Restricted cash, cash equivalents
and short-term investments 725 424
Total assets 24,517 13,215
Total debt and capital leases,
including current maturities 7,088 8,899(1)
Total liabilities 17,140 20,929
Total common stockholders' equity
(deficit) 7,377 (7,991)
(1) Includes certain debt and capital lease obligations classified as
subject to compromise as of December 31, 2006.
----------------------------------------------------------------------
FIRST QUARTER 2008 AND 2008 FULL YEAR GUIDANCE
----------------------------------------------------------------------
1Q 2008 Forecast 2008 Forecast
(year-over-year (year-over-year
change) change)
---------------- ---------------
Scheduled service ASMs (capacity)
Domestic (1) (4%) - (5%) (5.5%) - (6.5%)
International 3% - 4% 8% - 9%
Mainline (1) (1%) - (2%) (0.5%) - 0.5%
Regional 35% - 40% 50% - 55%
Consolidated (2) 1% - 2% 3% - 4%
Passenger service operating
expense per total ASM excluding
fuel (1) 3.5% - 4.5% 1% - 2%
1Q 2008 Forecast 2008 Forecast
---------------- ---------------
Average fuel cost per gallon,
excluding fuel taxes (1) $2.63 $2.57
Fuel gallons consumed (millions) 371 1,533
(1) Mainline statistics exclude Northwest Airlink regional carriers,
which is consistent with how the Company reports statistics to the
DOT.
(2) Consolidated statistics include Northwest Airlink regional
carriers.
----------------------------------------------------------------------
ESTIMATED FRESH-START AND EXIT-RELATED STOCK COMPENSATION EXPENSE
----------------------------------------------------------------------
(In millions)
Inc (Decr)
--------------
1Q 2008
Estimate
--------------
OPERATING REVENUES
Passenger and regional carrier
revenues $ (30)
Other 23
--------------
Total operating revenues (7)
OPERATING EXPENSES
Salaries, wages and benefits 9
Selling and marketing -
Depreciation and amortization (2)
--------------
Total operating expenses 7
OPERATING INCOME (LOSS) $ (14)
*T
Northwest Airlines
Copyright Business Wire 2008
