The nation's fourth-largest airline said its loss would have been $129 million without $975 million in bankruptcy expenses. Operating revenue for the quarter ended March 31 was $2.9 billion, up 3.3 percent from the same period a year ago. The current loss of $12.65 per share compared with a loss of $537 million, or $5.39 per share, during the same period last year. That was before it filed for bankruptcy protection in September, in part because of rising fuel prices.
The airline said it spent $1.87 per gallon on fuel (not counting taxes) for the quarter, up almost 36 percent from the same period last year.
Oil has been running around $70 a barrel or above, and every dollar increase raises Northwest's fuel costs by $43 million a year, the airline said.
Northwest said that when it filed for bankruptcy protection it planned on oil prices of $65 per barrel this year and $60 per barrel after that. High fuel costs and the volatility in their prices create "great uncertainty around this key element of our plan," Chief Financial Officer Neal Cohen said in a prepared statement.
Northwest, based in Eagan, took $1 billion in charges for renegotiating and rejecting aircraft leases, but recorded a $49 million gain for ending a pension plan.
It is aiming to save $400 million a year on its fleet by taking advantage of its ability in bankruptcy court to reject or renegotiate leases. Northwest said it has rejected or renegotiated leases for 211 aircraft so far.
Northwest said its operating expenses dropped 6.3 percent to $2.9 billion for the quarter. Salaries, wages and benefits dropped almost 30 percent because of wage reductions.
Northwest is most of the way toward getting $1.4 billion in labor cost reductions it has been seeking. Pilots approved a new contract last week. Flight attendants are voting through June 6 on pay cuts. But baggage handlers are resisting, and a trial is set to begin Monday to decide whether Northwest can throw out their contract.
"Reaching our labor cost savings goal would be a significant milestone in our ongoing efforts to achieve the $2.5 billion in annual business improvements necessary for Northwest to be profitable on a sustained basis," President and Chief Executive Doug Steenland said.
Northwest reduced its capacity by almost 11 percent for the first quarter, including a drop of 12.5 percent for domestic flights and 8.2 percent on international flights.
"Although we have made progress in our restructuring process, we still have work to do to position the company for long-term success," Steenland said.
The company said it ended the quarter with $1.28 billion in unrestricted cash and short-term investments.
Northwest is Michigan's largest air passenger carrier and has a hub at Detroit Metropolitan Airport.
Chicago Tribune
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