CHICAGO, Aug 7 (Reuters) - Bankrupt Northwest Airlines Corp. (NWACQ.PK: Quote, Profile, Research) on Monday said its quarterly loss widened because of expenses related to its reorganization.
The carrier, which filed for bankruptcy protection in September, said its quarterly net loss amounted to $285 million, or $3.27 per share, compared with $234 million or $2.69 per share a year earlier.
Excluding items related to its reorganization, Northwest said it earned $179 million.
Northwest Airlines Reports Second Quarter 2006 Results
Monday August 7, 8:30 am ET
EAGAN, Minn., Aug. 7 /PRNewswire-FirstCall/ -- Northwest Airlines Corporation (OTC: NWACQ - News) today reported a net loss of $285 million during the second quarter of 2006. This compares to a second quarter 2005 net loss of $234 million. Excluding reorganization items, Northwest reported a 2006 second quarter net profit of $179 million. This compares to a second quarter net loss of $288 million, excluding unusual items, last year.
Doug Steenland, president and chief executive officer, said, "Our second quarter results demonstrate that we are making steady progress on our restructuring goals, which is reflected in our year-over-year cost and revenue performance improvements."
"During the past week, we have reached two significant milestones which will further advance our restructuring goals: first, we have reached our targeted labor cost savings and second, through an enormous collaborative effort with Northwest Airlines employees, the Congress passed pension legislation which, when signed by the President into law, will enable Northwest to preserve its frozen defined benefit pension plans."
Steenland continued, "Notwithstanding these accomplishments, we still have work ahead of us to ensure that the airline is positioned for long-term success. For the first six months of this year we reported a profit, excluding restructuring charges, of $50 million on revenues of more than $6 billion. Going forward, with fuel costs forecasted to remain at record levels, we must maintain our relentless focus on all elements of our plan."
"While we continue our focus on restructuring, we are pleased by the great service that we are providing customers by delivering passengers and their bags to their final destination in an efficient and timely manner as evidenced by Department of Transportation statistics for the first six months of 2006. Our employees are doing an outstanding job of providing good customer service and I thank them for their hard work."
Operating revenues in the second quarter increased 3 percent versus the second quarter of 2005 to $3.3 billion. System passenger revenue increased 3.3 percent to more than $2.4 billion on 9.3 percent fewer mainline available seat miles (ASMs), resulting in a 13.9 percent improvement in unit revenue. Regional carrier revenues increased 15.1 percent on 16.3 percent lower capacity.
Operating expenses in the quarter decreased 11.5 percent year-over-year to $3.0 billion, while mainline unit costs, excluding fuel and unusual items, decreased by 11 percent on 9.3 percent fewer ASMs. Salaries, wages and benefits decreased 30.3 percent, primarily due to interim wage reductions which became effective in November 2005, mechanic pay and headcount reductions and the reduced level of flying. Aircraft maintenance materials and repairs expense increased 22.8 percent, largely due to the shift to third party maintenance vendors versus internally completed maintenance work. Aircraft rental expense decreased 47.6 percent, primarily due to restructured and rejected aircraft leases.
During the second quarter, fuel averaged $2.10 per gallon, excluding taxes, up 27.6 percent versus the second quarter of last year. Increased fuel prices were partially offset by 11.6 percent fewer gallons consumed as a result of the company's capacity reductions and the retirement or replacement of older, less fuel-efficient aircraft.
Neal Cohen, executive vice president and chief financial officer, said, "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. We must also continue to realize additional restructuring milestones in order to achieve sustainable long-term profitability, particularly in the face of $75 per barrel oil prices."
Northwest's quarter-ending unrestricted cash and short-term investments balance was $1.58 billion.
Commenting on the company's labor cost savings efforts, Steenland said, "With the August 1 implementation of permanent labor cost reductions with all of our contract employees, we have realized $1.4 billion of the $2.5 billion in annual business improvements that we have targeted to achieve through the restructuring process. We sincerely appreciate the significant personal sacrifice that each of our employees is continuing to make to help position Northwest for future success."
The carrier, which filed for bankruptcy protection in September, said its quarterly net loss amounted to $285 million, or $3.27 per share, compared with $234 million or $2.69 per share a year earlier.
Excluding items related to its reorganization, Northwest said it earned $179 million.
Northwest Airlines Reports Second Quarter 2006 Results
Monday August 7, 8:30 am ET
EAGAN, Minn., Aug. 7 /PRNewswire-FirstCall/ -- Northwest Airlines Corporation (OTC: NWACQ - News) today reported a net loss of $285 million during the second quarter of 2006. This compares to a second quarter 2005 net loss of $234 million. Excluding reorganization items, Northwest reported a 2006 second quarter net profit of $179 million. This compares to a second quarter net loss of $288 million, excluding unusual items, last year.
Doug Steenland, president and chief executive officer, said, "Our second quarter results demonstrate that we are making steady progress on our restructuring goals, which is reflected in our year-over-year cost and revenue performance improvements."
"During the past week, we have reached two significant milestones which will further advance our restructuring goals: first, we have reached our targeted labor cost savings and second, through an enormous collaborative effort with Northwest Airlines employees, the Congress passed pension legislation which, when signed by the President into law, will enable Northwest to preserve its frozen defined benefit pension plans."
Steenland continued, "Notwithstanding these accomplishments, we still have work ahead of us to ensure that the airline is positioned for long-term success. For the first six months of this year we reported a profit, excluding restructuring charges, of $50 million on revenues of more than $6 billion. Going forward, with fuel costs forecasted to remain at record levels, we must maintain our relentless focus on all elements of our plan."
"While we continue our focus on restructuring, we are pleased by the great service that we are providing customers by delivering passengers and their bags to their final destination in an efficient and timely manner as evidenced by Department of Transportation statistics for the first six months of 2006. Our employees are doing an outstanding job of providing good customer service and I thank them for their hard work."
Operating revenues in the second quarter increased 3 percent versus the second quarter of 2005 to $3.3 billion. System passenger revenue increased 3.3 percent to more than $2.4 billion on 9.3 percent fewer mainline available seat miles (ASMs), resulting in a 13.9 percent improvement in unit revenue. Regional carrier revenues increased 15.1 percent on 16.3 percent lower capacity.
Operating expenses in the quarter decreased 11.5 percent year-over-year to $3.0 billion, while mainline unit costs, excluding fuel and unusual items, decreased by 11 percent on 9.3 percent fewer ASMs. Salaries, wages and benefits decreased 30.3 percent, primarily due to interim wage reductions which became effective in November 2005, mechanic pay and headcount reductions and the reduced level of flying. Aircraft maintenance materials and repairs expense increased 22.8 percent, largely due to the shift to third party maintenance vendors versus internally completed maintenance work. Aircraft rental expense decreased 47.6 percent, primarily due to restructured and rejected aircraft leases.
During the second quarter, fuel averaged $2.10 per gallon, excluding taxes, up 27.6 percent versus the second quarter of last year. Increased fuel prices were partially offset by 11.6 percent fewer gallons consumed as a result of the company's capacity reductions and the retirement or replacement of older, less fuel-efficient aircraft.
Neal Cohen, executive vice president and chief financial officer, said, "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. We must also continue to realize additional restructuring milestones in order to achieve sustainable long-term profitability, particularly in the face of $75 per barrel oil prices."
Northwest's quarter-ending unrestricted cash and short-term investments balance was $1.58 billion.
Commenting on the company's labor cost savings efforts, Steenland said, "With the August 1 implementation of permanent labor cost reductions with all of our contract employees, we have realized $1.4 billion of the $2.5 billion in annual business improvements that we have targeted to achieve through the restructuring process. We sincerely appreciate the significant personal sacrifice that each of our employees is continuing to make to help position Northwest for future success."
