Northwest Airlines realized a net loss of $1.3 billion during the fourth quarter of 2005.Ê This compares to a net loss of $434 million in the fourth quarter of 2004.ÊExcluding reorganization and other unusual items, Northwest reported a
fourth quarter 2005 net loss of $387 million versus a fourth quarter 2004 net
loss of $373 million.

For the full year 2005, Northwest reported a net loss of $2.6
billion.Ê This compares to a net loss of $891 million for 2004.Ê

Excluding
reorganization and other unusual items, Northwest reported a full year 2005 net
loss of $1.4 billion versus a full year 2004 net loss of $726 million.

ÊÊÊ Northwest remains focused on its plan to realize $2.5 billion
in annual business improvements in order to return the company to profitability
on a sustained basis.Ê The restructuring
plan is centered on three goals:

ÊÊÊ (1) resizing and optimization of the airline’s fleet to better
serve Northwest’s markets

ÊÊÊ (2) realizing competitive labor and non-labor costs

ÊÊÊ (3) restructuring and recapitalization of the airline’s balance
sheet

Northwest continued to make noteworthy progress on its
restructuring goals including:

—reducing its system mainline capacity, or available seat
miles (ASMs), by 8.2 percent year-over-year.Ê Domestic ASMs were down 9.2 percent and international ASMs were reduced by 6.7 percent.Ê The domestic capacity reductions were accomplished across the network, while
international capacity reductions were accomplished primarily through the
suspension of the daily New York (JFK) to Tokyo-Narita flight and
additional seasonal reductions across the Atlantic network.

 

ÊÊÊ—rejecting or abandoning 51 mainline and regional aircraft,
and reaching agreements to enter into new, more favorable lease or
financing arrangements on 140 mainline and regional aircraft.Ê As part of Northwest’s restructuring efforts, the company has targeted $400 million in total annual fleet savings.

 

ÊÊÊ—securing additional savings toward its $1.4 billion labor cost-restructuring goal through interim wage reductions from
the Air Line Pilots Association (ALPA), the International
Association of Machinists and Aerospace Workers (IAM), and the Professional
Flight Attendants Association that were effective November 16,
2005.

 

ÊÊÊ—concluding agreements on permanent wage and benefit
reductions with theAircraft Technical Support Association (ATSA), the Transport
Workers Union of America (TWU), and Northwest Airlines Meteorology
Association (NAMA).Ê In addition,
the IAM has a contract offer out for member ratification.

 

ÊÊÊ—implementing a second round of management and salaried
employee pay and benefit reductions on December 1, 2005.

 

ÊÊÊ—concluding agreements with Airbus and Pratt & Whitney in
December that permit continued delivery and financing of the remaining 14
A330-300 and A330-200 wide body aircraft that Northwest had on
order.Ê Airbus agreed to finance 10 of the 14 A330s, and Pratt &
Whitney will finance the remainder.Ê The
aircraft are scheduled to join Northwest’s fleet through 2007.

 

ÊÊÊ—achieving additional non-labor cost savings towards its $150
million restructuring goal.ÊFor example, in January, Sabre Holdings and Northwest Airlines announced a new five-year, full content agreement that will improve Northwest’s global distribution system
costs.

 

 

ÊÊÊ Operating revenues in the fourth quarter increased by 5.9
percent versus the fourth quarter of 2004 to $2.9 billion.Ê This operating revenue
improvement included an increase in passenger and regional revenue of $113 million.Ê Passenger revenue per available seat mile
(RASM) increased by 11.5 percent, partly reflecting the impact of the company’s
action to reduce capacity 8.2 percent year-over-year.

ÊÊÊ Operating expenses in the quarter increased 5.8 percent versus
a year ago to $3.2 billion, excluding unusual items.Ê Unit costs, excluding fuel and
unusual items, increased by 4.6 percent on 8.2 percent fewer ASMs.Ê
Salaries, wages and benefits expense decreased by $155 million primarily
due to a 75 percent reduction in mechanic and related headcount versus last
year.Ê This was partially offset by a
$72 million increase in maintenance expense as a result of additional
utilization of third-party maintenance services for work that had previously
been performed by Northwest employees as well as increased aircraft and engine
check volume.Ê During the fourth
quarter, fuel averaged $1.98 per gallon, excluding taxes, up 42.4 percent versus the fourth
quarter of last year.

ÊÊÊ Northwest’s year-end unrestricted cash and short-term
investments balance was $1.26 billion.
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