Northwest Airlines Reports Second Quarter

ST. PAUL, MINN. - (July17, 2003) - Northwest Airlines Corporation (NASDAQ: NWAC), the parent of Northwest Airlines, today reported a second quarter net profit of $227 million or $2.45 per diluted common share. This compares to a second quarter 2002 net loss of $93 million or $1.08 per common share.
Northwest’s second quarter 2003 results included $387 million of unusual items:

* A $209 million reimbursement of security fees received from the U.S. government under the Emergency Wartime Supplemental Appropriations Act;
* A $199 million gain resulting from the sale of Northwest’s interest in Worldspan; and
* A $21 million charge related to the write-down of certain aircraft.
Excluding these unusual items, Northwest reported a second quarter 2003 net loss of $160 million or $1.86 per common share.
“Second quarter results were impacted by the war in Iraq and SARS (Severe Acute Respiratory Syndrome). Moreover, we are still not seeing meaningful improvement in the underlying financial performance of the airline,” said Richard Anderson, chief executive officer.
“Excluding the unusual gains resulting from the sale of our Worldspan investment and the one-time federal reimbursement received under the Wartime Act, Northwest’s $160 million loss was its worst second quarter performance in company history,” Anderson continued.
Anderson added, “While we aggressively reduced capacity and parked aircraft in response to the Iraq war and SARS, the revenue environment, at best, is showing marginal improvement. Clearly, with losses of the magnitude that we are experiencing, our top priority remains to bring the company’s costs in line with our new level of revenues. We continue to work with our labor union leaders and our suppliers to address our cost of operation, as Northwest must align its cost structure with its revenue expectations and with those of our major competitors.”
For the June 2003 quarter, Northwest reported a $73 million operating loss, which compares to last year’s second quarter $46 million operating loss.
Second quarter 2003 operating revenues of $2.3 billion were 4.5% lower than reported in the second quarter of 2002 on 9.1% fewer available seat miles (ASMs).
Operating expenses decreased 3.3%, primarily as a result of the lower capacity and cost reductions achieved. Second quarter 2003 unit costs, excluding fuel and unusual items, increased by 3.3% year-over-year.
During the quarter, fuel price averaged 80 cents per gallon, which was 16.6% higher than in the second quarter of last year.
Northwest’s quarter-end unrestricted cash balance was $2.8 billion, which includes the one-time $209 million payment received from the government, $278 million from the sale of Worldspan, and $150 million from the issuance of additional debt in the form of convertible notes.
“While our cash position remains strong at this time, it has been achieved primarily through borrowings, asset sales and the one-time government payment rather than generated by profits from operations,” said Bernie Han, chief financial officer.
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