Northwest Airlines Reports Second Quarter 2005 Results

Northwest Airlines Reports Second Quarter 2005 Results 


EAGAN, Minn., July 26  /PRNewswire-FirstCall/ -- Northwest Airlines Corporation
(NASDAQ:NWAC), the parent of Northwest Airlines, today reported a second quarter
net loss of $225 million or $2.59 per common share, including unusual items. 
This compares to the 2004 second quarter when the company reported a net loss
of $182 million or $2.11 per common share, including unusual items.

Excluding $54 million in net unusual items, the second quarter net loss was
$279 million or $3.21 per common share, compared to the 2004 second quarter net
loss of $78 million or $0.90 per common share, excluding unusual items.

"We need to rapidly achieve at least $1.1 billion in labor cost savings and
resolve our pension plan challenges by freezing our defined benefit pension
plans and obtaining federal legislation that addresses existing problems in the
pension laws.  Failing to do so will force Northwest to consider other
alternatives, including filing under Chapter 11 of the U.S. Bankruptcy Code,"
said Doug Steenland, president and chief executive officer.

"Many of our major competitors have significantly lowered their labor costs,
both in and outside of bankruptcy, leaving Northwest with the highest labor
costs in the industry.  Moreover, low cost carriers continue to grow and
represent a significant competitive challenge.  It is imperative that we reach
labor agreements with all of our unions as quickly as possible."

Steenland continued, "We are also working diligently with union leaders to
address our defined benefit pension plans' shortfalls.  We are freezing our
salaried workers retirement plan and replacing it with a new defined
contribution plan.  We are also negotiating with the unions representing our
contract employees regarding pension plan freezes."

"Along with several of our unions, we have asked Congress to enact legislation
that allows a longer time period for airlines to pay off the unfunded
liabilities in their pension plans.  We remain hopeful that we will be able to
address this issue quickly," he added.

"While we have serious near term issues that must be addressed, we have been
continuing our efforts to improve operating efficiencies while reducing cost. 
Together with our renewed aircraft fleet, unconstrained hub airport facilities
and a strong global route system, Northwest is positioned for long- term
success, once we address the key challenges we now face."

"Despite high load factors and inclement weather, our employees are continuing
to put customers first and I wish to thank them for their efforts.
Year-to-date, Northwest's departure and arrival performance and completion
factor have been strong," Steenland concluded.

Operating Results

Operating revenues in the second quarter increased by 11.3% versus the second
quarter of 2004 to $3.2 billion.  Passenger revenue per available seat mile
increased by 3.1% on 4.4% more available seat miles (ASMs).

Operating expenses in the quarter, excluding unusual items, increased 18%
versus a year ago to $3.33 billion.  Unit costs, excluding fuel and unusual
items, were 1.1 % higher.  Fuel prices averaged 164.2 cents per gallon,
excluding taxes, up 52.2% versus the second quarter of 2004.

Neal Cohen, executive vice president and chief financial officer, said, "Losses
of this magnitude are not sustainable.  During the first six months of 2005,
Northwest has been averaging losses of $4 million per day.  The company needs
to reduce costs and achieve positive results by, in particular, addressing
labor expenses and pension funding."

"In addition, the company continues to review market conditions to better match
supply with demand.  Northwest now anticipates reducing its mainline system
capacity by three to four percent in the fourth quarter."

Cohen continued, "With no reduction in near-term fuel prices expected, it is
imperative that we act quickly."

Other:

The National Mediation Board released Northwest on July 20 from mediated talks
with The Aircraft Mechanics Fraternal Association (AMFA) union.

Under terms of the federal Railway Labor Act, a thirty-day "cooling off" period
has begun.  The company is hopeful that both parties will reach a new agreement
in advance of an August 20 deadline.

While Northwest wants to reach an expedited consensual agreement with AMFA,
whatever the outcome of negotiations, Northwest customers should continue to
depend on Northwest to meet their travel needs.  If no agreement is reached,
the airline has developed comprehensive contingency plans, including expanded
vendor relationships and the augmentation of airline staff, to ensure that
Northwest continues to operate its full schedule.

Northwest remains in federal mediation with The International Association of
Machinists and Aerospace Workers (IAM) and The Professional Flight Attendants
Association (PFAA).  In addition, it is continuing contract negotiations with
representatives of its other unions.

A key business development issue is the airline's request for antitrust
immunity with other SkyTeam members.  Northwest believes that approval of the
request, currently before the U.S. Department of Transportation (DOT),
involving Air France, Alitalia, CSA Czech Airlines, Delta Air Lines, KLM Royal
Dutch Airlines and Northwest Airlines is necessary to both preserve and expand
the benefits that the alliance offers consumers, communities and the carriers
involved.

Northwest believes that to preserve fully the efficiencies and consumer
benefits of the existing airlines alliances, it is necessary to bridge the
immunities held by Northwest/KLM and SkyTeam.  Linking the Northwest/KLM and
SkyTeam alliance networks will generate substantial benefits including: new and
expanded trans-Atlantic nonstop service, new online connecting service in almost
9,000 markets not currently served by either of the alliances, increased pathway
options benefiting 16,280 city pairs that account for almost 80 percent of
trans-Atlantic travel and greater discount opportunities by allowing passengers
to choose from numerous itineraries, among other benefits.

During the second quarter, Northwest Airlines paid more than $296 million in
fees and non-income related taxes, representing an overall tax burden not faced
by other industries.

Northwest Airlines will webcast its second quarter results conference call at
11:30 a.m. Eastern Daylight Time (10:30 a.m. Central) today. Investors are
invited to listen to the call through the company's investor relations Web site
at http://ir.nwa.com/.

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 future level of air travel demand, the company's future load
factors and yields, the airline 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 aftermath of 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 negotiations both at other carriers
and the company, low fare carrier expansion, capacity decisions of other
carriers, actions of the U.S. and foreign governments, foreign currency
exchange rate fluctuation 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, 2004.  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 the world's fourth largest airline with hubs at Detroit,
Minneapolis/St. Paul, Memphis, Tokyo and Amsterdam, and approximately 1,600
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 900 cities in excess of 160 countries
on six continents.

For more information pertaining to Northwest, media inquiries can be directed
to Northwest Media Relations at [phone] or to Northwest's Web site at
http://www.nwa.com/ .

Note To Editors:  A table of Selected Financial and Statistical Data is
attached to this release.  For more information pertaining to Northwest, media
inquiries can be directed to Northwest Media Relations at [phone].
Investor inquiries can be directed to Northwest Airlines Investor Relations at
[phone]

                      NORTHWEST AIRLINES CORPORATION

  CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
  (Unaudited, in millions except per share amounts)

                      Three Months Ended           Six Months Ended
                           June 30        Percent      June 30       Percent
                        2005     2004     Change    2005     2004    Change
  OPERATING REVENUES
    Passenger          $2,347   $2,180      7.7    $4,382   $4,143    5.8
    Regional carrier
     revenues             344      274     25.5       620      491   26.3
    Cargo                 239      193     23.8       445      376   18.4
    Other                 265      224     18.3       546      464   17.7
     Total operating
      revenues          3,195    2,871     11.3     5,993    5,474    9.5

  OPERATING EXPENSES
    Salaries, wages and
     benefits             959      964     (0.5)    1,914    1,901    0.7
    Aircraft fuel and
     taxes                790      499     58.3     1,420      949   49.6
    Selling and
     marketing            223      204      9.3       428      379   12.9
    Other rentals and
     landing fees         168      149     12.8       324      295    9.8
    Aircraft
     maintenance
     materials and
     repairs              149      109     36.7       293      220   33.2
    Depreciation and
     amortization         134      133      0.8       272      274   (0.7)
    Aircraft rentals      103      115    (10.4)      207      229   (9.6)
    Regional carrier
     expenses             392      288     36.1       748      544   37.5
    Other                 409      358     14.2       811      739    9.7
    Aircraft and
     aircraft related
     write-downs (a)       48      104    (53.8)       48      104  (53.8)
     Total operating
      expenses          3,375    2,923     15.5     6,465    5,634   14.7

  OPERATING INCOME
   (LOSS)                (180)     (52)      n/m     (472)    (160)    n/m
    Operating margin    (5.6%)   (1.8%)  (3.8)pts.  (7.9%)   (2.9%) (5.0)pts.

  OTHER INCOME
   (EXPENSE)
    Interest expense,
     net                 (159)    (125)   (27.2)     (310)    (257) (20.6)
    Investment income      22       13     69.2        38       26   46.2
    Foreign currency
     gain (loss)           (2)      (8)    75.0        (7)      (4) (75.0)
    Other unusual items
     (b)                  102        -      n/m        84        -    n/m
    Other                   -       (3)   100.0         5       (3)   n/m
     Total other income
      (expense)           (37)    (123)    69.9      (190)    (238)  20.2

  INCOME (LOSS) BEFORE
   INCOME TAXES          (217)    (175)   (24.0)     (662)    (398) (66.3)

  Income tax expense
   (benefit)                -        -                  5        -

  NET INCOME (LOSS)      (217)    (175)              (667)    (398)

  Preferred stock
   requirements            (8)      (7)               (16)     (14)
  NET INCOME (LOSS)
   APPLICABLE TO
    COMMON SHAREHOLDERS $(225)   $(182)             $(683)   $(412)

  Earnings (Loss) per
   common share:
    Basic and Diluted  $(2.59)  $(2.11)            $(7.87)  $(4.77)

    Average shares used
     in computation:
     Basic and Diluted     87       86                 87       86

  NOTES:

  (a) During the quarter ended June 30, 2005, the Company recorded aircraft
      and aircraft related write-downs of $48 million on 9 owned and 2
      leased aircraft across multiple aircraft fleets.  During the quarter
      ended June 30, 2004, the Company recorded aircraft and aircraft
      related write-downs of $104 million.

  (b) During the quarter ended June 30, 2005, the Company sold approximately
      1.5 million shares of Prudential Financial, Inc. common stock, which
      was distributed to Northwest in connection with Prudential's
      demutualization.  Proceeds of the sale resulted in a $102 million gain.

      On February 1, 2005, the Company agreed to sell the Pinnacle Airlines
      note to Pinnacle Airlines Corp.  The outstanding balance on the note
      at the time of the sale was $120 million, and the purchase price was
      $102 million, inclusive of accrued interest.  As a result of the sale
      of this note, the Company recognized a loss of $18 million.



                      NORTHWEST AIRLINES CORPORATION

  OPERATING STATISTICS (1)
  (Unaudited)

                         Three Months Ended       Six Months Ended
                              June 30     Percent     June 30        Percent
                           2005    2004   Change  2005      2004     Change
  Scheduled Service:
    Available seat
     miles (ASM)
     (millions)           23,772   22,764   4.4  46,537    44,595      4.4
    Revenue passenger
     miles (RPM)
     (millions)           20,020   18,775   6.6  38,187    35,480      7.6
    Passenger load factor   84.2%    82.5% 1.7pts. 82.1%     79.6%    2.5pts.
    Revenue passengers
     (thousands)          15,145   14,289   6.0  28,647    26,801      6.9
    Passenger revenue
     per RPM (yield)
     (in cents)            11.73    11.61   1.0   11.48     11.68     (1.7)
    Passenger revenue
     per ASM (RASM)
     (in cents)             9.88     9.58   3.1    9.42      9.29      1.4
  Total operating ASM
     (millions)           23,805   22,791   4.4  46,630    44,685      4.4
  Passenger service
   operating expense
   per total ASM (2) (3)
   (in cents)              11.42    10.61   7.6   11.20     10.43      7.4
  Aircraft and aircraft
   related write-downs
   per total ASM
   (in cents)               0.20     0.45 (55.6)   0.10      0.23    (56.5)
  Mainline fuel expense
   per total ASM
   (in cents)               2.90     1.93  50.3    2.69      1.89     42.3

  Cargo ton miles (CTM)
   (millions)                616      577   6.8   1,158     1,117      3.7
  Cargo revenue per
   ton mile (in cents)     38.65    33.46  15.5   38.39     33.62     14.2

  Fuel gallons consumed
   (millions)                455      441   3.2     887       863      2.8
  Average fuel cost per
   gallon, excluding fuel
   taxes (in cents)       164.23   107.93  52.2  151.41    104.13     45.4
  Number of operating
   aircraft at end of
   period                                           433       436     (0.7)
  Full-time equivalent
   employees at end of
    period                                        38,348    39,154    (2.1)

  (1)  All statistics exclude Northwest Airlink regional carriers, which is
       consistent with how the Company reports statistics to the Department
       of Transportation ("DOT") and is comparable to statistics reported
       by other major network airlines.

  (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       Six Months Ended
                                     June 30                  June 30
                                2005        2004        2005       2004
  (in millions)
  Freighter operations          $200        $152        $355       $291
  MLT Inc. - net of
  intercompany eliminations       51          49         115        109
  Regional carriers              392         288         748        544
  Other                           13          15          25         29


  SELECTED BALANCE SHEET DATA
  (Unaudited)
                                       June 30, 2005     December 31, 2004
  (in millions)
  Cash, cash equivalents and
   unrestricted short-term investments      $2,144             $2,459
  Restricted cash, cash equivalents
   and short-term investments                  496                156
    Total cash, cash equivalents and
     short-term investments                  2,640              2,615

  Total assets                              14,352             14,042

  Long-term debt, including current
   maturities                                8,590              8,411
  Long-term obligations under capital
   leases, including current
   obligations                                 359                361

  Common stockholders' deficit              (3,752)            (3,087)



                        NORTHWEST AIRLINES CORPORATION

  UNUSUAL ITEMS
  (Unaudited)
                             Three Months Ended         Six Months Ended
                                June 30, 2005             June 30, 2005
                                     Earnings (Loss)         Earnings (Loss)
                             Income     per Share    Income     per Share
                             (Loss)  Basic  Diluted  (Loss)  Basic   Diluted

    Unusual Items:
      Gain on Sale of
       Prudential Shares       $102   $1.17   $1.17   $102   $1.18    $1.18
      Aircraft and Aircraft
       Related Write-Downs      (48)  (0.55)  (0.55)   (48)  (0.55)   (0.55)
      Loss on Sale of Note to
       Pinnacle Airlines          -       -       -    (18)  (0.21)   (0.21)


                             Three Months Ended         Six Months Ended
                                June 30, 2004             June 30, 2004
                                     Earnings (Loss)         Earnings (Loss)
                             Income     per Share    Income     per Share
                             (Loss)  Basic  Diluted  (Loss)  Basic   Diluted
    Unusual Items:
      Aircraft and Aircraft
       Related Write-Downs   $(104) $(1.21) $(1.21)  $(104)  $(1.21)  $(1.21)



                      NORTHWEST AIRLINES CORPORATION

  PASSENGER REVENUES
  (Unaudited)

  The following analysis by region is based on information reported to the
  Department of Transportation and excludes regional carriers:

                             System     Domestic    Pacific  Atlantic
  Second Quarter 2005
     Passenger revenues
      (in millions)          $2,347      $1,539      $496      $312

  Increase (Decrease)
   from Second Quarter
   2004:
    Passenger revenues          7.7%        3.6%     15.6%     17.3%

    Scheduled service
     ASMs (capacity)            4.4%        2.7%      5.6%     10.2%
    Scheduled service
     RPMs (traffic)             6.6%        5.4%      5.5%     13.4%
    Passenger load factor       1.7pts.     2.1pts.    - pts.   2.6pts.
    Yield                       1.0%       (1.6)%     9.5%      3.5%
    Passenger RASM              3.1%        0.9%      9.4%      6.5%


DATASOURCE: Northwest Airlines



CONTACT:  Northwest Airlines Media Relations, [phone]



Web site:  http://www.nwa.com/

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