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January 19, 2005
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| For the full year, Northwest lost $878 million, or $10.16 per share. Northwest earned $236 million, or $2.62 per share, during 2003 - but excluding special items, it said it would have lost $565 million that year. (Photo by Bill Alkofer/Getty Images) |
Eagan, Minn. — (AP) - Expensive fuel and battles with low-fare carriers combined to push Northwest Airlines Corp. into a larger-than-expected $420 million fourth-quarter loss, the airline said on Wednesday.
"This was a difficult quarter for Northwest Airlines," president and chief executive Doug Steenland told analysts.
The airline lost $878 million for the year, its largest loss since at least 1998. It lost $798 million in 2002.
J.P. Morgan analyst Jamie Baker wrote that Northwest's results were a "generally poor showing all around, in our opinion."
Northwest lost $4.84 per share, versus a profit of $3.60 a share, or $363 million, during the same period a year ago. But the year-ago quarter included a $492 million gain as Northwest took its stake in Pinnacle Airlines public and sold some of its online travel service holdings.
Northwest, the fourth-largest airline, would have lost even more if not for one-time gains such as $115 million from selling the rest of its shares in online travel seller Orbitz. Excluding unusual items, Northwest lost $359 million, or $4.14 per share. On that basis, analysts surveyed by Thomson First Call had been expecting a loss of $3.97 per share.
The fourth-largest airline reported revenue of $2.75 billion, up 6.4 percent from $2.59 billion a year ago. Northwest had $2.46 billion in cash when the quarter ended Dec. 31.
The company has been calling for labor concessions of $950 million per year for about a year and a half. Steenland said higher fuel prices and fare cuts earlier this month by Delta Air Lines - which Northwest matched in competitive markets - mean Northwest needs to "at least revisit whether we think the $950 (million) is still an appropriate target."
During the quarter, Northwest reached a two-year agreement with its pilots that will save the Eagan-based airline $300 million per year - $265 million from pilots and $35 million from management and other salaried workers. But talks with mechanics and flight attendants are stalled in disputes over whether rank-and-file members can watch the negotiations. And talks with ground workers are in mediation.
"Once we achieve labor cost restructuring, we believe Northwest has a strong business strategy for success," Steenland said.
The airline is still expanding service. Its "available seat miles," meaning one seat flown one mile, increased 7.4 percent during the fourth quarter from the previous year. But the passenger revenue per seat fell by 3 percent. During the quarter, Northwest doubled its flights to Indianapolis and expanded service in Milwaukee.
For the full year, Northwest lost $878 million, or $10.16 per share. Northwest earned $236 million, or $2.62 per share, during 2003 - but excluding special items, it said it would have lost $565 million that year.
Northwest shares fell 37 cents, or 4.4 percent, to close at $8.04 on the Nasdaq Stock Market.
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