Northwest Airlines Reports First Quarter Loss of $123 Million Excluding Non-Recurring Items

Northwest Airlines Corporation (Nasdaq: NWAC) today reported a first quarter net loss of $123 million or a $1.47 loss per common share, excluding non-recurring items. This compares to a 2000 net loss of $42 million or a 51 cent loss per common share, excluding non-recurring items. Results were slightly better than the Company's previous March guidance and First Call's consensus estimates of a $1.64 loss per share.

These results exclude two non-recurring items:

-- a $27 million pre-tax gain from the sale of Northwest's remaining 2.6 million shares of Continental Airlines common stock for $132 million,

-- a $94 million charge for expected retro-active pay and benefits associated with a recently reached tentative contract agreement with the Aircraft Mechanics Fraternal Association (AMFA), the union representing Northwest's 9,795 mechanics, custodians and cleaners.

Inclusive of those charges, Northwest reported a first quarter net loss of $171 million or a $2.05 loss per common share. See "Supplemental Table" for additional details.

"Several factors presented a challenging environment for Northwest during the first quarter: the weakening economy, increased fuel prices, severe winter weather and a higher level of cancellations and delays due to labor contract issues," said Richard Anderson, chief executive officer.

"As we enter the next quarter, we believe we are well positioned to navigate the continued uncertain economy on several fronts. Our new management team is well in place, implementing our proven strategies for growth. We have a sound financial plan to enhance revenue and reduce costs. And we are gratified to have reached a tentative agreement with our mechanics union."

Financial

First quarter operating revenue grew by $102 million or 4.1 percent year-over-year, reflecting slower growth than previous quarters. First quarter passenger revenue per seat mile (RASM) increased 0.9% year-over-year benefiting from a strong January, but weaker February and March performance, due to a weakening U.S. economy, which resulted in a significant decline in corporate business travel. Quarterly operating cost per seat mile (CASM), excluding provisions for AMFA retro-active pay and benefits, increased by 7.3 percent year-over-year, primarily due to higher fuel prices and labor costs. Excluding the effect of higher fuel prices, unit costs increased by 5.4%.

"In response to this economic downturn Northwest initiated a program of revenue enhancements and cost reductions totaling $200 million," said Mickey Foret, Northwest Airlines chief financial officer.

Highlights of Northwest's revenue enhancement/cost reduction initiatives include:

-- The optimization of its flight schedule that will slow 2001 capacity growth from 2.6% to 1.5%, due partially to the accelerated retirement of three DC 10-40 aircraft in the fall.

-- Deferring discretionary spending on advertising and management training.

-- Reducing overall management payroll expense by 5 percent.

Northwest is committed to maintaining the integrity of its core product while prudently reducing discretionary spending for the duration of this economic downturn. The Company will continue to enhance its World Business Class product, streamline and modernize its fleet, improve airport facilities, and introduce innovative technology to provide more convenient and efficient service for its customers.

Labor

On April 9, Northwest Airlines and AMFA reached tentative agreement on a four-year contract. "With ratification of the AMFA contract, Northwest will be one of the few major U.S. network carriers to have signed agreements with all of its labor unions," said Northwest Airlines President Doug Steenland. "This means our customers can book their summer travel with confidence and that the complete time, attention and resources of Northwest Airlines will be singularly directed to operational and service excellence."

Operations

Despite labor issues with AMFA and challenging winter weather, Northwest improved its performance on key indicators tracked by the Department of Transportation. In January and February 2001, Northwest ranked number one and number three, respectively, in on-time performance relative to the major network carriers. Northwest's on-time performance rankings for March and for the quarter are expected to be near the top of the network carriers. In year-over-year comparisons, Northwest also significantly reduced complaints regarding mishandled luggage claims and registered the lowest number of consumer complaints of the major network carriers in February.

Marketing

Northwest continues to be an innovator in reducing distribution costs. On February 28, the Company announced the elimination of commissions on ticket sales made via the Internet. In addition, Northwest continues to develop and expand sales and service initiatives through nwa.com. Compared to first quarter last year, online bookings and ticket sales at nwa.com have increased 74 percent.

Northwest continued the introduction of "Line Busting" technology. The Company now has approximately 240 self-service check-in devices in almost 40 airports assisting customers with quick, convenient flight check-in. Additionally, Internet check-in throughout the domestic system and airport customer service agents equipped with hand held computers are providing

Northwest customers with increased flexibility and convenience.