Northwest Airlines exits bankruptcy
Northwest Airlines, the last U.S. carrier in bankruptcy, left court protection Thursday after reducing its operating costs to the point where they are now close to the lowest in the industry.
The company used its 20 months in bankruptcy to carve $2.4 billion, or 20 percent, from its annual expenses. It slashed labor spending by $1.4 billion, or 40 percent. Northwest also reorganized its regional flights, trimmed its fleet by 13 percent, and replaced older fuel-guzzling planes with newer models.
“They were pretty aggressive,” said William Warlick, an analyst for Fitch in Chicago. “The proof is in the pudding, and they’re going to come out of bankruptcy with lower costs than virtually all other legacy carriers.”
The reorganization will produce a $794 million profit in 2007 after a $2.84 billion loss last year, Northwest estimates. The operating profit margin in the last quarter was 7 percent, the best among major U.S. airlines. American Airlines was second with 4.6 percent.
Northwest, based in Eagan, Minnesota, was the last of four large U.S. airlines to file for bankruptcy protection after air travel slumped in the wake of the 2001 terrorist attacks. US Airways Group filed for bankruptcy in August 2002 and again in September 2004; United Airlines in December 2002; and Delta Air Lines about 30 minutes before Northwest on Sept. 14, 2005.
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