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Northwest Avoids Quarterly Loss


By Ted Reed
TheStreet.com Staff Reporter
1/29/2008 3:47 PM EST
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Northwest Airlines (NWA - Cramer's Take - Stockpickr) said it broke even on an adjusted basis in the fourth quarter, becoming the first major airline to avoid reporting a loss.


The carrier beat expectations, as analysts surveyed by Thomson Financial had expected a loss of 8 cents. Including special items, Northwest lost $8 million, or 3 cents a share. Revenue rose 3.9% to $3.1 billion. Analysts had estimated $3.03 billion.

Although he declined to comment during a conference call on the carrier's merger talks with Delta (DAL - Cramer's Take - Stockpickr), CEO Doug Steenland spoke about the Justice Department's role in airline mergers while discussing Northwest's investment in Midwest (MEH - Cramer's Take - Stockpickr).

Northwest and TPG Capital plan to pay about $450 million for the Milwaukee-based carrier, and the DOJ has asked for additional data. Final approval is expected soon, Steenland said, adding: "If this had been another business, I think it probably would have taken less time, but the airline business is always subject to a little more scrutiny.

"The ability of the closing at Midwest to take place, while it was expected, does show that the department is prepared to let transactions go through," he added.

During the quarter, excluding bankruptcy items, consolidated passenger revenue per available seat mile rose 5.9%. Capacity fell by 1.5%. Looking ahead, CFO Dave Davis said: "We monitor macroeconomic developments the same as everyone, [and] based on all the information available to us, we don't see a decline. Bookings are a little stronger than we had otherwise anticipated."

Excluding fuel costs and unusual items, cost per available seat mile rose 5.1% due primarily to a rapid reduction in capacity. During the quarter, fuel expenses climbed 21.7%.

Northwest said its 2007 pretax margin of 6.1% was the highest among network carriers.