Northwest Airlines unable to buy back USD226m in stock

Airline Industry Information, August 4, 2003

AIRLINE INDUSTRY INFORMATION-(C)1997-2003 M2 COMMUNICATIONS LTD

Northwest Airlines will not immediately buy back USD226m in stock issued to employees in return for wage concessions as the measure would be illegal.

The airline's board of directors has reportedly determined that at the present time the company can not legally redeem the 4.8m shares of its Series C Preferred Stock still outstanding. Northwest Airlines issued the Series C Preferred Stock in 1993 to trusts for the benefit of its employees in connection with labour cost restructuring agreements.

The board will continue, on a regular basis, to revisit the company's ability to buy back the stock, and has stated that until the stock is repurchased, each share will accrue a 12% per year dividend on the USD46.96 per share buy back price.

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