Northwest Airlines announces further capacity cuts

Airline Industry Information, June 18, 2008

AIRLINE INDUSTRY INFORMATION-(C)1997-2008 M2 COMMUNICATIONS LTD

Northwest Airlines (NYSE:NWA) has said that it will make further capacity reductions in the fourth quarter of 2008 because of the extremely high cost of fuel.

The airline previously announced planned service cuts in April and has now said it will widen the measures, reducing system mainline capacity (domestic and international) by a total of around 8.5% to 9.5% compared with the fourth quarter of 2007.

Domestic consolidated capacity will be cut by 7-8% but Northwest's CEO Doug Steenland said that no domestic station closures are planned.

The airline has not yet determined exactly how many jobs will be lost as a result of the capacity reductions.

Northwest intends to remove 14 Boeing 757 and Airbus narrowbody aircraft from its fleet, and will reduce the DC-9 fleet from 94 aircraft at the start of 2008 to 61 aircraft by the end of the year.

Meanwhile Steenland said the airline is taking steps to improve revenues by increasing fuel surcharges, fares and fees.

He concluded by putting forward the case in favour of a merger with Delta Air Lines (NYSE:DAL), saying that merger-related synergies would improve the ability of both airlines to cope with the challenge presented by record-high fuel prices.

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