Northwest to Post Wider Loss Than Expected

Northwest Airlines Corp., the No. 4 U.S. airline, said Wednesday it would post a substantial loss in its first quarter, worse than analysts expected as the slowing economy cuts into high-paying corporate travel.

The warning makes Northwest the third major airline to reduce its first-quarter earnings outlook, following similar announcements from US Airways Group Inc. and Delta Air Lines Inc.

Analysts say the slowing economy is causing corporations to look for ways to save money, including reducing travel, and that business travelers may be looking for cheaper fares rather than making last-minute bookings at or near full price.

St. Paul, Minn.-based Northwest said it expected a loss of $130 million to $150 million, or $1.55 to $1.80 a share, in the three months ending March 31.

Analysts on average had been expecting a loss of 59 cents, according to First Call/Thomson Financial.

Northwest shares fell 94 cents to close at $19.75 on Nasdaq.

Northwest, which is contending with a potential strike this spring by mechanics, did not cite labor negotiations among the reasons for its earnings shortfall.

“We are beginning to experience the impact of a slowing U.S. economy, with February revenue below plan due primarily to a decline in corporate business travel,” Northwest said in a filing with the Securities and Exchange Commission.

“In the near term, we remain cautious, as we expect to see continued softness in our mix of business travelers,” the carrier added. That would hurt both revenue and profitability, the airline said.

International revenue also is showing the effects of an economic slowdown, with European sales weaker than expected, Northwest said.

Sales for Northwest’s significant Pacific operations are meeting expectations, the carrier said, adding, “We remain cautious based on the continued uncertainty in the Japan economy.”

Northwest’s cargo business started slowing significantly in January because of a decline in shipments of high-tech goods from Asia to the U.S. Northwest said this trend would probably continue in the near term as the U.S. demand for high-tech products “remains depressed.”