Bankruptcy Costs Contribute to Wider Loss at Northwest Air

Northwest Airlines Corp.’s fourth-quarter loss tripled to $1.31 billion because of costs from its bankruptcy filing in September and higher fuel expenses.

The loss came as Northwest pilots voted Tuesday to give their leaders the option to call a strike should contract talks fail and the carrier win court approval to impose concessions.

Northwest’s Air Line Pilots Assn. said pilots had cast 93% of ballots in favor of the strike option. Union leaders for Northwest’s 5,700 pilots could decide to call a strike as early as this week because a bankruptcy judge is scheduled to rule today on whether to grant Northwest’s request to scrap the contract.

Northwest and the pilots have been negotiating since the carrier’s Chapter 11 bankruptcy filing in September on a company request for $358 million in pay and benefit concessions. The airline says it needs the givebacks to help reduce labor expenses by $1.4 billion, stem losses and exit Chapter 11.

The loss at Northwest, the fourth-largest U.S. carrier, widened to $15.01 a share. The year-earlier loss was $426 million, or $5 a share. Sales rose 6% to $2.92 billion from $2.75 billion, the Eagan, Minn.-based company said.

The loss for Northwest’s first full quarter under Chapter 11 protection included bankruptcy expenses of $922 million and a 26% increase in spending on fuel to $170 million. The airline has been shedding flights and aircraft and is trying to cut annual costs by $2.5 billion. Northwest trimmed flight seat capacity 8.2% in the quarter and passenger traffic fell 4.9%.

The airline has already reached new contract agreements with three of its smaller unions for savings of $4 million annually. Temporary agreements with its three larger unions are saving the company $446 million on an annual basis.

Northwest ended the quarter with $1.26 billion in cash and short-term investments not earmarked for specific purposes.