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WCCO: Bankrupt NWA Reports $267 Million 4Q Loss

WCCO: Bankrupt NWA Reports $267 Million 4Q Loss

 
Old Feb 6, 07, 7:00 pm
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WCCO: Bankrupt NWA Reports $267 Million 4Q Loss

Bankrupt NWA Reports $267 Million 4Q Loss
Originally Posted by AP via WCCO
Minneapolis Profit-sharing checks from bankrupt airlines are as common as wings on pigs. So workers at Northwest Airlines could be forgiven if they cash theirs quickly.

Bankrupt Northwest Airlines Corp. announced $44 million in profit-sharing and other incentive pay on Tuesday, and it said it would have made $301 million in 2006 if not for bankruptcy expenses.

...
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Old Feb 6, 07, 7:18 pm
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Only $7MM was operating loss

Only $7MM of that loss was real money. The rest of it is paper losses due to bankruptcy proceedings.

I really think the pressure will be on AA and maybe even CO next year since they are the only legacies that hasn't reduced their costs in a bankruptcy since 9/11
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Old Feb 6, 07, 7:30 pm
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More relevant thread:

NWA Reports Full Year 2006 Results
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Old Feb 7, 07, 4:34 am
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Originally Posted by jman4l View Post
Only $7MM of that loss was real money. The rest of it is paper losses due to bankruptcy proceedings.

I really think the pressure will be on AA and maybe even CO next year since they are the only legacies that hasn't reduced their costs in a bankruptcy since 9/11
Thanks for pointing out some of the background data. My impression is that BK is when all of the negatives currently on the books gets written off, which can make for some ugly number. It will be interesting to see what the last quarter (in BK) negative results are, and what the first quarter (out of BK) positive results are.

Steve B.
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Old Feb 7, 07, 7:46 am
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Originally Posted by jman4l View Post
Only $7MM of that loss was real money. The rest of it is paper losses due to bankruptcy proceedings.
Not completely true. The operating loss include non-cash items and there are cash charges related to the bankruptcy proceedings.

With such a minimal operating loss, a good measure of NW's performance would be operating cash flow. I'm to lazy to look, but I imagine it reflects significantly improved financial performance.
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Old Feb 7, 07, 5:58 pm
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Originally Posted by jman4l View Post
Only $7MM of that loss was real money. The rest of it is paper losses due to bankruptcy proceedings.

I really think the pressure will be on AA and maybe even CO next year since they are the only legacies that hasn't reduced their costs in a bankruptcy since 9/11
I think you're too pessimistic about AA and CO. CO decimated their employees in their two previous bankruptcies and a couple years ago, CO was successful in imposing even more wage concessions on everyone but the FAs.

In 2003, AA rammed $1.8 billion of annual wage concessions down their employees' throats (all but $200 millon of that was from union-represented groups). Doing that kept AA out of bankruptcy, which itself is very expensive (UAL spent more than $660 million on lawyers, accountants, investment bankers, consultants and others for its Ch 11 case). AA, on the other hand, had that $660 million that UAL spent on its legal and other costs during its bankruptcy to contribute to the AA pension plans instead.
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