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NWA sees wider 1Q loss
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March 14, 2001: 11:41 a.m. ET
Carrier expects to lose $1.55 a share, cites decline in business passengers
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NEW YORK (CNNfn) - Northwest Airlines Wednesday forecast a steeper first-quarter loss than Wall Street had been expecting due to weak traffic, a day after Delta Air Lines issued a similar warning.
The nation's No. 5 airline said it expects a first-quarter loss of about $140 million, or at least $1.55 a share before special items, the company said in a filing with the U.S. Securities and Exchange Commission. That would be well above Wall Street forecasts for a loss of 59 cents a share.
The airline cited a slowdown in passenger traffic, especially among business travelers, who often pay full fare and account for the bulk of most airlines' profits.
 "Due to the weakening U.S. economy, Northwest will not meet analyst financial expectations, primarily due to the decline in corporate business travel, which has had an adverse impact on yields and revenues," Northwest said in the filing. "As a result of this economic slowdown, Northwest expects to report a net loss of $130 million to $150 million, excluding any non-recurring items, in the first-quarter ending March 31."
The warning comes a day after Delta said it expects to report a first-quarter loss rather than the profit forecast by Wall Street. The No. 3 carrier cited a reduced flight schedule, weakening economy and "customer avoidance" due to worries about a possible pilots' strike.
Labor unrest at Northwest, where President Bush's intervention last week staved off a strike by the union representing the carrier's 10,000 mechanics, may also have prompted business travelers to book away from Northwest, CIBC World Markets Analysts Julius Maldutis said.
"I think both in the case of Delta and Northwest you have two forces at work. One is the economic slowdown, which is putting caution into business travel," Maldutis said. "But equally, and more importantly, issues with regard to a potential strike I think is the real culprit."
The company said it remains cautious in the near term as it expects continued softness in business travel, and that international sales also are being affected by the slowdown.
Pacific sales are meeting expectations, but the company is being cautious in light of uncertainty about Japan's economy. European sales are lower.
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The company's cargo business also saw a "significant slowdown" in January, mainly because of a drop in Asia-to-U.S. shipments of technology goods, a trend likely to continue.
Northwest also said February revenue was below plan because of declining business travel, but that January sales matched company expectations with domestic revenue per available seat mile up 11.2 percent.
The company said capacity on its planes had declined in the last year, primarily because of seat improvements and the introduction of its World Business Class and elimination of international first class.
Maldutis said he is waiting to see not only how the labor issues are settled at Northwest and Delta, but what, if any guidance American Airlines (AMR: Research, Estimates) and United Airlines Corp. (UAL: Research, Estimates) will provide. United is awaiting regulatory approval for its proposed $4.3 billion merger with US Airways. Federal antitrust regulators are concerned about an air travel market dominated by United and American.
Northwest (NWAC: Research, Estimates) shares fell $1.19 to $19.50, while Delta (DAL: Research, Estimates) lost $2.57 to $38.89 in afternoon trading. AMR shares shed $2.05 to $32.25 while UAL shares slipped $1.52 to $35.20. 
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