Americas : Northwest blames loss on fuel hedges

Northwest Airlines reported a thirdquarter net loss of US$317 million, reversed from a US$244 million profit a year earlier, citing a US$410 million noncash charge related to fuel hedging as the reason. Third-quarter revenue rose 12.4 per cent to US$3.8 billion while expenses increased 37.5 per cent to US$4.01 billion, producing an operating loss of […]


fuel hedging Northwest Airlines


Northwest Airlines reported a thirdquarter net loss of US$317 million, reversed from a US$244 million profit a year earlier, citing a US$410 million noncash charge related to fuel hedging as the reason.

Third-quarter revenue rose 12.4 per cent to US$3.8 billion while expenses increased 37.5 per cent to US$4.01 billion, producing an operating loss of US$216 million, reversed from an operating profit of US$459 million in the same period a year earlier.

Excluding the hedging loss resulting from the recent drop in oil prices, highlighting the gamble that fuel hedging inherently is, NWA would have posted a US$93 million profit. The company’s executives expressed satisfaction with the result and optimism going forward despite weak economic conditions, citing stronger than expected bookings.

The carrier also noted that NWA’s decision earlier this year to charge for a second checked bag has led to a 40 per cent reduction in the number of second bags checked, reducing handling and manpower costs, as well as weight.