Out of bankruptcy, Northwest reports a profit

updated 7:47 p.m. ET July 31, 2007

MINNEAPOLIS - Northwest Airlines Corp., which emerged from bankruptcy protection on May 31, said on Tuesday that it earned $273 million during its second quarter before accounting boosts related to its reorganization.

Northwest shares fell 52 cents, or nearly 3 percent, to $17.43 Tuesday. They have generally been drifting lower since peaking at $26.50 in June after Northwest emerged from bankruptcy.

Including reorganization items Northwest earned $2.15 billion, or $8.20 per share, during the quarter that ended June 30. Northwest's finances benefited from $1.94 billion in reorganization items during the quarter, which included two months operating under bankruptcy protection and one month after it emerged.

Revenue for the quarter declined 3 percent, to $3.18 billion, from $3.29 billion a year ago.

Northwest earned 78 cents per share not counting reorganization items. On that basis, analysts surveyed by Thomson Financial were expecting a profit of 79 cents per share on revenue of $3.31 billion.

Although Northwest's finances improved out of bankruptcy, it has been plagued by operating problems. It has had to cancel hundreds of flights at the end of June and July because it couldn't provide enough pilots for its planes. The airline said those problems cost it $25 million during the second quarter.

"We sincerely apologize for the inconvenience these cancellations have caused our customers," President and Chief Executive Officer Doug Steenland said in a prepared statement.

The airline has been recalling furloughed pilots and has reduced its August schedule in an effort to avoid a repeat of those cancellations.

"We are confident that the measures we are taking will result in materially better operational performance during the coming months," Steenland said.

Northwest said it paid $2.04 per gallon for fuel before taxes and some hedging costs, down 2.7 percent from a year ago.

Northwest said it ended the quarter with $4 billion in cash, including $706 million set aside to pay certain obligations.

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