##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
 QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended September 30, 2009
 Commission File Number: 1-15285
 NORTHWEST AIRLINES CORPORATION
 (Exact name of registrant as specified in its charter)

Delaware
    
    41-1905580(State or other jurisdiction of incorporation or
    
    (I.R.S. Employer Identification No.)organization)2700 Lone Oak Parkway, Eagan, Minnesota
    
    55121(Address of principal executive offices)
    
    (Zip Code)

(612) 726-2111
(Registrants telephone number, including area code) o þ
   o o
  Large accelerated filer þ
    
    Accelerated filer o
    
    Non-accelerated filer o
    
    Smaller reporting company o(Do not check if a Smaller reporting company)
  o þ
  þ o
  The registrant meets the conditions set forth in General Instruction H(1)(a) and (b) of Form
10-Q and is therefore filing this Form with the reduced disclosure format permitted by General
Instruction H(2).




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TABLE OF CONTENTS  FORWARD-LOOKING STATEMENTSFINANCIAL STATEMENTSNOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTSITEM 2. Managements Discussion and Analysis of Financial Condition and Results of OperationsITEM 3. Quantitative and Qualitative Disclosures About Market RiskITEM 4. Controls and ProceduresPART II. OTHER INFORMATIONITEM 1. Legal ProceedingsITEM 1A. Risk FactorsITEM 6. ExhibitsSIGNATUREEX-31.1EX-31.2    Table of Contents   
 FORWARD-LOOKING STATEMENTS
  1




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##### Table of Contents



NORTHWEST AIRLINES CORPORATION
 
 Consolidated Balance Sheets
(Unaudited)
 September 30,
    
    
    December 31,(in millions, except share data)
    
    2009
    
    
    2008ASSETSCurrent Assets:Cash and cash equivalents
    
    $
    2,413
    
    
    $
    2,068Short-term investments
    
    
    21
    
    
    
    49Restricted cash and cash equivalents
    
    
    217
    
    
    
    196Accounts receivable, net of an allowance for uncollectible accounts of $2 and $6 at September
30, 2009
and December 31, 2008, respectively
    
    
    710
    
    
    
    729Hedge margin receivable
    
    
    
    
    
    
    526Expendable parts and supplies inventories, net of an allowance for obsolescence of $18 and $3 at September 30, 2009 and December 31, 2008, respectively
    
    
    154
    
    
    
    152Deferred income taxes, net
    
    
    49
    
    
    
    131Prepaid expenses and other
    
    
    257
    
    
    
    232Total current assets
    
    
    3,821
    
    
    
    4,083Property and Equipment, Net:Property and equipment, net of accumulated depreciation and amortization of $404 and $71 at
September 30, 2009 and December 31, 2008, respectively
    
    
    8,248
    
    
    
    8,683Other Assets:Goodwill
    
    
    4,619
    
    
    
    4,572Identifiable intangibles, net of accumulated amortization of $30 and $8 at September 30, 2009
and December 31, 2008, respectively
    
    
    2,665
    
    
    
    2,694Other noncurrent assets
    
    
    141
    
    
    
    236Total other assets
    
    
    7,425
    
    
    
    7,502Total assets
    
    $
    19,494
    
    
    $
    20,268LIABILITIES AND STOCKHOLDERS EQUITYCurrent Liabilities:Current maturities of long-term debt and capital leases
    
    $
    387
    
    
    $
    383Air traffic liability
    
    
    1,271
    
    
    
    1,521Accounts payable
    
    
    845
    
    
    
    903Frequent flyer deferred revenue
    
    
    474
    
    
    
    522Accrued salaries and related benefits
    
    
    383
    
    
    
    455Hedge derivatives liability
    
    
    68
    
    
    
    561Taxes payable
    
    
    218
    
    
    
    199Note payable to parent
    
    
    600
    
    
    
    200Other accrued liabilities
    
    
    229
    
    
    
    112Total current liabilities
    
    
    4,475
    
    
    
    4,856Noncurrent Liabilities:Long-term debt and capital leases
    
    
    4,299
    
    
    
    5,382Pension, postretirement and related benefits
    
    
    5,674
    
    
    
    5,476Frequent flyer deferred revenue
    
    
    1,424
    
    
    
    1,500Deferred income taxes, net
    
    
    1,001
    
    
    
    1,094Other noncurrent liabilities
    
    
    451
    
    
    
    533Total noncurrent liabilities
    
    
    12,849
    
    
    
    13,985Commitments and ContingenciesStockholders Equity:Common stock at $0.01 par value; 1,000 shares issued at September 30, 2009
and December 31, 2008, respectively
    
    
    
    
    
    
    Additional paid-in capital
    
    
    4,564
    
    
    
    3,605Accumulated deficit
    
    
    (838
    )
    
    
    (539
    )Accumulated other comprehensive loss
    
    
    (1,556
    )
    
    
    (1,639
    )Total stockholders equity
    
    
    2,170
    
    
    
    1,427Total liabilities and stockholders equity
    
    $
    19,494
    
    
    $
    20,268
  2




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##### Table of Contents



NORTHWEST AIRLINES CORPORATION
 Consolidated Statements of Operations
(Unaudited)
 Three Months Ended September 30,
    
    
    Nine Months Ended September 30,2009
    
    
    2008
    
    
    2009
    
    
    2008(in millions, except per share data)
    
    Post-Merger
    
    
    Pre-Merger
    
    
    Post-Merger
    
    
    Pre-MergerOperating Revenue:Passenger:Mainline
    
    $
    1,898
    
    
    $
    2,801
    
    
    $
    5,494
    
    
    $
    7,741Regional carriers
    
    
    492
    
    
    
    550
    
    
    
    1,397
    
    
    
    1,462Total passenger revenue
    
    
    2,390
    
    
    
    3,351
    
    
    
    6,891
    
    
    
    9,203Cargo
    
    
    99
    
    
    
    202
    
    
    
    275
    
    
    
    612Other, net
    
    
    363
    
    
    
    260
    
    
    
    906
    
    
    
    721Total operating revenue
    
    
    2,852
    
    
    
    3,813
    
    
    
    8,072
    
    
    
    10,536Operating Expense:Salaries and related costs
    
    
    764
    
    
    
    706
    
    
    
    2,245
    
    
    
    2,182Aircraft fuel and related taxes
    
    
    670
    
    
    
    1,946
    
    
    
    1,855
    
    
    
    4,246Contract carrier arrangements
    
    
    246
    
    
    
    275
    
    
    
    658
    
    
    
    820Contracted services
    
    
    183
    
    
    
    198
    
    
    
    549
    
    
    
    611Passenger commissions and other
selling expenses
    
    
    146
    
    
    
    226
    
    
    
    445
    
    
    
    665Aircraft maintenance materials and
outside repairs
    
    
    130
    
    
    
    168
    
    
    
    438
    
    
    
    563Landing fees and other rents
    
    
    125
    
    
    
    144
    
    
    
    404
    
    
    
    416Depreciation and amortization
    
    
    136
    
    
    
    122
    
    
    
    389
    
    
    
    1,015Passenger service
    
    
    76
    
    
    
    65
    
    
    
    191
    
    
    
    190Aircraft rent
    
    
    60
    
    
    
    57
    
    
    
    178
    
    
    
    167Impairment of goodwill and other
intangible assets
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,841Restructuring and merger-related items
    
    
    32
    
    
    
    1
    
    
    
    116
    
    
    
    1Other
    
    
    100
    
    
    
    123
    
    
    
    307
    
    
    
    389Total operating expense
    
    
    2,668
    
    
    
    4,031
    
    
    
    7,775
    
    
    
    15,106Operating Income (Loss)
    
    
    184
    
    
    
    (218
    )
    
    
    297
    
    
    
    (4,570
    )Other (Expense) Income:Interest expense
    
    
    (187
    )
    
    
    (112
    )
    
    
    (549
    )
    
    
    (334
    )Interest income
    
    
    2
    
    
    
    21
    
    
    
    9
    
    
    
    81Loss on extinguishment of debt
    
    
    (83
    )
    
    
    
    
    
    
    (83
    )
    
    
    Miscellaneous, net
    
    
    9
    
    
    
    (5
    )
    
    
    32
    
    
    
    (221
    )Total other expense, net
    
    
    (259
    )
    
    
    (96
    )
    
    
    (591
    )
    
    
    (474
    )Loss Before Income Taxes
    
    
    (75
    )
    
    
    (314
    )
    
    
    (294
    )
    
    
    (5,044
    )Income Tax (Provision) Benefit
    
    
    (2
    )
    
    
    (3
    )
    
    
    (5
    )
    
    
    211Net Loss
    
    $
    (77
    )
    
    $
    (317
    )
    
    $
    (299
    )
    
    $
    (4,833
    )Basic and Diluted Loss per Share
    
    
    N/A
    
    
    $
    (1.20
    )
    
    
    N/A
    
    
    $
    (18.35
    )
  3




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##### Table of Contents



NORTHWEST
AIRLINES CORPORATION
 Condensed Consolidated Statements of Cash Flow
(Unaudited)
 Nine Months Ended September 30,2009
    
    
    2008(in millions)
    
    Post-Merger
    
    
    Pre-MergerNet cash provided by operating activities
    
    $
    357
    
    
    $
    451Cash Flows From Investing Activities:Property and equipment additions, including advance payments, net
    
    
    110
    
    
    
    (1,014
    )Proceeds from sales of flight equipment
    
    
    77
    
    
    
    16Redemption of short-term investments
    
    
    28
    
    
    
    55Redesignation of cash equivalents to short-term investments
    
    
    
    
    
    
    (246
    )(Increase) decrease in restricted cash and cash equivalents
    
    
    (101
    )
    
    
    292Investment in affiliated companies
    
    
    
    
    
    
    (213
    )Other, net
    
    
    
    
    
    
    20Net cash provided by (used in) investing activities
    
    
    114
    
    
    
    (1,090
    )Cash Flows From Financing Activities:Payments on long-term debt and capital lease obligations
    
    
    (1,350
    )
    
    
    (365
    )Capital contribution from parent
    
    
    897
    
    
    
    Proceeds from intercompany loan
    
    
    400
    
    
    
    Proceeds from long-term obligations
    
    
    
    
    
    
    873(Payments) proceeds of short-term obligations, net
    
    
    (73
    )
    
    
    115Payments of deferred financing costs
    
    
    
    
    
    
    (114
    )Net cash (used in) provided by financing activities
    
    
    (126
    )
    
    
    509Net Increase (Decrease) in Cash and Cash Equivalents
    
    
    345
    
    
    
    (130
    )Cash and cash equivalents at beginning of period
    
    
    2,068
    
    
    
    2,939Cash and cash equivalents at end of period
    
    $
    2,413
    
    
    $
    2,809Non-cash transactions:Flight equipment
    
    $
    48
    
    
    $
    
  4




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NORTHWEST
AIRLINES CORPORATION
 
 Notes to the Condensed Consolidated Financial Statements
September 30, 2009
(Unaudited)
 NOTE 1. BASIS OF PRESENTATION
          New Accounting Standards
  5




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NOTE 2. FAIR VALUE MEASUREMENTS
  
    
    Level 1.Observable inputs such as quoted prices in active markets;
    
    Level 2. Inputs, other than the quoted prices in active markets, that are observable
either directly or indirectly; and
    
    Level 3. Unobservable inputs in which there is little or no market data, which require
the reporting entity to develop its own assumptions.
 Assets and Liabilities Measured at Fair Value on a Recurring Basis
 SignificantQuoted Prices
    
    Other
    
    Significantin Active
    
    Observable
    
    UnobservableSeptember 30,
    
    Markets
    
    Inputs
    
    Inputs(in millions)
    
    2009
    
    (Level 1)
    
    (Level 2)
    
    (Level 3)Cash equivalents
    
    $
    2,289
    
    
    $
    2,289
    
    
    $
    
    
    
    $
    Short-term investments
    
    
    21
    
    
    
    
    
    
    
    
    
    
    
    21Restricted cash equivalents
    
    
    217
    
    
    
    217
    
    
    
    
    
    
    
    Long-term investments
    
    
    5
    
    
    
    
    
    
    
    
    
    
    
    5Hedge derivatives liability, net
    
    
    (117
    )
    
    
    
    
    
    
    (52
    )
    
    
    (65
    )
   Assets and Liabilities Measured at Fair Value on a Recurring Basis Using Significant
Unobservable Inputs (Level 3)
 Hedge Derivatives(in millions)
    
    Liability, NetBalance at December 31, 2008
    
    $
    (549
    )Change in fair value included in earnings
    
    
    (77
    )Change in fair value included in other comprehensive income
    
    
    91Purchases and settlements, net
    
    
    470Balance at September 30, 2009
    
    $
    (65
    )
  Aircraft Fuel Expense and
    
    Other (Expense)(in millions)
    
    Related Taxes
    
    IncomeTotal losses  included in earnings
    
    $
    (76
    )
    $
    (1)Change in
unrealized losses relating to liabilities still held at September 30, 2009
    
    $
    
    
    $
    (1)
 6




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##### Table of Contents



Fair Value of Debt
  September 30,
    
    December 31,(in millions)
    
    2009
    
    2008Total debt at par value
    
    $
    5,917
    
    
    $
    7,353Unamortized discount, net
    
    
    (1,320
    )
    
    
    (1,678
    )Net carrying amount
    
    $
    4,597
    
    
    $
    5,675Fair value (1)
    
    $
    5,563
    
    
    $
    5,195
 (1)
    
    The aggregate fair value of our debt was based primarily on reported market
values and recently completed market transactions. NOTE 3. RISK MANAGEMENT AND FINANCIAL INSTRUMENTS
 Aircraft Fuel Price Risk
    7




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##### Table of Contents



Cash flow hedges
  Impact of Unrealized Gains and LossesConsolidated
    
    ConsolidatedBalance Sheets
    
    Income StatementsDerivative Instrument(1)
    
    Hedged Risk
    
    Effective Portion
    
    Ineffective PortionDesignated as cash flow hedges:Fuel hedges consisting of crude oil,
heating oil, and jet fuel swaps,
collars and call
options(2)
    
    Volatility in jet
fuel prices
    
    Effective portion
of hedge is
recorded in
accumulated other
comprehensive
income
    
    Excess, if any,
over effective
portion of hedge is
recorded in other
(expense) incomeInterest rate swaps and call options
    
    Changes in 
interest rates
    
    Entire hedge is
recorded in
accumulated other
comprehensive
income
    
    Expect hedge to
fully offset hedged
risk; no
ineffectiveness
recordedForeign currency forwards and collars
    
    Fluctuations in
foreign currency
exchange rates
    
    Entire hedge is
recorded in
accumulated other
comprehensive
income
    
    Expect hedge to
fully offset hedged
risk; no
ineffectiveness
recordedNot designated as hedges:Fuel contracts consisting of crude
oil, heating oil and jet fuel
extendable swaps and three-way
collars
    
    Volatility in jet
fuel prices
    
    Entire amount of change in fair value of
hedge is recorded in aircraft fuel expense
and related taxes
 (1)
    
    In the Merger, Delta assumed our outstanding hedge contracts, which include
fuel, interest rate and foreign currency cash flow hedges. On the Closing Date, Delta
designated certain of these contracts as hedges. The remaining derivative contracts did not
qualify for hedge accounting and settled as of June 30, 2009.(2)
    
    Ineffectiveness on our fuel hedge option contracts is calculated using a
perfectly effective hypothetical derivative, which acts as a proxy for the fair value of the
change in expected cash flows from the purchase of aircraft fuel. 8




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##### Table of Contents



Hedge Position
  September 30, 2009Other
    
    
    
    
    
    
    Hedge
    
    
    OtherNotional
    
    
    Maturity
    
    
    Noncurrent
    
    
    Accounts
    
    
    Derivatives
    
    
    Noncurrent
    
    
    Hedge Margin(in millions, unless otherwise stated)
    
    Balance
    
    
    Date
    
    
    Assets
    
    
    Payable
    
    
    Liability
    
    
    Liabilities
    
    
    ReceivableDesignated as hedgesInterest rate swaps and caps designated as cash flow hedges
    
    $
    1,597
    
    
    December 2009 - 
May 2019
    
    
    2
    
    
    
    
    
    
    
    (39
    )
    
    
    (27
    )Foreign currency exchange forwards and collars
    
    63.7 billion Japanese Yen, 257 million Canadian Dollars
    
    October 2009 - 
July 2012
    
    
    
    
    
    
    
    
    
    
    (28
    )
    
    
    (25
    )Total derivative instruments
    
    
    
    
    
    
    
    
    
    $
    2
    
    
    $
    
    
    
    $
    (67
    )
    
    $
    (52
    )
    
    $
    
 December 31, 2008Hedge
    
    
    OtherNotional
    
    
    Maturity
    
    
    Accounts
    
    
    Derivatives
    
    
    Noncurrent
    
    
    Hedge Margin(in millions, unless otherwise stated)
    
    Balance
    
    
    Date
    
    
    Payable
    
    
    Liability
    
    
    Liabilities
    
    
    ReceivableDesignated as hedgesFuel hedge swaps, collars and call options
    
    173 million gallons - crude oil
    
    January - June 2009
    
    $
    
    
    
    $
    (163
    )
    
    $
    Interest rate swaps and call options designated as cash flow hedges
    
    $
    1,700
    
    
    
    December 2009 - 
May 2019
    
    
    
    
    
    
    
    (32
    )
    
    
    (63
    )Foreign currency exchange forwards and collars
    
    45.0 billion Japanese Yen
    
    
    January - December 2009
    
    
    
    
    
    
    
    (48
    )
    
    
    Total designated
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (243
    )
    
    
    (63
    )Not designated as hedgesFuel hedge swaps and collars
    
    180 million gallons - crude oil, heating oil, jet fuel
    
    January - June 2009
    
    
    (119
    )
    
    
    (318
    )
    
    
    Total not designated
    
    
    
    
    
    
    
    
    
    
    (119
    )
    
    
    (318
    )
    
    
    Total derivative instruments
    
    
    
    
    
    
    
    
    
    $
    (119
    )
    
    $
    (561
    )
    
    $
    (63
    )
    
    $
    526
 9




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Hedge Gains (Losses)
  Effective Portion ReclassifiedEffective Portion Recognizedin Other Comprehensive Loss
    
    from Accumulated Other Comprehensive Loss to Earnings
    
    Ineffective Portion Recognized in Other (Expense) IncomeThree Months Ended
    
    Three Months Ended
    
    Three Months EndedSeptember 30,
    
    September 30,
    
    September 30,2009
    
    2008
    
    2009
    
    2008
    
    2009
    
    2008(in millions)
    
    Post-Merger
    
    Pre-Merger
    
    Post-Merger
    
    Pre-Merger
    
    Post-Merger
    
    Pre-MergerDesignated as hedgesFuel hedge swaps, collars and call
options(1)
    
    $
    
    
    
    $
    
    
    
    $
    (4
    )(4)
    
    $
    
    
    
    $
    3
    (4)
    
    $
    Interest rate swaps and call options
designated as cash flow hedges(2)
    
    
    (16
    )
    
    
    (9
    )
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    Foreign currency exchange forwards
and collars(3)
    
    
    52
    
    
    
    9
    
    
    
    
    
    
    
    (4
    )
    
    
    
    
    
    
    Total designated
    
    $
    36
    
    
    $
    
    
    
    $
    (3
    )
    
    $
    (4
    )
    
    $
    3
    
    
    $
    
 (1)
    
    Gains and losses on fuel hedge contracts reclassified from accumulated
other comprehensive loss are recorded in aircraft fuel and related taxes.(2)
    
    Gains and losses on interest rate swaps and call options reclassified from
accumulated other comprehensive loss are recorded in interest expense.(3)
    
    Gains and losses on foreign currency exchange contracts reclassified from
accumulated other comprehensive loss are recorded in passenger and cargo revenue.(4)
    
    Includes losses of $4 million and gains of $3 million recorded in
aircraft fuel and related taxes and other (expense) income, respectively, related to hedge
contracts allocated from Delta.  Effective Portion Reclassified fromEffective Portion Recognized inOther Comprehensive Loss
    
    Accumulated Other Comprehensive Loss to Earnings
    
    Ineffective Portion Recognized in Other (Expense) IncomeNine Months Ended
    
    Nine Months Ended
    
    Nine Months EndedSeptember 30,
    
    September 30,
    
    September 30,2009
    
    2008
    
    2009
    
    2008
    
    2009
    
    2008(in millions)
    
    Post-Merger
    
    Pre-Merger
    
    Post-Merger
    
    Pre-Merger
    
    Post-Merger
    
    Pre-MergerDesignated as hedgesFuel hedge swaps, collars and call
options(1)
    
    $
    71
    
    
    $
    
    
    
    $
    (92
    )(4)
    
    $
    
    
    
    $
    19
    (4)
    
    $
    Interest rate swaps and call options
designated as cash flow hedges(2)
    
    
    31
    
    
    
    11
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Foreign currency exchange forwards
and collars(3)
    
    
    (16
    )
    
    
    17
    
    
    
    2
    
    
    
    (13
    )
    
    
    
    
    
    
    Total designated
    
    $
    86
    
    
    $
    28
    
    
    $
    (90
    )
    
    $
    (13
    )
    
    $
    19
    
    
    $
    
 (1)
    
    Gains and losses on fuel hedge contracts reclassified from accumulated
other comprehensive loss are recorded in aircraft fuel and related taxes.(2)
    
    Gains and  losses on interest rate swaps and call options reclassified from accumulated
other comprehensive loss are recorded in interest expense.(3)
    
    Gains and losses on foreign currency exchange contracts reclassified from
accumulated other comprehensive loss are recorded in passenger and cargo revenue.(4)
    
    Includes losses of $17 million and gains of $19 million recorded in
aircraft fuel and related taxes and other (expense) income, respectively, related to hedge
contracts allocated from Delta. 10




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##### Table of Contents



Credit Risk
     NOTE 4. DEBT
   September 30,
    
    December 31,(in millions)
    
    2009
    
    2008Bank Credit Facility due 2010
    
    $
    
    
    
    $
    904Revolving Credit Facility due 2009
    
    
    
    
    
    
    Certificates due in installments from 2009 to 2022
    
    
    1,602
    
    
    
    1,735Aircraft financings due in installments from 2009 to 2025
    
    
    3,740
    
    
    
    4,003Other secured financings due in installments from 2009 to 2031
    
    
    575
    
    
    
    711Total secured debt
    
    
    5,917
    
    
    
    7,353Unamortized discount(1)
    
    
    (1,320
    )
    
    
    (1,678
    )Total debt
    
    
    4,597
    
    
    
    5,675Less: current maturities
    
    
    (386
    )
    
    
    (382
    )Total long-term debt
    
    $
    4,211
    
    
    $
    5,293
 (1)
    
    This item includes a reduction in the carrying value of debt as a result of
purchase accounting related to the Merger, which will be amortized to interest
expense over the remaining maturities of the respective debt. 11




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Obligations Guaranteed by Northwest
 Senior Secured Credit Facilities
     
    
    maintain a minimum fixed charge coverage ratio (defined as the ratio of (1)
earnings before interest, taxes, depreciation, amortization and
aircraft rent, and subject to other adjustments to net income
(EBITDAR) (excluding
gains and losses arising under fuel hedging arrangements incurred prior to the closing
date of the Senior Secured Credit Facilities) to (2) the sum of cash interest expense plus
cash aircraft rent expense plus the interest portion of Deltas capitalized lease
obligations) in each case for the twelve-month period ending as of the last day of each
fiscal quarter of not less than 1.20 to 1;
    
    maintain a minimum collateral coverage ratio (defined as the ratio of
aggregate current market value of the collateral to the sum of the aggregate outstanding
exposure under the Senior Secured Credit Facilities and certain obligations with equal
rights to payment and collateral and the aggregate principal amount of the outstanding
Senior Secured Notes) of 1.60:1; and
    
    maintain unrestricted cash, cash equivalents and short-term investments of not
less than $2 billion.
  Senior Secured Notes
   12




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Senior Second Lien Notes
    Revolving Credit Facility
    13




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Other Financing Agreements
 Certificates.
 Aircraft
Financing.
 Other Secured Financings.
  Covenants
  Future Maturities
  Years Ending December 31,
 (in millions)
    
    TotalThree months ending December 31, 2009
    
    $
    2012010
    
    
    5202011
    
    
    6632012
    
    
    4852013
    
    
    6852014
    
    
    571Thereafter
    
    
    2,7925,917Unamortized discount
    
    
    (1,320
    )Total
    
    $
    4,597
 14




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NOTE 5. EMPLOYEE BENEFIT PLANS
 Net Periodic Benefit Cost
  Other PostretirementPension Benefits
    
    BenefitsThree Months Ended
    
    Three Months EndedSeptember 30,
    
    September 30,2009
    
    2008
    
    2009
    
    2008(in millions)
    
    Post-Merger
    
    Pre-Merger
    
    Post-Merger
    
    Pre-MergerService cost
    
    $
    2
    
    
    $
    6
    
    
    $
    3
    
    
    $
    6Interest cost
    
    
    138
    
    
    
    141
    
    
    
    9
    
    
    
    12Expected return on plan assets
    
    
    (80
    )
    
    
    (140
    )
    
    
    
    
    
    
    Recognized net actuarial loss
    
    
    4
    
    
    
    
    
    
    
    
    
    
    
    Special termination and settlements
    
    
    3
    
    
    
    
    
    
    
    
    
    
    
    Net periodic cost
    
    $
    67
    
    
    $
    7
    
    
    $
    12
    
    
    $
    18
  Other PostretirementPension Benefits
    
    BenefitsNine Months Ended
    
    Nine Months EndedSeptember 30,
    
    September 30,2009
    
    2008
    
    2009
    
    2008(in millions)
    
    Post-Merger
    
    Pre-Merger
    
    Post-Merger
    
    Pre-MergerService cost
    
    $
    5
    
    
    $
    17
    
    
    $
    11
    
    
    $
    19Interest cost
    
    
    414
    
    
    
    423
    
    
    
    28
    
    
    
    36Expected return on plan assets
    
    
    (241
    )
    
    
    (420
    )
    
    
    
    
    
    
    Recognized net actuarial loss
    
    
    13
    
    
    
    1
    
    
    
    1
    
    
    
    Special termination and settlements
    
    
    8
    
    
    
    
    
    
    
    6
    
    
    
    Net periodic cost
    
    $
    199
    
    
    $
    21
    
    
    $
    46
    
    
    $
    55
 NOTE 6. COMPREHENSIVE LOSS
  Unrecognized
    
    Derivative
    
    Marketable
    
    Valuation(in millions)
    
    Pension Liability
    
    Instruments
    
    Equity Securities
    
    Allowance
    
    TotalBalance at December 31, 2008
    
    $
    (908
    )
    
    $
    (126
    )
    
    $
    (5
    )
    
    $
    (600
    )
    
    $
    (1,639
    )Pension adjustment
    
    
    (10
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (10
    )Changes in fair value
    
    
    
    
    
    
    13
    
    
    
    7
    
    
    
    
    
    
    
    20Reclassification to earnings
    
    
    
    
    
    
    73
    
    
    
    
    
    
    
    
    
    
    
    73Tax effect
    
    
    3
    
    
    
    (32
    )
    
    
    (2
    )
    
    
    31
    
    
    
    Balance at September 30, 2009
    
    $
    (915
    )
    
    $
    (72
    )
    
    $
    
    
    
    $
    (569
    )
    
    $
    (1,556
    )
 15




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NOTE 7. RESTRUCTURING AND MERGER-RELATED ITEMS
  Three Months Ended
    
    Nine Months EndedSeptember 30,
    
    September 30,(in millions)
    
    2009
    
    2008
    
    2009
    

2008Post-Merger
    
    Pre-Merger
    
    Post-Merger
    
    Pre-MergerSeverance and related costs
    
    $
    13
    
    
    $
    
    
    
    $
    41
    
    
    $
    Merger-related items
    
    
    19
    
    
    
    1
    
    
    
    75
    
    
    
    1Total restructuring and merger-related items
    
    $
    32
    
    
    $
    1
    
    
    $
    116
    
    
    $
    1
    Liability
    
    
    
    
    
    
    
    
    
    
    
    
    
    LiabilityBalance at
    
    Additional
    
    Purchase
    
    
    
    
    
    Balance atDecember 31,
    
    Costs and
    
    Accounting
    
    
    
    
    
    September 30,(in millions)
    
    2008
    
    Expenses
    
    Adjustments
    
    Payments
    
    2009Severance
and related costs (1)
    
    $
    47
    
    
    $
    35
    
    
    $
    
    
    
    $
    (39
    )
    
    $
    43Facilities and other(1)
    
    
    32
    
    
    
    
    
    
    
    18
    
    
    
    (5
    )
    
    
    45Total
    
    $
    79
    
    
    $
    35
    
    
    $
    18
    
    
    $
    (44
    )
    
    $
    88
 (1)
    
    The liability balance at December 31, 2008 represents liabilities recorded in
connection with the Merger.  NOTE 8. BANKRUPTCY CLAIMS RESOLUTION
   16




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NOTE 9. LOSS PER SHARE
    Three Months Ended
    
    Nine Months EndedSeptember 30,
    
    September 30,(in millions, except per share data)
    
    2008
    
    2008Basic and diluted:Net loss
    
    $
    (317
    )
    
    $
    (4,833
    )Weighted average shares outstanding(1)
    
    
    265
    
    
    
    263Basic and diluted loss per share
    
    $
    (1.20
    )
    
    $
    (18.35
    )
 (1)
    
    For the three and nine months ended September 30, 2008, we excluded from our
loss per share calculations all common stock equivalents because their effect was
anti-dilutive. These common stock equivalents totaled 12 million in restricted stock units and
stock options. NOTE 10. RELATED PARTY TRANSACTIONS
   September 30,
    
    December 31,(in millions)
    
    2009
    
    2008Accounts receivable
    
    $
    299
    
    
    $
    42Accounts payable
    
    
    (284
    )
    
    
    (27
    )Note payable to parent
    
    
    (600
    )
    
    
    (200
    )Net payable
    
    $
    (585
    )
    
    $
    (185
    )
  17




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ITEM 2. Managements Discussion and Analysis of Financial Condition and Results of Operations.
 General Information
   Overview
    Results of OperationsSeptember 2009 and 2008 Quarters
 Operating Revenue
 Mainline Passenger Revenue.
 Regional carriers
 Cargo
 Other, net.
 18




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Operating Expense
 Three Months Ended September 30,
    
    Increase
    
    Percent(in millions)
    
    2009
    
    2008
    
    (Decrease)
    
    ChangeOperating Expense:Salaries and related costs
    
    $
    764
    
    
    $
    706
    
    
    $
    58
    
    
    
    8
    %Aircraft fuel and related taxes
    
    
    670
    
    
    
    1,946
    
    
    
    (1,276
    )
    
    
    (66
    )%Contract carrier arrangements
    
    
    246
    
    
    
    275
    
    
    
    (29
    )
    
    
    (11
    )%Contracted services
    
    
    183
    
    
    
    198
    
    
    
    (15
    )
    
    
    (8
    )%Passenger commissions and other selling expenses
    
    
    146
    
    
    
    226
    
    
    
    (80
    )
    
    
    (35
    )%Aircraft maintenance materials and outside repairs
    
    
    130
    
    
    
    168
    
    
    
    (38
    )
    
    
    (23
    )%Landing fees and other rents
    
    
    125
    
    
    
    144
    
    
    
    (19
    )
    
    
    (13
    )%Depreciation and amortization
    
    
    136
    
    
    
    122
    
    
    
    14
    
    
    
    11
    %Passenger service
    
    
    76
    
    
    
    65
    
    
    
    11
    
    
    
    17
    %Aircraft rent
    
    
    60
    
    
    
    57
    
    
    
    3
    
    
    
    5
    %Restructuring and merger-related items
    
    
    32
    
    
    
    1
    
    
    
    31
    
    
    NMOther
    
    
    100
    
    
    
    123
    
    
    
    (23
    )
    
    
    (19
    )%Total operating expense
    
    $
    2,668
    
    
    $
    4,031
    
    
    $
    (1,363
    )
    
    
    (34
    )%
 Aircraft fuel and related taxes.
 Contract carrier arrangements.
 Passenger commission and other selling expenses.
 Aircraft maintenance materials and outside repairs.
 Restructuring and merger-related items.
 Other Expense (Income)
  Income Taxes
  19




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Results of OperationsNine Months Ended September 30, 2009 and 2008
 Operating Revenue
 Mainline Passenger Revenue.
 Regional Carriers
 Cargo
 Other, net.
 Operating Expense
 Nine Months Ended September 30,
    
    Increase
    
    Percent(in millions)
    
    2009
    
    2008
    
    (Decrease)
    
    ChangeOperating Expense:Salaries and related costs
    
    $
    2,245
    
    
    $
    2,182
    
    
    $
    63
    
    
    
    3
    %Aircraft fuel and related taxes
    
    
    1,855
    
    
    
    4,246
    
    
    
    (2,391
    )
    
    
    (56
    )%Contract carrier arrangements
    
    
    658
    
    
    
    820
    
    
    
    (162
    )
    
    
    (20
    )%Contracted services
    
    
    549
    
    
    
    611
    
    
    
    (62
    )
    
    
    (10
    )%Passenger commissions and other selling expenses
    
    
    445
    
    
    
    665
    
    
    
    (220
    )
    
    
    (33
    )%Aircraft maintenance materials and outside repairs
    
    
    438
    
    
    
    563
    
    
    
    (125
    )
    
    
    (22
    )%Landing fees and other rents
    
    
    404
    
    
    
    416
    
    
    
    (12
    )
    
    
    (3
    )%Depreciation and amortization
    
    
    389
    
    
    
    1,015
    
    
    
    (626
    )
    
    
    (62
    )%Passenger service
    
    
    191
    
    
    
    190
    
    
    
    1
    
    
    
    1
    %Aircraft rent
    
    
    178
    
    
    
    167
    
    
    
    11
    
    
    
    7
    %Impairment of goodwill and other intangible assets
    
    
    
    
    
    
    3,841
    
    
    
    (3,841
    )
    
    
    (100
    )%Restructuring and merger-related items
    
    
    116
    
    
    
    1
    
    
    
    115
    
    
    NMOther
    
    
    307
    
    
    
    389
    
    
    
    (82
    )
    
    
    (21
    )%Total operating expense
    
    $
    7,775
    
    
    $
    15,106
    
    
    $
    (7,331
    )
    
    
    (49
    )%
 Aircraft fuel and related taxes.
 Contract carrier arrangements.
 Passenger commission and other selling expenses.
 Aircraft maintenance materials and outside repairs.
 Depreciation and amortization.
 20




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Impairment of goodwill and other intangible assets.
 Restructuring and merger-related items.
 Other Expense (Income)
  Income Taxes
   
 ITEM 3. Quantitative and Qualitative Disclosures About Market Risk.
  
 ITEM 4. Controls and Procedures.
    21




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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
      
 22




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PART II. OTHER INFORMATION
 
 ITEM 1. Legal Proceedings.
  Northwest Airlines, Inc. v. Filipas, et al (U.S. Dist. Ct. Minnesota, Case 07-CIV-4803
(JNE/JJG)).
 
 ITEM 1A. Risk Factors.
 Risk Factors Relating to Northwest
 Our business and results of operations are dependent on the price and availability of aircraft
fuel. High fuel costs or cost increases could have a materially adverse effect on our
operating results. Likewise, significant disruptions in the supply of aircraft fuel would
materially adversely affect our operations and operating results.
     23




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The global economic recession has resulted in weaker demand for air travel and may create
challenges for us that could have a material adverse effect on our business and results of
operations.
  The global financial crisis may have an impact on our business and financial condition in ways
that we currently cannot predict.
  ERISA
 Our substantial indebtedness may limit our financial and operating activities and may
adversely affect our ability to incur additional debt to fund future needs.
  
    
    require us to dedicate a substantial portion of cash flow from operations
to the payment of principal, and interest on, indebtedness, thereby reducing the funds
available for operations and future business opportunities;
    
    make it more difficult for us to satisfy our payment and other
obligations under our indebtedness;
    
    limit our ability to borrow additional money for working capital,
restructurings, capital expenditures, research and development, investments,
acquisitions or other purposes, if needed, and increasing the cost of any of
these borrowings;
    
    make us more vulnerable to economic downturns, adverse industry conditions
or catastrophic external events;
    
    limit our ability to withstand competitive pressures;
    
    reduce our flexibility in planning for or responding to changing
business and economic conditions; and/or
    
    limit our flexibility in responding to changing business and economic
conditions, including increase competition and demand for new services, placing us
at a disadvantage when compared to our competitors that have less debt, and making
us more vulnerable than our competitors who have less debt to a downturn in our
business, industry or the economy in general.
 24




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Our
revolving credit facility includes financial and other covenants that impose restrictions
on our financial and business operations.
   Employee strikes and other labor-related disruptions may adversely affect our operations.
   The ability to realize fully the anticipated benefits of our merger with Delta may depend on
the successful integration of the businesses of Delta and Northwest.
  25




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Completion of the integration of the Delta and Northwest Airlines, Inc. workforces may present
significant challenges.
  Interruptions or disruptions in service at one of our hub airports could have a material
adverse impact on our operations.
  We are increasingly dependent on technology in our operations, and if our technology fails or
we are unable to continue to invest in new technology or integrate the systems and technologies of
Delta and Northwest, our business may be adversely affected.
   If we experience losses of senior management personnel and other key employees, our operating
results could be adversely affected.
  We are at risk of losses and adverse publicity stemming from any accident involving our
aircraft.
  26




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Our ability to use net operating loss carryforwards to offset future taxable income for U.S.
federal income tax purposes is subject to limitation.
 " NOLs"
   Risk Factors Relating to the Airline Industry
 The airline industry is highly competitive and, if we cannot successfully compete in the
marketplace, our business, financial condition and operating results will be materially
adversely affected.
    27




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The rapid spread of contagious illnesses can have a material adverse effect on our business
and results of operations.
  Terrorist attacks or international hostilities may adversely affect our business, financial
condition and operating results.
  The airline industry is subject to extensive government regulation, and new regulations may
increase our operating costs.
 FAA
   28




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Our insurance costs have increased substantially as a result of the September 11, 2001
terrorist attacks, and further increases in insurance costs or reductions in coverage could
have a material adverse impact on our business and operating results.
  
 ITEM 6. Exhibits.
 (a)
    
    Exhibits:
 31.1
    
    Certification by Northwests President and Chief Operating Officer with respect to
Northwests Quarterly Report on Form
10-Q for the quarterly period ended September 30, 200931.2
    
    Certification by Northwests Senior Vice President & Treasurer with respect to Northwests
Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2009
 29




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SIGNATURE
  Northwest Airlines CorporationBy
    /s/ Paul JacobsonPaul JacobsonSenior Vice President & Treasurer

(Principal Financial and Accounting Officer) 30