##### 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 June 30, 2009
 Commission File Number: 1-15285
 NORTHWEST AIRLINES CORPORATION
  Delaware
    
    41-1905580(State or other jurisdiction of incorporation or 
organization)
    
    (I.R.S. Employer Identification No.)2700 Lone Oak Parkway, Eagan, Minnesota
    
    55121(Address of principal executive offices)
    
    (Zip Code)
 (612) 726-2111
  þ o
   o o
  Large accelerated filer þ
Accelerated filer o
Non-accelerated filer o(Do not check if a smaller reporting company)
Smaller reporting company o  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 Operations.ITEM 3. Quantitative and Qualitative Disclosures About Market Risk.ITEM 4. Controls and Procedures.PART II. OTHER INFORMATIONITEM 1. Legal Proceedings.ITEM 1A. Risk Factors.ITEM 6. Exhibits.SIGNATUREEX-31.1EX-31.2    Table of Contents   
 FORWARD-LOOKING STATEMENTS
  1




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NORTHWEST AIRLINES CORPORATION
Consolidated Balance Sheets
(Unaudited)
 June 30,
    
    
    December 31,(in millions, except share data)
    
    2009
    
    
    2008ASSETSCurrent Assets:Cash and cash equivalents
    
    $
    2,621
    
    
    $
    2,068Short-term investments
    
    
    21
    
    
    
    49Restricted cash and cash equivalents
    
    
    128
    
    
    
    196Accounts receivable, net of an allowance for uncollectible accounts
of $3 and $6 at June 30, 2009 and December 31, 2008, respectively
    
    
    638
    
    
    
    659Hedge margin receivable
    
    
    
    
    
    
    526Expendable parts and supplies inventories, net of an allowance for obsolescence
of $13 and $3 at June 30, 2009 and December 31, 2008, respectively
    
    
    156
    
    
    
    152Deferred income taxes, net
    
    
    37
    
    
    
    131Prepaid expenses and other
    
    
    258
    
    
    
    232Total current assets
    
    
    3,859
    
    
    
    4,013Property and Equipment, Net:Property and equipment, net of accumulated depreciation and amortization
of $293 and $71 at June 30, 2009 and December 31, 2008, respectively
    
    
    8,424
    
    
    
    8,683Other Assets:Goodwill
    
    
    4,578
    
    
    
    4,572Identifiable intangibles, net of accumulated amortization
of $23 and $8 at June 30, 2009 and December 31, 2008, respectively
    
    
    2,673
    
    
    
    2,694Other noncurrent assets
    
    
    173
    
    
    
    236Total other assets
    
    
    7,424
    
    
    
    7,502Total assets
    
    $
    19,707
    
    
    $
    20,198LIABILITIES AND STOCKHOLDERS EQUITYCurrent Liabilities:Current maturities of long-term debt and capital leases
    
    $
    1,156
    
    
    $
    383Air traffic liability
    
    
    1,422
    
    
    
    1,451Accounts payable
    
    
    869
    
    
    
    903Frequent flyer deferred revenue
    
    
    499
    
    
    
    522Accrued salaries and related benefits
    
    
    408
    
    
    
    455Hedge derivatives liability
    
    
    61
    
    
    
    561Taxes payable
    
    
    256
    
    
    
    199Note payable
to parent
    
    
    600
    
    
    
    200Other accrued liabilities
    
    
    170
    
    
    
    112Total current liabilities
    
    
    5,441
    
    
    
    4,786Noncurrent Liabilities:Long-term debt and capital leases
    
    
    4,373
    
    
    
    5,382Pension, postretirement and related benefits
    
    
    5,592
    
    
    
    5,476Frequent flyer deferred revenue
    
    
    1,443
    
    
    
    1,500Deferred income taxes, net
    
    
    989
    
    
    
    1,094Other noncurrent liabilities
    
    
    434
    
    
    
    533Total noncurrent liabilities
    
    
    12,831
    
    
    
    13,985Commitments and ContingenciesStockholders Equity:Common stock at $0.01 par value; 1,000 shares issued at
June 30, 2009 and December 31, 2008, respectively
    
    
    
    
    
    
    Additional paid-in capital
    
    
    3,663
    
    
    
    3,605Accumulated deficit
    
    
    (761
    )
    
    
    (539
    )Accumulated other comprehensive loss
    
    
    (1,467
    )
    
    
    (1,639
    )Total stockholders equity
    
    
    1,435
    
    
    
    1,427Total liabilities and stockholders equity
    
    $
    19,707
    
    
    $
    20,198
  2




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NORTHWEST AIRLINES CORPORATION
Consolidated Statements of Operations
(Unaudited)
 Post-Merger
    
    
    Pre-Merger
    
    
    Post-Merger
    
    
    Pre-MergerThree Months Ended June 30,
    
    

Six Months Ended June 30,(in millions, except per share data)
    
    2009
    
    
    2008
    
    
    2009
    
    
    2008Operating Revenue:Passenger:Mainline
    
    $
    1,802
    
    
    $
    2,638
    
    
    $
    3,596
    
    
    $
    4,940Regional carriers
    
    
    462
    
    
    
    506
    
    
    
    905
    
    
    
    912Total passenger revenue
    
    
    2,264
    
    
    
    3,144
    
    
    
    4,501
    
    
    
    5,852Cargo
    
    
    84
    
    
    
    213
    
    
    
    176
    
    
    
    410Other, net
    
    
    274
    
    
    
    232
    
    
    
    543
    
    
    
    461Total operating revenue
    
    
    2,622
    
    
    
    3,589
    
    
    
    5,220
    
    
    
    6,723Operating Expense:Salaries and related costs
    
    
    733
    
    
    
    748
    
    
    
    1,481
    
    
    
    1,476Aircraft fuel and related taxes
    
    
    599
    
    
    
    1,185
    
    
    
    1,185
    
    
    
    2,300Contract carrier arrangements
    
    
    222
    
    
    
    281
    
    
    
    412
    
    
    
    545Contracted services
    
    
    144
    
    
    
    207
    
    
    
    366
    
    
    
    413Aircraft maintenance materials and outside repairs
    
    
    153
    
    
    
    186
    
    
    
    308
    
    
    
    395Passenger commissions and other selling expenses
    
    
    124
    
    
    
    224
    
    
    
    299
    
    
    
    439Landing fees and other rents
    
    
    131
    
    
    
    143
    
    
    
    279
    
    
    
    272Depreciation and amortization
    
    
    126
    
    
    
    745
    
    
    
    253
    
    
    
    893Aircraft rent
    
    
    60
    
    
    
    56
    
    
    
    118
    
    
    
    110Passenger service
    
    
    62
    
    
    
    66
    
    
    
    115
    
    
    
    125Impairment of goodwill and other intangible assets
    
    
    
    
    
    
    (76
    )
    
    
    
    
    
    
    3,841Restructuring and merger-related items
    
    
    31
    
    
    
    
    
    
    
    84
    
    
    
    Other
    
    
    104
    
    
    
    123
    
    
    
    207
    
    
    
    266Total operating expense
    
    
    2,489
    
    
    
    3,888
    
    
    
    5,107
    
    
    
    11,075Operating
Income (Loss)
    
    
    133
    
    
    
    (299
    )
    
    
    113
    
    
    
    (4,352
    )Other (Expense) Income:Interest expense
    
    
    (189
    )
    
    
    (108
    )
    
    
    (362
    )
    
    
    (222
    )Interest income
    
    
    3
    
    
    
    24
    
    
    
    7
    
    
    
    60Miscellaneous, net
    
    
    17
    
    
    
    (208
    )
    
    
    23
    
    
    
    (216
    )Total other expense, net
    
    
    (169
    )
    
    
    (292
    )
    
    
    (332
    )
    
    
    (378
    )Loss Before Income Taxes
    
    
    (36
    )
    
    
    (591
    )
    
    
    (219
    )
    
    
    (4,730
    )Income Tax (Provision) Benefit
    
    
    (3
    )
    
    
    214
    
    
    
    (3
    )
    
    
    214Net Loss
    
    $
    (39
    )
    
    $
    (377
    )
    
    $
    (222
    )
    
    $
    (4,516
    )Basic and Diluted Loss per Share
    
    
    N/A
    
    
    $
    (1.43
    )
    
    
    N/A
    
    
    $
    (17.19
    )
  3




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NORTHWEST AIRLINES CORPORATION
 Condensed Consolidated Statements of Cash Flow
 (Unaudited)
 Six Months Ended June 30,(in millions)
    
    2009
    
    
    2008Net cash provided by operating activities
    
    $
    369
    
    
    $
    477Cash Flows From Investing Activities:Property and equipment additions, including advance payments, net
    
    
    77
    
    
    
    (695
    )Proceeds from sales of flight equipment
    
    
    73
    
    
    
    14Redemption of short-term investments
    
    
    28
    
    
    
    55Decrease in restricted cash and cash equivalents
    
    
    7
    
    
    
    300Investment in affiliated companies
    
    
    
    
    
    
    (213
    )Other, net
    
    
    
    
    
    
    20Net cash provided by (used in) investing activities
    
    
    185
    
    
    
    (519
    )Cash Flows From Financing Activities:Proceeds from intercompany loan
    
    
    400
    
    
    
    Payments on long-term debt and capital lease obligations
    
    
    (328
    )
    
    
    (216
    )(Payments)
proceeds of short-term obligations, net
    
    
    (73
    )
    
    
    133Proceeds from long-term obligations
    
    
    
    
    
    
    476Payments of
deferred financing costs
    
    
    
    
    
    
    (74
    )Net cash (used in) provided by financing activities
    
    
    (1
    )
    
    
    319Net Increase in Cash and Cash Equivalents
    
    
    553
    
    
    
    277Cash and cash equivalents at beginning of period
    
    
    2,068
    
    
    
    2,939Cash and cash equivalents at end of period
    
    $
    2,621
    
    
    $
    3,216Non-cash transactions:Flight equipment
    
    $
    45
    
    
    $
    
  4




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NORTHWEST AIRLINES CORPORATION
 
 Notes to the Condensed Consolidated Financial Statements
 June 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
    
    UnobservableJune 30,
    
    Markets
    
    Inputs
    
    Inputs(in millions)
    
    2009
    
    (Level 1)
    
    (Level 2)
    
    (Level 3)Cash equivalents
    
    $
    2,500
    
    
    $
    2,500
    
    
    $
    
    
    
    $
    Short-term investments
    
    
    21
    
    
    
    
    
    
    
    
    
    
    
    21Restricted cash equivalents
    
    
    109
    
    
    
    109
    
    
    
    
    
    
    
    Long-term investments
    
    
    45
    
    
    
    
    
    
    
    
    
    
    
    45Hedge derivatives liability, net
    
    
    (54
    )
    
    
    
    
    
    
    (5
    )
    
    
    (49
    )
   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
    
    
    107Purchases and settlements, net
    
    
    470Balance at June 30, 2009
    
    $
    (49
    )
  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 June
30, 2009
    
    $
    
    
    
    $
    (1
    )
 6




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##### Table of Contents



Fair Value of Debt
  June 30,
    
    December 31,(in millions)
    
    2009
    
    2008Total
debt at par value
    
    $
    6,937
    
    
    $
    7,353Unamortized discount, net
    
    
    (1,498
    )
    
    
    (1,678
    )Net carrying amount
    
    $
    5,439
    
    
    $
    5,675Fair value(1)
    
    $
    5,926
    
    
    $
    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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Cash flow hedges
  Impact of Unrealized Gains and LossesConsolidated
    
    ConsolidatedBalance Sheets
    
    Income StatementsDerivative Instrument(1)
    
    Hedged Risk
    
    Effective Portion
    
    Ineffective PortionDesignated under SFAS 133: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 qualifying or not designated 
under SFAS 133:Fuel hedges 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 in accordance with SFAS 133. The remaining derivative
contracts that were not designated under SFAS 133 did not qualify for hedge accounting.(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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Hedge Position
  June 30, 2009PrepaidExpenses
    
    
    Other
    
    
    
    
    
    
    Hedge
    
    
    OtherNotional
    
    
    Maturity
    
    
    and Other
    
    
    Noncurrent
    
    
    Accounts
    
    
    Derivatives
    
    
    Noncurrent(in millions, unless otherwise stated)
    
    Balance
    
    
    Date
    
    
    Assets
    
    
    Assets
    
    
    Payable
    
    
    Liability
    
    
    LiabilitiesDesignated under SFAS 133Fuel hedge swaps, collars
and call options(1)
    
    
    
    
    
    
    
    
    
    $
    
    
    
    $
    
    
    
    $
    (10
    )
    
    $
    
    
    
    $
    Interest rate swaps and
caps designated as cash
flow hedges
    
    $
    1,700
    
    
    December 2009 - May 2019
    
    
    
    
    
    
    1
    
    
    
    
    
    
    
    (36
    )
    
    
    (14
    )Foreign currency exchange
forwards and collars
    
    79.8 billion Japanese Yen,
61.0 million Canadian Dollars
    
    July 2009 -April 2012
    
    
    4
    
    
    
    5
    
    
    
    
    
    
    
    (11
    )
    
    
    (5
    )Total designated under SFAS 133
    
    
    
    
    
    
    
    
    
    
    4
    
    
    
    6
    
    
    
    (10
    )
    
    
    (47
    )
    
    
    (19
    )Not designated under SFAS 133Fuel hedge swaps and collars
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (17
    )
    
    
    (14
    )
    
    
    Total not designated under SFAS 133
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (17
    )
    
    
    (14
    )
    
    
    Total derivative instruments
    
    
    
    
    
    
    
    
    
    $
    4
    
    
    $
    6
    
    
    $
    (27
    )
    
    $
    (61
    )
    
    $
    (19
    )(1)     All contracts assumed
in the Merger were settled by June 30, 2009.
 December 31, 2008Hedge
    
    
    OtherNotional
    
    
    Maturity
    
    
    Accounts
    
    
    Derivatives
    
    
    Noncurrent(in millions, unless otherwise stated)
    
    Balance
    
    
    Date
    
    
    Payable
    
    
    Liability
    
    
    LiabilitiesDesignated under SFAS 133Fuel 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 under SFAS 133
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (243
    )
    
    
    (63
    )Not designated under SFAS 133Fuel hedge swaps and collars
    
    180 million gallons - crude oil, heating oil, jet
fuel
    
    January - June 2009
    
    
    (119
    )
    
    
    (318
    )
    
    
    Total not
designated under SFAS 133
    
    
    
    
    
    
    
    
    
    
    (119
    )
    
    
    (318
    )
    
    
    Total derivative instruments
    
    
    
    
    
    
    
    
    
    $
    (119
    )
    
    $
    (561
    )
    
    $
    (63
    )
 9




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Hedge Gains (Losses)
  Post-Merger
    
    Pre-Merger
    
    Post-Merger
    
    Pre-Merger
    
    Post-Merger
    
    Pre-MergerEffective Portion ReclassifiedEffective Portion Recognized
    
    from Accumulated Other
    
    Ineffective Portion Recognizedin Other Comprehensive Loss
    
Comprehensive Loss to Earnings
    
    in Other (Expense) IncomeThree Months Ended June 30,
    
    Three Months Ended June 30,
    
    Three Months Ended June 30,(in millions)
    
    2009
    
    2008
    
    2009
    
    2008
    
    2009
    
    2008Designated under SFAS 133Fuel hedge swaps, collars and call
options(1)
    
    $
    25
    
    
    $
    
    
    
    $

(19
    )(4)
    
    $
    
    
    
    $
    19
    (4)
    
    $
    Interest rate swaps and call options
designated as cash flow hedges(2)
    
    
    35
    
    
    
    36
    
    
    
    (1
    )
    
    
    
    
    
    
    
    
    
    
    Foreign currency exchange forwards
and collars(3)
    
    
    (19
    )
    
    
    47
    
    
    
    (2
    )
    
    
    (4
    )
    
    
    
    
    
    
    Total designated under SFAS 133
    
    $
    41
    
    
    $
    83
    
    
    $
    (22
    )
    
    $
    (4
    )
    
    $
    19
    
    
    $
    
 (1)
    
    Gains and losses on fuel hedge contracts reclassified from accumulated other
comprehensive loss are recorded in aircraft fuel and related taxes.(2)
    
    Losses on interest rate swaps and call options reclassified from accumulated other
comprehensive loss are recorded in interest expense.(3)
    
    Losses on foreign currency exchange contracts reclassified from accumulated other
comprehensive loss are recorded in passenger and cargo revenue.(4)
    
    Includes losses of $6 million and gains of
$18 million recorded in aircraft fuel and related taxes and
other (expense) income, respectively, related to hedge contracts
allocated from Delta.
  Post-Merger
    
    Pre-Merger
    
    Post-Merger
    
    Pre-Merger
    
    Post-Merger
    
    Pre-MergerEffective Portion ReclassifiedEffective Portion Recognized
    
    from Accumulated Other
    
    Ineffective Portion Recognizedin Other Comprehensive Loss
    
    Comprehensive Loss to Earnings
    
    in Other (Expense) IncomeSix Months Ended June 30,
    
    Six Months Ended June 30,
    
    Six Months Ended June 30,(in millions)
    
    2009
    
    2008
    
    2009
    
    2008
    
    2009
    
    2008Designated under SFAS 133Fuel hedge swaps, collars and call options(1)
    
    $
    71
    
    
    $
    
    
    
    $
    (88
    )(4)
    
    $
    
    
    
    $
    16
    (4)
    
    $
    Interest rate swaps and call options designated as cash flow hedges(2)
    
    
    47
    
    
    
    20
    
    
    
    (1
    )
    
    
    
    
    
    
    
    
    
    
    Foreign currency exchange forwards and collars(3)
    
    
    36
    
    
    
    8
    
    
    
    2
    
    
    
    (9
    )
    
    
    
    
    
    
    Total designated under SFAS 133
    
    $
    154
    
    
    $
    28
    
    
    $
    (87
    )
    
    $
    (9
    )
    
    $
    16
    
    
    $
    
 (1)
    
    Gains and losses on fuel hedge contracts reclassified from accumulated other
comprehensive loss are recorded in aircraft fuel and related taxes.(2)
    
    Losses on interest rate swaps and call options reclassified from accumulated other
comprehensive loss are recorded in interest expense.(3)
    
    Losses on foreign currency exchange contracts reclassified from accumulated other
comprehensive loss are recorded in passenger and cargo revenue.(4)
    
    Includes losses of $13 million and gains of
$16 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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Credit Risk
       NOTE 4. DEBT
 Credit Facilities
    Short-Term Obligations
 Accounts Receivable Financing.
 Covenants
  11




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##### Table of Contents



NOTE 5. EMPLOYEE BENEFIT PLANS
 Net Periodic Benefit Cost
  Post-Merger
    
    Pre-Merger
    
    Post-Merger
    
    Pre-MergerOther PostretirementPension Benefits
    
    BenefitsThree Months Ended June 30,
    
    Three Months Ended June 30,(in millions)
    
    2009
    
    2008
    
    2009
    
    2008Service cost
    
    $
    1
    
    
    $
    6
    
    
    $
    4
    
    
    $
    6Interest cost
    
    
    138
    
    
    
    141
    
    
    
    10
    
    
    
    12Expected return on plan assets
    
    
    (81
    )
    
    
    (140
    )
    
    
    
    
    
    
    Recognized net actuarial loss
    
    
    5
    
    
    
    
    
    
    
    1
    
    
    
    Special termination and settlements
    
    
    2
    
    
    
    
    
    
    
    
    
    
    
    Net periodic cost
    
    $
    65
    
    
    $
    7
    
    
    $
    15
    
    
    $
    18
  Post-Merger
    
    Pre-Merger
    
    Post-Merger
    
    Pre-MergerOther PostretirementPension Benefits
    
    BenefitsSix Months Ended June 30,
    
    Six Months Ended June 30,(in millions)
    
    2009
    
    2008
    
    2009
    
    2008Service cost
    
    $
    3
    
    
    $
    11
    
    
    $
    8
    
    
    $
    12Interest cost
    
    
    276
    
    
    
    282
    
    
    
    19
    
    
    
    24Expected return on plan assets
    
    
    (161
    )
    
    
    (280
    )
    
    
    
    
    
    
    Recognized net actuarial loss
    
    
    9
    
    
    
    
    
    
    
    1
    
    
    
    Special termination and settlements
    
    
    5
    
    
    
    
    
    
    
    6
    
    
    
    Net periodic cost
    
    $
    132
    
    
    $
    13
    
    
    $
    34
    
    
    $
    36
 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
    
    
    11
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    11Changes in fair value
    
    
    
    
    
    
    80
    
    
    
    7
    
    
    
    
    
    
    
    87Reclassification to
earnings
    
    
    
    
    
    
    74
    
    
    
    
    
    
    
    
    
    
    
    74Tax effect
    
    
    (4
    )
    
    
    (57
    )
    
    
    (2
    )
    
    
    63
    
    
    
    Balance at June 30, 2009
    
    $
    (901
    )
    
    $
    (29
    )
    
    $
    
    
    
    $
    (537
    )
    
    $
    (1,467
    )
 12




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NOTE 7. RESTRUCTURING AND MERGER-RELATED ITEMS
  Post-Merger
    
    Pre-Merger
    
    Post-Merger
    
    Pre-MergerThree Months Ended June 30,
    
    Six Months Ended June 30,(in millions)
    
    2009
    
    2008
    
    2009
    
    2008Severance and related costs
    
    $
    
    
    
    $
    
    
    
    $
    28
    
    
    $
    Merger-related items
    
    
    31
    
    
    
    
    
    
    
    56
    
    
    
    Total restructuring and merger-related items
    
    $
    31
    
    
    $
    
    
    
    $
    84
    
    
    $
    
    Liability
    
    
    
    
    
    
    
    
    
    
    
    
    
    LiabilityBalance at
    
    Additional
    
    Purchase
    
    
    
    
    
    Balance atDecember 31,
    
    Costs and
    
    Accounting
    
    
    
    
    
    June 30,(in millions)
    
    2008
    
    Expenses
    
    Adjustments
    
    Payments
    
    2009Severance and related cost(1)
    
    $
    47
    
    
    $
    22
    
    
    $
    
    
    
    $
    (32
    )
    
    $
    37Facilities and other(1)
    
    
    32
    
    
    
    
    
    
    
    (2
    )
    
    
    (1
    )
    
    
    29Total
    
    $
    79
    
    
    $
    22
    
    
    $
    (2
    )
    
    $
    (33
    )
    
    $
    66
 
 (1)
    
    The liability balance at December 31, 2008 represents liabilities recorded in
connection with the Merger.  NOTE 8. BANKRUPTCY CLAIMS RESOLUTION
   13




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NOTE 9. LOSS PER SHARE
    ThreeMonths
    
    Six MonthsEnded
    
    EndedJune 30,
    
    June 30,(in millions, except per share data)
    
    2008
    
    2008Basic and diluted:Net loss
    
    $
    (377
    )
    
    $
    (4,516
    )Weighted average shares outstanding(1)
    
    
    263
    
    
    
    263Basic and diluted loss per share
    
    $
    (1.43
    )
    
    $
    (17.19
    )
 
 (1)
    
    For the three and six months ended June 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
   June 30,
    
    
    December 31,(in millions)
    
    2009
    
    
    2008Accounts receivable
    
    $
    260
    
    
    $
    42Accounts payable
    
    
    (259
    )
    
    
    (27
    )Note payable to parent
    
    
    (600
    )
    
    
    (200
    )Net payable
    
    $
    (599
    )
    
    $
    (185
    )
 14




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ITEM 2. Managements Discussion and Analysis of Financial Condition and Results of Operations.
 General Information
   Overview
    15




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Results of OperationsJune 2009 and 2008 Quarters
 Operating Revenue
 Mainline Passenger
Revenue.
 Regional carriers
 Cargo
 Other, net.
 Operating Expense
 IncreaseThree Months Ended June 30,
    
    (Decrease)
    
    Percent(In millions)
    
    2009
    
    2008
    
    from 2008
    
    ChangeOperating Expense:Salaries and related costs
    
    $
    733
    
    
    $
    748
    
    
    $
    (15
    )
    
    
    (2)
    %Aircraft fuel and related taxes
    
    
    599
    
    
    
    1,185
    
    
    
    (586
    )
    
    
    (49
    )Contract carrier arrangements
    
    
    222
    
    
    
    281
    
    
    
    (59
    )
    
    
    (21
    )Contracted services
    
    
    144
    
    
    
    207
    
    
    
    (63
    )
    
    
    (30
    )Aircraft maintenance materials and
outside repairs
    
    
    153
    
    
    
    186
    
    
    
    (33
    )
    
    
    (18
    )Passenger commissions and other selling
expenses
    
    
    124
    
    
    
    224
    
    
    
    (100
    )
    
    
    (45
    )Landing fees and other rents
    
    
    131
    
    
    
    143
    
    
    
    (12
    )
    
    
    (8
    )Depreciation and amortization
    
    
    126
    
    
    
    745
    
    
    
    (619
    )
    
    
    (83
    )Aircraft rent
    
    
    60
    
    
    
    56
    
    
    
    4
    
    
    
    7Passenger service
    
    
    62
    
    
    
    66
    
    
    
    (4
    )
    
    
    (6
    )Impairment of goodwill and other
intangible assets
    
    
    
    
    
    
    (76
    )
    
    
    76
    
    
    NMRestructuring and merger-related items
    
    
    31
    
    
    
    
    
    
    
    31
    
    
    NMOther
    
    
    104
    
    
    
    123
    
    
    
    (19
    )
    
    
    (15
    )Total operating expense
    
    $
    2,489
    
    
    $
    3,888
    
    
    $
    (1,399
    )
    
    
    (36)
    %
 Aircraft fuel and related taxes.
 Contract carrier arrangements.
 Contracted services.
 Aircraft
maintenance materials and outside repairs.
 Passenger commission and other selling expenses.
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Depreciation and amortization.
 Impairment of goodwill and other intangible assets.
 Restructuring and merger-related items.
 Other Expense (Income)
  Income Taxes
   Results of OperationsSix Months Ended June 2009 and 2008
 Operating Revenue
 Mainline
Passenger Revenue.
 Regional Carriers
 Cargo
 Other, net.
 17




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Operating Expense
 IncreaseSix Months Ended June 30,
    
    (Decrease)
    
    Percent(In millions)
    
    2009
    
    2008
    
    from 2008
    
    ChangeOperating Expense:Salaries and related costs
    
    $
    1,481
    
    
    $
    1,476
    
    
    $
    5
    
    
    
    
    %Aircraft fuel and related taxes
    
    
    1,185
    
    
    
    2,300
    
    
    
    (1,115
    )
    
    
    (48
    )Contract carrier arrangements
    
    
    412
    
    
    
    545
    
    
    
    (133
    )
    
    
    (24
    )Contracted services
    
    
    366
    
    
    
    413
    
    
    
    (47
    )
    
    
    (11
    )Aircraft maintenance materials and
outside repairs
    
    
    308
    
    
    
    395
    
    
    
    (87
    )
    
    
    (22
    )Passenger commissions and other
selling expenses
    
    
    299
    
    
    
    439
    
    
    
    (140
    )
    
    
    (32
    )Landing fees and other rents
    
    
    279
    
    
    
    272
    
    
    
    7
    
    
    
    3Depreciation and amortization
    
    
    253
    
    
    
    893
    
    
    
    (640
    )
    
    
    (72
    )Aircraft rent
    
    
    118
    
    
    
    110
    
    
    
    8
    
    
    
    7Passenger service
    
    
    115
    
    
    
    125
    
    
    
    (10
    )
    
    
    (8
    )Impairment of goodwill and other
intangible assets
    
    
    
    
    
    
    3,841
    
    
    
    (3,841
    )
    
    NMRestructuring and merger-related items
    
    
    84
    
    
    
    
    
    
    
    84
    
    
    NMOther
    
    
    207
    
    
    
    266
    
    
    
    (59
    )
    
    
    (22
    )Total operating expense
    
    $
    5,107
    
    
    $
    11,075
    
    
    $
    (5,968
    )
    
    
    (54
    )%
 Aircraft fuel and related taxes.
 Contract carrier arrangements.
 Aircraft
maintenance materials and outside repairs.
 Passenger commission and other selling expenses.
 Depreciation and amortization.
 Impairment of goodwill and other intangible assets.
 Restructuring and merger-related items.
 Other Expense (Income)
  18




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Income Taxes
   
 ITEM 3. Quantitative and Qualitative Disclosures About Market Risk.
  
 ITEM 4. Controls and Procedures.
    19




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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
      
 20




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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
 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.
  Certain of our credit facilities include financial and other covenants that impose
restrictions on our financial and business operations.
   21




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Our ability to use certain net operating loss carryforwards to offset future taxable income for
U.S. federal income tax purposes is subject to limitation.
    Risk Factors Relating to the Airline Industry
 The rapid spread of contagious illnesses can have a material adverse effect on our business and
results of operations.
  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.
    22




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ITEM 6. 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 June 30, 200931.2
    
    Certification by Northwests Vice President - Finance
with respect to Northwests Quarterly Report on Form 10-Q for
the quarterly period ended June 30, 2009
 
 SIGNATURE
  NORTHWEST AIRLINES CORPORATIONBy
    /s/ Ray WinborneRay WinborneVice President  Finance
(Principal Financial and Accounting Officer) 23