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 , 2008

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 organization)		(I.R.S. Employer Identification No.)

2700 Lone Oak Parkway, Eagan, Minnesota		55121
(Address of principal executive offices)		(Zip Code)

(612) 726-2111

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer x	Accelerated filer o	Non-accelerated filer o (Do	Smaller reporting company o
		not check if a smaller
		reporting company)

Indicate by a check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes o No x

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.

Yes x No o

As of October 15, 2008, there were 257,815,985 shares of the registrant’s Common Stock outstanding.

NORTHWEST AIRLINES CORPORATION

PART I. FINANCIAL INFORMATION		Page No.

Item 1.	Financial Statements.

	Condensed Consolidated Statements of Operations	3

	Condensed Consolidated Balance Sheets	5

	Condensed Consolidated Statements of Cash Flows	6

	Notes to Condensed Consolidated Financial Statements	7

	The Computations of Ratio of Earnings to Fixed Charges are attached hereto and filed as Exhibit 12.1

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.	23

Item 3.	Quantitative and Qualitative Disclosures About Market Risk.	37

Item 4.	Controls and Procedures.	37

PART II. OTHER INFORMATION

Item 1.	Legal Proceedings.	37

Item 1A.	Risk Factors.	37

Item 4.	Submission of Matters to a Vote of Security Holders.	39

Item 6.	Exhibits.	40

SIGNATURE		41

EXHIBIT INDEX		41

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements.

NORTHWEST AIRLINES CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

	Successor
	Three Months Ended

	September 30
(Unaudited, in millions except per share amounts)	2008			2007
Operating Revenues
Passenger	$	2,732		$	2,577
Regional carrier revenues	557			379
Cargo	201			212
Other	308			210
Total operating revenues	3,798			3,378

Operating Expenses
Aircraft fuel and taxes	1,912			882
Salaries, wages and benefits	651			660
Selling and marketing	201			185
Aircraft maintenance materials and repairs	181			210
Other rentals and landing fees	150			142
Depreciation and amortization	122			122
Aircraft rentals	93			93
Regional carrier expenses	257			181
Other	447			444
Total operating expenses	4,014			2,919

Operating Income (Loss)	(216		)	459

Other Income (Expense)
Interest expense, net	(113		)	(107		)
Investment income	17			52
Other, net	(2		)	1
Total other income (expense)	(98		)	(54		)

Income (Loss) Before Income Taxes	(314		)	405

Income tax expense (benefit)	3			161

Net Income (Loss)	$	(317	)	$	244

Earnings (loss) per common share:
Basic	$	(1.20	)	$	0.93
Diluted	$	(1.20	)	$	0.93

Average shares used in computation:
Basic	265			262
Diluted	265			262

See accompanying notes.

NORTHWEST AIRLINES CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

	Successor						Predecessor
	Nine Months			Period from			Period from

	Ended			June 1 to			January 1 to

	September 30,			September 30,			May 31,

(Unaudited, in millions except per share amounts)	2008			2007			2007
Operating Revenues
Passenger	$	7,529		$	3,438		$	3,768
Regional carrier revenues	1,479			514			521
Cargo	611			281			318
Other	882			275			317
Total operating revenues	10,501			4,508			4,924

Operating Expenses
Aircraft fuel and taxes	4,233			1,152			1,289
Salaries, wages and benefits	2,006			865			1,027
Selling and marketing	591			250			315
Aircraft maintenance materials and repairs	599			274			303
Other rentals and landing fees	441			188			235
Depreciation and amortization	1,015			161			206
Aircraft rentals	280			124			160
Regional carrier expenses	669			241			342
Goodwill and other indefinite-lived intangibles impairment	3,841			-			-
Other	1,395			599			684
Total operating expenses	15,070			3,854			4,561

Operating Income (Loss)	(4,569		)	654			363

Other Income (Expense)
Interest expense, net	(335		)	(147		)	(219		)
Investment income	78			69			56
Reorganization items, net	-			-			1,551
Other, net	(218		)	4			(2		)
Total other income (expense)	(475		)	(74		)	1,386

Income (Loss) Before Income Taxes	(5,044		)	580			1,749

Income tax expense (benefit)	(211		)	230			(2		)

Net Income (Loss)	$	(4,833	)	$	350		$	1,751

Earnings (loss) per common share:
Basic	$	(18.35	)	$	1.33		$	20.03
Diluted	$	(18.35	)	$	1.33		$	14.28

Average shares used in computation:
Basic	263			262			87
Diluted	263			262			113

See accompanying notes.

NORTHWEST AIRLINES CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

Successor

September 30,

December 31,

(Unaudited, in millions except share data)

2008

2007

Assets

Current Assets

Cash and cash equivalents

2,809

2,939

Unrestricted short-term investments

286

Restricted cash, cash equivalents and short-term investments

446

725

Accounts receivable, less allowance (2008--$6, 2007--$4)

717

776

Flight equipment spare parts, less allowance (2008--$25, 2007--$10)

132

135

Maintenance and operating supplies

204

180

Prepaid expenses and other

260

187

Total current assets

4,854

5,037

Property and Equipment

Flight equipment, net

8,053

7,520

Other property and equipment, net

592

558

Total property and equipment

8,645

8,078

Flight Equipment Under Capital Leases, Net

Other Assets

Goodwill

2,873

6,035

International routes, less accumulated amortization (2008--$4; 2007--$2)

2,389

2,976

Other intangibles, less accumulated amortization (2008--$40; 2007--$54)

1,497

2,136

Investments in affiliated companies

Other, less accumulated depreciation and amortization (2008--$29; 2007--$8)

422

223

Total other assets

7,184

11,394

Total Assets

20,691

24,517

Liabilities and Stockholders’ Equity

Current Liabilities

Air traffic liability/deferred frequent flier liability

2,393

2,004

Accounts payable and other liabilities

1,698

1,651

Current maturities of long-term debt

593

446

Current obligations under capital leases

Total current liabilities

4,692

4,104

Long-Term Debt

7,001

6,515

Long-Term Obligations Under Capital Leases

119

124

Deferred Credits and Other Liabilities

Long-term pension and postretirement health care benefits

3,639

3,638

Deferred frequent flier liability

1,426

1,490

Deferred income taxes

913

1,131

Other

181

138

Total deferred credits and other liabilities

6,159

6,397

Common Stockholders’ Equity

Common stock, $.01 par value; shares authorized--400,000,000; shares issued--253,698,246 and 233,187,998 at September 30, 2008 and December 31, 2007, respectively

Additional paid-in capital

7,310

7,235

Retained earnings (accumulated deficit)

(4,491

)

342

Accumulated other comprehensive income (loss)

(102

)

(202

)

Treasury stock--2,931 and 1,684 at September 30, 2008 and December 31, 2007, respectively

Total common stockholders’ equity

2,720

7,377

Total Liabilities and Stockholders’ Equity

20,691

24,517

See accompanying notes.

NORTHWEST AIRLINES CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
	Successor						Predecessor
	Nine Months			Period from			Period from

	Ended			June 1 to			January 1 to

	September 30,			September 30,			May 31,

(Unaudited, in millions)	2008			2007			2007
Cash Flows from Operating Activities
Net income (loss)	$	(4,833	)	$	350		$	1,751
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization	1,015			161			206
Income tax expense (benefit)	(211		)	230			(2		)
Pension and other postretirement benefit contributions less than (greater than) expense	(9		)	(10		)	(2		)
Stock-based compensation	84			41			-
Reorganization items, net	-			-			(1,551		)
Investment impairment	213			-			-
Goodwill and other indefinite-lived intangibles impairment	3,841			-			-
Increase (decrease) in cash flows from operating assets and liabilities, excluding the effects of the acquisition of Mesaba Aviation, Inc.:
Changes in certain assets and liabilities	121			(192		)	15
Air traffic liability/deferred frequent flier liability	326			(199		)	448
Long-term vendor deposits/holdbacks	-			162			163
Post-emergence reorganization payments	(7		)	(151		)	-
Other, net	30			(21		)	18
Net cash provided by (used in) operating activities	570			371			1,046

Cash Flows from Reorganization Activities
Net cash provided by (used in) reorganization activities	-			-			5

Cash Flows from Investing Activities
Capital expenditures	(1,014		)	(387		)	(312		)
Purchase of short-term investments	-			-			(44		)
Reclassification of cash equivalents into short-term investments	(246		)	-			-
Proceeds from sales of short-term investments	55			72			15
Payments of fuel hedge margin deposits	(104		)	-			-
Investment in affiliated companies	(213		)	-			-
Decrease (increase) in restricted cash, cash equivalents and short-term investments	277			(205		)	(74		)
Cash and cash equivalents acquired in acquisition of Mesaba Aviation, Inc.	-			-			16
Proceeds from sale of property, equipment and other assets	16			258			1
Proceeds from sale of investment in affiliate	20			-			-
Other, net	-			1			-
Net cash provided by (used in) investing activities	(1,209		)	(261		)	(398		)

Cash Flows from Financing Activities
Proceeds from long-term debt	873			409			326
Proceeds from short-term borrowings	133			-			-
Payments of long-term debt and capital lease obligations	(365		)	(516		)	(610		)
Payments of deferred financing costs	(114		)	(1		)	(1		)
Proceeds from equity rights offering	-			750			-
Payments related to equity rights offering	-			-			(22		)
Other, net	(18		)	-			-
Net cash provided by (used in) financing activities	509			642			(307		)

Increase (Decrease) in Cash and Cash Equivalents	(130		)	752			346

Cash and cash equivalents at beginning of period	2,939			1,807			1,461
Cash and cash equivalents at end of period	$	2,809		$	2,559		$	1,807

Available to be borrowed under credit facilities	$	7		$	127		$	127

Cash and cash equivalents and unrestricted short-term investments at end of period	$	3,095		$	3,131		$	2,445

Supplemental Cash Flow Information:
Interest paid	$	319		$	113		$	208

Investing and Financing Activities Not Affecting Cash:
Manufacturer financing of aircraft and other non-cash transactions	$	-		$	335		$	167

See accompanying notes.

NORTHWEST AIRLINES CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 1 – Basis of Presentation

The condensed consolidated financial statements of Northwest Airlines Corporation (“NWA Corp.”), the direct parent corporation of Northwest Airlines, Inc. (“Northwest”), include the accounts of NWA Corp. and all consolidated subsidiaries (collectively, the “Company”). Unless otherwise indicated, the terms “we,” “us,” and “our” refer to NWA Corp. and all consolidated subsidiaries. The condensed consolidated financial statements included herein have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). The information and footnote disclosures normally included in annual financial statements prepared in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”) have been condensed or omitted as permitted by such rules and regulations. These financial statements and related notes should be read in conjunction with the financial statements and notes included in the Company’s audited consolidated financial statements, which are provided in the Company’s Annual Report on Form 10-K for the year ended December 31, 2007, as amended (the “2007 Form 10-K”).

Northwest’s operations account for approximately 99% of the Company’s consolidated operating revenues and expenses. Northwest is a major air carrier engaged principally in the commercial transportation of passengers and cargo, directly serving as many as 251 cities in 24 countries in North America, Asia and Europe. Northwest’s global airline network includes domestic hubs at Detroit, Minneapolis/St. Paul and Memphis, an extensive Pacific route system with a hub in Tokyo, a transatlantic joint venture with KLM Royal Dutch Airlines (“KLM”), which operates through a hub in Amsterdam, a domestic and international alliance with Continental Airlines, Inc. (“Continental”) and Delta Air Lines, Inc. (“Delta”), membership in SkyTeam, a global airline alliance with KLM, Continental, Delta, Air France, Aeroflot, Alitalia, Aeromexico, China Southern, CSA Czech Airlines and Korean Air, exclusive marketing agreements with three domestic regional carriers, Pinnacle Airlines, Inc. (“Pinnacle”), Mesaba Aviation, Inc. (“Mesaba”), a wholly-owned subsidiary, and Compass Airlines, Inc. (“Compass”), a wholly-owned subsidiary, which currently operate as Northwest Airlink carriers and a cargo business that includes a dedicated fleet of freighter aircraft that operate through hubs in Anchorage and Tokyo. See “Note 15 – Subsequent Events” for additional information regarding Northwest’s alliances with Continental.

As a result of the application of fresh-start reporting in accordance with American Institute of Certified Public Accountants’ Statement of Position 90-7, Financial Reporting by Entities in Reorganization Under the Bankruptcy Code (“SOP 90-7”) upon the Company’s emergence from bankruptcy on May 31, 2007, the financial statements prior to June 1, 2007 are not comparable with the financial statements for periods on or after June 1, 2007. References to “Successor Company” refer to the Company on or after June 1, 2007, after giving effect to the application of fresh-start reporting. References to “Predecessor Company” refer to the Company prior to June 1, 2007. See “Note 3 – Fresh-Start Reporting” for further details.

The Company maintains a Web site at http://www.nwa.com . Information contained on the Company’s Web site is not incorporated into this quarterly report on Form 10-Q. Annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, all amendments to those reports and other information about the Company are available free of charge through this Web site at http://ir.nwa.com as soon as reasonably practicable after those reports are electronically filed with or furnished to the SEC.

In the opinion of management, the interim financial statements reflect adjustments, consisting of normal recurring accruals, unless otherwise noted, which are necessary to present fairly the Company’s financial position, results of operations and cash flows for the periods indicated.

The Company’s results of operations for interim periods are not necessarily indicative of the results for an entire year due to seasonal factors as well as competitive and general economic conditions. The Company’s second and third quarter operating results have historically been more favorable due to increased leisure travel on domestic and international routes during the spring and summer months.

Certain prior year amounts have been reclassified to conform to the current year financial statement presentation.

Merger Agreement with Delta. On April 14, 2008, NWA Corp, and Delta entered into an Agreement and Plan of Merger (the “Merger Agreement”) that provides, among other things, for NWA Corp. to be merged with a wholly-owned subsidiary of Delta (the “Merger”).

Consummation of the Merger is subject to customary closing conditions, including the approval of NWA Corp.’s and Delta’s stockholders and receiving certain domestic and foreign regulatory and antitrust approvals (including from the Federal Aviation Administration and the United States Department of Transportation, under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and pursuant to Council Regulation (EEC) 139/2004 of the European Commission). The Merger Agreement contains certain termination rights for both NWA Corp. and Delta. The Merger Agreement further provides that, upon termination of the Merger Agreement under specified circumstances, the Company may be required to pay to Delta, or Delta may be required to pay to the Company, a termination fee of $165 million. NWA Corp.’s stockholders approved the proposed Merger at the annual stockholders meeting held on September 25, 2008. Delta’s stockholders approved share issuances in conjunction with the proposed Merger at a special stockholders meeting on the same date.

Under the terms of the Merger Agreement, each outstanding share of NWA Corp. common stock will be converted into the right to receive 1.25 shares of Delta common stock. Stock options and other equity awards granted under the Company’s 2007 Stock Incentive Plan will convert into stock options and equity awards with respect to Delta common stock, after giving effect to the exchange ratio.

Certain contracts, employee benefit arrangements and debt instruments of the Company contain change in control provisions that may be triggered by the Merger, resulting in changes to the terms or settlement amounts of the contracts, arrangements or instruments.

We currently expect the Merger to close by the end of 2008. However, factors outside of our control could require us to complete the Merger at a later time or not to complete it at all.

Stockholder Rights Plan. Pursuant to the Stockholder Rights Plan (the “Rights Plan”), each share of common stock has attached to it a right and, until the rights expire or are redeemed, each new share of common stock issued by NWA Corp., will include one right. Once exercisable, each right entitles the holder (other than the acquiring person or group) to purchase one one-hundredth of a share of Series A Junior Participating Preferred Stock at an exercise price of $120, subject to adjustment. The rights become exercisable upon the occurrence of certain events, including the acquisition by any air carrier with passenger revenues in excess of approximately $1 billion per year (as such amount may be increased based on increases in the Consumer Price Index from 2000) (a “Major Carrier”), a holding company of a Major Carrier or any of their respective affiliates acquires beneficial ownership of 20% or more of NWA Corp.’s outstanding common stock or commences a tender or exchange offer that would result in such person or group acquiring beneficial ownership of 20% or more of NWA Corp.’s outstanding common stock. The rights expire on May 31, 2017, and may be redeemed by NWA Corp. at a price of $.01 per right prior to the time they become exercisable.

On April 14, 2008, prior to the execution of the Merger Agreement, NWA Corp. amended the Rights Plan to provide, among other things, that neither the approval, execution, delivery, announcement or performance of the Merger Agreement or the consummation of the Merger or any other transactions contemplated thereby will cause a triggering event under which the rights would become exercisable. The amendment also provides that the Rights Plan and the rights established thereby will terminate in all respects immediately prior to the Merger becoming effective.

Restrictions on the Transfer of Common Stock. To reduce the risk of a limitation under Section 382 of the Internal Revenue Code on the Company’s ability to use its net operating loss carryforwards (“NOLs”), the Amended and Restated Certificate of Incorporation of NWA Corp. restricts certain transfers of common stock for two years after the Company’s emergence from bankruptcy. Such restrictions can be extended thereafter for three consecutive one year periods (to June 2012) upon, each time, the affirmative vote of the NWA Corp. stockholders. During the two year period, these restrictions generally provide that any attempted transfer of common stock prior to the expiration of the term of the transfer restrictions will be prohibited and void if such transfer would cause the transferee’s ownership interest in NWA Corp. to increase to 4.95% or above, including an increase in a transferee’s ownership interest from 4.95% or above to a greater ownership interest, unless approved by the Board of Directors on the basis that the transfer does not increase the risk of an ownership change. In the event that these restrictions are extended beyond the two year period, the Board of Directors will approve proposed transfers that, taking into account all prior transfers, do not result in an aggregate owner shift under Section 382 of more than 30%. If the aggregate owner shift as of any date after the two year period exceeds 30%, the Board of Directors has the discretion to approve any subsequent transfers subject to the standards applicable during the two year period until the earlier of the date on which the aggregate owner shift no longer exceeds 30%, or the restriction is no longer in effect.

Note 2 – Voluntary Reorganization Under Chapter 11

Background and General Bankruptcy Matters. The following discussion provides general background information regarding the Company’s Chapter 11 cases, and is not intended to be an exhaustive summary. Detailed information pertaining to the bankruptcy filings may be obtained at http://www.nwa-restructuring.com .

On September 14, 2005 (the “Petition Date”), NWA Corp. and 12 of its direct and indirect subsidiaries (collectively, the “Debtors”) filed voluntary petitions for relief under Chapter 11 of the United States Bankruptcy Code with the United States Bankruptcy Court for the Southern District of New York (the “Bankruptcy Court”). Subsequently, on September 30, 2005, NWA Aircraft Finance, Inc., an indirect subsidiary of NWA Corp., also filed a voluntary petition for relief under Chapter 11. On May 18, 2007, the Bankruptcy Court entered an order approving and confirming the Debtors’ First Amended Joint and Consolidated Plan of Reorganization Under Chapter 11 of the Bankruptcy Code (as confirmed, the “Plan” or “Plan of Reorganization”). The Plan became effective and the Debtors emerged from bankruptcy protection on May 31, 2007 (the “Effective Date”). On the Effective Date, the Company implemented fresh-start reporting in accordance with SOP 90-7.

The Plan generally provided for the full payment or reinstatement of allowed administrative claims, priority claims, and secured claims, and the distribution of new common stock of the Successor Company to the Debtors’ creditors, employees and others in satisfaction of allowed unsecured claims. The Plan contemplates the issuance of approximately 277 million shares of new common stock by the Successor Company out of the 400 million shares of new common stock authorized under its amended and restated certificate of incorporation.

The new common stock is listed on the New York Stock Exchange (the “NYSE”) and began trading under the symbol “NWA” on May 31, 2007. Pursuant to the Plan of Reorganization, stockholders of NWA Corp. prior to the Effective Date received no distributions and their stock was cancelled.

In connection with the consummation of the Plan of Reorganization, on the Effective Date, the Company’s existing $1.225 billion Senior Corporate Credit Facility (“Bank Credit Facility”) was converted into exit financing in accordance with its terms. See “Note 10 – Long-Term Debt” for additional information.

Claims Resolution Process . Pursuant to terms of the Plan of Reorganization, approximately 234.4 million shares of the Successor Company’s common stock will be issued to holders of allowed general unsecured and guaranty claims of the Debtors. Once a claim is allowed consistent with the claims resolution process, the claimant is entitled to a distribution of new common stock. Approximately 227.2 million shares of new common stock have been issued and distributed through October 15, 2008, in respect of valid unsecured and guaranty claims. In total, there are approximately 7.2 million remaining shares of new common stock held in reserve under the terms of the Plan of Reorganization. The Merger Agreement contemplates that following the Merger the right to receive shares held in the reserves will become the right to receive shares of Delta common stock adjusted for the exchange ratio.

The Company estimates that the probable range of unsecured claims to be allowed will be between $8.0 and $8.2 billion. Differences between claim amounts filed and the Company’s estimates are being investigated and will be resolved in connection with the claims resolution process. However, there will be no further financial impact to the Company associated with the settlement of such unsecured claims, as the holders of all allowed unsecured claims against the Predecessor Company will receive under the Plan of Reorganization only their pro rata share of the distribution of the newly issued Common Stock of the Successor Company. Secured claims were deemed unimpaired under the Plan of Reorganization and were satisfied upon either reinstatement of the obligations in the Successor Company, surrendering the collateral to the secured party, or by making full payment in cash.

Note 3 – Fresh-Start Reporting

Upon emergence from its Chapter 11 proceedings on May 31, 2007, the Company adopted fresh-start reporting in accordance with SOP 90-7. The Company’s emergence from Chapter 11 resulted in a new reporting entity with no retained earnings or accumulated deficit. Accordingly, the Company’s consolidated financial statements for periods prior to June 1, 2007 are not comparable to consolidated financial statements presented on or after June 1, 2007.

Fresh-start reporting reflects the value of the Company as determined in the confirmed Plan of Reorganization. Under fresh-start reporting, the Company’s asset values are remeasured and allocated in conformity with Statement of Financial Accounting Standards (“SFAS”) No. 141, Business Combinations (“SFAS No. 141”). The excess of reorganization value over the fair value of tangible and identifiable intangible assets was recorded as goodwill in the accompanying Condensed Consolidated Balance Sheets. In addition, fresh-start reporting also required that all liabilities, other than deferred taxes and pension and other postretirement benefit obligations, be stated at fair value or at the present values of the amounts to be paid using appropriate market interest rates. Deferred taxes were determined in conformity with SFAS No. 109, Accounting for Income Taxes (“SFAS No. 109”). As part of the provisions of SOP 90-7, on June 1, 2007 we were required to adopt all accounting guidance that was going to be effective within the subsequent twelve-month period. See “Note 5 – Fair Value Measurements” for additional information.

Estimates of fair value represented the Company’s best estimates based on its valuation models which incorporated industry data and trends and relevant market rates and transactions.

To facilitate the calculation of the enterprise value of the Successor Company, Northwest’s financial advisors assisted management in the preparation of a valuation analysis for the Successor Company’s common stock to be distributed as of the Effective Date to the unsecured creditors. The enterprise valuation included (i) a 40% weighting towards a comparable company analysis based on financial ratios and multiples of comparable companies, which were then applied to the financial projections developed by the Company to arrive at an enterprise value; and (ii) a 60% weighting towards a discounted cash flow analysis which measures the projected multi-year, un-levered free cash flows of the Company to arrive at an enterprise value.

The estimated enterprise value and corresponding equity value in fresh-start reporting were highly dependent upon achieving the future financial results set forth in the five-year financial projections included in the Company’s Plan of Reorganization, as well as the realization of certain other assumptions. The equity value of the Company in fresh-start reporting was calculated to be a range of approximately $6.45 billion to $7.55 billion. Based on claims trading prior to the Company’s Effective Date and the trading value of the Company’s common stock post emergence, the equity value of the Company was estimated to be $6.45 billion for purposes of preparing the Company’s financial statements. The estimates and assumptions made in this valuation were inherently subject to significant uncertainties and the resolution of contingencies beyond the reasonable control of the Company. See “Note 4 – Goodwill and Intangibles” for a description of the cumulative net goodwill impairment charges of $3.2 billion recorded in 2008.

Note 4 – Goodwill and Intangibles

Goodwill represents the excess of the reorganization value of the Successor Company over the fair value of tangible assets and identifiable intangible assets resulting from the application of SOP 90-7. Northwest’s goodwill mainly consists of two components:

·	A valuation allowance recorded against our net deferred tax assets, as required by SFAS No. 109; this valuation allowance will be reversed against goodwill when the Company reports income in future periods.

·	Revenue-generating intangibles that do not meet the contractual or separable criteria of SFAS No. 141, including our flight network and international routes to open skies countries.

Identifiable intangible assets consist primarily of international route authorities, trade names, airport slots/airport operating rights, certain partner contracts and other items. International route authorities, certain airport slots/airport operating rights and trade names are indefinite-lived and, as such, are not amortized. The Company’s definite-lived intangible assets are amortized on a straight-line basis over the remaining estimated lives of the related assets, which span periods of three to 29 years.

The Company tests the carrying amount of goodwill and other indefinite-lived intangible assets annually as of October 1 or whenever events or circumstances indicate that impairment may have occurred. Impairment testing is performed in accordance with SFAS No. 142, Goodwill and Other Intangible Assets (“SFAS No. 142”). The Company is annually required to complete Step 1 (determining and comparing the fair value of the Company’s reporting unit to its carrying value) of the impairment test. Step 2 is required to be completed if Step 1 indicates that the carrying value of the reporting unit exceeds the fair value and involves the calculation of the implied fair value of goodwill. Step 2 of the goodwill impairment test involves measuring the Company’s other assets and liabilities at fair value to calculate an implied fair value of goodwill and measure the amount of impairment, if any.

The Company evaluates long-lived tangible assets and definite-lived intangible assets for potential impairments in accordance with SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets , (“SFAS No. 144”). For definite-lived intangible assets, impairment evaluations are initiated based on quarterly reviews of key indicators of impairment. The Company records impairment losses on long-lived assets when events and circumstances indicate the assets might be impaired and the undiscounted cash flows estimated to be generated by those assets are less than their carrying amounts. Impairment losses are measured by comparing the fair value of the assets to their carrying amounts.

The Company determined that the announced Merger with Delta on April 14, 2008, was a triggering event under SFAS No. 142, requiring the Company to further evaluate the carrying value of its goodwill. As a result of this evaluation, the Company recorded a net goodwill impairment charge of $3.2 billion during the first and second quarters of 2008 to reduce the book value of Northwest’s equity to its implied fair value as of the Merger announcement date. Based on the 5-day average closing price of Delta’s common stock around the Merger announcement date, the right to receive 1.25 shares of Delta stock for each share of NWA Corp. common stock, and the projected number of NWA Corp.’s common shares to be converted into Delta common stock on the transaction close date, the implied fair value of NWA Corp.’s equity on the announcement date was $3.3 billion. Additionally, Northwest recorded a net $1.1 billion of impairment charges in the second quarter related to certain flight equipment, definite-lived and indefinite-lived intangible assets, investments in affiliated companies, and the related deferred tax effects.

Due to the limited time available between the Merger announcement date and the Company’s first quarter 2008 Form 10-Q filing date, there was insufficient time to complete Step 2 of the goodwill impairment test and calculate the implied fair value of goodwill. Therefore, we recorded our best estimate of the impairment as of March 31, 2008. This implied fair value calculation resulted in the Company recording a goodwill impairment charge of $3.9 billion for the quarter ended March 31, 2008 because we believed the conditions that caused our implied fair value to decline existed as of that date. Northwest finalized the impairment test of long-lived assets and Step 2 of the goodwill impairment test during the second quarter of 2008, resulting in an additional net charge of $547 million, which includes an adjustment of estimated goodwill from $2.2 billion to the implied fair value of goodwill of $2.9 billion. The adjustment to goodwill resulted in the reversal of $674 million of impairment expense recorded in the first quarter of 2008 which is classified as goodwill and other indefinite-lived intangibles impairment expense. Additionally, Northwest recorded $624 million of depreciation and amortization related to impairment of certain flight equipment and definite-lived intangibles, $598 million of impairment expense in goodwill and other indefinite-lived intangibles impairment expense related to indefinite-lived intangibles, $213 million in other non-operating expense related to other than temporary impairment on investments in affiliated companies and $214 million in income tax benefit related to the reversal of deferred tax liabilities related to certain of the indefinite-lived intangible assets.

During the second quarter 2008, the indefinite-lived intangibles were impaired to fair value if the fair value was lower than the carrying amount, in accordance with SFAS No. 142. The definite-lived intangibles and flight equipment were subject to recoverability tests to determine if a loss in fair value measured in Step 2 would result in an impairment charge, in accordance with the guidance in SFAS No. 144. The investment in affiliated companies consists of a minority ownership interest in Midwest Air Partners, LLC, which in turn purchased Midwest Air Group, Inc. (the “Midwest” investment). This equity investment was subject to a recoverability test in accordance with Accounting Principles Board Opinion 18, The Equity Method of Accounting for Investments in Common Stock (“APB 18”). Under APB 18, a loss in value of an investment which is other than a temporary decline should be recognized.

The following table presents a roll-forward of the intangible assets affected by impairment charges as the result of the impairment analyses performed during the second quarter:

	Successor
	Definite-lived intangibles						Indefinite-lived intangibles
							Pacific Routes
	SkyTeam						and Narita
	Alliance and						Airport			NWA Trade
	Other Code			NWA Customer			Operating			Name and
(In thousands)	Share Partners			Relationships			Rights			Other
December 31, 2007 gross carrying amount	$	461,900		$	530,000		$	2,961,700		$	663,625
December 31, 2007 accumulated amortization	(8,981		)	(34,352		)	-			-
December 31, 2007 net carrying amount	452,919			495,648			2,961,700			663,625

Amortization Expense	(9,719		)	(14,722		)	-			-
SFAS No. 142 Impairment	-			-			(584,700		)	(13,200		)
SFAS No. 144 Impairment	(106,653		)	(480,926		)	-			-
September 30, 2008 net carrying amount	$	336,547		$	-		$	2,377,000		$	650,425

In accordance with SOP 90-7, a reduction in the valuation allowance associated with the realization of pre-emergence deferred tax assets in future periods will sequentially reduce the value of recorded goodwill followed by other indefinite-lived assets until the net carrying cost of these assets is zero. Adjustments to goodwill during the nine months ended September 30, 2008 are shown in the table below:

(In thousands)
Balance as of December 31, 2007	$	6,034,609
Impairment charges, net	(3,243,377		)
Adjustments related to deferred tax assets	74,013
Other	8,020
Balance as of September 30, 2008	$	2,873,265

The following table presents information about our intangible assets, including goodwill, at September 30, 2008 and December 31, 2007:

		Successor
		September 30, 2008					December 31, 2007
	Remaining	Gross Carrying		Accumulated			Gross Carrying		Accumulated
(In thousands)	Asset Life	Amount		Amortization			Amount		Amortization
SkyTeam alliance & other code share partners	29	$	352,200	$	(15,653	)	$	461,900	$	(8,981	)
England airport operating rights	4	16,000		(4,267		)	16,000		(1,867		)
NWA customer relationships	8	-		-			530,000		(34,352		)
WorldPerks affinity card contract	14	195,700		(17,396		)	195,700		(7,611		)
WorldPerks marketing partner relationships	21	43,000		(2,606		)	43,000		(1,140		)
Visa contract	3	11,900		(3,967		)	11,900		(1,736		)

Pacific routes and Narita slots/airport operating rights	Indefinite	2,377,000		-			2,961,700		-
NWA trade name and other	Indefinite	650,425		-			663,625		-
Slots/airport operating rights	Indefinite	283,300		-			283,300		-
Goodwill	Indefinite	2,873,265		-			6,034,609		-

		$	6,802,790	$	(43,889	)	$	11,201,734	$	(55,687	)

Total amortization expense recognized was approximately $8.2 million and $23.9 million for the three month periods ended September 30, 2008 and September 30, 2007, respectively. Amortization expense of $627.9 million, $31.9 million and $0.6 million was recognized for the nine month period ended September 30, 2008, four month period ended September 30, 2007 and five month period ended May 31, 2007, respectively. Of the amortization expense recognized during the nine months ended September 30, 2008, $587.6 million was related to the second quarter 2008 SFAS No. 144 impairment expense of intangibles for the SkyTeam alliance & other code share partners and the NWA customer relationships. Accordingly, the carrying amount and accumulated depreciation related to these assets have been reduced by corresponding amounts. We expect to record amortization expense of $8.2 million for the remainder of 2008, $32.9 million per year from 2009 through 2010, $31.2 million in 2011, $28.1 million in 2012 and $26.7 million in 2013.

Note 5 – Fair Value Measurements

The Company adopted SFAS No. 157, Fair Value Measurements (“SFAS No. 157”), on the Effective Date in accordance with SOP 90-7. SFAS No. 157 defines fair value, establishes a consistent framework for measuring fair value and expands disclosure requirements about fair value measurements. SFAS No. 157 requires, among other things, the Company’s valuation techniques used to measure fair value to maximize the use of observable inputs and minimize the use of unobservable inputs. This standard was applied prospectively to the valuation of assets and liabilities on and after the Effective Date.

There are three general valuation techniques that may be used to measure fair value, as described below:

(A) Market approach – Uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities. Prices may be indicated by pricing guides, sale transactions, market trades, or other sources;

(B) Cost approach – Based on the amount that currently would be required to replace the service capacity of an asset (replacement cost); and

(C) Income approach – Uses valuation techniques to convert future amounts to a single present amount based on current market expectations about the future amounts (includes present value techniques, option-pricing models, and excess earnings method). Net present value is an income approach where a stream of expected cash flows is discounted at an appropriate market interest rate. Excess earnings method is a variation of the income approach where the value of a specific asset is isolated from its contributory assets.

Measured on a Recurring Basis. For assets and liabilities measured at fair value on a recurring basis during the period, SFAS No. 157 requires quantitative disclosures about the fair value measurements separately for each major category.

Additionally, based on market conditions during the period, we changed the valuation technique for our $250 million investment in the The Reserve Primary Fund (the “Primary Fund”) from a market approach to an income approach using a discounted cash flow model. The Primary Fund was a AAA-rated money market fund which has suspended redemptions and is in the process of liquidating the portfolio of investments because it held some securities in Lehman Brothers which was downgraded. As a result, in mid-September, the net asset value of the Primary Fund decreased below $1 per share as a result of the trustees of the Primary Fund valuing at zero debt securities issued by Lehman Brothers Holdings, Inc. (“Lehman Brothers”) held by the Primary Fund. Accordingly, Northwest reclassified this security on its balance sheet from cash equivalents to unrestricted short-term investments and recognized an other than temporary impairment of $3.75 million, which was Northwest’s pro rata share of the Primary Fund’s overall investment attributable to the Lehman Brothers’ securities. As each security in the portfolio matures or additional liquidity becomes available within the fund, the money market fund manager will repay those amounts to each investor on a pro rata basis. As a result of these events, Northwest adjusted its fair value measurement of the Primary Fund from Level 1 to Level 3 within the SFAS No. 157 three-tier fair value hierarchy. Changes in market conditions could result in further adjustments to the fair value of these investments.

Assets and liabilities itemized below were measured at fair value during the period using the market and income approaches:

	Successor Assets
			Quoted								Quoted
			Prices								Prices
			in Active		Significant						in Active		Significant
			Markets for		Other		Significant				Markets for		Other		Significant
	As of		Identical		Observable		Unobservable		As of		Identical		Observable		Unobservable
	September 30,		Assets		Inputs		Inputs		December 31,		Assets		Inputs		Inputs		Valuation
(In millions)	2008		(Level 1)		(Level 2)		(Level 3)		2007		(Level 1)		(Level 2)		(Level 3)		Technique
Cash and cash equivalents	$	2,809	$	2,809	$	-	$	-	$	2,939	$	2,939	$	-	$	-	(A)
Unrestricted short-term investments	286		-		40		246		95		95		-		-		(C)
Restricted cash, cash equivalents, and short-term investments	446		441		5		-		725		725		-		-		(A),(C)
Derivatives	40		-		40		-		26		-		26		-		(A),(C)
Total	$	3,581	$	3,250	$	85	$	246	$	3,785	$	3,759	$	26	$	-

	Successor Liabilities
			Quoted								Quoted
			Prices								Prices
			in Active		Significant						in Active		Significant
			Markets for		Other		Significant				Markets for		Other		Significant
	As of		Identical		Observable		Unobservable		As of		Identical		Observable		Unobservable
	September 30,		Assets		Inputs		Inputs		December 31,		Assets		Inputs		Inputs		Valuation
(In millions)	2008		(Level 1)		(Level 2)		(Level 3)		2007		(Level 1)		(Level 2)		(Level 3)		Technique
Derivatives	$	169	$	-	$	169	$	-	$	3	$	-	$	3	$	-	(A),(C)
Total	$	169	$	-	$	169	$	-	$	3	$	-	$	3	$	-

For the Primary Fund assets reclassified into unrestricted short-term investments during the third quarter, and measured at fair value on a recurring basis using Level 3 inputs, the reconciliation of the beginning and ending balances is reflected in the table below:

	Successor Assets
	Level 3
	Unrestricted
	Short-term
(In millions)	Investments
Balance as of December 31, 2007	$	-
Gains (losses) during the period: Investment loss	(4		)
Purchases, sales, and settlements (net)	-
Transfers in or (out) of Level 3	250
Balance as of September 30, 2008	$	246

Measured on a Non-Recurring Basis. For assets and liabilities measured on a non-recurring basis during the period, SFAS No. 157 requires quantitative disclosures about the fair value measurements separately for each major category. During the third quarter of 2008, Northwest did not remeasure assets or liabilities at fair value on a non-recurring basis. For further information about Northwest’s goodwill and other asset impairment charges recorded in the first and second quarters, refer to “Note 4 – Goodwill and Intangibles.”

Note 6 – Geographic Regions

The Company is managed as one cohesive business unit, of which revenues are derived primarily from the commercial transportation of passengers and cargo. Operating revenues from flight segments serving a foreign destination are classified into the Pacific or Atlantic regions, as appropriate. The following table shows the operating revenues for each region:

	Successor
	Three Months Ended
	September 30
(In millions)	2008		2007
Domestic	$	2,359	$	2,156
Pacific, principally Japan	822		766
Atlantic	617		456
Total operating revenues	$	3,798	$	3,378

Successor

Predecessor

Nine Months

Period from

Ended

June 1 to

January 1 to

September 30,

May 31,

(In millions)

2008

2007

Domestic

6,777

2,906

3,346

Pacific, principally Japan

2,208

998

1,064

Atlantic

1,516

604

514

Total operating revenues

10,501

4,508

4,924

The Company’s tangible assets consist primarily of flight equipment, which are utilized across geographic markets and therefore have not been allocated.

Note 7 – Reorganization Related Items

In accordance with SOP 90-7, the financial statements for the periods presented distinguish transactions and events that are directly associated with the reorganization from the ongoing operations of the Company. In connection with its bankruptcy proceedings, implementation of our Plan of Reorganization and adoption of fresh-start accounting, the Company recorded the following largely non-cash reorganization income/(expense) items:

	Predecessor
	Period from
	January 1 to
	May 31,
(In millions)	2007
Discharge of unsecured claims and liabilities (a)	$	1,763
Revaluation of frequent flyer obligations (b)	(1,559		)
Revaluation of other assets and liabilities (c)	2,816
Employee-related charges (d)	(312		)
Abandonment of aircraft and buildings (d)	(323		)
Restructured aircraft lease/debt charges (d)	(74		)
Professional fees	(60		)
Other (d)	(700		)
Reorganization items, net	$	1,551

(a)		The gain on discharge of unsecured claims and liabilities relates to the Company’s unsecured claims as of the Petition Date and the discharge of unsecured claims established as part of the bankruptcy process. In accordance with the Plan of Reorganization, the Company discharged its estimated $8.2 billion in unsecured creditor obligations in exchange for the distribution of approximately 234 million common shares of the Successor Company valued at emergence at $6.45 billion. Accordingly, the Company recognized a non-cash reorganization gain of approximately $1.8 billion.

(b)		The Company revalued its frequent flyer miles to estimated fair value as a result of fresh-start reporting, which resulted in a $1.6 billion non-cash reorganization charge.

(c)		In accordance with fresh-start reporting, the Company revalued its assets at their estimated fair value and revalued its liabilities at estimated fair value or the present value of amounts to be paid. This resulted in a non-cash reorganization gain of $2.8 billion, primarily as a result of newly recognized intangible assets, offset partially by reductions in the fair value of tangible property and equipment.

(d)		Prior to emergence the Company recorded its final provisions for allowed or projected unsecured claims including employee-related Association of Flight Attendants – Communication Workers of America (“AFA-CWA”) contract related claims, other employee related claims, claims associated with restructured aircraft lease/debt, and municipal bond obligation related settlements.

Note 8 – Income Taxes

The Company accounts for income taxes in accordance with SFAS No. 109 , which requires that deferred tax assets and liabilities are recognized using enacted tax rates, for the tax effect of temporary differences between the financial reporting and tax bases of recorded assets and liabilities. SFAS No. 109 also requires that deferred tax assets be reduced by a valuation allowance if it is more likely than not that some or all of the deferred tax assets will not be realized. Based on the consideration of all available evidence, the Company has provided a valuation allowance on deferred tax assets recorded beginning in the first quarter 2003. The Company continues to maintain a full valuation allowance against its deferred tax assets due to the uncertainty regarding the ultimate realization of those assets.

An ownership change under Internal Revenue Code Section 382 occurred in connection with the Company’s bankruptcy Plan of Reorganization. However, the Company does not believe that such change has any material impact on the Company’s ability to use its NOL carryforwards and other tax attributes.

Generally, the Company would not record a tax benefit related to a quarterly net loss unless it had a high degree of confidence that it would record a full-year profit. A tax benefit of $214 million was recorded during the 2008 second quarter to decrease the deferred tax liability associated with the impairment of an indefinite-lived intangible asset.

Note 9 – Earnings (Loss) Per Share Data

The following tables set forth the computation of basic and diluted earnings (loss) per common share:

	Successor
	Three Months Ended
	September 30
(In millions)	2008			2007
Numerator:
Net income (loss) applicable to common stockholders	$	(317	)	$	244

Effect of dilutive securities	-			-
Adjusted net income (loss) for diluted earnings (loss) per share	$	(317	)	$	244

Denominator:
Weighted-average shares outstanding for basic and diluted earnings (loss) per share	265.0			262.2

Effect of dilutive securities	-			-
Adjusted weighted-average shares outstanding and assumed conversions for diluted earnings (loss) per share	265.0			262.2


Basic earnings (loss) per common share	$	(1.20	)	$	0.93


Diluted earnings (loss) per common share	$	(1.20	)	$	0.93

	Successor					Predecessor
	Nine Months			Period from		Period from
	Ended			June 1 to		January 1 to
	September 30,			September 30,		May 31,
(In millions)	2008			2007		2007
Numerator:
Net income (loss) applicable to common stockholders	$	(4,833	)	$	350	$	1,751

Effect of dilutive securities:
Gain on discharge of convertible debt	-			-		(82		)
Gain on discharge of Series C Preferred Stock	-			-		(60		)
Adjusted net income (loss) for diluted earnings (loss) per share	$	(4,833	)	$	350	$	1,609

Denominator:
Weighted-average shares outstanding for basic and diluted earnings (loss) per share	263.4			262.2		87.4

Effect of dilutive securities:
Contingently convertible debt	-			-		19.1
Series C Preferred Stock	-			-		6.2
Adjusted weighted-average shares outstanding and assumed conversions for diluted earnings (loss) per share	263.4			262.2		112.7


Basic earnings (loss) per common share	$	(18.35	)	$	1.33	$	20.03

Successor EPS . For the three and nine months ended September 30, 2008, approximately 12 million restricted stock units and stock options to purchase shares of the Successor Company’s common stock were outstanding but excluded from the computation of diluted earnings per share because the Company reported a net loss for these periods.

For the three months ended September 30, 2007 and the period from June 1 to September 30, 2007, approximately 15 million restricted stock units and stock options to purchase shares of the Successor Company’s common stock were outstanding but excluded from the computation of diluted earnings per share because the effect of including the shares would have been anti-dilutive.

Predecessor EPS. Predecessor basic earnings per share was computed based on the Predecessor’s weighted average shares outstanding. Dilutive earnings per share included securities related to the Predecessor’s Series C Preferred Stock and convertible debt.

For the period from January 1 to May 31, 2007, stock options to purchase approximately 7 million shares of common stock were outstanding but excluded from the computation of diluted earnings per share because the effect of including the shares would have been anti-dilutive.

Note 10 - Long-Term Debt

As of September 30, 2008, contractual maturities of long-term debt (inclusive of short-term maturities), excluding capital lease obligations and any potential acceleration of the Bank Credit Facility as described below, through December 31, 2012 were as follows (in millions):

remainder of	2008	$	218	(a)
	2009	599
	2010	538
	2011	670
	2012	504

(a) In November 2007, the Company entered into an accounts receivable financing facility. The facility size is up to $150 million and as of September 30, 2008, $115 million of the $122 million available was drawn. The financing is a 364-day facility that matures in November 2008 with annual renewal provisions that could result in a final maturity date of November 29, 2012.

On August 21, 2006, the Predecessor Company entered into a $1.225 billion Senior Corporate Credit Facility (“Bank Credit Facility”), formerly referred to by us as the DIP/Exit Facility, consisting of a $1.05 billion term loan facility and a $175 million revolving credit facility which has been fully drawn since its inception. Loans drawn under the $175 million revolving credit facility may be borrowed and repaid at the Company’s discretion. Up to $75 million of the revolving credit facility may be utilized by the Company as a letter of credit facility. As amended in March 2007, both loan facilities under the Bank Credit Facility bear interest at LIBOR plus 2.00%. Letter of credit fees are 2.125% per annum. To the extent that the revolving credit facility is not utilized, the Company is required to pay an undrawn commitment fee of 50 basis points per annum. The Bank Credit Facility is rated BB- by Standard & Poor’s Rating Services (“S&P”) and B1 by Moody’s Investors Service, Inc. (“Moody’s”) and is secured by a first lien on the Company’s Pacific Route authorities. The March 2007 amendment also allowed the Company to grant pari-passu liens in the Pacific Route authorities to secure up to $150 million of exposure arising from hedging trades entered into with Bank Credit Facility lenders. The interest rate as of September 30, 2008 was 4.75% on both the term loan facility and the revolving credit facility.

The final maturity date of the Bank Credit Facility is August 21, 2013. Principal on the term loan portion of the Bank Credit Facility will be repaid at 1.0% per year with the balance (94.0%) due at maturity. The first two such principal repayments were made on August 21, 2007 and August 21, 2008. On September 15, 2008, the Company entered into an amendment to the Bank Credit Facility which provides that, (i) subject to the consummation of the Merger, the Company will be permitted to guarantee approximately $2.5 billion of Delta obligations, (ii) the Company will be required to repay $300 million of the approximately $1.2 billion outstanding under the Bank Credit Facility and (iii) the final maturity date will be the earlier of the date on which Northwest is merged with and into Delta or December 31, 2010. The merger of Northwest with Delta (as opposed to the Merger of NWA Corp. with a subsidiary of Delta) is not expected to occur before late 2009.

The Bank Credit Facility requires ongoing compliance with various financial covenants including a requirement for the Company to maintain a minimum ratio of consolidated EBITDAR to consolidated fixed charges (“Fixed Charge Coverage Ratio”). Under an amendment to the Bank Credit Facility completed in April 2008, compliance by the Company with the Fixed Charge Coverage Ratio has been waived through March 31, 2009 followed by a phase-in period as set forth below:

Number of		Required
Months Covered	Period Ending	Coverage Ratio
Three	June 30, 2009	1.00 to 1.0
Six	September 30, 2009	1.10 to 1.0
Nine	December 31, 2009	1.20 to 1.0
Twelve	March 31, 2010	1.30 to 1.0
Twelve	June 30, 2010	1.40 to 1.0
Twelve	September 30, 2010 and each quarter ending thereafter	1.50 to 1.0

For purposes of calculating this ratio, EBITDAR is defined as operating income, adjusted to exclude the effects of depreciation, amortization, aircraft rents and costs (but only up to $150 million of cash costs) payable in connection with a merger or acquisition and to include the effects of interest income and governmental reimbursements for losses resulting from developments affecting the aviation industry. Earnings also exclude non-recurring non-cash charges (subject to the inclusion of any cash payments then or thereafter made with respect thereto) and are determined without giving effect to any acceleration of rental expense. Fixed charges are defined as interest expense (excluding the fees and expenses of obtaining the April 2008 and September 2008 amendments and non-cash merger-related adjustments incurred in connection with the Merger) and aircraft rent expense (without giving effect to any acceleration of rental expense). Additionally, certain aircraft sublease rental income is excluded from EBITDAR and reduces aircraft rental expense in fixed charges.

Although the Company was in compliance with all required financial covenants as of September 30, 2008, continued compliance depends on many factors, some of which are beyond the Company’s control, including the overall industry revenue environment and the level of fuel costs.

Note 11 – Fleet Information and Commitments

As shown in the following table, Northwest operated a mainline fleet of 319 aircraft at September 30, 2008, consisting of 260 narrow-body and 59 wide-body aircraft. Northwest’s purchase commitments for aircraft as of September 30, 2008 are also provided.

		In Service
						Aircraft
	Seating		Capital	Operating		on Firm
Aircraft Type	Capacity	Owned	Lease	Lease	Total	Order

Passenger Aircraft
Airbus:
A319	124	55	-	2	57	5
A320	148	42	-	28	70	2
A330-200	243	11	-	-	11	-
A330-300	298	21	-	-	21	-

Boeing:
787-8	TBD	-	-	-	-	18
757-200	160-184	34	1	15	50	-
757-300	224	16	-	-	16	-
747-400	403	4	-	12	16	-

McDonnell Douglas:
DC9	100-125	67	-	-	67	-
		250	1	57	308	25

Freighter Aircraft
Boeing 747F		8	-	3	11	-

Total Mainline Operated Aircraft		258	1	60	319	25

Regional Aircraft
CRJ200	50	-	-	141	141	-
Saab 340	33	-	-	49	49	-
CRJ900	76	31	-	-	31	5
Embraer 175	76	28	-	-	28	6

Total Airlink Operated Aircraft		59	-	190	249	11

Total Aircraft		317	1	250	568	36

T he Company took delivery of 18 CRJ900 and 21 Embraer 175 aircraft during the nine months ended September 30, 2008. Two Embraer 175 aircraft had not been placed into service before September 30, 2008 and therefore are not included in the table above. In connection with the acquisition of these 39 aircraft, the Company entered into long-term debt arrangements. Under such arrangements, the aggregate amount of debt incurred totaled $690 million.

Note 12 – Comprehensive Income (Loss)

Comprehensive income (loss) consisted of the following:

	Successor
	Three Months Ended
	September 30
(In millions)	2008			2007
Net income (loss)	$	(317	)	$	244
Pension, other postretirement, and long-term disabilities benefits	1			-
Change in unrealized gain (loss) on available-for-sale securities	-			(4		)
Change in deferred gain (loss) from hedging activities	(1		)	(2		)
Foreign currency translation adjustments	-			-
Comprehensive income (loss)	$	(317	)	$	238

	Successor						Predecessor
	Nine Months			Period from			Period from
	Ended			June 1 to			January 1 to
	September 30,			September 30,			May 31,
(In millions)	2008			2007			2007
Net income (loss)	$	(4,833	)	$	350		$	1,751
Pension, other postretirement, and long-term disabilities benefits	72			-			-
Change in unrealized gain (loss) on available-for-sale securities	-			(5		)	1
Change in deferred gain (loss) from hedging activities	28			(1		)	-
Foreign currency translation adjustments	-			-			(1		)
Comprehensive income (loss)	$	(4,733	)	$	344		$	1,751

Note 13 – Pension and Other Postretirement Health Care Benefits

The Company has several defined benefit pension plans and defined contribution 401(k)-type plans covering substantially all of its employees. Northwest froze future benefit accruals for its defined benefit Pension Plans for Salaried Employees, Pilot Employees, and Contract Employees effective August 31, 2005, January 31, 2006, and September 30, 2006, respectively. Replacement coverage was provided for these employees through 401(k)-type defined contribution plans including the Pilot Money Purchase Plan or, in the case of International Association of Machinists & Aerospace Workers (“IAM”) represented employees, the IAM National Multi-Employer Plan.

Northwest also sponsors various contributory and noncontributory medical, dental and life insurance benefit plans covering certain eligible retirees and their dependents. The expected future cost of providing such postretirement benefits is accrued over the service lives of active employees. Retired employees are not offered Company-paid medical and dental benefits after age 64, with the exception of certain employees who retired prior to 1987 and receive lifetime Company-paid medical and dental benefits. Prior to age 65, the retiree share of the cost of medical and dental coverage is based on a combination of years of service and age at retirement. Medical and dental benefit plans are unfunded and costs are paid as incurred. The pilot group is provided Company-paid decreasing life insurance coverage.

The Pension Protection Act of 2006 (“2006 Pension Act”) allows commercial airlines to elect special funding rules for defined benefit plans that are frozen. The unfunded liability for a frozen defined benefit plan may be amortized over a fixed 17-year period. The unfunded liability is defined as the actuarial liability calculated using an 8.85% interest rate minus the fair market value of plan assets. Northwest elected the special funding rules for frozen defined benefit plans under the 2006 Pension Act effective October 1, 2006. As a result of this election (1) the funding waivers that Northwest received for the 2003 plan year contributions were deemed satisfied under the 2006 Pension Act, and (2) the funding standard account for each Plan was reduced to zero as of September 30, 2006. New contributions that came due under the 2006 Pension Act funding rules were paid while Northwest was in bankruptcy and must continue to be paid going forward. If the new contributions are not paid, the future funding deficiency that would develop will be based on the regular funding rules rather than the special funding rules.

Federal legislation enacted in December 2007 effected a change in the retirement age for pilots from age 60 to 65. Due to this legislative change, the Company has updated its retirement assumptions for pilots and assumes that certain pilots will continue to work past age 60. This change had an immaterial impact on Northwest’s overall pension benefit and other postretirement obligations.

Components of net periodic benefit cost of defined benefit plans and defined contribution plan costs:

	Successor
	Pension Benefits						Other Benefits
	Three Months Ended						Three Months Ended
	September 30,						September 30,
(In millions)	2008			2007			2008			2007
Defined benefit plan costs
Service cost	$	6		$	11		$	6		$	6
Interest cost	141			139			12			11
Expected return on plan assets	(140		)	(143		)	-			-
Amortization of prior service cost	-			-			-			-
Recognized net actuarial loss and other events	-			-			-			-
Net periodic benefit cost	7			7			18			17

Defined contribution plan costs	27			16			-			-
Total benefit cost	$	34		$	23		$	18		$	17

	Pension Benefits									Other Benefits
	Successor						Predecessor			Successor				Predecessor
	Nine Months			Period from			Period from			Nine Months		Period from		Period from
	Ended			June 1 to			January 1 to			Ended		June 1 to		January 1 to
	September 30,			September 30,			May 31,			September 30,		September 30,		May 31,
(In millions)	2008			2007			2007			2008		2007		2007
Defined benefit plan costs
Service cost	$	17		$	15		$	19		$	19	$	8	$	10
Interest cost	423			185			225			36		15		22
Expected return on plan assets	(420		)	(191		)	(207		)	-		-		-
Amortization of prior service cost	-			-			-			-		-		(15		)
Recognized net actuarial loss and other events	1			-			18			-		-		16
Net periodic benefit cost	21			9			55			55		23		33

Defined contribution plan costs	82			20			23			-		-		-
Total benefit cost	$	103		$	29		$	78		$	55	$	23	$	33

Note 14 – Stock-Based Compensation

Prior to the Effective Date, the Company maintained stock incentive plans for officers and key employees of the Company (the “Prior Management Plans”) and a stock option plan for pilot employees (the “Pilot Plan”). On the Effective Date, outstanding awards under the Prior Management Plans and Pilot Plan were cancelled in accordance with the terms of the Plan. On the Effective Date, the 2007 Stock Incentive Plan (the “2007 Plan”) of the Successor Company provided for in the Plan of Reorganization became effective. In September 2008, the stockholders of the Company approved an amendment to the 2007 Plan, which expanded the definition of participants to include members of the Company’s Board of Directors. The 2007 Plan is a stock-based incentive compensation plan, under which the Compensation Committee of the Board of Directors has the authority to grant to employees equity-based awards including stock options, stock appreciation rights, restricted stock, restricted stock units, and/or other stock-based awards, including performance-based awards. Each of these awards may be granted alone, in conjunction with, or in tandem with other awards under the 2007 Plan. Awards may be made to any employee of the Company or a subsidiary of the Company who is selected to participate in the plan and to members of the Company’s Board of Directors. The number of participants participating in the 2007 Plan, as amended, will vary from year to year. At its inception, the 2007 Plan provided that 21.3 million shares of common stock of the Successor Company were available for issuance under the plan. As of September 30, 2008, approximately 6.8 million shares remained available for new awards to be granted under the 2007 Plan.

The total stock-based non-cash compensation expense recognized related to stock-based plans and liability awards is summarized as follows:

	Successor								Predecessor
					Nine Months		Period from		Period from
	Three Months Ended				Ended		June 1 to		January 1 to
	September 30,				September 30,		September 30,		May 31,
(In millions)	2008		2007		2008		2007		2007
Stock-based plans	$	12.4	$	29.7	$	82.4	$	39.2	$	0.2
Liability awards	0.5		1.2		1.8		1.5		(1.3)
Total stock-based non-cash compensation expense	$	12.9	$	30.9	$	84.2	$	40.7	$	(1.1)

There was no corresponding tax benefit in 2008 or 2007 related to the stock-based compensation, as the Company records a full valuation allowance against its deferred tax assets due to the uncertainty regarding the ultimate realization of those assets. See “Note 8 – Income Taxes” for additional information.

Note 15 – Subsequent Events

Alliances with Continental. Since 1998, Northwest and Continental have been in a domestic and international commercial alliance (“CO/NW Alliance Agreement”) that includes codesharing, frequent flyer program reciprocity and other cooperative marketing programs. The CO/NW Alliance Agreement allowed either party to provide a six-month notice of termination of the agreement in the event of a change of control involving the Company, which under the CO/NW Alliance Agreement occurred on the execution of the Merger Agreement with Delta. On October 9, 2008, Continental Airlines provided NWA Corp. with such a six-month notice and as a result the CO/NW Alliance Agreement will terminate in April 2009.

Northwest, Continental, and Delta are also party to a separate three-way commercial alliance agreement (the “DL/CO/NW Alliance Agreement”). The DL/CO/NW Alliance Agreement was designed to connect the three carriers’ domestic and international networks and provides for codesharing, reciprocity of frequent flyer programs, airport club use and other cooperative marketing programs. The DL/CO/NW Alliance Agreement allows each party to provide a nine-month notice of termination of the agreement following the consummation of a change of control involving two of the three parties to the agreement. Based on Continental’s decision to terminate the CO/NW Alliance Agreement with Northwest, and Continental’s announced intention to join the Star Alliance, the Company anticipates that Continental will also terminate the DL/CO/NW Alliance Agreement and its participation in SkyTeam following the closing of the Merger. The financial impact of Continental’s termination of its alliance relationships with Northwest and Delta was fully considered and netted against the projected network synergies generated by the Merger.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Overview

On the Effective Date, the Company implemented fresh-start reporting in accordance with American Institute of Certified Public Accountants’ Statement of Position 90-7, Financial Reporting by Entities in Reorganization under the Bankruptcy Code (“SOP 90-7”). Thus the consolidated financial statements prior to June 1, 2007 reflect results based upon the historical cost basis of the Company while the post-emergence consolidated financial statements reflect the new basis of accounting incorporating the fair value adjustments made in recording the effects of fresh-start reporting. Therefore, the post-emergence periods are not comparable to the pre-emergence periods. However, for discussions on the results of operations, the Company believes that comparisons of financial results between the post-emergence and pre-emergence periods provide management and investors with a better perspective of the Company’s core business and on-going operational financial performance and trends.

Merger Agreement with Delta. On April 14, 2008, NWA Corp. and Delta Air Lines, Inc. (“Delta”) entered into an Agreement and Plan of Merger (the “Merger Agreement”) that provides, among other things, for NWA Corp. to be merged with a wholly-owned subsidiary of Delta (the “Merger”).

Consummation of the Merger is subject to customary closing conditions, including obtaining the approval of NWA Corp.’s and Delta’s stockholders and receiving certain domestic and foreign regulatory and antitrust approvals (including from the Federal Aviation Administration and the United States Department of Transportation, under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and pursuant to Council Regulation (EEC) 139/2004 of the European Commission). The Merger Agreement contains certain termination rights for both NWA Corp. and Delta. The Merger Agreement further provides that, upon termination of the Merger Agreement under specified circumstances, the Company may be required to pay to Delta, or Delta may be required to pay to the Company, a termination fee of $165 million. NWA Corp.’s stockholders approved the proposed Merger at the annual stockholders meeting held on September 25, 2008. Delta’s stockholders approved share issuances in conjunction with the proposed Merger at a special stockholders meeting on the same date.

Under the terms of the Merger Agreement, each outstanding share of NWA Corp. common stock will be converted into the right to receive 1.25 shares of Delta common stock. Stock options and other equity awards granted under the Company’s 2007 Management Equity Plan will convert into stock options and equity awards with respect to Delta common stock, after giving effect to the exchange ratio.

We currently expect the Merger to close by the end of 2008. However, factors outside of our control could require us to complete the Merger at a later time or not to complete it at all.

Third Quarter 2008 Results

For the quarter ended September 30, 2008, the Company recorded a net loss of $317 million, which includes a $409.6 million loss associated with marking-to-market out-of-period fuel hedges. This compares to third quarter 2007 net income of $244 million, which included a $12.1 million gain associated with marking-to-market out-of-period fuel hedges.

Operating revenues in the third quarter increased 12.4 percent versus the third quarter of 2007 to $3.8 billion. System consolidated passenger revenue increased 11.3 percent to $3.3 billion on 2.9 percent additional available seat miles (“ASMs”), resulting in an 8.1 percent increase in unit revenue.

Operating expenses in the quarter increased 37.5 percent year-over-year to $4 billion. Aircraft fuel and taxes increased 116.8 percent compared with the third quarter of 2007, primarily due to increased fuel prices and marking-to-market out-of-period fuel hedges. During the third quarter, fuel averaged $3.79 per gallon, excluding taxes and mark-to-market expense related to future period fuel derivative contracts, up 79.8 percent versus the third quarter of last year.

At September 30, 2008, the Company had cash and cash equivalents of $2.8 billion and unrestricted short-term investments of $286 million, providing total available liquidity of $3.1 billion. This amount excludes $446 million of restricted short-term investments (which may include amounts held as cash).

Operating Statistics – Three and nine months ended September 30, 2008 and 2007

Information with respect to the Company’s operating statistics follows :

PASSENGER AND REGIONAL CARRIER REVENUES AND STATISTICAL RESULTS

	Three Months Ended						Nine Months Ended
	September 30				Percent		September 30				Percent
	2008		2007		Change		2008		2007		Change
Scheduled service - Consolidated: (1)
Available seat miles (ASM) (millions)	24,587		23,889		2.9		72,464		70,438		2.9
Revenue passenger miles (RPM) (millions)	21,037		20,644		1.9		61,104		59,453		2.8
Passenger load factor	85.6	%	86.4	%	(0.8	)pts.	84.3	%	84.4	%	(0.1	)pts.
Revenue passengers (millions)	17.1		17.3		(1.2	)	50.5		50.3		0.4
Passenger revenue per RPM (yield)	15.63	¢	14.32	¢	9.1		14.74	¢	13.86	¢	6.3
Passenger revenue per ASM (RASM)	13.38	¢	12.38	¢	8.1		12.43	¢	11.70	¢	6.2

Fuel gallons consumed - Consolidated (millions) (1)	430		443		(2.9	)	1,286		1,295		(0.7	)

Scheduled service - Mainline: (2)
Available seat miles (ASM) (millions)	21,745		22,030		(1.3	)	64,803		65,178		(0.6	)
Revenue passenger miles (RPM) (millions)	18,879		19,215		(1.7	)	55,338		55,518		(0.3	)
Passenger load factor	86.8	%	87.2	%	(0.4	)pts.	85.4	%	85.2	%	0.2	pts.
Revenue passengers (millions)	12.7		13.9		(8.6	)	38.2		40.9		(6.6	)
Passenger revenue per RPM (yield)	14.47	¢	13.41	¢	7.9		13.61	¢	12.98	¢	4.9
Passenger revenue per ASM (RASM)	12.56	¢	11.70	¢	7.4		11.62	¢	11.06	¢	5.1

Fuel gallons consumed - Mainline (millions) (2)	367		398		(7.8	)	1,110		1,167		(4.9	)

(1) Consolidated statistics include Northwest Airlink regional carriers.

(2) Mainline statistics exclude Northwest Airlink regional carriers, which is consistent with how the Company reports statistics to the Department of Transportation (“DOT”).

MAINLINE OPERATING STATISTICAL RESULTS (1)

Three Months Ended

Nine Months Ended

September 30

Percent

September 30

Percent

2008

2007

Change

2008

2007

Change

Total operating ASM (millions)

21,880

22,059

(0.8

)

65,207

65,248

(0.1

)

Passenger service operating expense per total ASM (2) (3)

14.76

10.76

37.2

13.02

10.52

23.8

Mainline fuel expense per total ASM

7.55

3.47

117.6

5.59

3.29

69.9

Out-of-period mark-to-market gains (losses) per total ASM related to fuel derivative contracts

(1.50

)¢

0.05

n/m

(0.21

)¢

0.05

n/m

Mainline fuel expense per total ASM, excluding out-of-period mark-to-market adjustments related to fuel derivative contracts

6.05

3.52

71.9

5.38

3.34

61.1

Cargo ton miles (millions)

402

529

(24.0

)

1,320

1,491

(11.5

)

Cargo revenue per ton mile

50.06

40.00

25.2

46.33

40.16

15.4

Fuel gallons consumed (millions)

367

398

(7.8

)

1,110

1,167

(4.9

)

Average fuel cost per gallon, excluding taxes

474.80

208.17

128.1

346.92

197.35

75.8

Out-of-period mark-to-market gains (losses) per fuel gallons consumed related to fuel derivative contracts

(95.65

)¢

2.72

n/m

(13.24

)¢

2.71

n/m

Average fuel cost per gallon, excluding fuel taxes and out-of-period mark-to-market gains (losses) related to fuel derivative contracts

379.15

210.89

79.8

333.68

200.06

66.8

Number of operating aircraft at end of period

319

364

(12.4

)

Full-time equivalent employees at end of period

28,135

29,579

(4.9

)

(1) Mainline statistics exclude Northwest Airlink regional carriers, which is consistent with how the Company reports statistics to the DOT.

(2) This financial measure excludes non-passenger service expenses. The Company believes that providing financial measures directly related to passenger service operations allows investors to evaluate and compare the Company’s core operating results to those of the industry.

(3) Passenger service operating expense excludes the following items unrelated to passenger service operations, net of eliminations where applicable:

	Three Months Ended				Nine Months Ended
	September 30				September 30
(In millions)	2008		2007		2008		2007
Goodwill impairment	$	-	$	-	$	3,243	$	-
Other impairment charges	-		-		1,240		-
Regional carrier expenses	578		320		1,437		899
Freighter operations	175		173		498		460
MLT Inc. - net of intercompany eliminations	29		40		113		145
Other	3		14		51		48

Results of Operations – Three months ended September 30, 2008 and 2007

Operating Revenues . Operating revenues increased 12.4 percent ($420 million).

System Passenger Revenues. Mainline passenger revenues increased by 6.0 percent. In the following analysis by region, mainline statistics exclude Northwest Airlink regional carriers, which is consistent with how the Company reports statistics to the DOT.

	Mainline									Total
	Domestic			Pacific			Atlantic			Mainline			Consolidated
2008
Passenger revenues (in millions)	$	1,526		$	683		$	523		$	2,732		$	3,289

Increase (Decrease) from 2007:
Passenger revenues (in millions)	$	(5	)	$	57		$	103		$	155		$	333
Percent	(0.3		)%	9.1		%	24.5		%	6.0		%	11.3		%

Scheduled service ASMs (capacity)	(9.9		)%	1.9		%	22.4		%	(1.3		)%	2.9		%
Scheduled service RPMs (traffic)	(8.6		)%	(1.7		)%	20.5		%	(1.7		)%	1.9		%
Passenger load factor	1.2		pts.	(3.1		)pts.	(1.3		)pts.	(0.4		)pts.	(0.8		)pts.
Yield	9.1		%	11.0		%	3.2		%	7.9		%	9.1		%
Passenger RASM	10.7		%	7.1		%	1.6		%	7.4		%	8.1		%

Regional Carrier Revenues . Regional carrier revenues increased 47.0 percent ($178 million) to $557 million primarily due to a 52.9 percent increase in available seat miles associated with the delivery of new 76 seat regional aircraft, partially offset by a decrease in yield.

Cargo Revenues . Cargo revenues decreased 5.2 percent ($11 million) to $201 million due primarily to a 24.0 percent decrease in volume offset by a 25.2 percent improvement in yield.

Other Revenue. Other revenue increased 46.7 percent ($98 million) to $308 million due primarily to increased charter and partner revenues.

Operating Expenses . Operating expenses increased 37.5 percent ($1.1 billion) for the three months ended September 30, 2008. The following table and notes present operating expenses for the three months ended September 30, 2008 and 2007 and describe significant year-over-year variances:

	Three Months Ended				Increase
	September 30				(Decrease)			Percent
(In millions)	2008		2007		from 2007			Change		Note
Operating Expenses
Aircraft fuel and taxes	$	1,912	$	882	$	1,030		116.8	%	A
Salaries, wages and benefits	651		660		(9		)	(1.4	)	B
Selling and marketing	201		185		16			8.6		C
Aircraft maintenance materials and repairs	181		210		(29		)	(13.8	)	D
Other rentals and landing fees	150		142		8			5.6		E
Depreciation and amortization	122		122		-			-		B
Aircraft rentals	93		93		-			-		B
Regional carrier expenses	257		181		76			42.0		F
Other	447		444		3			0.7		B
Total operating expenses	$	4,014	$	2,919	$	1,095		37.5	%

A. Aircraft fuel and taxes increased due to a 128.1 percent increase in the average fuel cost per gallon to $4.75 offset by a 7.8 percent decrease in gallons consumed. During the third quarter of 2008 we recognized $436.2 million in net fuel derivative contract losses, consisting of $378.1 million in out-of-period mark-to-market losses and $58.1 million of losses for contracts settled in the current period. During the third quarter of 2007 we recognized $31.5 million in net fuel derivative contract gains, consisting of $10.8 million in out-of-period mark-to-market losses and $20.7 million of gains for contracts settled in the period.

B. Salaries, wages and benefits, depreciation and amortization, aircraft rentals, and other expenses were relatively flat year-over-year.

C. Selling and marketing increased year-over-year primarily due to higher credit card fees and commissions.

D. Aircraft maintenance and repairs decreased year-over-year primarily due to lower engine repair expense.

E. Other rentals and landing fees increased year-over-year primarily due to higher facilities rents and landing fees.

F. Regional carrier expense increased year-over-year primarily due to higher fuel costs.

Other Income and Expense. The Company recorded non-operating expense of $98 million in the third quarter of 2008 as compared to non-operating expense of $54 million in the third quarter of 2007. The increase in non-operating expense is primarily due to increased interest expense and lower investment income compared to the third quarter 2007.

Tax Expense (Benefit). Given its recent loss experience, the Company provides a valuation allowance against tax benefits, principally for net operating losses in excess of its deferred tax liability. It is more likely than not that future deferred tax assets will require a valuation allowance to be recorded to fully reserve against the uncertainty that those assets would be realized. See “Item 1. Financial Statements, Note 8 – Income Taxes” for additional discussion of the Company’s tax accounts.

Results of Operations – Nine months ended September 30, 2008 and 2007

Operating Revenues . Operating revenues increased 11.3 percent ($1.1 billion).

System Passenger Revenues. In the following analysis by region, mainline statistics exclude Northwest Airlink regional carriers, which is consistent with how the Company reports statistics to the DOT.

The following analysis by region outlines the Company’s year-over-year performance as reported and excluding fresh-start related changes.

	Mainline									Total
	Domestic			Pacific			Atlantic			Mainline			Consolidated
As reported:
2008
Passenger revenues (in millions)	$	4,446		$	1,799		$	1,284		$	7,529		$	9,008

Increase (Decrease) from 2007:
Passenger revenues (in millions)	$	(48	)	$	134		$	237		$	323		$	767
Percent	(1.1		)%	8.0		%	22.6		%	4.5		%	9.3		%

Scheduled service ASMs (capacity)	(6.7		)%	(0.5		)%	22.6		%	(0.6		)%	2.9		%
Scheduled service RPMs (traffic)	(5.1		)%	(0.9		)%	18.5		%	(0.3		)%	2.8		%
Passenger load factor	1.4		pts.	(0.4		)pts.	(2.9		)pts.	0.2		pts.	(0.1		)pts.
Yield	4.3		%	9.1		%	3.5		%	4.9		%	6.3		%
Passenger RASM	6.1		%	8.6		%	0.1		%	5.1		%	6.2		%

Regional Carrier Revenues . Regional carrier revenues increased 42.9 percent ($444 million) to $1.5 billion primarily due to a 45.7 percent increase in available seat miles associated with the delivery of new 76 seat regional aircraft, partially offset by a decrease in yield.

Cargo Revenues. Cargo revenues increased 2.0 percent ($12 million) to $611 million due primarily to a 15.4 percent increase in yield offset by an 11.5 percent decrease in volume.

Other Revenue. Other revenue increased 49 percent ($290 million) to $882 million due to increased charter and partner revenues, and the portion of payments received from non-airline marketing partners for frequent flyer miles that is now recorded in Other Revenues.

Operating Expenses . Operating expenses increased $6.7 billion for the nine months ended September 30, 2008 as compared to the combined nine months ended September 30, 2007. As a result of the adoption of fresh-start reporting, the Company’s financial statements on or after June 1, 2007 are not comparable with its pre-emergence financial statements because they are, in effect, those of a new entity. The effects of fresh-start reporting and the impact of exit-related stock compensation expense on the Company’s Condensed Consolidated Statements of Operations are itemized in column (1). During 2008, the Company recorded impairment charges associated with goodwill, international routes, other intangibles and aircraft; the impacts are itemized in column (2). On April 24, 2007, Mesaba Aviation, Inc. was acquired by the Company and became a wholly-owned consolidated subsidiary; the impact for the portion of 2008 when Mesaba was not a wholly owned subsidiary in 2007 is itemized in column (3). Excluding the items described above, the comparable year-over-year operating performance variances are itemized in column (4). The following table and notes present operating expenses for the nine months ended September 30, 2008 and 2007 and describe significant year-over-year variances:

			Increase (Decrease) Due To:
			(1)		(2)	(3)		(4)
	Nine Months Ended		Fresh-Start/								Total
	September 30,		Exit-Related			Mesaba					Increase
		Combined	Stock Comp		Impairment	Net of					(Decrease)		Percent
(In millions)	2008	2007	Expense		Charges	Elimination		Operations		Note	from 2007		Change
Operating Expenses
Aircraft fuel and taxes	$ 4,233	$ 2,441	$ -		$ -	$ 1		$ 1,791		A	$ 1,792		73.4	%
Salaries, wages and benefits	2,006	1,892	21		-	47		46		B	114		6.0
Selling and marketing	591	565	-		-	-		26		C	26		4.6
Aircraft maintenance materials and repairs	599	577	-		-	13		9		D	22		3.8
Other rentals and landing fees	441	423	-		-	6		12		D	18		4.3
Depreciation and amortization	1,015	367	(3	)	642	3		6		D	648		176.6
Aircraft rentals	280	284	-		-	-		(4	)	D	(4	)	(1.4	)
Regional carrier expenses	669	583	-		-	(75	)	161		E	86		14.8
Goodwill and other indefinite- lived intangibles	3,841	-	-		3,841	-		-		F	3,841		n/m
Other	1,395	1,283	-		-	13		99		G	112		8.7
Total operating expenses	$ 15,070	$ 8,415	$ 18		$ 4,483	$ 8		$ 2,146			$ 6,655		79.1	%

A. Aircraft fuel and taxes increased due to a 75.8 percent increase in the average fuel cost per gallon to $3.47 offset by a 4.9 percent decrease in gallons consumed. Fuel expense for the 2008 period includes $161.6 million in net fuel derivative contract losses, consisting of $161.0 million in out-of-period mark-to-market losses and $0.6 million of losses for contracts settled in the current period. Fuel expense for the 2007 period includes $47.7 million in net fuel derivative contract gains, consisting of $31.5 million in out-of-period mark-to-market gains and $16.2 million of gains for contracts settled during the period.

B. Salaries, wages and benefits were higher year-over-year primarily due to increased volume, employee retention program expense, summer reliability program expense, and higher group insurance and pension costs, partially offset by decreased employee profit sharing program related expense.

C. Selling and marketing expense, increased primarily due to increased selling and marketing fees and credit cards fees.

D. Aircraft maintenance materials and repairs expense, other rentals and landing fees, depreciation and amortization, and aircraft rentals were relatively flat year-over-year.

E. Regional carrier expenses increased primarily due to higher fuel costs.

F. During 2008, as part of the goodwill impairment test, the Company recorded non-cash impairment charges to goodwill and other indefinite-lived intangibles to reduce the book value of Northwest’s equity to its implied fair value as of the Merger announcement date. See “Item 1. Financial Statements, Note 4 – Goodwill and Intangibles” for additional information.

G. Other expenses (which include MLT operating expenses, outside services, insurance, passenger food, personnel expenses, communication expenses and supplies) were higher versus prior year due largely to increases in outside services with the shift to third party vendors versus internally staffed station operations, personnel expenses, communication expenses and passenger food.

Other Income and Expense. The Company recorded non-operating expense of $475 million in the nine months ended September 30, 2008 as compared to non-operating income of $1.3 billion in the nine months ended September 30, 2007. The difference of $1.8 billion year-over-year was primarily due to a $1.8 billion gain on debt discharge and $1.3 billion in net gains associated with the revaluation of our assets and liabilities as part of our adoption of fresh-start accounting. These gains were offset by $1.6 billion in reorganization-related expenses in the nine months ended September 30, 2007 and the impairment of the Company’s $213 million minority ownership interest in Midwest Air Partners, LLC in conjunction with Step 2 of the goodwill impairment test recorded during the second quarter of 2008. See “Critical Accounting Estimates, Goodwill and Other Impairments ” for additional information and “Item 1. Financial Statements, Note 7 – Reorganization Related Items” for additional information related to reorganization items.

Tax Expense (Benefit). The Company recorded a non-cash income tax benefit of $211 million in the nine months ended September 30, 2008, primarily related to the impairment charges recorded in conjunction with Step 2 of the goodwill impairment test for certain indefinite-lived intangible assets. The Company recorded a non-cash income tax expense in the nine months ended September 30, 2007 of $228 million. See “Item 1. Financial Statements, Note 8 – Income Taxes” for additional discussion of the Company’s tax accounts.

Liquidity and Capital Resources

Significant Liquidity Events

In November 2007, the Company entered into an accounts receivable financing facility. The facility size is up to $150 million and as of September 30, 2008, $115 million of the $122 million available was drawn. The financing is a 364-day facility that matures in November 2008 with annual renewal provisions that could result in a final maturity date of November 29, 2012.

On July 15, 2008, the Company entered into a $183 million private debt financing secured by ten 757-200 aircraft and 17 spare engines, which had previously been unencumbered. The obligation is to be repaid over seven years.

Cash Flows. Liquidity decreased by $33 million during the nine months ended September 30, 2008, primarily due to net cash used in investing activities, offset by net cash provided by operating activities and net cash provided by financing activities.

Operating Activities. Net cash provided by operating activities for the nine months ended September 30, 2008 was $570 million, which compares with $1.4 billion of net cash provided by operating activities for the nine months ended September 30, 2007. The decrease in year-over-year net cash provided by operations was primarily due to reduced net income in 2008.

Investing Activities. Investing activities during the nine months ended September 30, 2008 included the purchase of 18 CRJ900 and 21 Embraer 175 aircraft and other related costs. Other related costs included costs to commission aircraft before entering revenue service, deposits on ordered aircraft, facility improvements and ground equipment purchases. On January 31, 2008, the Company also contributed $213 million for a minority ownership interest in Midwest Air Partners, LLC, which in turn purchased Midwest Air Group, Inc. (the “Midwest” investment). Subsequently, as part of Step 2 of the goodwill impairment test completed during the second quarter of 2008, the Company was required to re-measure the fair value of its investment in Midwest. Based on Midwest’s financial deterioration subsequent to January 31, 2008, the fair value re-measurement of the Company’s investment in Midwest resulted in the Company writing off the carrying value of its investment in Midwest during the second quarter of 2008. Additionally, during the nine months ended September 30, 2008, the Company had decreases in restricted cash, cash equivalents and short-term investments, an increase in unrestricted short-term investments and sold its Class A Preferred share to Pinnacle for a purchase price of $20 million. During the third quarter of 2008, the Company also made margin call payments of $118 million related to its outstanding fuel hedge contracts. This amount includes $104 million of margin call deposits classified as prepaid expenses and $14 million that was classified as restricted cash. Investing activities during the nine months ended September 30, 2007 included the purchase of seven A330-300, seven CRJ900, and four Embraer 175 aircraft and other related costs.

Financing Activities. Financing activities during the nine months ended September 30, 2008 consisted primarily of the financing of 18 CRJ900 and 21 Embraer 175 aircraft with long-term debt, the financing of ten 757-200 aircraft and 17 spare engines for proceeds of $183 million, and a net draw of $115 million on an a ccounts receivable financing facility, offset by scheduled debt payments. Financing activities during the nine months ended September 30, 2007 consisted primarily of receiving $750 million in proceeds from the equity offering consummated as part of the Company’s emergence from bankruptcy, the financing of one A330-300, seven CRJ900, and four Embraer 175 with long-term debt, and the financing of Boeing 787 pre-delivery deposits, partially offset by debt payments and debt prepayments.

The Company also financed the delivery of six Airbus A330-300 aircraft during the nine months ended September 30, 2007 through non-cash transactions with the manufacturer, which are reflected as long-term debt on the Company’s Condensed Consolidated Balance Sheets, but are not classified as a cash flow activity. In connection with the acquisition of these aircraft, the Company entered into long-term debt arrangements. Under these arrangements, the aggregate amount of debt incurred totaled approximately $502 million.

Investing activities affecting cash flows and non-cash transactions and leasing activities related to the initial acquisition of aircraft consisted of the following for the nine months ended September 30:

	Investing Activities Affecting Cash Flows		Non-cash Transactions and Leasing Activities
	2008	2007	2008	2007

Airbus A330-300	-	1	-	6
CRJ900	18	7	-	-
Embraer 175	21	4	-	-
	39	12	-	6

Debt . Contractual maturities of long-term debt (inclusive of short-term maturities), excluding capital lease obligations and any potential acceleration of the Bank Credit Facility as described below, through December 31, 2012, are as follows (in millions):

remainder of	2008	$	218	(a)
2009		599
2010		538
2011		670
2012		504

Number of		Required
Months Covered	Period Ending	Coverage Ratio
Three	June 30, 2009	1.00 to 1.0
Six	September 30, 2009	1.10 to 1.0
Nine	December 31, 2009	1.20 to 1.0
Twelve	March 31, 2010	1.30 to 1.0
Twelve	June 30, 2010	1.40 to 1.0
Twelve	September 30, 2010 and each quarter ending thereafter	1.50 to 1.0

Aircraft Commitments. Committed expenditures for aircraft and related equipment, including estimated amounts for contractual price escalations and predelivery deposits, will be approximately (in millions):

remainder of	2008	$	269
2009		314
2010		749
2011		232
2012		670

Pension Funding Obligations. The Company has several defined benefit pension plans and defined contribution 401(k)-type plans covering substantially all of its employees. Northwest froze future benefit accruals for its defined benefit Pension Plans for Salaried Employees, Pilot Employees, and Contract Employees effective August 31, 2005, January 31, 2006, and September 30, 2006, respectively. Replacement pension coverage is provided for these employees through 401(k)-type defined contribution plans including the Pilot Money Purchase Plan or, in the case of IAM represented employees, the IAM National Multi-Employer Plan.

It is Northwest’s policy to fund annually at least the minimum contribution as required by the Employee Retirement Income Security Act of 1974, as amended (“ERISA”).

Critical Accounting Estimates

Goodwill and Other Impairments. The Company tests the carrying amount of goodwill and other indefinite-lived intangible assets annually as of October 1 or whenever events or circumstances indicate that impairment may have occurred. Impairment testing is performed in accordance with SFAS No. 142, Goodwill and Other Intangible Assets (“SFAS No. 142”). The Company is annually required to complete Step 1 (determining and comparing the fair value of the Company’s reporting unit to its carrying value) of the impairment test. Step 2 is required to be completed if Step 1 indicates that the carrying value of the reporting unit exceeds the fair value and involves the calculation of the implied fair value of goodwill. Step 2 of the goodwill impairment test involves measuring the Company’s other assets and liabilities at fair value to calculate an implied fair value of goodwill and measure the amount of impairment, if any.

The Company determined that the announced Merger with Delta was a triggering event under SFAS No. 142, requiring the Company to further evaluate the carrying value of its goodwill. As a result of this evaluation, the Company recorded an impairment charge to reduce the book value of Northwest’s equity to its implied fair value as of the Merger announcement date. Based on the 5-day average closing price of Delta’s common stock around the Merger announcement date, the right to receive 1.25 shares of Delta stock for each share of NWA Corp. common stock, and the projected number of NWA Corp.’s common shares to be converted into Delta common stock on the transaction close date, the implied fair value of NWA Corp.’s equity on the announcement date was $3.3 billion.

Due to the limited time available between the Merger announcement date and the Company’s first quarter 2008 Form 10-Q filing date, there was insufficient time to complete Step 2 of the goodwill impairment test and calculate the implied fair value of goodwill. Therefore, we recorded our best estimate of the impairment as of March 31, 2008. This implied fair value calculation resulted in the Company recording a goodwill impairment charge of $3.9 billion for the quarter ended March 31, 2008 because we believe the conditions that caused our implied fair value to decline existed as of that date. Northwest finalized the impairment test of long-lived assets and Step 2 of the goodwill impairment test during the second quarter of 2008, resulting in an additional net charge of $547 million ($2.08 per share), which includes an adjustment of estimated goodwill from $2.2 billion to the implied fair value of goodwill of $2.9 billion. The adjustment to goodwill resulted in the reversal of $674 million of impairment expense recorded in the first quarter of 2008 which is classified as goodwill and other indefinite-lived intangibles impairment expense. Additionally, Northwest recorded $624 million of depreciation and amortization related to impairment of certain flight equipment and definite-lived intangibles, $598 million of impairment expense in goodwill and other indefinite-lived intangibles impairment expense related to indefinite-lived intangibles, $213 million in other non-operating expense related to other than temporary impairment on investments in affiliated companies and $214 million in income tax benefit related to the reversal of deferred tax liabilities related to certain of the indefinite-lived intangible assets.

The indefinite-lived intangibles were impaired to fair value if the fair value was lower than the carrying amount, in accordance with SFAS No. 142. The definite-lived intangibles and flight equipment were subject to recoverability tests to determine if a loss in fair value measured in Step 2 would result in an impairment charge, in accordance with the guidance in SFAS No. 144. The investment in affiliated companies consists of a minority ownership interest in Midwest Air Partners, LLC, which in turn purchased Midwest Air Group, Inc. (the “Midwest” investment). This equity investment was subject to a recoverability test in accordance with Accounting Principles Board Opinion 18, The Equity Method of Accounting for Investments in Common Stock (“APB 18”). Under APB 18, a loss in value of an investment which is other than a temporary decline should be recognized. See “Item 1. Financial Statements, Note 4 – Goodwill and Intangibles” for additional information regarding the impairments and fair value measurements related to the impairments.

One of the significant unobservable inputs underlying the goodwill and intangible fair value measurements is the discount rate. In our Step 2 analysis performed as of March 31, 2008, Northwest determined the discount rate using the Weighted Average Cost of Capital (“WACC”) of the airline industry, which we measured using a Capital Asset Pricing Model (“CAPM”). The CAPM in our valuation of goodwill and indefinite-lived intangibles utilized a 50% debt and 50% equity structure. The historical average debt-to-equity structure of the major airlines since 1990 is also approximately 50% debt and 50% equity, which was similar to Northwest’s debt-to-equity structure at emergence. The return on debt was measured using a bid-to-yield analysis of major airline corporate bonds and the expected market rate of return for equity was measured based on the risk free rate, the airline industry beta, and risk premiums based on the Federal Reserve Statistical Release H.15 or Ibbotson® Stocks, Bonds, Bills, and Inflation® Valuation Yearbook, Edition 2008. These factors resulted in an 11% discount rate on March 31, 2008. This compares to an 11% discount rate at emergence and a 10.5% discount rate on our last impairment testing date of October 31, 2007.

The estimates and assumptions made in this valuation are inherently subject to significant judgments and are influenced by market forces beyond the reasonable control of the Company. Accordingly, there can be no assurance that the estimates, assumptions, and amounts reflected in the valuations will be realized, and actual results could vary materially. Moreover, the market value of the Company’s common stock may differ materially from the equity valuation.

Other Information

Foreign Currency. The Company is exposed to the effect of foreign currency exchange rate fluctuations on the U.S. dollar value of foreign currency-denominated operating revenues and expenses. The Company’s largest exposure comes from the Japanese yen. From time to time, the Company uses financial instruments to hedge its exposure to the Japanese yen. Hedging gains or losses are recorded in accumulated other comprehensive income (loss) until the associated transportation is provided, at which time they are recognized as an increase or decrease in revenue. The Company hedged 27.4 billion yen of its yen-denominated sales during the three months ended September 30, 2008, resulting in an effective rate of 109.44 yen per U.S. dollar on forward contracts, the prevailing average contract rate for the period. The Company did not hedge any of its yen-denominated sales during the three months ended September 30, 2007. The average market yen rate for the quarters ended September 30, 2008 and 2007 was 108.62 and 118.40, respectively.

On occasion, the Company uses forward contracts, collars or put options to hedge a portion of its anticipated yen-denominated sales. The changes in market value of such instruments have historically been highly effective at offsetting exchange rate fluctuations in yen-denominated sales. As of September 30, 2008, the Company had hedged approximately 40.1% of its anticipated yen-denominated sales for the remainder of 2008 and 31.6% of its anticipated 2009 yen-denominated sales. The 2008 Japanese yen hedges consist of forward contracts which hedge approximately 29.5% of remaining yen-denominated sales at an average rate of 109.19 yen per U.S. dollar and collar options which hedge approximately 10.6% of remaining yen-denominated sales with a rate range between 102.40 and 116.40 yen per U.S. dollar. The 2009 Japanese yen hedges consist of forward contracts which hedge approximately 25.3% of its 2009 anticipated yen-denominated sales at an average rate of 100.06 yen per U.S. dollar and collar options which hedge approximately 6.3% of yen-denominated sales with a rate range between 99.52 and 103.50 yen per U.S. dollar. This compares to 20.1% of its anticipated 2008 sales hedged as of September 30, 2007. As of September 30, 2008 and 2007, unrealized pre-tax gains of $8.3 million and $1.1 million, respectively, were outstanding in accumulated other comprehensive income associated with the Japanese yen hedge contracts.

As of September 30, 2008, the Company had also hedged approximately 64.6% of its remaining 2008 anticipated Canadian dollar denominated sales with forward contracts at an average rate of 1.0012 Canadian dollars per U.S. dollar. This compares to 41.6% of its anticipated 2008 sales hedged as of September 30, 2007. As of September 30, 2008 and 2007, an unrealized pre-tax gain of $5.3 million and an unrealized pre-tax loss of $2.6 million, respectively, were outstanding in accumulated other comprehensive income associated with the Canadian dollar hedge contracts. The average Canadian dollar to U.S. dollar exchange rate for the quarters ended September 30, 2008 and 2007 was 1.008 and 1.04, respectively.

Counterparties to these financial instruments expose the Company to credit loss in the event of nonperformance, but the Company does not expect any of the counterparties to fail to meet their obligations. The amount of such credit exposure is generally the unrealized gains, if any, in such contracts. To manage credit risks, the Company selects counterparties based on credit ratings, limits exposure to any single counterparty and monitors the market position with each counterparty. It is the Company’s practice to participate in foreign currency hedging transactions with a maximum span of 24 months.

Aircraft Fuel. The Company is exposed to the effect of changes in the price and availability of aircraft fuel. In order to provide a measure of control over price and supply, the Company trades and ships fuel and maintains fuel storage facilities to support its flight operations. To further manage the price risk of fuel costs, the Company primarily utilizes futures contracts traded on regulated futures exchanges, swap agreements and options.

As of September 30, 2008, the Company had economically hedged the price of approximately 79% of its projected fuel requirements for the remainder of 2008 and 24% of its projected fuel requirements for 2009, through a combination of collars, three-way collars and swap agreements.

The 2008 crude oil collars, which hedge the price of approximately 55% of the Company’s projected fuel requirements for the remainder of 2008, provide upside protection beginning, on average, with a crude oil equivalent price of $105.62 per barrel, and payment obligations beginning, on average, with a crude oil equivalent price of $89.05 per barrel. The 2008 heating oil collars, which hedge the price of approximately 12% of the Company’s projected fuel requirements for the remainder of 2008, provide upside protection beginning, on average, with a heating oil equivalent price of $138.92 per barrel, and payment obligations beginning, on average, with a heating oil equivalent price of $121.34 per barrel. The 2008 swap contracts consist of extendable jet fuel swap agreements which hedge approximately 12% of the Company’s projected remaining 2008 fuel requirements and provide upside protection at a jet fuel equivalent price of $160.94 per barrel and capped, on average, at $199.50 per barrel.

The 2009 crude oil collars, which hedge the price of approximately 9% of the Company’s projected fuel requirements for 2009, provide upside protection beginning, on average, with a crude oil equivalent price of $110.25 per barrel, and payment obligations beginning, on average, with a crude oil equivalent price of $88.28 per barrel. The 2009 three-way crude oil collars, which hedge the price of approximately 10% of the Company’s projected fuel requirements for 2009, provide upside protection beginning, on average, with a crude oil equivalent price of $134.33 per barrel and capped, on average, at $166.56 per barrel, and payment obligations beginning, on average, with a crude oil equivalent price of $114.30 per barrel. The three-way heating oil collars, which hedge the price of approximately 1% of the Company’s projected fuel requirements for 2009, provide upside protection beginning, on average, with a heating oil equivalent price of $174.30 per barrel and capped, on average, at $205.13 per barrel, and payment obligations beginning, on average, with a heating oil equivalent price of $143.47 per barrel. The 2009 crude oil swaps, which hedge approximately 1% of the Company’s projected 2009 fuel requirements and provide upside protection at a crude oil equivalent price of $100.09 per barrel. The 2009 jet fuel swap agreements, which hedge approximately 3% of the Company’s projected 2009 fuel requirements and provide upside protection at a jet fuel equivalent price of $160.94 per barrel and capped, on average, at $199.50 per barrel.

The Company currently has no fuel derivative contracts outstanding that are designated for special hedge accounting treatment, and therefore had no related unrealized gains (losses) in accumulated other comprehensive income (loss) as of September 30, 2008. The Company records any changes in the contracts’ values as mark-to-market adjustments through the Consolidated Statement of Operations on a quarterly basis. During the three months ended September 30, 2008, the Company recognized $436.2 million of net fuel derivative losses as increases in fuel expense, including $378.1 million of out-of-period losses. The Company allocates mark-to-market adjustments to regional carrier expense for fuel consumed by our non-consolidated Airlink partners. For the three months ended September 30, 2008, the Company recognized $36.5 million of fuel derivative net losses as increases in regional carrier expense, including $31.5 million of out-of-period losses.

As of September 30, 2007, the Company had hedged the price of approximately 50% of its projected fuel requirements for the remainder of 2007 through a combination of collar options and fixed price swap agreements. The collar options, which hedged the price of approximately 40% of the Company’s projected fuel requirements for the remainder of 2007, consisted of crude oil put options with an average price of $56 per barrel, and related call options at an average price of $75 per barrel. The fixed price crude oil swap agreements, which hedged the price of approximately 10% of the Company’s projected fuel requirements for the remainder of 2007, included agreements with an average price of $63 per barrel. Net gains of $31.5 million were recorded as decreases in fuel expense during the three months ended September 30, 2007, including $10.8 million in out-of-period mark-to-market gains and $20.7 million of gains for contracts that settled in the three months ended September 30, 2007. Additionally, for the three months ended September 30, 2007, net gains of $3.6 million were recorded as a reduction to regional carrier expense.

Interest Rates. The Company’s earnings are also affected by changes in interest rates due to the impact those changes have on its interest expense from floating rate debt instruments. During June 2006, the Company entered into individual interest rate cap hedges related to three floating rate debt instruments, with a total cumulative notional amount as of September 30, 2008 of $381 million. Additionally, during February 2008, the Company entered into individual interest rate swap hedges related to two floating rate debt instruments, with a total cumulative notional amount as of September 30, 2008 of $901 million. The objective of the interest rate cap and swap hedges is to protect the anticipated payments of interest (cash flows) on the designated debt instruments from adverse market interest rate changes. The maturity date of each of the interest rate cap and swap hedges corresponds exactly with the maturity dates of the designated debt instruments. As of September 30, 2008, the Company has recorded $10.3 million of pre-tax unrealized gains in accumulated other comprehensive income (loss) associated with these hedges. On October 7, 2008, the company entered into ten additional interest rate swap hedges related to ten floating debt instruments with a total cumulative notional amount of $492.6 million at a weighted average interest rate of 4.25%.

War Risk Insurance. Following the events of September 11, 2001, commercial aviation insurers materially curtailed war risk coverage and increased insurance premiums. Subsequently, the FAA was mandated to offer U.S. airlines war risk insurance. The coverage was recently extended to March 31, 2009, from its previous expiration of December 31, 2008. While the government may again extend the period that it provides war risk coverage, there is no assurance that this will occur, or if it does, how long the extension will last, what will be included in the coverage, or at what cost the coverage will be provided. Commercial war risk insurance in amounts and scope adequate for our operations is not currently available at reasonable prices. Should the U.S. government stop providing war risk insurance in its current form to the U.S. airline industry, it is expected that the premiums charged by commercial aviation insurers for this coverage, if available at all, would be higher than the premium currently charged by the government and the coverage materially more restrictive. Commercial aviation insurers could further increase insurance premiums and reduce or cancel coverage in the event of a new terrorist attack or other events adversely affecting the airline industry. Significant increases in insurance premiums could negatively impact our financial condition and results of operations. If we are unable to obtain adequate war risk insurance, our business could be materially and adversely affected.

If we were to be involved in an accident, we could be exposed to significant tort liability. Although we carry insurance to cover damages arising from such accidents, resulting tort liability could be higher than our policy limits which could negatively impact our financial condition.

Forward-Looking Statements. Certain of the statements made throughout Management’s Discussion and Analysis of Financial Condition and Results of Operations and elsewhere in this quarterly report are not purely historical facts, including statements regarding our beliefs, expectations, intentions or strategies for the future, may be “forward-looking statements” under the Private Securities Litigation Reform Act of 1995. All forward-looking statements involve a number of risks and uncertainties that could cause actual results to differ materially from the plans, intentions and expectations reflected in or suggested by the forward-looking statements. Such risks and uncertainties include, among others, the ability of the Company to operate pursuant to the terms of its financing facilities (particularly the related financial covenants), the ability of the Company to attract, motivate and/or retain key executives and associates, the future level of air travel demand, the Company’s future passenger traffic and yields, the airline industry pricing environment, increased costs for security, the cost and availability of aviation insurance coverage and war risk coverage, the general economic condition of the U.S. and other regions of the world, the price and availability of jet fuel, the war in Iraq, the possibility of additional terrorist attacks or the fear of such attacks, concerns about Severe Acute Respiratory Syndrome (SARS) and other influenza or contagious illnesses, labor strikes, work disruptions, labor negotiations both at other carriers and the Company, difficulties in integrating the operations of the Company and Delta following the Merger, low cost carrier expansion, capacity decisions of other carriers, actions of the U.S. and foreign governments (including conditions imposed by U.S. or foreign governments to obtain regulatory approval for the Merger), foreign currency exchange rate fluctuations and inflation. Other factors include the possibility that the Merger may not close, including due to the failure to receive required regulatory approvals, or the failure of other closing conditions. The Company cautions that the foregoing list of factors is not exclusive. Additional information with respect to the factors and events that could cause differences between forward-looking statements and future actual results is contained in the Company’s Securities and Exchange Commission filings, including the Company’s Annual Report on Form 10-K for the year ended December 31, 2007, as amended (the “2007 Form 10-K”) and subsequent quarterly reports on Form 10-Q and current reports on Form 8-K. We undertake no obligation to update any forward-looking statements to reflect events or circumstances that may arise after the date of this release.

Developments in any of these areas, as well as other risks and uncertainties detailed from time to time in the Company’s Securities and Exchange Commission filings, could cause the Company’s results to differ from results that have been or may be projected by or on behalf of the Company. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. These statements deal with the Company’s expectations about the future and are subject to a number of factors that could cause actual results to differ materially from the Company’s expectations. All subsequent written or oral forward-looking statements attributable to the Company, or persons acting on behalf of the Company, are expressly qualified in their entirety by the factors described above.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

Information required by this item is provided under the captions “Foreign Currency” and “Aircraft Fuel” within “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this Quarterly Report on Form 10-Q. Also see “Item 7a. Quantitative and Qualitative Disclosures About Market Risk” in the Company’s 2007 Form 10-K.

Item 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures – As of September 30, 2008, management performed an evaluation under the supervision and with the participation of the Company’s President and Chief Executive Officer and Executive Vice President and Chief Financial Officer of the effectiveness of the design and operation of the Company’s disclosure controls and procedures covered in this Quarterly Report on Form 10-Q. Based on that evaluation, the Company’s President and Chief Executive Officer and Executive Vice President and Chief Financial Officer concluded that the Company’s disclosure controls and procedures are effective in alerting them in a timely manner to material information required to be disclosed in the Company’s periodic reports filed with the SEC as of the end of such period.

Changes in Internal Control – There was no change in the Company’s internal control over financial reporting that occurred during the Company’s fiscal third quarter ended September 30, 2008 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings.

Reference is made to “Item 3. Legal Proceedings” in the Company’s 2007 Form 10-K.

On June 18, 2008 a private lawsuit was filed on behalf of 28 individuals seeking an injunction to prohibit the proposed Merger. D’ Augusta, et al. v. Northwest Airlines Corporation and Delta Air Lines, Inc. , (Civ. 08-3007 N.D. Calif.). The complaint alleges that the proposed Merger would violate Section 7 of the Clayton Act, 15 U.S.C. Sec. 18. The Company intends to vigorously defend the lawsuit.

Item 1A. Risk Factors.

See Part I, Item 1A., “Risk Factors,” of the Company’s 2007 Form 10-K for a detailed discussion of the risk factors affecting the Company. The information below provides updates to the previously disclosed risk factors and should be read in conjunction with the risk factors and information disclosed in the 2007 Form 10-K.

Risks Relating to the Pending Merger with Delta Air Lines

Uncertainty about the Merger and diversion of management could harm us or the combined company, whether or not the Merger is completed.

In response to the announcement of the Merger, current and prospective employees could experience uncertainty about their future with us or the combined company. These uncertainties may impair our ability to retain, recruit or motivate key personnel. Completion of the Merger will also require a significant amount of time and attention from our management. The diversion of management attention away from ongoing operations could adversely affect our business relationships. If the Merger is not completed by the end of 2008 as currently anticipated, the adverse effects of these uncertainties and the diversion of management could be exacerbated by the delay.

Failure to complete the Merger for regulatory or other reasons could adversely affect our stock price and our future business and financial results.

Completion of the Merger is conditioned upon, among other things, the receipt of certain regulatory and antitrust approvals, including under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended. There is no assurance that we will receive the necessary approvals or satisfy the other conditions necessary for completion of the Merger. Failure to complete the pending Merger would prevent us from realizing the anticipated benefits of the Merger. We will also incur transaction costs, whether or not the Merger is completed. In addition, the current market price of our common stock may reflect a market assumption that the Merger will occur, and a failure to complete the Merger could result in a negative perception by the market of us generally and a resulting decline in the market price of our common stock.

The anticipated benefits of the Merger may not be realized fully or at all or may take longer to realize than expected.

The Merger involves the integration of two companies that have previously operated independently. Prior to announcement, we did not conduct any integration planning for the two companies. The two companies will devote significant management attention and resources to integrating the two companies. Delays in this process could adversely affect the combined company’s business, financial results, financial condition and stock price. Even if we are able to integrate our business operations successfully, there can be no assurance that this integration will result in the realization of the full benefits of synergies, cost savings, innovation and operational efficiencies that we currently expect from this integration or that these benefits will be achieved within the anticipated time frame.

Additionally, as a condition to their approval of the Merger, regulatory agencies may impose requirements, limitations or costs or require divestitures or place restrictions on the conduct of the combined company’s business. If we agree to these requirements, limitations, costs, divestitures or restrictions, our ability to realize the anticipated benefits of the Merger may be impaired.

Any “ownership change” could limit our ability to utilize our net operating loss carryforwards.

Under the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”), a corporation is generally allowed a deduction in any taxable year for net operating losses carried over from prior years. As of December 31, 2007, the Company had approximately $3.6 billion of federal and state net operating loss (“NOL”) carryforwards. A corporation’s use of its NOL carryforwards is generally limited under Section 382 of the Internal Revenue Code if a corporation undergoes an “ownership change.” However, when an “ownership change” occurs pursuant to the implementation of a plan of reorganization under the Bankruptcy Code (as was the case on the Effective Date of the Company’s Plan), special rules in either Section 382(l)(5) or Section 382(l)(6) of the Internal Revenue Code apply instead of the general Section 382 limitation rules. In general terms, Sections 382(l)(5) or (l)(6) allow for a more favorable utilization of a company’s NOL carryforwards than would otherwise have been available following an “ownership change” not in connection with a plan of reorganization.

It is currently anticipated that the completion of the Merger will result in a second ownership change under Section 382. Pursuant to the Merger Agreement, the Company has elected out of Section 382(l)(5). As such, Section 382(l)(6) will be applicable to the ownership change that occurred pursuant to the Plan of Reorganization. Nonetheless, any subsequent (including the one in connection with the Merger) ownership change could further limit the Company’s ability to utilize its NOL carryforwards for taxable years including or following the subsequent “ownership change.”

Item 4. Submission of Matters to a Vote of Security Holders.

The Company’s Annual Meeting of Stockholders was held on September 25, 2008 in New York City, New York. At the Annual Meeting, the stockholders of the Company voted on four items. 215,321,944 shares of the Company’s common stock, 85% of the outstanding shares, were represented in person or by proxy.

1. The nominees for director were elected based upon the following votes:

Nominees	In Favor	Withheld
Roy J. Bostock	177,023,495	38,298,449

David A. Brandon	153,272,119	62,049,825

Michael J. Durham	205,204,698	10,117,246

John M. Engler	190,884,167	24,437,777

Mickey P. Foret	204,641,917	10,680,027

Robert L. Friedman	191,221,635	24,100,309

Doris Kearns Goodwin	191,545,886	23,776,058

Jeffrey G. Katz	191,861,891	23,460,053

James J. Postl	197,782,530	17,539,414

Rodney E. Slater	212,604,362	2,717,582

Douglas M. Steenland	190,279,239	25,042,705

William S. Zoller	203,691,997	11,629,947

2. The proposal to adopt the Agreement and Plan of Merger dated as of April 14, 2008, by and among Delta Air Lines, Inc., Nautilus Merger Corporation, a direct, wholly-owned subsidiary of Delta, and the Company received the following votes:

For		Against		Abstentions		Broker Non-Votes
191,140,765		3,254,803		252,087		20,674,289

3. The proposal to ratify the appointment of Ernst & Young as independent auditors for the year ending December 31, 2008 received the following votes:

For		Against		Abstentions		Broker Non-Votes
212,498,495		1,637,793		1,185,656		–

4. The proposal to approve the amendment to the Northwest Airlines Corporation 2007 Stock Incentive Plan received the following votes:

For		Against		Abstentions		Broker Non-Votes
176,739,204		16,561,103		1,347,348		20,674,289

Item 6. Exhibits.

(a) Exhibits :

12.1 Computation of Ratio of Earnings to Fixed Charges.

31.1 Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer.

31.2 Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer.

32.1 Section 1350 Certification of Chief Executive Officer.

32.2 Section 1350 Certification of Chief Financial Officer.

SIGNATURE

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized this 22 nd day of October 2008.

	NORTHWEST AIRLINES CORPORATION

	By	/s/ Anna M. Schaefer
		Anna M. Schaefer
		Vice President – Finance and Chief Accounting Officer (principal accounting officer)

EXHIBIT INDEX

Exhibit No.		Description

12.1		Computation of Ratio of Earnings to Fixed Charges

31.1		Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer

31.2		Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer

32.1		Section 1350 Certification of Chief Executive Officer

32.2		Section 1350 Certification of Chief Financial Officer