UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~June~~September 30, 2009

Commission File Number: 1-15285

NORTHWEST AIRLINES CORPORATION

(Exact name of registrant as specified in its charter)

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

(612) 726-2111 (Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (~~Registrant’s~~1) has ~~telephone~~filed ~~number,~~all ~~including~~reports ~~area~~required ~~code~~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 o No þ

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 þ No o

Note: The registrant is no longer subject to the filing requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934 and is now a voluntary filer.

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes o No o

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

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

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 þ

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 þ No o

The registrant is a wholly owned subsidiary of Delta Air Lines, Inc., a Delaware corporation, and there is no market for the registrant’s common stock, par value $0.01 per share. As of ~~June~~ September 30, 2009, there were 1,000 shares of the registrant’s Common Stock outstanding.

The registrant meets the conditions set forth in General Instruction H(1)(a) and (b) of Form 10-Q and is therefore filing this Form with the reduced disclosure format permitted by General Instruction H(2).

TABLE OF CONTENTS

FORWARD-LOOKING STATEMENTS
Financial Statements
FINANCIAL STATEMENTS
Notes to the Condensed Consolidated Financial Statements
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
	ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
	ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
	ITEM 3. Quantitative and Qualitative Disclosures About Market Risk.
	ITEM 3. Quantitative and Qualitative Disclosures About Market Risk
	ITEM 4. Controls and Procedures.
	ITEM 4. Controls and Procedures
PART II. OTHER INFORMATION	~~PART II. OTHER INFORMATION~~
	ITEM 1. Legal Proceedings.
	ITEM 1. Legal Proceedings
	ITEM 1A. Risk Factors.
	ITEM 1A. Risk Factors
	ITEM 6. Exhibits.
	ITEM 6. Exhibits
SIGNATURE
EX-31.1
EX-31.2

Unless otherwise indicated, Northwest Airlines Corporation and our wholly-owned subsidiaries are collectively referred to as “Northwest,” “we,” “us,” and “our.”

FORWARD-LOOKING STATEMENTS

Statements in this Form 10-Q (or otherwise made by us or on our behalf) that are not historical facts, including statements about our estimates, expectations, beliefs, intentions, projections or strategies for the future, may be “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from historical experience or our present expectations. For examples of such risks and uncertainties, please see the cautionary statements contained in “~~Item 1A. Risk Factors” of our Annual Report on Form 10-K for the fiscal year ended December 31, 2008 (“Form 10-K”) and “~~Part II, Item 1A. Risk Factors” in this Form 10-Q. All forward-looking statements speak only as of the date made, and we undertake no obligation to publicly update or revise any forward-looking statements to reflect events or circumstances that may arise after the date of this report.

NORTHWEST AIRLINES CORPORATION ~~Consolidated Balance Sheets (Unaudited)~~

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

Consolidated Balance Sheets
(Unaudited)


	September 30,			December 31,
(in millions, except share data)	2009			2008

ASSETS
Current Assets:
Cash and cash equivalents	$	2,413		$	2,068
Short-term investments		21			49
Restricted cash and cash equivalents		217			196
Accounts receivable, net of an allowance for uncollectible accounts of $2 and $6 at September 30, 2009 and December 31, 2008, respectively		710			729
Hedge margin receivable		—			526
Expendable parts and supplies inventories, net of an allowance for obsolescence of $18 and $3 at September 30, 2009 and December 31, 2008, respectively		154			152
Deferred income taxes, net		49			131
Prepaid expenses and other		257			232

Total current assets		3,821			4,083


Property and Equipment, Net:
Property and equipment, net of accumulated depreciation and amortization of $404 and $71 at September 30, 2009 and December 31, 2008, respectively		8,248			8,683


Other Assets:
Goodwill		4,619			4,572
Identifiable intangibles, net of accumulated amortization of $30 and $8 at September 30, 2009 and December 31, 2008, respectively		2,665			2,694
Other noncurrent assets		141			236

Total other assets		7,425			7,502

Total assets	$	19,494		$	20,268


LIABILITIES AND STOCKHOLDER’S EQUITY
Current Liabilities:
Current maturities of long-term debt and capital leases	$	387		$	383
Air traffic liability		1,271			1,521
Accounts payable		845			903
Frequent flyer deferred revenue		474			522
Accrued salaries and related benefits		383			455
Hedge derivatives liability		68			561
Taxes payable		218			199
Note payable to parent		600			200
Other accrued liabilities		229			112

Total current liabilities		4,475			4,856


Noncurrent Liabilities:
Long-term debt and capital leases		4,299			5,382
Pension, postretirement and related benefits		5,674			5,476
Frequent flyer deferred revenue		1,424			1,500
Deferred income taxes, net		1,001			1,094
Other noncurrent liabilities		451			533

Total noncurrent liabilities		12,849			13,985


Commitments and Contingencies

Stockholder’s Equity:
Common stock at $0.01 par value; 1,000 shares issued at September 30, 2009 and December 31, 2008, respectively		—			—
Additional paid-in capital		4,564			3,605
Accumulated deficit		(838	)		(539	)
Accumulated other comprehensive loss		(1,556	)		(1,639	)

Total stockholder’s equity		2,170			1,427

Total liabilities and stockholder’s equity	$	19,494		$	20,268

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

NORTHWEST AIRLINES CORPORATION ~~Consolidated Statements of Operations (Unaudited)~~

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

Consolidated Statements of Operations
(Unaudited)


	Three Months Ended September 30,						Nine Months Ended September 30,
	2009			2008			2009			2008
(in millions, except per share data)	Post-Merger			Pre-Merger			Post-Merger			Pre-Merger


Operating Revenue:
Passenger:
Mainline	$	1,898		$	2,801		$	5,494		$	7,741
Regional carriers		492			550			1,397			1,462

Total passenger revenue		2,390			3,351			6,891			9,203
Cargo		99			202			275			612
Other, net		363			260			906			721

Total operating revenue		2,852			3,813			8,072			10,536

Operating Expense:
Salaries and related costs		764			706			2,245			2,182
Aircraft fuel and related taxes		670			1,946			1,855			4,246
Contract carrier arrangements		246			275			658			820
Contracted services		183			198			549			611
Passenger commissions and other selling expenses		146			226			445			665
Aircraft maintenance materials and outside repairs		130			168			438			563
Landing fees and other rents		125			144			404			416
Depreciation and amortization		136			122			389			1,015
Passenger service		76			65			191			190
Aircraft rent		60			57			178			167
Impairment of goodwill and other intangible assets		—			—			—			3,841
Restructuring and merger-related items		32			1			116			1
Other		100			123			307			389

Total operating expense		2,668			4,031			7,775			15,106


Operating Income (Loss)		184			(218	)		297			(4,570	)

Other (Expense) Income:
Interest expense		(187	)		(112	)		(549	)		(334	)
Interest income		2			21			9			81
Loss on extinguishment of debt		(83	)		—			(83	)		—
Miscellaneous, net		9			(5	)		32			(221	)

Total other expense, net		(259	)		(96	)		(591	)		(474	)


Loss Before Income Taxes		(75	)		(314	)		(294	)		(5,044	)

Income Tax (Provision) Benefit		(2	)		(3	)		(5	)		211


Net Loss	$	(77	)	$	(317	)	$	(299	)	$	(4,833	)


Basic and Diluted Loss per Share		N/A		$	(1.20	)		N/A		$	(18.35	)

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

NORTHWEST AIRLINES CORPORATION

Condensed Consolidated Statements of Cash Flow (Unaudited)

(Unaudited)


	Nine Months Ended September 30,
	2009			2008
(in millions)	Post-Merger			Pre-Merger

Net cash provided by operating activities	$	357		$	451

Cash Flows From Investing Activities:
Property and equipment additions, including advance payments, net		110			(1,014	)
Proceeds from sales of flight equipment		77			16
Redemption of short-term investments		28			55
Redesignation of cash equivalents to short-term investments		—			(246	)
(Increase) decrease in restricted cash and cash equivalents		(101	)		292
Investment in affiliated companies		—			(213	)
Other, net		—			20

Net cash provided by (used in) investing activities		114			(1,090	)

Cash Flows From Financing Activities:
Payments on long-term debt and capital lease obligations		(1,350	)		(365	)
Capital contribution from parent		897			—
Proceeds from intercompany loan		400			—
Proceeds from long-term obligations		—			873
(Payments) proceeds of short-term obligations, net		(73	)		115
Payments of deferred financing costs		—			(114	)

Net cash (used in) provided by financing activities		(126	)		509

Net Increase (Decrease) in Cash and Cash Equivalents		345			(130	)
Cash and cash equivalents at beginning of period		2,068			2,939

Cash and cash equivalents at end of period	$	2,413		$	2,809


Non-cash transactions:
Flight equipment	$	48		$	—

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

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

NORTHWEST AIRLINES CORPORATION

Notes to the Condensed Consolidated Financial Statements September 30, 2009 (Unaudited)

June 30, 2009 (Unaudited)

NOTE 1. BASIS OF PRESENTATION

The accompanying unaudited Condensed Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information. Consistent with these requirements, this Form 10-Q does not include all the information required by GAAP for complete financial statements. As a result, this Form 10-Q should be read in conjunction with the Consolidated Financial Statements and accompanying Notes in our Form 10-K.

On October 29, 2008 (the “Closing Date”), a wholly-owned subsidiary of Delta Air Lines, Inc. (“Delta”) merged (the “Merger”) with and into Northwest Airlines Corporation. On the Closing Date, (1) Northwest Airlines Corporation and its wholly-owned subsidiaries, including Northwest Airlines, Inc. (collectively, “Northwest”), became wholly-owned subsidiaries of Delta and (2) each share of Northwest common stock outstanding on the Closing Date or issuable under Northwest’s Plan of Reorganization (as defined in Note 8) was converted into the right to receive 1.25 shares of Delta common stock.

As a result of the application of purchase accounting ~~in accordance with Statement of Financial Accounting Standards (“SFAS”) No. 141~~, ~~“Business Combinations”,~~ the Condensed Consolidated Financial Statements on or after October 30, 2008 are not comparable to the Condensed Consolidated Financial Statements prior to that date. References to “Post-Merger” refer to Northwest on or after October 30, 2008, after giving effect to the application of purchase accounting. References to “Pre-Merger” refer to Northwest prior to October 30, 2008.

Our Condensed Consolidated Financial Statements include the accounts of Northwest Airlines Corporation and our wholly-owned subsidiaries. To the extent that an asset, liability, revenue or expense is directly associated with Northwest, it is reflected as such in the accompanying Condensed Consolidated Financial Statements. Certain other revenue and expense have been allocated from Delta to Northwest based on key business activity drivers in accordance with Delta’s cost allocation policy. Management believes such allocations are reasonable; however, they may not be equivalent to the actual revenue and expense that would have been recognized had we been operating as an independent, publicly-traded company for the periods presented subsequent to the Closing Date.

We have marketing alliances with other airlines to enhance our access to domestic and international markets. These arrangements can include codesharing, reciprocal frequent flyer program benefits, shared or reciprocal access to passenger lounges, joint promotions, common use of airport gates and ticket counters, ticket office co-location and other marketing agreements. We have received anti-trust immunity for certain of our marketing arrangements, which enables us to offer a more integrated route network and develop common sales, marketing and discount programs for customers. Some of our marketing arrangements provide for the sharing of revenues and expenses. Revenues and expenses associated with collaborative arrangements are presented on a gross basis in the applicable line items in our Consolidated Statements of Operations.

Management believes that the accompanying unaudited Condensed Consolidated Financial Statements reflect all adjustments, including adjustments required by purchase accounting, normal recurring items and restructuring and merger-related items, considered necessary for a fair statement of results for the interim periods presented.

Due to seasonal variations in the demand for air travel, the volatility of aircraft fuel prices, changes in global economic conditions and other factors, operating results for the three and ~~six~~nine months ended ~~June~~September 30, 2009 are not necessarily indicative of operating results for ~~the~~ the entire year.

We have reclassified certain prior period amounts in our Condensed Consolidated Financial Statements to be consistent with our current period presentation.

We have evaluated the financial statements for subsequent events through the date of the filing of this Form 10-Q.

New Accounting Standards

In March 2008, the Financial Accounting Standards Board (the “FASB”) issued ~~SFAS No. 161,~~ “Disclosures about Derivative Instruments and Hedging Activities—an amendment to FASB Statement No. 133.” ~~(“SFAS~~The ~~161”). SFAS 161~~ standard changes the disclosure requirements for derivative instruments and hedging activities. Entities are required to provide enhanced disclosures about (1) how and why an entity uses derivative instruments, (2) how derivative instruments and related hedged items are accounted for ~~under SFAS No. 133~~, ~~“Accounting for Derivative Instruments~~ and ~~Hedging Activities”~~ (~~“SFAS 133”), and (~~3) how derivative instruments and related hedged items affect an entity’s financial position, financial performance and cash flows. ~~SFAS~~This ~~161~~standard is ~~applicable~~effective for fiscal years and interim periods. We adopted ~~SFAS~~this ~~161~~standard on January 1, 2009.

In April 2009, the FASB issued FASB Staff Position (“FSP”) 107-1 and Accounting Principles Board (“APB”) Opinion No. 28-1, “Interim Disclosures about Fair Value of Financial Instruments” (“FSP 107-1 and APB 28-1”). FSP 107-1 and APB 28-1 amend FASB Statement No. 107, “Disclosures about Fair Values of Financial Instruments,” to require disclosures about fair value of financial instruments in interim financial statements as well as in annual financial statements. It also amends APB Opinion No. 28, “Interim Financial Reporting,” to require those disclosures in all interim financial statements. We adopted FSP 107-1 and APB 28-1 effective April 1, 2009.

In April 2009, the FASB issued “Interim Disclosures about Fair Value of Financial Instruments.” The standard amends required disclosures about fair value of financial instruments in interim financial statements as well as in annual financial statements. We adopted this standard effective April 1, 2009.

NOTE 2. FAIR VALUE MEASUREMENTS

~~SFAS No. 157, “~~Fair ~~Value Measurements” (“SFAS 157”), defines fair~~ value, ~~establishes~~is ~~a consistent~~defined ~~framework~~as ~~for measuring fair value and expands disclosure for each major asset and liability category measured at fair value on either a recurring or nonrecurring basis. SFAS 157 clarifies that fair value is~~ an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. Accordingly, fair value is a market-based measurement that is determined based on assumptions that market participants would use in pricing an asset or liability. AsA ~~a basis for considering such assumptions, SFAS 157 establishes a~~ three-tier fair value hierarchy, is ~~which~~used ~~prioritizes~~to prioritize the inputs used in measuring fair value as follows:

	•		Level 1. Observable inputs such as quoted prices in active markets;

	•		Level 2. Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and

	•		Level 3. Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.

Assets and Liabilities Measured at Fair Value on a Recurring Basis

						Significant
				Quoted Prices		Other			Significant
				in Active		Observable			Unobservable
	June 30,			Markets		Inputs			Inputs
	September 30,			Markets		Inputs			Inputs
(in millions)	2009			(Level 1)		(Level 2)			(Level 3)
Cash equivalents	$	2,~~500~~289		$	2,~~500~~289	$	—		$	—
Short-term investments		21			—		—			21
Restricted cash equivalents		~~109~~217			~~109~~217		—			—
Long-term investments		455			—		—			455
Hedge derivatives liability, net		(54117	)		—		(552	)		(4965	)

We record our cash equivalents and short-term investments at estimated fair value. The estimated fair values of other financial instruments, including derivative instruments, ~~have been~~are determined using available market information and valuation methodologies, primarily discounted cash flow analyses.

Valuation techniques for assets and liabilities in the Level 3 fair value hierarchy are based on the income approach using (1) a discounted cash flow model for investments and (2) a market and income approach using a discounted cash flow model for interest rate hedges.

Assets and Liabilities Measured at Fair Value on a Recurring Basis Using Significant Unobservable Inputs (Level 3)

	Hedge Derivatives
(in millions)	Liability, Net
Balance at December 31, 2008	$	(549	)
Change in fair value included in earnings		(77	)
Change in fair value included in other comprehensive income		~~107~~91
Purchases and settlements, net		470
Balance at June 30, 2009	$	(49	)
Balance at September 30, 2009	$	(65	)

Losses included in earnings above for the ~~six~~nine months ended ~~June~~September 30, 2009 are recorded on our Consolidated ~~Statement~~Statements of Operations as follows:

	Fuel Expense and				Other (Expense)
	Aircraft Fuel Expense and			Other (Expense)
(in millions)	Related Taxes			Income	~~Income~~
Total losses included in earnings	$	(76	)	$	$(1)	(1	)
Change in unrealized losses relating to liabilities still held at June 30, 2009	$	—			$	(1	)
Change in unrealized losses relating to liabilities still held at September 30, 2009	$	—		$	(1)

Fair Value of Debt

Market risk associated with our fixed and variable rate long-term debt relates to the potential reduction in fair value and negative impact to future earnings, respectively, from an increase in interest rates. The following table presents information about the fair value of our debt at ~~June~~September 30, 2009 and December 31, 2008:

	June 30,			December 31,
	September 30,			December 31,
(in millions)	2009			2008
Total debt at par value	$	65,~~937~~917		$	7,353
Unamortized discount, net		(1,~~498~~320	)		(1,678	)
Net carrying amount	$	54,~~439~~597		$	5,675
Fair value(1)	$	5,926		$	5,195
Fair value (1)	$	5,563		$	5,195



⁽¹⁾		The aggregate fair value of our debt was based primarily on reported market values and recently completed market transactions.

NOTE 3. RISK MANAGEMENT AND FINANCIAL INSTRUMENTS

Aircraft Fuel Price Risk

Our results of operations are materially impacted by changes in aircraft fuel prices, interest rates and foreign currency exchange rates. In an effort to manage our exposure to these risks, we periodically enter into various derivative instruments, including fuel, interest rate and foreign currency hedges. InWe ~~accordance with SFAS 133, we are required to~~ recognize all derivative instruments as either assets or liabilities at fair value on our Consolidated Balance Sheets and to recognize certain changes in the fair value of derivative instruments on our Consolidated Statements of Operations.

We also participate in a fuel hedge program sponsored by Delta, whereby Delta enters into fuel hedges to manage the price risk of fuel costs associated with ~~the~~our and Delta’s estimated consolidated fuel consumption ~~of Delta and us~~. In association with the terms of this program, Delta records the fair value of all related fuel hedges on its Consolidated Balance Sheets, and a pro-rata percentage of the hedge gains or losses are allocated to us based on fuel consumption and recorded on our Consolidated Statements of Operations.

We perform, at least quarterly, both a prospective and retrospective assessment of the effectiveness of our hedge contracts, including assessing the possibility of counterparty default. If we determine that a derivative is no longer expected to be highly effective, we discontinue hedge accounting prospectively and recognize subsequent changes in the fair value of the hedge in earnings. As a result of our effectiveness assessment at ~~June~~September 30, 2009, we believe our hedge contracts will continue to be highly effective in offsetting changes in cash flow attributable to the hedged risk.

Cash flow hedges

For derivative instruments that are designated and qualify as cash flow hedges ~~under SFAS 133~~, the effective portion of the gain or loss on the derivative is reported as a component of accumulated other comprehensive income and reclassified into earnings in the same period during which the hedged transaction affects earnings. The effective portion of the derivative represents the change in fair value of the hedge that offsets the change in fair value of the hedged item. To the extent the change in the fair value of the hedge does not perfectly offset the change in the fair value of the hedged item, the ineffective portion of the hedge is immediately recognized in other (expense) income on our Consolidated Statements of Operations. The following table summarizes the accounting treatment and classification of our cash flow hedges on our Condensed Consolidated ~~Financial~~ Financial Statements:

		Impact of Unrealized Gains and Losses
		Consolidated	Consolidated
		Balance Sheets	Income Statements
Derivative Instrument(1)	Hedged Risk	Effective Portion	Ineffective Portion
Designated under SFAS 133:
Designated as cash flow hedges:
Fuel hedges consisting of crude oil, heating oil, and jet fuel swaps, collars and call options(2)	Volatility in jet fuel prices	Effective portion of hedge is recorded in accumulated other comprehensive income	Excess, if any, over effective portion of hedge is recorded in other (expense) income
Interest rate swaps and call options	Changes in interest rates	Entire hedge is recorded in accumulated other comprehensive income	Expect hedge to fully offset hedged risk; no ineffectiveness recorded
Foreign currency forwards and collars	Fluctuations in foreign currency exchange rates	Entire hedge is recorded in accumulated other comprehensive income	Expect hedge to fully offset hedged risk; no ineffectiveness recorded
Not qualifying or not designated under SFAS 133:
Not designated as hedges:
Fuel hedges consisting of crude oil, heating oil and jet fuel extendable swaps and three-way collars	Volatility in jet fuel prices	Entire amount of change in fair value of hedge is recorded in aircraft fuel expense and related taxes
Fuel contracts consisting of crude oil, heating oil and jet fuel extendable swaps and three-way collars	Volatility in jet fuel prices	Entire amount of change in fair value of hedge is recorded in aircraft fuel expense and related taxes

(1)		In the Merger, Delta assumed our outstanding hedge contracts, which include fuel, interest rate and foreign currency cash flow hedges. On the Closing Date, Delta designated certain of these contracts as hedges ~~in accordance with SFAS 133~~. The remaining derivative contracts ~~that~~did ~~were~~ not ~~designated~~qualify ~~under~~for ~~SFAS~~hedge ~~133~~accounting ~~did~~and ~~not~~settled ~~qualify~~as ~~for~~of ~~hedge~~June ~~accounting~~30, 2009.
(2)		Ineffectiveness on our fuel hedge option contracts is calculated using a “perfectly effective” hypothetical derivative, which acts as a proxy for the fair value of the change in expected cash flows from the purchase of aircraft fuel.

Hedge Position

The following tables reflect the estimated fair value gain (loss) position of our hedge contracts at ~~June~~September 30, 2009 and December 31, 2008:

	June 30, 2009
	September 30, 2009
				Prepaid
				Other				Hedge			Other
				Expenses		Other					Hedge			Other
	Notional		Maturity	Noncurrent		Accounts		Derivatives			Noncurrent			Hedge Margin
	Notional		Maturity	and Other		Noncurrent		Accounts			Derivatives			Noncurrent
(in millions, unless otherwise stated)	Balance		Date	Assets		Payable		Liability			Liabilities			Receivable
(in millions, unless otherwise stated)	Balance		Date	Assets		Assets		Payable			Liability			Liabilities
Designated as hedges
Designated under SFAS 133
Interest rate swaps and caps designated as cash flow hedges	$	1,597	December 2009 - May 2019		2		—		(39	)		(27	)
Fuel hedge swaps, collars and call options(1)				$	—	$	—	$	(10	)	$	—		$	—
Foreign currency exchange forwards and collars	63.7 billion Japanese Yen, 257 million Canadian Dollars		October 2009 - July 2012		—		—		(28	)		(25	)
Interest rate swaps and caps designated as cash flow hedges	$	1,700	December 2009 - May 2019		—		1		—			(36	)		(14	)
Total derivative instruments				$	2	$	—	$	(67	)	$	(52	)	$	—
Foreign currency exchange forwards and collars	79.8 billion Japanese Yen, 61.0 million Canadian Dollars		July 2009 -April 2012		4		5		—			(11	)		(5	)
Total designated under SFAS 133					4		6		(10	)		(47	)		(19	)
Not designated under SFAS 133
Fuel hedge swaps and collars					—		—		(17	)		(14	)		—
Total not designated under SFAS 133					—		—		(17	)		(14	)		—
Total derivative instruments				$	4	$	6	$	(27	)	$	(61	)	$	(19	)
(1) All contracts assumed in the Merger were settled by June 30, 2009.

	December 31, 2008
								Hedge			Other
	Notional		Maturity		Accounts			Derivatives			Noncurrent			Hedge Margin
(in millions, unless otherwise stated)	Balance		Date		Payable			Liability			Liabilities			Receivable
Designated under SFAS 133
Designated as hedges
Fuel hedge swaps, collars and call options	173 million gallons - crude oil		January - June 2009		$	—		$	(163	)	$	—
Interest rate swaps and call options designated as cash flow hedges	$	1,700	~~December 2009 - May 2019~~	December 2009 - May 2019		—			(32	)		(63	)
Foreign currency exchange forwards and collars	45.0 billion Japanese Yen		~~January - December 2009~~	January - December 2009		—			(48	)		—
Total designated under SFAS 133						—			(243	)		(63	)
Total designated						—			(243	)		(63	)
Not designated under SFAS 133
Not designated as hedges
Fuel hedge swaps and collars	180 million gallons - crude oil, heating oil, jet fuel		January - June 2009			(119	)		(318	)		—
Total not designated under SFAS 133						(119	)		(318	)		—
Total not designated						(119	)		(318	)		—
Total derivative instruments					$	(119	)	$	(561	)	$	(63	)	$	526

Hedge Gains (Losses)

Gains (losses) recorded on our Condensed Consolidated Financial Statements for the three months ended ~~June~~September 30, 2009 and 2008 related to our designated hedge contracts ~~designated under SFAS 133~~ are as follows:

	Post-Merger			Pre-Merger			Post-Merger			Pre-Merger			Post-Merger			Pre-Merger
							Effective Portion Reclassified
	Effective Portion Recognized						from Accumulated Other						Ineffective Portion Recognized
	Effective Portion Recognizedin Other Comprehensive Loss						from Accumulated Other Comprehensive Loss to Earnings						Ineffective Portion Recognized in Other (Expense) Income
	in Other Comprehensive Loss						Comprehensive Loss to Earnings						in Other (Expense) Income
	Three Months Ended						Three Months Ended						Three Months Ended
	Three Months Ended June 30,						Three Months Ended June 30,						Three Months Ended June 30,
	September 30,						September 30,						September 30,
(in millions)	2009			2008			2009			2008			2009			2008
	2009			2008			2009			2008			2009			2008
Designated under SFAS 133
(in millions)	Post-Merger			Pre-Merger			Post-Merger			Pre-Merger			Post-Merger			Pre-Merger
Fuel hedge swaps, collars and call options(1)	$	25		$	—		$	(19	)(4)	$	—		$	19	(4)	$	—
Designated as hedges
Interest rate swaps and call options designated as cash flow hedges(2)		35			36			(1	)		—			—			—
Fuel hedge swaps, collars and call options(1)	$	—		$	—		$	(4	)(4)	$	—		$	3	(4)	$	—
Foreign currency exchange forwards and collars(3)		(19	)		47			(2	)		(4	)		—			—
Interest rate swaps and call options designated as cash flow hedges(2)		(16	)		(9	)		1			—			—			—
Total designated under SFAS 133	$	41		$	83		$	(22	)	$	(4	)	$	19		$	—
Foreign currency exchange forwards and collars(3)		52			9			—			(4	)		—			—
Total designated	$	36		$	—		$	(3	)	$	(4	)	$	3		$	—

(1)		Gains and losses on fuel hedge contracts reclassified from accumulated other comprehensive loss are recorded in aircraft fuel and related taxes.
(2)		~~Losses~~Gains and losses on interest rate swaps and call options reclassified from accumulated other comprehensive loss are recorded in interest expense.
(3)		~~Losses~~Gains and losses on foreign currency exchange contracts reclassified from accumulated other comprehensive loss are recorded in passenger and cargo revenue.
(4)		Includes losses of $64 million and gains of $183 million recorded in aircraft fuel and related taxes and other (expense) income, respectively, related to hedge contracts allocated from Delta.

Gains (losses) recorded on our Condensed Consolidated Financial Statements for the ~~six~~nine months ended ~~June~~September 30, 2009 and 2008 related to our designated hedge contracts designated ~~under SFAS 133~~ are as follows:

	Post-Merger			Pre-Merger		Post-Merger			Pre-Merger			Post-Merger			Pre-Merger
						Effective Portion Reclassified from
						Effective Portion Reclassified
	Effective Portion Recognized inOther Comprehensive Loss					Accumulated Other Comprehensive Loss to Earnings						Ineffective Portion Recognized in Other (Expense) Income
	Effective Portion Recognized					from Accumulated Other						Ineffective Portion Recognized
	Nine Months Ended					Nine Months Ended						Nine Months Ended
	in Other Comprehensive Loss					Comprehensive Loss to Earnings						in Other (Expense) Income
	September 30,					September 30,						September 30,
	Six Months Ended June 30,					Six Months Ended June 30,						Six Months Ended June 30,
	2009			2008		2009			2008			2009			2008
(in millions)	~~2009~~Post-Merger			~~2008~~Pre-Merger		~~2009~~Post-Merger			~~2008~~Pre-Merger			~~2009~~Post-Merger			~~2008~~Pre-Merger
Designated under SFAS 133
Designated as hedges
Fuel hedge swaps, collars and call options(1)	$	71		$	—	$	(8892	)(4)	$	—		$	1619	(4)	$	—
Interest rate swaps and call options designated as cash flow hedges(2)		4731			2011		(1—	)		—			—			—
Foreign currency exchange forwards and collars(3)		36(16	)		817		2			(913	)		—			—
Total designated under SFAS 133	$	154		$	28	$	(87	)	$	(9	)	$	16		$	—
Total designated	$	86		$	28	$	(90	)	$	(13	)	$	19		$	—

(1)		Gains and losses on fuel hedge contracts reclassified from accumulated other comprehensive loss are recorded in aircraft fuel and related taxes.
(2)		~~Losses~~Gains and losses on interest rate swaps and call options reclassified from accumulated other comprehensive loss are recorded in interest expense.
(3)		~~Losses~~Gains and losses on foreign currency exchange contracts reclassified from accumulated other comprehensive loss are recorded in passenger and cargo revenue.
(4)		Includes losses of $1317 million and gains of $1619 million recorded in aircraft fuel and related taxes and other (expense) income, respectively, related to hedge contracts allocated from Delta.

We recorded a gain of $8 million and a loss of $15 million to aircraft fuel and related taxes on our Consolidated Statements of Operations for the three and six months ended June 30, 2009 related to our derivative contracts that were not designated as hedges under SFAS 133. We expect to reclassify $31 million in unrealized gains recorded in accumulated other comprehensive loss on Delta’s Consolidated Balance Sheet into our Consolidated Statement of Operations during the next 12 months.

We recorded a loss of $473 million for the three months ended September 30, 2008 and losses of $15 million and $174 million for the nine months ended September 30, 2009 and 2008, respectively, to aircraft fuel and related taxes on our Consolidated Statements of Operations for the nine months ended September 30, 2009 related to our derivative contracts that were not designated as hedges. As of September 30, 2009, we expect to reclassify $11 million in unrealized gains recorded in accumulated other comprehensive loss on Delta’s Consolidated Balance Sheet into our Consolidated Statement of Operations during the next 12 months.

Credit Risk

To manage credit risk associated with our ~~aircraft fuel price,~~ interest rate and foreign currency hedging programs, counterparties are selected based on their credit ratings and exposure is limited to any one counterparty. The market position of these programs and relative market position with each counterparty are also monitored.

In accordance with our hedge agreements, (1) we may require counterparties to fund the margin associated with our gain position on hedge contracts and (2) counterparties may require us to fund the margin associated with our loss position on these contracts. The amount of the margin, if any, is periodically adjusted based on the fair value of the hedge contracts. The margin requirements are intended to mitigate a party’s exposure to market volatility and the associated contracting party risk. We do not offset margin funded to counterparties or margin funded to us by counterparties against fair value amounts recorded for our hedge contracts.

The hedge margin we receive from counterparties is recorded, as appropriate, in cash and cash equivalents or restricted cash, with the offsetting obligation in accounts payable on our Consolidated Balance Sheets. The margin we provide to counterparties is recorded in hedge margin receivable or restricted cash on our Consolidated Balance Sheets. All cash flows associated with purchasing and settling fuel hedge contracts are classified as operating cash flows on our Condensed Consolidated Statements of Cash Flows.

In accordance with our interest rate and foreign currency hedge agreements, which qualify as cash flow hedges, the respective counterparties are not required to fund margin to us and we are not required to fund margin to them.

Our accounts receivable are generated largely from the sale of passenger airline tickets and cargo transportation services. The majority of these sales are processed through major credit card companies, resulting in accounts receivable that may be subject to certain holdbacks by the credit card processors.

We also have receivables from the sale of mileage credits under our WorldPerks ~~Programs~~Program to participating airlines and non-airline businesses such as credit card companies, hotels and car rental agencies. We believe the credit risk associated with these receivables is minimal and that the allowance for uncollectible accounts that we have provided is appropriate.

NOTE 4. DEBT

In September 2009, Delta borrowed a total of $2.1 billion under three new financings: (1) Senior Secured Credit Facilities; (2) Senior Secured Notes; and (3) Senior Second Lien Notes. Delta used a portion of the net proceeds to repay in full the Bank Credit Facility due in 2010 in the form of a capital contribution. Delta’s new financing agreements are guaranteed by substantially all of Delta’s subsidiaries, including us, and are secured by our Pacific route authorities and certain related assets.

~~We are party to a $904 million senior corporate credit facility (the “Bank Credit Facility”) and a $500 million revolving credit facility (the “$500 Million Revolving Credit Facility”).~~ The ~~Bank~~ ~~Credit~~following ~~Facility~~table ~~was~~summarizes ~~fully~~our ~~drawn~~debt at ~~June~~September 30, 2009 and December 31, 2008~~. We did not have any~~: ~~outstanding borrowings under the $500 Million Revolving Credit Facility at June 30, 2009 or December 31, 2008.~~

The final maturity date for borrowings under the Bank Credit Facility and the $500 Million Revolving Credit Facility is the earlier of (1) the date that Northwest Airlines, Inc. is no longer a separate legal entity, including when it is merged with and into Delta Air Lines, Inc.; or (2) December 31, 2010 for the Bank Credit Facility, and October 29, 2009 and October 29, 2011 for the $300 million and $200 million tranches, respectively, under the $500 Million Revolving Credit Facility.


	September 30,			December 31,
(in millions)	2009			2008

Bank Credit Facility due 2010	$	—		$	904
Revolving Credit Facility due 2009		—			—
Certificates due in installments from 2009 to 2022		1,602			1,735
Aircraft financings due in installments from 2009 to 2025		3,740			4,003
Other secured financings due in installments from 2009 to 2031		575			711

Total secured debt		5,917			7,353
Unamortized discount⁽¹⁾		(1,320	)		(1,678	)

Total debt		4,597			5,675
Less: current maturities		(386	)		(382	)

Total long-term debt	$	4,211		$	5,293

To(1) ~~integrate~~This ~~the~~item ~~operations~~includes ~~of Delta and Northwest Airlines, Inc., we must obtain~~ a ~~single operating~~reduction ~~certificate~~in ~~for~~ the ~~two~~carrying ~~airlines~~value ~~from~~of ~~the~~debt ~~Federal~~as ~~Aviation Administration. When Northwest Airlines, Inc. is no longer~~ a ~~certificated~~result ~~carrier, key assets~~ of ~~the~~purchase ~~two~~accounting ~~companies~~related ~~would be~~to ~~combined into a single entity by merging Northwest Airlines, Inc. with and into Delta Air Lines, Inc. Because this merger could occur within~~ the ~~next 12 months~~Merger, wewhich ~~classified~~will ~~borrowings~~be ~~under~~amortized ~~the~~to ~~Bank~~interest ~~Credit Facility~~expense asover ~~short-term on our Consolidated Balance Sheet at June 30, 2009. In March 2009, we shortened~~ the ~~amortization~~remaining ~~period~~maturities ~~from December 2010 to March 2010~~ of the ~~fair~~respective ~~value adjustment (~~debt ~~discount) recorded during purchase accounting on this debt~~.

Short-Term Obligations

Accounts Receivable Financing. In November 2007, we entered into an accounts receivable financing facility of up to $150 million. The facility matures in 364 days with annual renewal provisions that could result in a final maturity date of November 29, 2012. As of December 31, 2008, $100 million was drawn under the facility. In June 2009, we amended the facility and its size was reduced to $100 million. As of June 30, 2009, $28 million was drawn under the facility.

Covenants

We were in compliance with all covenants in our financing agreements at June 30, 2009.

Obligations Guaranteed by Northwest

Senior Secured Credit Facilities

In September 2009, Delta entered into a first-lien revolving credit facility in the aggregate principal amount of $500 million (the “Revolving Facility”) and a first-lien term loan facility in the aggregate principal amount of $250 million (the “Term Facility” and collectively with the Revolving Facility, the “Senior Secured Credit Facilities”). The Senior Secured Credit Facilities are guaranteed by substantially all of Delta’s domestic subsidiaries, including us and certain of our subsidiaries (the “Guarantors”) and are secured by a first lien on our Pacific route authorities and certain related assets (the “Pacific Collateral”). Lenders under the Senior Secured Credit Facilities and holders of the Senior Secured Notes (as described below) will have equal rights to payment and collateral.

Borrowings under the Term Facility will be repaid in an amount equal to 1% of the original principal amount of the term loans annually (to be paid in equal quarterly installments), with the balance of the term loans due and payable in September 2013. Borrowings under the Term Facility bear interest at a variable rate equal to LIBOR or another index rate, in each case plus a specified margin. As of September 30, 2009, the Term Facility had an interest rate of 8.8% per annum.

In September 2009, Delta borrowed the entire amount of the Revolving Facility, which matures in March 2013. Borrowings under the Revolving Facility can be prepaid without penalty and amounts prepaid can be reborrowed. Borrowings under the Revolving Facility bear interest at a variable rate equal to LIBOR or another index rate, in each case plus a specified margin. As of September 30, 2009, the Revolving Facility had an interest rate 9.4% per annum.

The Senior Secured Credit Facilities include affirmative, negative and financial covenants that restrict Delta’s ability to, among other things, incur additional secured indebtedness, make investments, sell or otherwise dispose of assets if not in compliance with the collateral coverage ratio tests, pay dividends or repurchase stock. These covenants may have a material adverse impact on Delta’s operations. The Senior Secured Credit Facilities also contain financial covenants that require Delta to:

	•		maintain a minimum fixed charge coverage ratio (defined as the ratio of (1) earnings before interest, taxes, depreciation, amortization and aircraft rent, and subject to other adjustments to net income (“EBITDAR”) (excluding gains and losses arising under fuel hedging arrangements incurred prior to the closing date of the Senior Secured Credit Facilities) to (2) the sum of cash interest expense plus cash aircraft rent expense plus the interest portion of Delta’s capitalized lease obligations) in each case for the twelve-month period ending as of the last day of each fiscal quarter of not less than 1.20 to 1;

	•		maintain a minimum collateral coverage ratio (defined as the ratio of aggregate current market value of the collateral to the sum of the aggregate outstanding exposure under the Senior Secured Credit Facilities and certain obligations with equal rights to payment and collateral and the aggregate principal amount of the outstanding Senior Secured Notes) of 1.60:1; and

	•		maintain unrestricted cash, cash equivalents and short-term investments of not less than $2 billion.

The Senior Secured Credit Facilities also contain mandatory prepayment provisions that require Delta in certain instances to prepay obligations under the Senior Secured Credit Facilities in connection with dispositions of collateral. In addition, if the collateral coverage ratio is less than 1.60:1, Delta must either provide additional collateral in the form of cash or additional routes and slots to secure the obligations, or Delta must repay the loans under the Senior Secured Credit Facilities by an amount necessary to comply with the collateral coverage ratio.

Senior Secured Notes

Also in September 2009, Delta issued $750 million of Senior Secured Notes (the “Senior Secured Notes”). The Senior Secured Notes mature in September 2014 and have a fixed interest rate of 9.5% per annum. Delta may redeem some or all of the Senior Secured Notes at any time on or after September 15, 2011 at specified redemption prices. If Delta sells certain of its assets or if they experience specific kinds of changes in control, they must offer to repurchase the Senior Secured Notes.

Delta’s obligations under the Senior Secured Notes are guaranteed by the Guarantors. The Senior Secured Notes and related guarantees are secured on a senior basis equally and ratably with the indebtedness incurred under Delta’s Senior Secured Credit Facilities by security interests in the Pacific Collateral.

The Senior Secured Notes include covenants that, among other things, restrict Delta’s ability to sell assets, incur additional indebtedness, issue preferred stock, make investments or pay dividends. In addition, in the event the collateral coverage ratio, which has the same definition as in the Senior Secured Credit Facilities, is less than 1.60:1, Delta must pay additional interest on the Senior Secured Notes at the rate of 2% per annum until the collateral coverage ratio equals at least 1.60:1.

The Senior Secured Notes contain events of default customary for similar financings, including cross-defaults to other material indebtedness. Upon the occurrence of an event of default, the outstanding obligations under the Senior Secured Notes may be accelerated and become due and payable immediately.

Senior Second Lien Notes

Also in September 2009, Delta issued $600 million of Senior Second Lien Notes (the “Senior Second Lien Notes”). The Senior Second Lien Notes mature in March 2015 and have a fixed interest rate of 12.25% per annum. Delta may redeem some or all of the Senior Second Lien Notes at any time on or after March 15, 2012 at specified redemption prices. If Delta sells certain of its assets or if they experience specific kinds of changes in control, they must offer to repurchase the Senior Second Lien Notes.

Delta’s obligations under the Senior Second Lien Notes are guaranteed by the Guarantors. The Senior Second Lien Notes and related guarantees are secured on a junior basis by security interests in the Pacific Collateral.

The Senior Second Lien Notes include covenants and default provisions that are substantially similar to the ones described under “Senior Secured Notes” above. In addition, in the event (1) the collateral coverage ratio (defined as the ratio of aggregate current market value of the collateral to the sum of the aggregate outstanding exposure under the Senior Secured Credit Facilities and certain obligations with equal rights to payment and collateral, the aggregate principal amount of the outstanding Senior Secured Notes, and the aggregate principal amount of the outstanding Senior Second Lien Notes and any other permitted junior indebtedness that is secured by the collateral) is less than 1.00:1 or (2) Delta is required to pay additional interest on the Senior Secured Notes, Delta must pay additional interest on the Senior Second Lien Notes at the rate of 2% per annum until the later of (a) the collateral coverage ratio equals at least 1.00:1 or (b) special interest on the Senior Secured Notes ceases to accrue.

Revolving Credit Facility

In September 2009, we amended the Revolving Credit Facility to, among other things, reduce its borrowing limit from $500 million to $300 million and change its maturity date to December 30, 2009. Borrowings under the Revolving Credit Facility can be prepaid without penalty and amounts prepaid can be reborrowed. Borrowings under the Revolving Credit Facility are guaranteed by certain of our subsidiaries. The Revolving Credit Facility and related guarantees are secured by substantially all of our unencumbered assets as of October 29, 2008.

The Revolving Credit Facility contains financial covenants that require us to maintain (1) unrestricted cash, cash equivalents and short-term investments, together with the undrawn amount of the Revolving Credit Facility (“Cash Liquidity”), of not less than $1.25 billion, (2) a minimum collateral coverage threshold (defined as the appraised value of certain eligible collateral) of not less than $625 million and (3) a minimum ratio of EBITDAR to consolidated fixed charges.

The Revolving Credit Facility contains events of default customary for financings of its type, including cross-defaults to other material indebtedness. Upon the occurrence of an event of default, the outstanding obligations under the Revolving Credit Facility may be accelerated and become due and payable immediately and our cash may become restricted. Additionally, if at any time Cash Liquidity is less than $2.25 billion, the commitment of each lender under the Revolving Credit Facility is reduced by 50%.

Other Financing Agreements

Certificates. Pass-Through Trust Certificates and Enhanced Equipment Trust Certificates (collectively, the “Certificates”) are secured by 89 aircraft. As of September 30 2009, the Certificates had interest rates ranging from 1.0% to 9.2%.

Aircraft Financing. We have $3.7 billion of loans secured by 155 aircraft, not including aircraft securing the Certificates, which had interest rates ranging from 0.9% to 7.2% at September 30, 2009.

Other Secured Financings. Other secured financings primarily include (1) manufacturer term loans, secured by spare parts, spare engines and aircraft, (2) real estate loans, (3) a Metropolitan Airport Commission loan and (4) a receivables securitization (the “Accounts Receivable Financing Facility”). The financings had annual interest rates ranging from 1.5% to 8.8% at September 30, 2009.

In November 2007, we entered into the Accounts Receivable Financing Facility for up to $150 million. The facility matures in 364 days with annual renewal provisions that could result in a final maturity date of November 29, 2012. As of December 31, 2008, $100 million was drawn under the facility. In June 2009, the facility was amended to include Delta and its size was reduced to $100 million. As of September 30, 2009, we had $27 million was drawn under the facility.

Covenants

We were in compliance with all covenants in our financing agreements at September 30, 2009.

Future Maturities

The following table summarizes scheduled maturities of our debt, including current maturities, at September 30, 2009:

Years Ending December 31,


(in millions)	Total

Three months ending December 31, 2009	$	201
2010		520
2011		663
2012		485
2013		685
2014		571
Thereafter		2,792

		5,917
Unamortized discount		(1,320	)

Total	$	4,597

NOTE 5. EMPLOYEE BENEFIT PLANS

Net Periodic Benefit Cost

Net periodic cost for the three months ended ~~June~~September 30, 2009 and 2008 includes the ~~following~~ following components:

	Post-Merger			Pre-Merger			Post-Merger		Pre-Merger
							Other Postretirement
	Pension Benefits						Benefits
	Three Months Ended June 30,						Three Months Ended June 30,
	Three Months Ended						Three Months Ended
(in millions)	2009			2008			2009		2008
	September 30,						September 30,
Service cost	$	1		$	6		$	4	$	6
	2009			2008			2009		2008
Interest cost		138			141			10		12
(in millions)	Post-Merger			Pre-Merger			Post-Merger		Pre-Merger
Expected return on plan assets		(81	)		(140	)		—		—
Service cost	$	2		$	6		$	3	$	6
Recognized net actuarial loss		5			—			1		—
Interest cost		138			141			9		12
Special termination and settlements		2			—			—		—
Expected return on plan assets		(80	)		(140	)		—		—
Net periodic cost	$	65		$	7		$	15	$	18
Recognized net actuarial loss		4			—			—		—
Special termination and settlements		3			—			—		—
Net periodic cost	$	67		$	7		$	12	$	18

Net periodic cost for the ~~six~~nine months ended ~~June~~September 30, 2009 and 2008 includes the following components:

	Post-Merger			Pre-Merger			Post-Merger		Pre-Merger
							Other Postretirement
	Pension Benefits						Benefits
	Six Months Ended June 30,						Six Months Ended June 30,
	Nine Months Ended						Nine Months Ended
(in millions)	2009			2008			2009		2008
	September 30,						September 30,
Service cost	$	3		$	11		$	8	$	12
	2009			2008			2009		2008
Interest cost		276			282			19		24
(in millions)	Post-Merger			Pre-Merger			Post-Merger		Pre-Merger
Expected return on plan assets		(161	)		(280	)		—		—
Service cost	$	5		$	17		$	11	$	19
Recognized net actuarial loss		9			—			1		—
Interest cost		414			423			28		36
Special termination and settlements		5			—			6		—
Expected return on plan assets		(241	)		(420	)		—		—
Net periodic cost	$	132		$	13		$	34	$	36
Recognized net actuarial loss		13			1			1		—
Special termination and settlements		8			—			6		—
Net periodic cost	$	199		$	21		$	46	$	55

NOTE 6. COMPREHENSIVE LOSS

The following table shows the components of accumulated other comprehensive loss for the ~~six~~nine months ended ~~June~~September 30, 2009:

	Unrecognized			Derivative			Marketable			Valuation
(in millions)	Pension Liability			Instruments			Equity Securities			Allowance			Total
Balance at December 31, 2008	$	(908	)	$	(126	)	$	(5	)	$	(600	)	$	(1,639	)
Pension adjustment		11(10	)		—			—			—			11(10	)
Changes in fair value		—			8013			7			—			8720
Reclassification to earnings		—			7473			—			—			7473
Tax effect		(43	)		(5732	)		(2	)		6331			—
Balance at June 30, 2009	$	(901	)	$	(29	)	$	—		$	(537	)	$	(1,467	)
Balance at September 30, 2009	$	(915	)	$	(72	)	$	—		$	(569	)	$	(1,556	)

1215

NOTE 7. RESTRUCTURING AND MERGER-RELATED ITEMS

The following table shows charges recorded in restructuring and merger-related items on our Consolidated Statements of Operations for the three and ~~six~~nine months ended ~~June~~September 30, 2009 and 2008:

	Post-Merger		Pre-Merger		Post-Merger		Pre-Merger
	Three Months Ended				Nine Months Ended
	Three Months Ended June 30,				Six Months Ended June 30,
	September 30,				September 30,
(in millions)	2009		2008		2009		2008
Severance and related costs	$	—	$	—	$	28	$	—
	Post-Merger		Pre-Merger		Post-Merger		Pre-Merger
Merger-related items		31		—		56		—
Severance and related costs	$	13	$	—	$	41	$	—
Total restructuring and merger-related items	$	31	$	—	$	84	$	—
Merger-related items		19		1		75		1
Total restructuring and merger-related items	$	32	$	1	$	116	$	1

Severance and related costs primarily relates to ~~voluntary~~ workforce reduction programs for U.S. ~~non-pilot employees announced in December 2008 in which approximately 1,500 employees elected~~ ~~to participate~~employees. During the ~~six~~three and nine months ended ~~June~~September 30, 2009, we recorded $2813 million and $41 million, respectively, associated with ~~the~~ ~~December 2008~~ workforce reduction ~~program~~programs, including $6 million of special termination benefits related to retiree healthcare during the nine months ended September 30, 2009. We expect any additional charges to be incurred in connection with these programs will be immaterial.

Merger-related items relate to costs associated with integrating ~~the~~our operations ~~of Northwest~~ into Delta, including costs related to information technology, employee relocation and training, and re-branding of aircraft and stations.

The following table shows ~~the~~ balances for ~~these~~ restructuring charges as of ~~June~~September 30, 2009, and the activity for the ~~six~~nine months then ended. The table also shows the balances for the ~~restructuring~~ restructuring charges assumed in the Merger as of ~~June~~September 30, 2009, and the activity for the ~~six~~ nine months then ended.

	Liability										Liability
	Balance at		Additional		Purchase						Balance at
	December 31,		Costs and		Accounting						~~June~~September 30,
(in millions)	2008		Expenses		Adjustments			Payments			2009
Severance and related cost(1)	$	47	$	22	$	—		$	(32	)	$	37
Severance and related costs (1)	$	47	$	35	$	—		$	(39	)	$	43
Facilities and other(1)		32		—		(218	)		(15	)		2945
Total	$	79	$	2235	$	(218	)	$	(3344	)	$	6688



⁽¹⁾		The liability balance at December 31, 2008 represents liabilities recorded in connection with the Merger.

We ~~decided~~ intend to ground the entire fleet of B-747-200F dedicated freighter aircraft by ~~December~~ December 31, 2009, due to its age and inefficiency. As a result, we reviewed the fleet and related ~~spare~~ spare engines for impairment during the ~~six~~nine months ended ~~June~~September 30, 2009 and concluded that no ~~impairment~~ impairment existed.

NOTE 8. BANKRUPTCY CLAIMS RESOLUTION

In September 2005, Northwest and substantially all of its subsidiaries (the “Northwest Debtors”) filed voluntary petitions for reorganization under Chapter 11 of the Bankruptcy Code. On May 31, 2007, the Northwest Debtors emerged from bankruptcy. The Northwest Debtors’ First Amended Joint and Consolidated Plan of Reorganization (“Plan of Reorganization”) generally provides for the distribution of Northwest common stock to the Northwest Debtors’ creditors, employees and others in satisfaction of allowed general, unsecured claims.

Pursuant to terms of the Plan of Reorganization, 226 million shares of the Pre-Merger company’s common stock were issuable to holders of allowed general unsecured claims and ~~eight~~ eight million shares were issuable to holders who also held a guaranty claim from the Northwest Debtors. ~~Once~~ Once a claim is allowed, consistent with the claims resolution process as provided in the Plan of Reorganization, the claimant is entitled to a distribution. Pursuant to the terms of the Merger Agreement, each outstanding share of Northwest common stock (including shares issuable pursuant to the Plan of Reorganization) was converted into and became exchangeable for 1.25 shares of ~~Delta~~ Delta common stock. An equivalent of ~~228~~229 million shares of the Pre-Merger company’s common stock (or 286 million Post-Merger shares of Delta common stock) have been issued and distributed through ~~June~~ September 30, 2009, in respect of valid unsecured and guaranty claims. In total, an equivalent of five ~~six~~ million remaining shares of the Pre-Merger company’s new common stock (or ~~seven~~six million Post-Merger shares of Delta common stock) were held in reserve under the terms of the Plan of Reorganization.

1316

We estimate that our unsecured claims to be allowed will not exceed $8.2 billion. Differences between claim amounts filed and our estimates are being investigated and will be resolved in connection with the claims resolution process. However, there will be no further financial impact to us associated with the settlement of such unsecured claims, as the holders of all allowed unsecured claims against the Pre-Merger company will receive, under the Plan of Reorganization, Delta common stock based on the pro-rata amount of Northwest shares held in reserve. Secured ~~claims~~ claims were deemed unimpaired under the Plan of Reorganization and were satisfied upon either reinstatement of the obligations in the Pre-Merger company, surrendering the collateral to the secured party, or by making full payment in cash.

NOTE 9. LOSS PER SHARE

On the Closing Date, we became a wholly-owned subsidiary of Delta and the shares of Northwest, which traded under the symbol “NWA,” ceased trading on, and were delisted from, the New York Stock Exchange. As a result, we are not presenting Post-Merger company loss per share data for the three and ~~six~~nine months ended ~~June~~September 30, 2009.

We ~~calculated~~calculate basic loss per share by dividing the net loss attributable to common stockholders by the weighted average number of common shares outstanding. Shares issuable upon the satisfaction of certain conditions are considered outstanding and included in the computation of basic loss per share. Accordingly, the calculation of basic loss per share for the three and ~~six~~nine months ended ~~June~~ September 30, 2008 assumes there was outstanding at the beginning of each of these periods all 234 million shares contemplated by the Plan of Reorganization to be distributed to holders of allowed unsecured and guaranty claims.

The following table shows our computation of basic and diluted loss per share for the three and ~~six~~nine months ended ~~June~~September 30, 2008:

	Three
	Three Months Ended			Nine Months Ended
	Months			Six Months
	September 30,			September 30,
	Ended			Ended
	June 30,			June 30,
(in millions, except per share data)	2008			2008
Basic and diluted:
Net loss	$	(~~377~~317	)	$	(4,~~516~~833	)
Weighted average shares outstanding(1)		~~263~~265			263
Basic and diluted loss per share	$	(1.4320	)	$	(1718.1935	)

(1) For the three and ~~six~~nine months ended ~~June~~September 30, 2008, we excluded from our loss per share calculations all common stock equivalents because their effect was anti-dilutive. These common stock equivalents totaled 12 million in restricted stock units and stock options.

NOTE 10. RELATED PARTY TRANSACTIONS

Subsequent to the Merger, we entered into a $300 million intercompany credit facility with Delta (the “Delta Credit Facility”). On February 4, 2009, we amended the size of the Delta Credit Facility from $300 million to $750 million. On July 22, 2009, we amended the Delta Credit Facility from $750 million to $2 billion. During the ~~six~~nine months ended ~~June~~September 30, 2009, we drew an additional $400 million for a total of $600 million outstanding as of ~~June~~September 30, 2009. Interest on on unpaid principal is paid quarterly. We paid $4 million in interest in the ~~six~~nine months ended ~~June~~ September 30, 2009 and had an outstanding interest payable of $3 million as of that date.

Certain revenue and expense have been allocated from Delta to Northwest based on key business activity drivers in accordance with Delta’s cost allocation policy. Accordingly, the volume of intercompany receivable and payable transactions has ~~significantly~~ increased since December 31, 2008. The below table reflects the balances of these intercompany transactions as of ~~June~~September 30, 2009 ~~and~~ and December 31, 2008:

	June 30,			December 31,
	September 30,			December 31,
(in millions)	2009			2008
Accounts receivable	$	~~260~~299		$	42
Accounts payable		(~~259~~284	)		(27	)
Note payable to parent		(600	)		(200	)
Net payable	$	(~~599~~585	)	$	(185	)

14 In October 2009, our WorldPerks Program was merged into Delta’s SkyMiles Program. WorldPerks miles were combined into the SkyMiles Program based on a one-to-one ratio. As miles are redeemed, Delta will allocate the applicable revenue realized to Northwest in accordance with its cost allocation policy.

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

General Information

We provide scheduled air transportation for passengers and cargo throughout the United States (“U.S.”) and the world. On October 29, 2008 (the “Closing Date”), we completed our merger (the “Merger”) with a wholly-owned subsidiary of Delta Air Lines, Inc. (“Delta”), creating the world’s largest airline. As a result of the Merger, Northwest and its subsidiaries, including Northwest Airlines, Inc., became wholly-owned subsidiaries of Delta and the shares of Northwest, which traded under the symbol “NWA,” ceased trading on, and were delisted from, the New York Stock Exchange.

As a result of the application of purchase accounting ~~in accordance with Statement of Financial Accounting Standards (“SFAS”) No. 141~~, ~~“Business Combinations” (“SFAS 141”),~~ the financial statements prior to the Closing Date are not comparable with the financial statements for periods on or after the Closing Date. References to “Post-Merger” refer to Northwest on or after the Closing Date, after giving effect to the application of purchase accounting. References to “Pre-Merger” refer to Northwest prior to the Closing Date.

Overview

For the ~~June~~September 2009 quarter, we reported a net loss of $3977 million. This compares to a ~~June~~ September 2008 quarter net loss of $~~377~~ 317 million, which included a ~~net~~ $~~548~~473 million ~~charge~~loss ~~primarily~~ related to ~~an impairment of intangible assets and a $293 million gain related to~~ our derivative contracts.

Total operating revenue declined 2725% to $2.9 billion in the ~~June~~September 2009 quarter compared to the ~~June~~September 2008 ~~quarter~~ ~~to $2~~quarter.~~6 billion.~~ Total ~~consolidated~~ passenger revenue declined 2829% to $2.34 billion. Operating expenses in the quarter decreased 3634% ~~year-over-year~~ to $2.57 billion, primarily related to lower aircraft fuel and related costs in the ~~June~~September 2009 ~~quarter~~ ~~and impairment related charges recorded in the June 2008~~ quarter.

At ~~June~~September 30, 2009, we had $2.64 billion in cash, cash equivalents and short-term investments. In September 2009, Delta borrowed a total of $2.1 billion under three new financings. Delta used a portion of the net proceeds to repay in full our approximately $900 million senior secured exit financing facility due in 2010 in the form of a capital contribution. Delta’s new financing agreements are guaranteed by substantially all of Delta’s subsidiaries, including us, and are secured by our Pacific route authorities and certain related assets. In addition, we had $~~500~~300 million in an undrawn revolving credit facility.

15Results of Operations—September 2009 and 2008 Quarters

Results of Operations—June 2009 and 2008 Quarters

Operating Revenue

Mainline Passenger Revenue. Mainline passenger revenue decreased $~~836~~903 million, or 32%, primarily due to ~~(1)~~ weakened demand for air travel from the ~~year-over-year~~ ~~decreases~~global inrecession and related capacity, reductions. Passenger revenue per available seat mile (“PRASM”) decreased 28% as a result of a 27% decrease in passenger ~~load~~mile ~~factor~~yield. ~~and~~The decrease in passenger mile yield reflects (1) a reduction in business demand and significantly reduced demand for international travel due to the global recession, (2) an overall decrease in average fares due to competitive pricing pressures and (3) lower fuel surcharges due to the year-over-year decline in fuel prices.

Regional carriers. Passenger revenue of regional carriers decreased $4458 million to $~~462~~492 million primarily due to a 2219% decrease in passenger mile yield.

Cargo. Cargo revenue decreased $~~129~~103 million to $8499 million due to the effects of capacity reductions, including the grounding of ~~certain~~five dedicated freighter B-747-200F aircraft, since the Closing Date, significantly reduced cargo yields, decreased international volume and lower fuel surcharges due to the year-over-year decline in fuel prices.

Other, net. Other, net revenue increased $42103 million to $~~274~~363 million due primarily to increased baggage handling fees.

~~Operating Expense~~18

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

Aircraft fuel and related taxes. Aircraft fuel and related taxes decreased $586 million primarily due to (1) $724 million associated with lower average fuel prices and (2) $143 million in lower fuel consumption due to capacity reductions. These decreases were partially offset by $11 million in net fuel hedge losses for the June 2009 quarter, compared to $293 million in net fuel hedge gains for the June 2008 quarter.

Contract carrier arrangements. Contract carrier arrangements decreased primarily due to lower fuel costs.

Contracted services. Contracted services decreased primarily due to lower passenger and ramp handling costs.

Aircraft maintenance materials and outside repairs. Aircraft maintenance materials and outside repairs decreased primarily due to the decrease in capacity and related grounding of aircraft.

Passenger commission and other selling expenses. Passenger commissions and other selling expenses decreased primarily due to the decrease in capacity.

~~Depreciation~~Operating ~~and amortization. Depreciation and amortization expenses decreased as a result~~Expense ~~of $624 million in impairment related charges recorded in the June 2008 quarter, primarily related to certain intangible assets and aircraft.~~

Impairment of goodwill and other intangible assets. During the March 2008 quarter, we experienced a significant decline in market capitalization driven primarily by record high fuel prices and overall airline industry conditions. In addition, the announcement of our intention to merge with Delta established a stock exchange ratio based on the relative valuation of Northwest and Delta. As a result of these indicators, we determined goodwill was impaired and recorded a non-cash charge of $3.9 billion based on a preliminary assessment. During the June 2008 quarter, we finalized the goodwill impairment test and reversed $674 million of the goodwill impairment charge recorded in the March 2008 quarter. During the June 2008 quarter, we also recorded a non-cash charge of $598 million to reduce the carrying value of certain intangible assets based on their revised estimated fair values.


	Three Months Ended September 30,				Increase			Percent
(in millions)	2009		2008		(Decrease)			Change

Operating Expense:
Salaries and related costs	$	764	$	706	$	58			8	%
Aircraft fuel and related taxes		670		1,946		(1,276	)		(66	)%
Contract carrier arrangements		246		275		(29	)		(11	)%
Contracted services		183		198		(15	)		(8	)%
Passenger commissions and other selling expenses		146		226		(80	)		(35	)%
Aircraft maintenance materials and outside repairs		130		168		(38	)		(23	)%
Landing fees and other rents		125		144		(19	)		(13	)%
Depreciation and amortization		136		122		14			11	%
Passenger service		76		65		11			17	%
Aircraft rent		60		57		3			5	%
Restructuring and merger-related items		32		1		31		NM
Other		100		123		(23	)		(19	)%

Total operating expense	$	2,668	$	4,031	$	(1,363	)		(34	)%

~~Restructuring~~Aircraft fuel and ~~merger-~~related ~~items~~taxes. ~~During~~Aircraft ~~the~~fuel ~~June 2009~~and ~~quarter,~~related wetaxes ~~recorded~~decreased $311.3 ~~million~~billion inprimarily ~~merger-related~~due ~~charges~~to (1) $702 million associated with ~~integrating~~lower ~~the~~average ~~operations~~fuel ofprices, ~~Northwest~~(2) ~~into~~$105 million ~~Delta~~from a 6% decline in fuel consumption due to capacity reductions and (3) a $469 million reduction in fuel hedge losses compared to the September 2008 quarter.

Contract carrier arrangements. Contract carrier arrangements decreased primarily due to lower average fuel prices.

Passenger commission and other selling expenses. Passenger commissions and other selling expenses decreased in connection with the decrease in passenger revenue.

Aircraft maintenance materials and outside repairs. Aircraft maintenance materials and outside repairs decreased as a result of capacity reductions.

Restructuring and merger-related items. During the September 2009 quarter, we recorded a $19 million charge for merger-related items associated with integrating our operations into Delta and a $13 million charge in connection with employee workforce reduction programs.

Other Expense (Income)

We recorded other expense, net of $~~169~~259 million in the ~~June~~September 2009 quarter as compared to ~~other~~ other expense, net of $~~292~~96 million in the ~~June~~September 2008 quarter. This ~~decrease~~increase is primarily due to an ~~the~~$83 million ~~impairment~~non-cash ~~in 2008~~loss for the write-off of ~~our~~the ~~$213 million~~unamortized ~~minority~~discount ~~ownership~~on ~~interest~~the inextinguishment ~~Midwest~~of our ~~Air~~senior ~~Partners,~~secured ~~LLC,~~exit ~~partially~~financing ~~offset by~~facility (the “Bank Credit Facility”) and an increase in debt discount amortization recorded in interest expense as a result of purchase accounting.

Income Taxes

We recorded an income tax ~~expense~~provision of $2 million and $3 million for the ~~June~~September 2009 ~~quarter~~and 2008 quarters, primarily related to international and state income taxes. We did not record an income tax benefit as a result of our loss for the ~~June~~September 2009 ~~quarter~~and 2008 quarters. The deferred tax asset resulting from ~~such~~those a net operating ~~loss~~ islosses are fully reserved by a valuation allowance.

~~We recorded an income tax benefit of $214 million for the June 2008 quarter, primarily as a~~19 result of the impairment of our indefinite-lived intangible assets. The impairment of goodwill did not result in an income tax benefit as goodwill is not deductible for income tax purposes. We did not record an income tax benefit for the remainder of our June 2008 quarter loss. The deferred tax asset resulting from such a net operating loss is fully reserved by a valuation allowance.

Results of Operations—Six Months Ended June 2009 and 2008

Operating Revenue

Mainline Passenger Revenue. Mainline passenger revenue decreased by $1.3 billion due to (1) the year-over-year decreases in capacity, passenger load factor and passenger mile yield and (2) lower fuel surcharges due to year-over-year decline in fuel prices.

Regional Carriers. Passenger revenue of regional carriers was relatively flat for the six months ended June 30, 2009 and 2008.

Cargo. Cargo revenue decreased $234 million to $176 million due to the effects of capacity reductions including the grounding of certain dedicated freighter B-747-200F aircraft, significantly reduced cargo yields, decreased international volume and lower fuel surcharges due to the year-over-year decline.

Other, net. Other, net revenue increased $82 million to $543 million due primarily to increased baggage handling fees.

Results of Operations—Nine Months Ended September 30, 2009 and 2008

Operating Revenue

Mainline Passenger Revenue. Mainline passenger revenue decreased $2.2 billion, or 29%, primarily due to weakened demand for air travel from the global recession, the effects of the H1N1 virus and related capacity reductions. PRASM decreased 21% as a result of a 19% decrease in passenger mile yield. The decrease in passenger mile yield reflects (1) a reduction in business demand and significantly reduced demand for international travel due to the global recession, (2) an overall decrease in average fares due to competitive pricing pressures and (3) lower fuel surcharges due to year-over-year decline in fuel prices.

Regional Carriers. Passenger revenue of regional carriers decreased by $65 million to $1.4 billion primarily due to a 20% decrease in passenger mile yield.

Cargo. Cargo revenue decreased $337 million to $275 million due to the effects of capacity reductions, including the grounding of five dedicated freighter B-747-200F aircraft since the Closing Date, significantly reduced cargo yields, decreased international volume and lower fuel surcharges due to the year-over-year decline in fuel prices.

Other, net. Other, net revenue increased $185 million to $906 million due primarily due to new or increased administrative service charges and baggage handling fees.

Operating Expense

					Increase
	Nine Months Ended September 30,				Increase			Percent
	Six Months Ended June 30,				(Decrease)			Percent
(in millions)	2009		2008		(Decrease)			Change
(In millions)	2009		2008		from 2008			Change
Operating Expense:
Salaries and related costs	$	12,~~481~~245	$	12,~~476~~182	$	563			—3	%
Aircraft fuel and related taxes		1,~~185~~855		24,~~300~~246		(12,~~115~~391	)		(4856	)%
Contract carrier arrangements		~~412~~658		~~545~~820		(~~133~~162	)		(2420	)%
Contracted services		~~366~~549		~~413~~611		(4762	)		(1110	)%
Aircraft maintenance materials and outside repairs		308		395		(87	)		(22	)
Passenger commissions and other selling expenses		445		665		(220	)		(33	)%
Passenger commissions and other selling expenses		299		439		(140	)		(32	)
Aircraft maintenance materials and outside repairs		438		563		(125	)		(22	)%
Landing fees and other rents		~~279~~404		~~272~~416		7(12	)		(3	)%
Depreciation and amortization		~~253~~389		~~893~~1,015		(~~640~~626	)		(7262	)%
Aircraft rent		118		110		8			7
Passenger service		191		190		1			1	%
Passenger service		115		125		(10	)		(8	)
Aircraft rent		178		167		11			7	%
Impairment of goodwill and other intangible assets		—		3,841		(3,841	)	NM	(100	)%
Restructuring and merger-related items		84116		—1		84115		NM
Other		~~207~~307		~~266~~389		(5982	)		(2221	)%
Total operating expense	$	57,~~107~~775	$	1115,~~075~~106	$	(57,~~968~~331	)		(5449	)%

Aircraft fuel and related taxes. Aircraft fuel and related taxes decreased $12.14 billion primarily due to decreases of (1) $1.29 billion associated with lower average fuel prices, ~~and~~ (2) $~~289~~394 million infrom ~~lower~~a 10% decline in fuel consumption due to capacity reductions~~. These decreases were partially~~ ~~offset~~and by(3) a $~~103~~ 67 million reduction in ~~net~~ fuel hedge losses ~~for the six months ended June 30, 2009, compared to $283 million in net fuel hedge gains for the six months ended June 30, 2008~~year-over-year.

Contract carrier arrangements. Contract carrier arrangements decreased primarily due to lower average fuel ~~costs~~prices.

~~Aircraft maintenance~~Passenger ~~materials~~commission and ~~outside~~other ~~repairs~~selling expenses. ~~Aircraft~~Passenger ~~maintenance~~commissions ~~materials~~ and ~~outside~~other ~~repairs~~selling expenses decreased ~~primarily~~in ~~due~~connection towith the decrease in ~~capacity~~passenger ~~and related grounding of aircraft~~revenue.

~~Passenger~~Aircraft ~~commission~~maintenance materials and ~~other~~outside ~~selling expenses~~repairs. ~~Passenger~~Aircraft ~~commissions~~maintenance materials and ~~other selling~~outside ~~expenses~~repairs decreased ~~primarily~~as ~~due~~a toresult ~~the~~of ~~decrease in~~ capacity reductions.

Depreciation and amortization. Depreciation and amortization ~~expenses~~ decreased as a result of $641 million in impairment related charges recorded in the ~~six~~nine months ended ~~June~~September 30, 2008, primarily related to certain definite-lived intangible assets and aircraft.

~~Impairment of goodwill and other intangible assets. During the March 2008 quarter, we~~20 experienced a significant decline in market capitalization driven primarily by record high fuel prices and overall airline industry conditions. In addition, the announcement of our intention to merge with Delta established a stock exchange ratio based on the relative valuation of Northwest and Delta. As a result of these indicators, we determined goodwill was impaired and recorded a non-cash charge of $3.9 billion based on a preliminary assessment. During the June 2008 quarter, we finalized the goodwill impairment test and reversed $674 million of the goodwill impairment charge recorded in the March 2008 quarter. During the June 2008 quarter, we also recorded a non-cash charge of $598 million to reduce the carrying value of certain intangible assets based on their revised estimated fair values.

Restructuring and merger-related items. During the six months ended June 30, 2009, we recorded $84 million in merger-related charges associated with integrating the operations of Northwest into Delta.

Other Expense (Income)

We recorded other expense, net of $332 million in the six months ended June 30, 2009 as compared to other expense, net of $378 million in the six months ended June 30, 2008. The decrease is due to the impairment in 2008 of our $213 million minority ownership interest in Midwest Air Partners, LLC, partially offset by (1) the increase in debt discount amortization recorded in interest expense as a result of purchase accounting and (2) a decrease in interest income primarily from significantly reduced short-term interest rates.

Impairment of goodwill and other intangible assets. During the March 2008 quarter, we experienced a significant decline in market capitalization driven primarily by record high fuel prices and overall airline industry conditions. In addition, the announcement of our intention to merge with Delta established a stock exchange ratio based on the relative valuation of Northwest and Delta. As a result of these indicators, we determined goodwill was impaired and recorded a non-cash charge of $3.2 billion. We also recorded a non-cash charge of $598 million to reduce the carrying value of certain indefinite-lived intangible assets based on their revised estimated fair values.

Restructuring and merger-related items. During the nine months ended September 30, 2009, we recorded a $75 million charge for merger-related items associated with integrating our operations into Delta and a $41 million charge in connection with employee workforce reduction programs.

Other Expense (Income)

We recorded other expense, net of $591 million in the nine months ended September 30, 2009 as compared to other expense, net of $474 million in the nine months ended September 30, 2008. The increase is due to (1) the increase in debt discount amortization recorded in interest expense as a result of purchase accounting, (2) an $83 million non-cash loss for the write-off of the unamortized discount on the extinguishment of the Bank Credit Facility and (3) a decrease in interest income primarily from significantly reduced short-term interest rates, partially offset by the impairment in 2008 of our $213 million minority ownership interest in Midwest Air Partners, LLC.

Income Taxes

We recorded an income tax ~~expense~~provision of $35 million for the ~~six~~nine months ended ~~June~~September 30, 2009, primarily related to international and state income taxes. We did not record an income tax benefit as a result of our loss for the ~~six~~nine months ended ~~June~~September 30, 2009. The deferred tax ~~asset~~ asset resulting from such a net operating loss is fully reserved by a valuation allowance.

We recorded an income tax benefit of $~~214~~211 million for the ~~six~~nine months ended ~~June~~September 30, 2008, primarily as a result of the impairment of our indefinite-lived intangible assets. The ~~impairment~~ impairment of goodwill did not result in an income tax benefit as goodwill is not deductible for income tax purposes. We did not record an income tax benefit for the remainder of ~~six~~nine months ended ~~June~~ September 30, ~~2008~~ ~~loss~~2008. The deferred tax asset resulting from such a net operating loss is fully reserved by a valuation allowance.

ITEM 3. Quantitative and Qualitative Disclosures About Market Risk.

Omitted under the reduced disclosure format permitted by General Instruction H(2)(c) of Form 10-Q.

ITEM 4. Controls and Procedures.

Management, including the President and Chief Operating Officer and Senior Vice President ~~- Finance~~& Treasurer, performed an evaluation of our disclosure controls and procedures, which have ~~been~~ been designed to effectively identify and timely disclose important information. Management, ~~including~~ including the President and Chief Operating Officer and Senior Vice President -& ~~Finance~~Treasurer, concluded that the controls and procedures were effective as of ~~June~~September 30, 2009 to ensure that material information was accumulated and communicated to management, including the President and Chief Operating Officer and Senior Vice President -& ~~Finance~~Treasurer, as appropriate to allow timely decisions regarding required disclosure.

Except as set forth below, during the three months ended ~~June~~September 30, 2009, we made no change in in our internal control over financial reporting that has materially affected, or is reasonably ~~likely~~ likely to materially affect, our internal control over financial reporting.

On October 29, 2008 we completed our Merger with Delta Air Lines, Inc. We are currently integrating policies, processes, people, technology and operations for the combined company. Management will continue to evaluate our internal control over financial reporting as we execute Merger integration activities.

1921

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors of
Northwest Airlines Corporation

We have reviewed the condensed consolidated balance sheet of Northwest Airlines Corporation (the Company) as of ~~June~~ September 30, 2009 (Post-merger Successor), and the related condensed consolidated statements of operations for the three-month and ~~six~~nine-month periods ended ~~June~~ September 30, 2009 (Post-merger Successor) and 2008 (Pre-merger Successor), and the condensed consolidated statements of cash flows for the ~~six~~nine-month periods ended ~~June~~ September 30, 2009 (Post-merger Successor) and 2008 (Pre-merger Successor). These financial statements are the responsibility of the Company’s management.

We conducted our review in accordance with the standards of the Public Company Accounting Oversight Board (United States). A review of interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with standards of the Public Company Accounting Oversight Board, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.

Based on our review, we are not aware of any material modifications that should be made to the accompanying condensed consolidated financial statements referred to above for them to be in conformity with U.S. generally accepted accounting principles.

We have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheet of Northwest Airlines Corporation as of December 31, 2008 (Post-merger Successor) and the related consolidated statements of operations, stockholder’s equity, and cash flows for the ~~year~~period ~~ended~~from October 30, 2008 to December 31, 2008 (Post-merger Successor), the period from January 1, 2008 to October 29, 2008 (Pre-merger Successor) and in our report dated March 2, 2009, we expressed an unqualified opinion on those consolidated financial statements.

/s/ Ernst & Young LLP

Atlanta, Georgia ~~July 30~~October 28, 2009

2022

PART II. OTHER INFORMATION

ITEM 1. Legal Proceedings.

Reference is made to “Item 3. Legal Proceedings” in our 2008 Form 10-K for a discussion of other legal proceedings.

Northwest Airlines, Inc. v. Filipas, et al (U.S. Dist. Ct. Minnesota, Case 07-CIV-4803 (JNE/JJG)). On December 12, 2007, Northwest Airlines, Inc. filed a declaratory judgment action against six of its employee pilots seeking a declaration that its recently implemented Target Benefit Pension Plan (collectively bargained for with the Air Line Pilots Association) does not violate any applicable prohibitions against age discrimination, including under ERISA. The court has certified a defendant class of all employee pilots who will receive less under the new target plan than they would have received under the predecessor plan that provided benefits to pilots on a “flat percentage” or “pro rata to pay” basis. On January 26, 2009, the District Court granted summary judgment in favor of Northwest on its claim as well as the defendants’ counterclaims. Claims by the employee pilots against the Air Line Pilots Association remain pending in the case and consequently no final order has been entered.

ITEM 1A. Risk Factors.

“Item 1A. Risk Factors” of our Form 10-K includes a discussion of our risk factors. The information presented below updates, and should be read in conjunction with, the risk factors and information disclosed in our Form 10-K. Except as presented below, there have been no material changes from the risk factors described in our Form 10-K.

Risk Factors Relating to Northwest

Our business and results of operations are dependent on the price and availability of aircraft fuel. High fuel costs or cost increases could have a materially adverse effect on our operating results. Likewise, significant disruptions in the supply of aircraft fuel would materially adversely affect our operations and operating results.

Our operating results are significantly impacted by changes in the price and availability of aircraft fuel. Fuel prices have increased substantially in the last five years and spiked at record high levels in 2008 before falling dramatically during the latter part of 2008. In 2008, our average fuel price per gallon rose 72% to $3.69, as compared to an average price of $2.15 in 2007, which was 6% higher than our average price of $2.02 in 2006 and significantly higher than fuel prices in the earlier part of this decade. Fuel costs represented 32% of our operating expense in 2008 and 2007. Our average fuel price per gallon was $1.77 for the first nine months of 2009, and fuel costs represented 26% of operating expense for that period. Fuel costs have had a significant negative effect on our results of operations and financial condition.

Our ability to pass along the increased costs of fuel to our customers is limited by the competitive nature of the airline industry. We often have not been able to increase our fares to offset the effect of increased fuel costs in the past and we may not be able to do so in the future.

In addition, our aircraft fuel purchase contracts do not provide material protection against price increases or assure the availability of our fuel supplies. We purchase most of our aircraft fuel under contracts that establish the price based on various market indices. We also purchase aircraft fuel on the spot market, from offshore sources and under contracts that permit the refiners to set the price. In an effort to manage our exposure to changes in fuel prices, we use derivative instruments, which are comprised of crude oil, heating oil and jet fuel swap, collar and call option contracts, though we may not be able to successfully manage this exposure. Depending on the type of hedging instrument used, our ability to benefit from declines in fuel prices may be limited.

We are currently able to obtain adequate supplies of aircraft fuel, but it is impossible to predict the future availability or price of aircraft fuel. Weather-related events, natural disasters, political disruptions or wars involving oil-producing countries, changes in governmental policy concerning aircraft fuel production, transportation or marketing, changes in aircraft fuel production capacity, environmental concerns and other unpredictable events may result in additional fuel supply shortages and fuel price increases in the future. Additional increases in fuel costs or disruptions in fuel supplies could have additional negative effects on us.

The global economic recession has resulted in weaker demand for air travel and may create challenges for us that could have a material adverse effect on our business and results of operations.

As the effects of the global economic recession have been felt in our domestic and international markets, we are experiencing significantly weaker demand for air travel. Our demand began to slow during the December 2008 quarter and global economic conditions in 2009 are substantially reducing U.S. airline industry revenues in 2009 compared to 2008. As a result, Delta is reducing its consolidated capacity by 7- to 9% in 2009 compared to the combined capacity of Delta and Northwest during 2008 (which reflects planned domestic ~~capacity reductions of 8-10%~~ and international capacity reductions of 7- to 9%). Demand for air travel could remain weak or even continue to fall if the global economic recession continues for an extended period, and overall demand could fall lower than we are able prudently to reduce capacity. The weakness in the United States and international economies is having a significant negative impact on our results of operations and could continue to have a significant negative impact on our future results of operations.

~~Certain~~The ofglobal ~~our credit facilities include~~ financial ~~and~~crisis ~~other~~may ~~covenants~~have ~~that~~an ~~impose restrictions~~impact on our ~~financial~~business and ~~business~~financial ~~operations~~condition in ways that we currently cannot predict.

~~Our exit~~The ~~facility financing~~ credit ~~agreement~~crisis and ~~liquidity~~related ~~facility credit~~turmoil ~~agreement~~in ~~both~~the ~~contain~~global financial ~~covenants~~system ~~that~~has ~~require~~had ~~us,~~and may continue to ~~maintain~~have aan ~~minimum~~impact ~~fixed~~on ~~charge~~our ~~coverage~~business ~~ratio, minimum unrestricted cash reserves~~ and ~~minimum~~our ~~collateral~~financial ~~coverage ratios~~condition. ~~The~~For ~~value~~example, ofour ~~the collateral~~ability ~~that~~to ~~has~~access the ~~been~~capital ~~pledged~~markets inmay ~~both~~be ~~facilities~~severely ~~may~~restricted ~~change~~at ~~over~~a time, ~~including~~when ~~due~~we towould ~~factors that~~like, ~~are~~or ~~not~~need, ~~under~~to ~~our~~do ~~control~~so, which ~~resulting~~could inhave aan ~~situation~~impact ~~where~~on weour ~~may~~flexibility ~~not~~to bereact ~~able~~ to ~~maintain~~changing ~~the collateral~~economic ~~coverage~~and ~~ratio~~business conditions. In addition, ~~both of~~ the credit ~~facilities~~crisis ~~contain~~could ~~other negative covenants customary for such financings. These covenants may~~ have aan ~~material adverse~~ impact on our ~~operations.~~ ~~Moreover,~~fuel ifhedging wecontracts ~~fail~~or our tointerest ~~comply~~hedging ~~with~~contracts ~~the~~if ~~covenants~~counterparties ~~in either facility and~~ are ~~unable~~ forced to ~~obtain~~file afor ~~waiver~~bankruptcy or ~~amendment,~~are otherwise anunable ~~event~~to ofperform ~~default~~their ~~would result under that facility~~obligations.

~~Both~~The offinancial ~~the credit~~crisis ~~facilities~~and economic downturn have also ~~contain~~resulted ~~other~~in ~~events~~broadly oflower ~~default~~investment asset ~~customary~~returns and values, including in the defined benefit pension plans that we sponsor for eligible ~~such~~employees ~~financings~~and retirees. IfAs anof ~~event~~December 31, 2008, the defined benefit pension plans had an estimated benefit obligation of ~~default~~approximately $8.8 billion and were tofunded ~~occur,~~through ~~the~~assets ~~lenders~~with ~~could,~~a value ~~among~~of ~~other~~approximately ~~things,~~$3.9 billion. ~~declare~~We ~~outstanding~~estimate ~~borrowings~~that our funding requirements for our defined ~~under~~benefit pension plans, which are governed by the ~~respective~~Employee ~~credit~~Retirement ~~facility~~Income ~~immediately~~Security ~~due~~Act (“ERISA”) and ~~payable~~have been frozen for future accruals, ~~and~~are ~~our~~approximately ~~cash~~$60 million ~~may~~in ~~become~~2009 and $300 million ~~restricted~~in 2010. WeThe ~~cannot~~significant ~~provide~~increase ~~assurance~~in ~~that~~required wefunding ~~would~~is ~~have~~due ~~sufficient~~primarily ~~liquidity~~ to ~~repay~~the ordecline in the ~~refinance~~investment ~~borrowings~~markets ~~under~~in ~~either~~2008, ofwhich negatively affected the ~~credit~~value ~~facilities~~of ifour ~~such~~pension ~~borrowings~~assets. ~~were~~Estimates of ~~accelerated~~pension ~~upon~~plan anfunding requirements can vary materially from actual funding requirements because ~~event~~the ofestimates ~~default.~~are Inbased ~~addition~~on various assumptions concerning factors outside our control, anincluding, among ~~event~~other ofthings, ~~default~~the ormarket ~~declaration~~performance of assets; statutory requirements; and demographic data ~~acceleration~~for ~~under~~participants, ~~either~~including the number of participants and the rate of participant attrition. ~~credit~~Results ~~facilities~~that ~~could~~vary ~~also~~significantly ~~result~~from inour anassumptions ~~event~~could ofhave ~~default~~a ~~under~~material ~~other~~impact ~~financing~~on ~~agreements~~our future funding obligations.

21Our substantial indebtedness may limit our financial and operating activities and may adversely affect our ability to incur additional debt to fund future needs.

We have substantial indebtedness, which could:

	•		require us to dedicate a substantial portion of cash flow from operations to the payment of principal, and interest on, indebtedness, thereby reducing the funds available for operations and future business opportunities;

	•		make it more difficult for us to satisfy our payment and other obligations under our indebtedness;

	•		limit our ability to borrow additional money for working capital, restructurings, capital expenditures, research and development, investments, acquisitions or other purposes, if needed, and increasing the cost of any of these borrowings;

	•		make us more vulnerable to economic downturns, adverse industry conditions or catastrophic external events;

	•		limit our ability to withstand competitive pressures;

	•		reduce our flexibility in planning for or responding to changing business and economic conditions; and/or

	•		limit our flexibility in responding to changing business and economic conditions, including increase competition and demand for new services, placing us at a disadvantage when compared to our competitors that have less debt, and making us more vulnerable than our competitors who have less debt to a downturn in our business, industry or the economy in general.

~~Our~~ In ~~ability~~addition, toa ~~use~~substantial ~~certain~~level ~~net~~of ~~operating~~indebtedness, ~~loss~~particularly ~~carryforwards~~because substantially all of our assets are currently subject to ~~offset~~liens, ~~future~~could ~~taxable~~limit ~~income~~our ability to obtain additional financing on acceptable terms or at all for working capital, capital expenditures and general corporate Upurposes.S We have historically had substantial liquidity needs in the operation of our business. These ~~federal~~liquidity ~~income~~needs ~~tax~~could ~~purposes~~vary issignificantly ~~subject~~and tomay ~~limitation~~be affected by general economic conditions, industry trends, performance and many other factors not within our control.

InOur revolving ~~general,~~credit ~~under~~facility ~~Section 382~~includes offinancial ~~the~~and ~~Internal~~other ~~Revenue~~covenants ~~Code of 1986, as amended, a corporation~~ that ~~undergoes~~impose ~~an “ownership change” is subject to limitations~~ restrictions on ~~its~~our ~~ability~~financial toand ~~utilize~~business ~~its pre-change net operating losses (“NOLs”), to offset future taxable income~~operations. ~~In general, an ownership~~ change occurs if the aggregate stock ownership of certain stockholders increases by more than 50 percentage points over such stockholders’ lowest percentage ownership during the testing period (generally three years).

AsOur ofrevolving ~~June 30,~~credit ~~2009,~~facility ~~Delta~~agreement ~~reported~~contains afinancial ~~consolidated~~covenants ~~federal~~that ~~and~~require ~~state~~us ~~NOL~~to ~~carryforward~~maintain ~~of approximately $16.0 billion. Both Delta and Northwest experienced an ownership change in 2007 as~~ a ~~result~~minimum offixed ~~their~~charge ~~respective~~coverage ~~plans~~ratio, ofminimum ~~reorganization~~unrestricted ~~under~~cash ~~Chapter 11~~reserves ofand ~~the U.S.~~minimum ~~Bankruptcy~~collateral ~~Code~~coverage ratios. AsIn aaddition, ~~result of~~ the ~~merger,~~credit ~~Northwest~~facility ~~experienced~~contains aother ~~subsequent~~negative ~~ownership change.~~covenants ~~Delta~~customary ~~and~~for ~~its~~such ~~subsidiaries,~~financings. ~~including~~If ~~Northwest,~~we ~~experienced~~fail ato ~~subsequent~~comply ~~ownership~~with ~~change~~these oncovenants ~~December 17,~~and ~~2008~~are asunable to obtain a ~~result~~waiver ofor ~~the merger~~amendment, ~~the~~an ~~issuance~~event of ~~equity~~default towould ~~employees~~result. inThese ~~connection~~covenants ~~with~~are ~~the~~subject ~~merger~~to ~~and other transactions~~important ~~involving~~exceptions ~~the~~and ~~sale of our common stock within the testing period~~qualifications.

The revolving credit facility agreement also contains other events of default customary for such financings. If an event of default were to occur, the lenders could, among other things, declare outstanding amounts due and payable, and our cash may become restricted. We cannot provide assurance that we would have sufficient liquidity to repay or refinance the borrowings under the credit facility if such amounts were accelerated upon an event of default. In addition, an event of default or declaration of acceleration under the credit facility could also result in an event of default under other of our financing agreements.

Employee strikes and other labor-related disruptions may adversely affect our operations.

Our business is labor intensive, utilizing large numbers of pilots, flight attendants and other personnel. As of September 30, 2009, approximately 59% of our workforce was unionized. Strikes or labor disputes with our unionized employees may adversely affect our ability to conduct business. Relations between air carriers and labor unions in the United States are governed by the Railway Labor Act, which provides that a collective bargaining agreement between an airline and a labor union does not expire, but instead becomes amendable as of a stated date. The Railway Labor Act generally prohibits strikes or other types of self-help actions both before and after a collective bargaining agreement becomes amendable, unless and until the collective bargaining processes required by the Railway Labor Act have been exhausted.

In addition, if we or our affiliates are unable to reach agreement with any of our unionized work groups on future negotiations regarding the terms of their collective bargaining agreements or if additional segments of our workforce become unionized, we may be subject to work interruptions or stoppages, subject to the requirements of the Railway Labor Act. Likewise, if third party regional carriers with whom we have contract carrier agreements are unable to reach agreement with their unionized work groups on current or future negotiations regarding the terms of their collective bargaining agreements, those carriers may be subject to work interruptions or stoppages, subject to the requirements of the Railway Labor Act, which could have a negative impact on our operations.

The ability to realize fully the anticipated benefits of our merger with Delta may depend on the successful integration of the businesses of Delta and Northwest.

Our merger with Delta involved the combination of two companies which operated as independent public companies prior to the merger. Delta is devoting significant attention and resources to integrating business practices and operations in order to achieve the benefits of the merger, including expected synergies. If we are unable to integrate our business practices and operations in a manner that allows us to achieve the anticipated revenue and cost synergies, or if achievement of such synergies takes longer or costs more than expected, the anticipated benefits of the merger may not be realized fully or at all or may take longer to realize than expected. In addition, it is possible that the integration process could result in the loss of key employees, diversion of management’s attention, the disruption or interruption of, or the loss of momentum in our ongoing businesses or inconsistencies in standards, controls, procedures and policies, any of which could adversely affect our ability to maintain relationships with customers and employees or our ability to achieve the anticipated benefits of the merger, or could reduce our earnings or otherwise adversely affect our business and financial results. Delta expects to incur total cash costs of approximately $500 million over approximately three years to integrate the two airlines.

Completion of the integration of the Delta and Northwest Airlines, Inc. workforces may present significant challenges.

The successful integration of Delta and Northwest and achievement of the anticipated benefits of the merger depend significantly on integrating Delta’s and Northwest Airlines, Inc.’s employee groups and on maintaining productive employee relations. While integration of a number of the workgroups (including pilots and aircraft maintenance technicians) is proceeding, completion of the integration of certain workgroups (including flight attendants, airport employees and reservations employees) of the two pre-merger airlines will require the resolution of potentially difficult issues, including, but not limited to the process and timing for determining whether the combined post-merger workgroups wish to have union representation. Unexpected delay, expense or other challenges to integrating the workforces could impact the expected synergies from the combination of Delta and Northwest and affect our financial performance.

Interruptions or disruptions in service at one of our hub airports could have a material adverse impact on our operations.

Our business is heavily dependent on our operations at our hub airports in Detroit, Memphis, Minneapolis/St. Paul, Amsterdam and Tokyo-Narita. Each of these hub operations includes flights that gather and distribute traffic from markets in the geographic region surrounding the hub to other major cities and to other hubs. A significant interruption or disruption in service at one of our hubs could have a serious impact on our business, financial condition and results of operations.

We are increasingly dependent on technology in our operations, and if our technology fails or we are unable to continue to invest in new technology or integrate the systems and technologies of Delta and Northwest, our business may be adversely affected.

We have become increasingly dependent on technology initiatives to reduce costs and to enhance customer service in order to compete in the current business environment. For example, we have made significant investments in websites, check-in kiosks and related initiatives. The performance and reliability of the technology are critical to our ability to attract and retain customers and our ability to compete effectively. These initiatives will continue to require significant capital investments in our technology infrastructure to deliver these expected benefits. If we are unable to make these investments, our business and operations could be negatively affected. In addition, we may face challenges associated with integrating complex systems and technologies that support the separate operations of Delta and Northwest. If we are unable to manage these challenges effectively, our business and results of operations could be negatively affected.

In addition, any internal technology error or failure or large scale external interruption in technology infrastructure we depend on, such as power, telecommunications or the internet, may disrupt our technology network. Any individual, sustained or repeated failure of technology could impact our customer service and result in increased costs. Our technology systems and related data may be vulnerable to a variety of sources of interruption due to events beyond our control, including natural disasters, terrorist attacks, telecommunications failures, computer viruses, hackers and other security issues. While we have in place, and continue to invest in, technology security initiatives and disaster recovery plans, these measures may not be adequate or implemented properly to prevent a business disruption and its adverse financial consequences to our business.

If we experience losses of senior management personnel and other key employees, our operating results could be adversely affected.

We are dependent on the experience and industry knowledge of our officers and other key employees to execute our business plans. If we experience a substantial turnover in our leadership and other key employees, our performance could be materially adversely impacted. Furthermore, we may be unable to attract and retain additional qualified executives as needed in the future.

We are at risk of losses and adverse publicity stemming from any accident involving our aircraft.

An aircraft crash or other accident could expose us to significant tort liability. The insurance we carry to cover damages arising from any future accidents may be inadequate. In the event that the insurance is not adequate, we may be forced to bear substantial losses from an accident. In addition, any accident involving an aircraft that we operate or an aircraft that is operated by an airline that is one of our codeshare partners could create a public perception that our aircraft are not safe or reliable, which could harm our reputation, result in air travelers being reluctant to fly on our aircraft and harm our business.

Our ability to use net operating loss carryforwards to offset future taxable income for U.S. federal income tax purposes is subject to limitation.

In general, under Section 382 of the Internal Revenue Code of 1986, as amended, a corporation that undergoes an “ownership change” is subject to limitations on its ability to utilize its pre-change net operating losses ("NOLs"), to offset future taxable income. In general, an ownership change occurs if the aggregate stock ownership of certain stockholders (generally 5% shareholders, applying certain look-through rules) increases by more than 50 percentage points over such stockholders’ lowest percentage ownership during the testing period (generally three years).

As of September 30, 2009, Delta reported a consolidated federal and state NOL carryforward of approximately $16.5 billion. Both Delta and Northwest experienced an ownership change in 2007 as a result of their respective plans of reorganization under Chapter 11 of the U.S. Bankruptcy Code. As a result of the merger, Northwest experienced a subsequent ownership change. Delta also experienced a subsequent ownership change on December 17, 2008 as a result of the merger, the issuance of equity to employees in connection with the merger and other transactions involving the sale of our common stock within the testing period.

The Delta and Northwest ownership changes resulting from the merger could limit the ability to utilize pre-change NOLs that were not subject to limitation, and could further limit the ability to utilize NOLs that were already subject to limitation. Limitations imposed on the ability to use NOLs to offset future taxable income could cause U.S. federal income taxes to be paid earlier than otherwise would be paid if such limitations were not in effect and could cause such NOLs to expire unused, in each case reducing or eliminating the benefit of such NOLs. Similar rules and limitations may apply for state income tax purposes. NOLs generated subsequent to December 17, 2008 are not limited.

Risk Factors Relating to the Airline Industry

The rapid spread of contagious illnesses can have a material adverse effect on our business and results of operations.

The rapid spread of a contagious illness, such as the H1N1 flu virus beginning in March 2009, can have a material adverse effect on the demand for worldwide air travel and therefore have a material adverse effect on our business and results of operations. Further acceleration of the spread of H1N1 during the flu season in the Northern Hemisphere could have a significant adverse impact on our financial results in addition to the impact that we have already experienced during the spring of 2009. Moreover, our operations could be negatively affected if employees are quarantined as the result of exposure to a contagious illness. Similarly, travel restrictions or operational problems resulting from the rapid spread of contagious illnesses in any part of the world in which we operate may materially impact our operations and adversely affect our results of operations.

The airline industry is highly competitive and, if we cannot successfully compete in the marketplace, our business, financial condition and operating results will be materially adversely affected.

We face significant competition with respect to routes, services and fares. Our domestic routes are subject to competition from both new and established carriers, some of which have lower costs than we do and provide service at low fares to destinations served by us. In particular, we face significant competition at ~~several of~~ our hub airports either directly at ~~the~~those ~~hub~~ airports or at the hubs of other airlines that are located in close proximity to our hubs. We also face competition in smaller to medium-sized markets from regional jet operators.

Low-cost carriers, including Southwest, AirTran and JetBlue, ~~in the U.S.~~ have placed ~~significant~~ significant competitive pressure on ~~us and other~~ network carriers in the domestic market. In addition, other network carriers have also significantly reduced their costs over the last several years. Our ability to compete effectively depends, in part, on our ability to maintain a competitive cost structure. If we cannot maintain our costs at a competitive level, then our business, financial condition and operating results could be materially adversely affected. In light of increased jet fuel costs and other issues in recent years, we expect consolidation to occur in the airline industry. As a result of consolidation, we may face significant competition from larger carriers that may be able to generate higher amounts of revenue and compete more efficiently.

In addition, we compete with foreign carriers, both on interior U.S. routes, due to marketing and codesharing arrangements, and in international markets. Through marketing and codesharing arrangements with U.S. carriers, foreign carriers have obtained access to interior U.S. passenger traffic. Similarly, U.S. carriers have increased their ability to sell international transportation, such as transatlantic services to and beyond European cities, through alliances with international carriers. International marketing alliances formed by domestic and foreign carriers, including the Star Alliance (among United Airlines, Lufthansa German Airlines and others and which Continental has announced its intention to join in October 2009) and the oneworld Alliance (among American Airlines, British Airways and others) have also significantly increased competition in international markets. InThe ~~addition, the~~ adoption of liberalized Open Skies Aviation ~~Agreements~~ Agreements with an increasing number of countries around the world, including in particular the Open Skies agreement between the ~~U.S.~~United States and the Member States of the European Union, has accelerated this trend. Negotiations are under way between the United States and other countries, such as Japan, regarding similar agreements with countries, which, if effectuated, could significantly increase competition in these markets.

2227

The rapid spread of contagious illnesses can have a material adverse effect on our business and results of operations.

The rapid spread of a contagious illness, such as the H1N1 flu virus, can have a material adverse effect on the demand for worldwide air travel and therefore have a material adverse effect on our business and results of operations. Further acceleration of the spread of H1N1 during the flu season in the Northern Hemisphere could have a significant adverse impact on the demand for air travel and as a result our financial results in addition to the impact that we experienced during the spring of 2009. Moreover, our operations could be negatively affected if employees are quarantined as the result of exposure to a contagious illness. Similarly, travel restrictions or operational problems resulting from the rapid spread of contagious illnesses in any part of the world in which we operate may have a materially adverse impact on our business and results of operations.

Terrorist attacks or international hostilities may adversely affect our business, financial condition and operating results.

The terrorist attacks of September 11, 2001 caused fundamental and permanent changes in the airline industry, including substantial revenue declines and cost increases, which resulted in industry-wide liquidity issues. Additional terrorist attacks or fear of such attacks, even if not made directly on the airline industry, would negatively affect us and the airline industry. The potential negative effects include increased security, insurance and other costs and lost revenue from increased ticket refunds and decreased ticket sales. Our financial resources might not be sufficient to absorb the adverse effects of any further terrorist attacks or other international hostilities involving the United States.

The airline industry is subject to extensive government regulation, and new regulations may increase our operating costs.

Airlines are subject to extensive regulatory and legal compliance requirements that result in significant costs. For instance, the Federal Aviation Administration (“FAA”) from time to time issues directives and other regulations relating to the maintenance and operation of aircraft that necessitate significant expenditures. We expect to continue incurring expenses to comply with the FAA’s regulations.

Other laws, regulations, taxes and airport rates and charges have also been imposed from time to time that significantly increase the cost of airline operations or reduce revenues. For example, the Aviation and Transportation Security Act, which became law in November 2001, mandates the federalization of certain airport security procedures and imposes additional security requirements on airports and airlines, most of which are funded by a per ticket tax on passengers and a tax on airlines. The federal government has on several occasions proposed a significant increase in the per ticket tax. The proposed ticket tax increase, if implemented, could negatively impact our revenues.

Proposals to address congestion issues at certain airports or in certain airspace, particularly in the Northeast United States, have included concepts such as “congestion-based” landing fees, “slot auctions” or other alternatives that could impose a significant cost on the airlines operating in those airports or airspace and impact the ability of those airlines to respond to competitive actions by other airlines. Furthermore, events related to extreme weather delays have caused Congress and the U.S. Department of Transportation to consider proposals related to airlines’ handling of lengthy flight delays during extreme weather conditions. The enactment of such proposals could have a significant negative impact on our operations. In addition, some states have also enacted or considered enacting such regulations.

Future regulatory action concerning climate change and aircraft emissions could have a significant effect on the airline industry. For example, the European Commission is seeking to impose an emissions trading scheme applicable to all flights operating in the European Union, including flights to and from the United States. Laws or regulations such as this emissions trading scheme or other U.S. or foreign governmental actions may adversely affect our operations and financial results.

We and other U.S. carriers are subject to domestic and foreign laws regarding privacy of passenger and employee data that are not consistent in all countries in which we operate. In addition to the heightened level of concern regarding privacy of passenger data in the United States, certain European government agencies are initiating inquiries into airline privacy practices. Compliance with these regulatory regimes is expected to result in additional operating costs and could impact our operations and any future expansion.

Our insurance costs have increased substantially as a result of the September 11, 2001 terrorist attacks, and further increases in insurance costs or reductions in coverage could have a material adverse impact on our business and operating results.

As a result of the terrorist attacks on September 11, 2001, aviation insurers significantly reduced the maximum amount of insurance coverage available to commercial air carriers for liability to persons (other than employees or passengers) for claims resulting from acts of terrorism, war or similar events. At the same time, aviation insurers significantly increased the premiums for such coverage and for aviation insurance in general. Since September 24, 2001, the U.S. government has been providing U.S. airlines with war-risk insurance to cover losses, including those resulting from terrorism, to passengers, third parties (ground damage) and the aircraft hull. The coverage currently extends through August 31, 2010. The withdrawal of government support of airline war-risk insurance would require us to obtain war-risk insurance coverage commercially, if available. Such commercial insurance could have substantially less desirable coverage than that currently provided by the U.S. government, may not be adequate to protect our risk of loss from future acts of terrorism, may result in a material increase to our operating expenses or may not be obtainable at all, resulting in an interruption to our operations.

ITEM 6. Exhibits.

(a)

Exhibits:

~~31.1~~	31.1	~~Certification by Northwest’s President and Chief Operating Officer with respect to Northwest’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2009~~	Certification by Northwest’s President and Chief Operating Officer with respect to Northwest’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2009
~~31.2~~	31.2	~~Certification by Northwest’s Vice President - Finance with respect to Northwest’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2009~~	Certification by Northwest’s Senior Vice President & Treasurer with respect to Northwest’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2009

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 ~~30th~~28th day of ~~July~~October 2009.

~~NORTHWEST~~Northwest ~~AIRLINES~~Airlines ~~CORPORATION~~Corporation By /s/ ~~Ray~~Paul ~~Winborne~~Jacobson ~~Ray~~Paul ~~Winborne~~Jacobson Senior Vice President —& ~~Finance~~Treasurer (Principal Financial and Accounting Officer)

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

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