Northwest Airlines (NWA) Increases Fuel Surcharge
Northwest Airlines (NYSE: NWA) announced it will increase the fuel surcharge $10 each way, matching the increase first implemented by Delta Air Lines and matched by United Airlines, American Airlines, and Continental Airlines. This brings the fuel surcharge on domestic fares to $65 each way.
Crude oil, which is Northwest's largest operating expense, closed at $123.69 per barrel on Thursday. Oil accounts for nearly 40% of Northwest's costs and continues to represent an extraordinary challenge for Northwest and the airline industry.
Last month, the airline announced a plan to mitigate the dramatic fuel cost increases. That plan included revenue enhancements from increased fees, fares and fuel surcharges; domestic capacity reductions of five percent; a fleet reduction of 15 to 20 aircraft; an estimated $100 million reduction in non-aircraft capital expenditures; and a $100 million improvement to the airline's bottom line, profit and loss statement, that will be achieved through other cost reductions, productivity improvements and revenue enhancements.[SM]
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