Northwest Orient Airlines Annual Report 1981 
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Northwest Orient Airlines now serves 16 countries. 
  From The President 
The 55th Annual Report to Shareholders 
Northwest Airlines earned a net profit 
of $10,460,000 in 1981. This was a 
favorable result against the back- 
drop of rising costs, recession- 
softened traffic, severe price-cutting 
by some carriers, and reduced air 
traffic control capacity following the 
PATCO strike. With a $26 million 
improvement in operating income 
and a S3 million gain in net earnings 
over 1980, Northwest Airlines was one 
of only four major U.S. carriers to 
report a net profit for 1981. 
Progress in 1981 
Significant progress was made in a 
number of areas to strengthen the 
company and enhance its ability to 
meet the serious challenges now 
at hand. 
 We took delivery of two Boeing 
727-200's early in the year. Final 
payments of $20 million were made 
from internally provided funds. Major 
ground equipment additions were 
also made during the year. 
 We met competition from old 
and new carriers alike and 
increased our market share of total 
traffic through an aggressive 
marketing program which included 
a new advertising look. 
 We began new services: Boston 
to London; Twin Cities to Oslo; Los 
Angeles nonstop to Tokyo; Tokyo to 
Guam; and Taipei to Manila. We 
also began a new cargo service 
to Houston. 
Your company's unique financial 
strength shows in the fact that total 
debt of all kinds represented only 
13% of invested capital at year end; 
and our long-term debt, now down 
to $12.5 million, contrasts widely with 
debt of many other airlines now in 
the hundreds of millions in 
most cases. 
Difficulties in 1982 
The a irline industry is in crisis as we 
move into 1982. The deepening 
economic slump has brought two 
successive years of depressed traffic, 
and strong measures are required 
4 
to fend off crippling effects of the 
continuing downturn. We have 
already begun. 
 Company officers' salaries have 
been frozen at the level set over a 
year ago in January 1981. 
 Six hundred management 
employees have already started a 
new program entitled "Ten Percent 
More Work-Not Ten Percent Less 
Pay''. Under this plan, effective from 
mid-February, each manager will 
work an extra half-day per week. 
 Cutbacks in some poor flights have 
been made in February and March 
to accommodate the deepening 
recession in traffic. 
 Along with these cutbacks, job 
reductions equivalent to 560 fewer 
employees for the near term have 
been accomplished by unpaid 
leaves of absence; advanced 
vacations; and approximately 200 
layoff notices. 
These efforts will do much to keep 
Northwest Airlines in shape to retain 
its strong position in the industry. 
Fleet Update 
While soaring interest rates and 
depressed profits have occasioned 
a delay in new fleet orders at this 
time, Northwest Airlines has none- 
theless embarked on a strong 
program to increase the capacity 
and economic value of its present 
fleet of 106 passenger airplanes. 
In recent months Northwest Airlines 
began a major modification and 
seat reconfiguration program with its 
fifty-two 727-200 aircraft. In addition 
Northwest has implemented plans to 
improve seating capacity in its 24 
Boeing 7 47's and 22 McDonnell 
Douglas DC-10 aircraft during 1982 
and 1983. 
New slimline, lighter seating, 
providing greater comfort levels 
than before, improved the Boeing 
727-200 capacity from 128 to 146 
passenger seats. The airline's 7 47 
reconfiguration will increase 
capacity from 367 to 394 seats 
while providing a more spacious 
and comfortable executive class 
compartment which broadens the 
appeal to business travelers. 
The DC-10 modification to follow in 
1983 will involve complete refurbish- 
ment of the aircraft's interior and an 
improved seating capacity from the 
current 236 to a total of 292 seats. 
Northwest Airline's modification 
program to improve its total 
passenger fleet seating capacity 
will provide a gain of new seats 
equivalent to 14 new airplanes at an 
overall cost of S33,000,000. This 
additional capacity in Northwest 
Airlines aircraft plus complete rework 
of the DC-10 interiors will require a 
low capital cost outlay of about 
S 12,000 per seat compared with the 
new-airplane cost of $150,000 to 
$200,000 per seat. 
New Officers Elected 
Two corporate officer changes have 
been made in the past year. Bruce 
Fillips was elected Vice President- 
Comptroller and James Thorne was 
elected Vice President-Properties. 
A special note of gratitude must be 
extended to Lyman E. Wakefield, Jr. 
who retired this year from our board 
of directors. Elected a member of 
the board in March 1954, Lyman E. 
Wakefield, Jr. served with distinction 
as a director of Northwest Airlines for 
more than 27 years. 
In Summary 
We have an outstanding fleet, a 
sound route structure, excellent 
facilities and a highly trained and 
dedicated group of employees. 
We thank you for your confidence in 
1981 and we will work to maintain 
your trust as we direct our efforts to 
maximize the opportunities for 
Northwest Airlines throughout 1982. 
-=;., 
Jr- ir-7 
M. Joseph Lapensky 
President and Chief Executive Officer 
March 26, 1982 
 Marketing Highlights Northwest Orient's 1981 
marketing efforts were 
directed toward expanding 
the airline's share of high-yield 
commercial traffic while 
heightening its emphasis on 
customer service and 
convenient scheduling. 
Responding to an 
increasingly competitive 
environment, Northwest 
restructured its already strong 
sales department. A new 
Market Planning Division was 
created enabling Northwest 
to improve its planning and 
execution of marketing 
strategies appropriate in the 
price-sensitive, deregulated 
environment of today. 
New market strategies 
included strengthening of 
existing traffic hubs and 
introducing service in 
selected new markets, while 
utilizing flexible pricing 
policies and service 
combinations to increase 
traffic and market share. 
Advertising 
Northwest Orient initiated a 
major reorganization of its 
domestic system advertising 
agencies with the appoint- 
ment of Grey Advertising, Inc. 
and Colle McVoy, Inc. 
Geirongerfjord in Norway. 
Grey's priority assignment was 
to reposition Northwest Orient 
Airlines in the domestic 
marketplace. This effort 
resulted in what may well 
be Northwest's most 
effective communication 
package ever. 
After assessing results of 
an intense nationwide 
research project, Northwest 
developed a significant 
advertising strategy to 
increase identity and market 
share by concentrating 
advertising weight in eight 
major domestic stronghold 
markets. Substantial television 
time was purchased in these 
5 
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 Marketing Highlights 
(continued) 
New nonstop service from 
Los Angeles to "lokw. on the 
airtine named for the-Orient. 
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cities. "The World Is Going Our 
Way" was chosen as the 
overall advertising theme to 
highlight the strong work 
ethic, fiscal conservatism 
and efficiency which 
characterizes Northwest and 
underscores the resultant 
benefits to the travel- 
ing public. 
"The American Winner" was 
introduced as the airlines' 
campaign theme throughout 
Europe embodying charac- 
teristics similar to the domestic 
campaign. 
Post advertising research 
demonstrates substantially 
improved consumer aware- 
ness of Northwest Airlines as a 
major worldwide carrier with 
one of the most modern, well- 
maintained fleets in the 
industry. 
Convention, Incentive and 
Charter Sales Increase 
Convention, Incentive and 
Charter Sales showed strong 
gains in 1981. Northwest 
Airlines has continued to 
maintain industry leadership 
in the Convention and 
Incentive market. Anticipating 
the needs of the expanding 
corporate meetings market, 
Northwest refined its 
nationwide convention 
coordination service to 
include greater emphasis 
on arranging air travel for 
business meetings. The new 
program called Northwest 
Orient Meeting Services, 
provides the corporate 
planner with toll-free phone 
access to a network of 
experienced cont erence 
and convention consultants. 
In addition, Northwest has 
developed special incentive 
air fares to attract more 
national corporations to the 
airline's European and 
Orient destinations. 
Charter Sales increased by 
7 3 % with the operation of 
747 charters to San Juan 
and Las Vegas through a 
major midwest tour operator. 
Fare Agreements Reached 
Northwest Orient Airlines 
concluded special low fare 
"Round The World" agree- 
ments with eight airlines to 
further enhance its inter- 
national traffic. 
In the U.S., economic 
conditions led to increased 
fare competition. One-way, 
deep discount fares 
replaced the round-trip 
advance purchase d iscount 
fares. Where necessary, 
Northwest Orient met the 
low-fare competition. 
Northwest continues to offer 
substantial savings on first- 
class, executive and 
economy-class fares to 
London through its Boston 
and Twin Cities gateways. 
These routes play a key role 
in generating new business 
through the London market 
and contributed greatly to 
Northwest's 45.5% increase in 
Atlantic passenger revenue. 
Tour Sales 
Northwest's Tour Sales carried 
out a program to position its 
tour products in a way to 
attract more discretionary 
traffic during an economi- 
cally sluggish year. 
Tourism to Northwest's Orient 
destinations showed good 
growth in 1981. Although 
Northwest did not fly directly 
into the People's Republic 
of China, travel to China 
became a highlight in 
promotional efforts for 
Pacific travel. 
In the Atlantic market, 
Northwest's tour programs 
produced strong traffic gains 
in the Twin Cities-London 
market during the peak 
summer season of 1981. 
The Boston-London nonstop 
route complemented the 
potential of the Twin Cities- 
London segment by building 
a strong nationwide tour base 
for 1982 and beyond. 
More contract bulk 
agreements were reached 
with major tour operators to 
stimulate leisure traffic in 
the domestic 48 states and 
to Hawaii. 
Cargo Market Share 
Expanded 
In spite of a stagnant 
economy, Northwest Airlines 
expanded its cargo market 
share by anticipating 
freighter service needs in 
key world markets. 
In 1981, Northwest provided a 
necessary link in the energy 
equipment supply chain by 
inaugurating 7 47 all-freighter 
service between the oil rich 
North Sea development 
through Prestwick, Scotland 
and Houston, Texas, and 
linked the Texas oil equipment 
supply base with the oil rigs of 
Alaska's North Slope through 
Anchorage and on to the 
oil-producing areas in South- 
east Asia. 
With a continuing improve- 
ment in yield, freight ton-miles 
were up 16.4 percent for 
1981, led by a gain of 44 
percent for Atlantic ton-miles. 
Pacific ton-miles were up 12 
percent and domestic ton- 
miles climbed 13 percent in 
this period. 
Total freight revenue for 1981 
was up 16.6 percent for the 
year, with increases of 5.5 
percent in domestic revenue, 
28 percent in Pacific revenue 
and 17 percent in Atlantic 
revenue. 
Freighters continue to carry 
the majority of our freight 
revenue ton-miles with 56 
percent of the total moving 
in the 747F. 
Northwest's position in the 
eastbound transatlantic 
Northwest's computerized engine testing facil ity. 
cargo market was 
strengthened when final 
approval was obtained from 
airport authorities in Boston for 
construction of the most 
advanced state-of-the-art 
cargo facility. Northwest's 
already strong position in the 
East Coast's high-technology 
electronic components 
market will be enhanced by 
this facility. 
Plans were laid during 
1981 for the opening of the 
San Francisco market to 
Northwest's 7 47 freighter 
service during early 1982. This 
promises a substantial market 
share of high-technology 
electronic equipment moving 
from California to the Orient. 
In addition, shipments of 
California produce continue 
to expand through this 
gateway. 
Recognizing that much of 
westbound transpacific 
freight is moved by Japanese 
freight consolidators, 
Northwest transferred key 
Orient employees to serve as 
International Customer 
Service Managers in the 
major shipping communities 
of New York, Chicago, Los 
Angeles and San Francisco. 
7 
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 Report of 
Ernst & Whinney, 
Independent 
Auditors 
Notice to 
Stockholders 
Northwest Airlines, Inc. 
8 
To the Stockholders and Board of Directors 
Northwest Airlines, Inc., Saint Paul, Minnesota 
We have examined the statements of financial position of Northwest Airlines, Inc. 
and subsidiaries as of December 31, 1981 and 1980, and the related statements of 
earnings, stockholders' equity and changes in financial position for each of the three 
years in the period ended December 31, 1981. Our examinations were made in 
accordance with generally accepted auditing standards and, accordingly, 
included such tests of the accounting records and such other auditing procedures 
as we considered necessary in the c ircumstances. 
In our opinion, the financia l statements referred to above present fairly the 
consolidated financial position of Northwest Airlines, Inc. and subsidiaries at 
December 31 , 1981 and 1980, and the consolidated results of their operations and 
changes in their financial position for each of the three years in the period ended 
December 31, 1981, in conformity with generally accepted accounting principles 
applied on a consistent basis. 
Saint Paul, Minnesota, February 18, 1982 
Any person who either owns, as of December 31 of the year preceding issuance of 
this annual report, or subsequently acquires, beneficially or as trustee, more than 
5 per centum, in the aggregate, of any class of the capital stock or capital of the air 
carrier, shall file with the Civil Aeronautics Board (CAB) a report containing the 
information required by Section 245.12 of the CAB's Economic Regulations on or 
before April 1, as to capital stock or capital owned as of December 31 of the 
preceding year, and, in the case of stock subsequently acquired, a report under 
Section 245.13 of such Economic Regulations, within 10 days after such acquisition, 
unless such person has otherwise filed with the CAB a report covering such 
acquisition or ownership. 
A bank or broker which holds, as trustee, more than 5 per centum of any class of the 
capital stock or capital of an air carrier to the extent that it holds such shares on the 
last day of any quarter of a calendar year, shall file with the CAB, within 30 days after 
the end of the quarter, a report in accordance with the provisions of Section 245.14 
of the CAB's Economic Regulations. Any person required to report under the CAB's 
regulations who grants a security interest in more than 5 per centum of any class of 
the capital stock or capital of the air carrier shall, within 30 days after granting such 
security interest, file with the CAB a report containing the information required in 
Section 245.15 of the CAB's Economic Regulations. 
Any stockholder who believes that he may be required to file such a report may 
obtain further information by writing to the Director, Bureau of Operating Rights, Civil 
Aeronautics Board, Washington, D.C. 20428. 
Co-Registrars and Transfer Agents: Northwestern National Bank, Minneapolis, MN, 
Northwestern Trust Co., f'lew York, NY. 
Stock Listed: Common Stock listed on New York Exchange, Pacific Coast Stock 
Exchange and Midwest Stock Exchange. There were 9,113 stockholders of record as 
of March 10, 1982. 
 Statements of Year Ended December 31 1981 1980 1979 
Earnings 
Operating Revenues 
Northwest Airlines, Inc. 
Pa ssenger $1 ,521 ,856 S 1,347,830 S 1,067,214 
(In Thousands) 
Freight 221 ,691 190,837 160,716 
Ma il 59,786 57,305 38,685 
Charter a nd other transportation 21 ,766 16,303 15,093 
Nontra nsport 29,191 27,055 28,850 
1,854,290 1,639,330 1,310,558 
Operating Expenses 
Flying operations 858,997 776,862 526,887 
Ma intena nce 156,450 139,833 111 ,647 
Passenger seNice 147,650 133,922 114,654 
Aircraft a nd traffic servicing 248,766 226,153 198,509 
ReseNations, sa les a nd advertising 271 ,344 229,148 169,341 
Administrative and general 35,847 33,468 27,767 
Depreciation a nd a mortization 133,489 124,078 106,401 
1,852,543 1,663,464 1,255,206 
OPERATING INCOME (LOSS) 1,747 (24,134) 55,352 
Other Income (Expenses) 
Interest, net of ca pita lized interest 
of ( 1981 - $6 72; 1980-$3,393; 
1979-$6,240) (14,135) (15,831) (1,635) 
Gain on sa le of flight equipment 16,975 143 15,544 
Other 3,322 3,719 15,099 
6,162 (11,969) 29,008 
EARNINGS (LOSS) BEFORE INCOME TAXES 7,909 (36,103) 84,360 
Income taxes (credit)-Note D (2,551) (43,187) 11 ,885 
NET EARNINGS $ 10,460 s 7,084 s 72,475 
Average shares of Common Stock 
outsta nd ing during the year 21,656 21 ,646 21 ,632 
Ea rnings per share of Common Stock $.48 S.33 $3.35 
See notes to financ ia l statements. 
9 
 Statements of December 31 1981 1980 
Financial Position Assets 
Northwest Airlines, Inc. 
(Dollars In Thousands) Current Assets 
Cash and short-term investments $ 34,570 $ 20,514 
Accounts receivable, less allowance of $1 ,700 
(1980-$1,600) 138,112 124,957 
Flight equipment spare parts, less allowance for 
depreciation of $23,369 (1980-$19,883) 41,418 42,654 
Maintenance and operating supplies 18,868 16,920 
Prepaid expenses 11,583 7,332 
TOTAL CURRENT ASSETS 244,551 212,377 
Other Assets 50,498 37,445 
Property and Equipment 
Flight equipment 1,992,015 1,995,168 
Less a llowance for depreciation 881,050 794,673 
1,110,965 1,200,495 
Advance payments on new flight equipment 9,166 
1,110,965 1,209,661 
Other property and equipment 190,397 169,423 
Less allowance for depreciation 104,030 96,367 
86,367 73,056 
1,197,332 1,282,717 
$1,492,381 $1,532,539 
10 
 December 31 1981 1980 
Liabilities and Stockholders' Equity 
Current Liabilities 
Commercial paper $ 45,551 s 34,168 
Accounts payable and accrued expenses 152,183 142,343 
Employee compensation 36,030 30,141 
Air traffic liability 88,233 107,013 
Income taxes 1,735 800 
Current maturities of long-term debt 50,000 37,500 
TOTAL CURRENT LIABILITIES 373,732 351 ,965 
Long-Term Debt-Note B 12,500 62,500 
Deferred Credits and Other Liabilities 
Income taxes-Note D 256,014 260,100 
Other 17,625 18,932 
273,639 279,032 
Stockholders' Equity-Note C 
Common Stock S1 .25 par value, authorized 
40,000,000 shares; issued and outstanding 
21,661,367 shares (1980-21,647,280 shares) 27,077 27,059 
Capital surplus 125,256 124,940 
Retained earnings 680,177 687,043 
832,510 839,042 
Commitments and Contingencies-Note F 
$1,492,381 $1 ,532,539 
See notes to financia l statements. 
11 
 Statements of Year Ended December 31 1981 1980 1979 
Changes in Funds Provided 
Financial Position Net earnings $ 10,460 s 7,084 s 72,475 
Northwest Airlines, Inc. Items not affecting working capital : 
(In Thousands) Depreciation and amortization 133,489 124,078 106,401 
Increase (decrease) in deferred 
income taxes (4,086) (53,228) 22,669 
TOTAL FROM OPERATIONS 139,863 77,934 201,545 
Proceeds from sale of flight equipment 
less gain included in earnings 6,274 433 2,818 
TOTAL PROVIDED 146,137 78,367 204,363 
Funds Used 
Flight equipment and other 
property additions 50,676 145,709 193,634 
Advance deposits on aircraft 9,1 66 96,503 
Cash d ividends 17,326 17,317 17,306 
Reduction of long-term debt 50,000 37,500 
Other 17,728 9,136 15,708 
TOTAL USED 135,730 218,828 323,151 
INCREASE (DECREASE) IN 
WORKING CAPITAL $ 10,407 $( 140,461) $(118,788) 
Changes in Working Capital Consist of 
Increase (decrease) in current assets: 
Cash and short-term investments $ 14,056 S (54,069) $( 109,445) 
Receivables 13,155 13,525 31,650 
Recoverable income taxes (21,726) 21,726 
Inventories 712 17,875 5,058 
Prepaid expenses 4,251 3,608 (2,334) 
32,174 (40,787) (53,345) 
Increase (decrease) in current liabilities: 
Commercial paper 11,383 34,168 
Accounts payable and accrued 
expenses 9,840 (21 ,057) 64,098 
Other accrued liabilities 6,824 1,594 (14,485) 
Air traffic liability (18,780) 47,469 15,830 
Current maturities of long-term debt 12,500 37,500 
21 ,767 99,674 65,443 
INCREASE (DECREASE) IN 
WORKING CAPITAL $ 10,407 $( 140,461) $(118,788) 
See notes to financial statements. 
12 
 Statements of 
Stockholders' 
Equity 
Northwest Airlines, Inc. 
(In Thousands) 
Notes to Financial 
Statements 
Northwest Airlines, Inc. 
Common Stock Capital Retained 
Shares Amount Surplus Earnings 
Balance January 1, 1979 21 ,626 $27,033 S 124,551 $642,107 
Exercise of stock options 14 16 246 
Net earnings for 1979 72,475 
Cash dividends-S .80 a share (17 ,306) 
Balance December 31 , 1979 21,640 27,049 124,797 697,276 
Exercise of stock options 7 10 143 
Net earnings for 1980 7,084 
Cash dividends-S .80 a share (17 ,317) 
Balance December 31, 1980 21,647 27,059 124,940 687,043 
Exercise of stock options 14 18 316 
Net earnings for 1981 10,460 
Cash dividends-S .80 a share (17,326) 
Balance December 31 , 1981 21,661 $27,077 S 125,256 $680,177 
See notes to financial statements. 
December 31 , 1981 
Note A-Accounting Policies 
A summary of significant accounting policies of the Company is set forth below: 
Basis of Presentation: The financial statements include the accounts of the Company 
and its wholly-owned subsidiaries after elimination of inter-company accounts and 
transactions. 
Short-Term Investments: Short-term investments are stated at cost which approximates 
market and amounted to $19,098,000 and $1,943,000 at December 31, 1981 and 
1980, respectively. 
Flight Equipment and Property: Provision for depreciation is computed by the straight 
line method over the estimated useful lives of the assets. Depreciation of flight 
equipment spare parts, rotables and assemblies is provided by the straight line 
method at rates which depreciate cost, less residual value, over the estimated useful 
lives of the related aircraft. 
Pension Plans: The Company has several noncontributory pension plans covering 
substantially all of its employees. The Company's policy is to annually fund pension 
costs accrued, which includes amortization of prior service costs over periods of ten 
to thirty years. 
Income Taxes: Income taxes are provided at statutory rates to earnings before 
income taxes regardless of when such taxes are paid . Deferred income taxes arise 
principally from timing differences between financial and tax methods of accounting 
for depreciation and capitalized interest. 
13 
 Notes to Financial 
Statements 
Northwest Airlines, Inc. 
14 
Note A-Accounting Policies (continued) 
The Company uses the flow-through method of accounting for investment credits. 
Investment credits not applied on tax returns are offset against deferred income taxes 
to the extent they are applicable to deferred taxes becoming payable in the 
investment credit carryover periods. 
Operating Revenues: Passenger and cargo revenues are recognized when the 
transportation is provided. 
Earnings Per Share: Earnings per share are based on the average number of shares 
of Common Stock outstanding. No material dilution would result upon exercise of 
outstanding stock options. 
Note 8-Long-Term Debt and Credit Arrangements 
Long-term debt consists of borrowings from banks payable $12.5 million quarterly 
beginning April 1, 1981. Interest is paid based on a formula related to prime 
commercia l loan rates; however, total interest shall not exceed H's% per annum 
over the term of the loan. The debt matures in 1983. 
The Company has line of credit arrangements with banks for short-term borrowings 
up to $125,000,000 through April 15, 1982. Borrowings under the credit lines bear 
interest at tr.1e prime rate. Commitment fees which are 3/s % per annum on 
outstanding bala nces of commercial paper amounted to $171,000 in 1981. At 
December 31 , 1981, $45,551,000 of the lines were assigned to support outstanding 
commerc ia l paper. 
Note C-Stockholders' Equity 
Shares 
1981 1980 
Cumulative Preferred Stock, $25 par value: 
Authorized 1,000,000 1,000,000 
Issued None None 
Common Stock options at prices which were not less than 100% of market at date of 
grant are as follows: 
Shares Price Per Share 
Outstanding at January 1, 1980 90,395 $19.13/24.00 
Exerc ised (7,691) 19.13/24.00 
Lapsed (18,939) 19.13/24.00 
Outstanding at December 31, 1980 63,765 22.75/24.00 
Exercised (14,087) 22.75/24.00 
Lapsed (5,560) 22.75/24.00 
Outstanding at December 31, 1981 44,118 22.75/24.00 
Options exercisable: 
At December 31 , 1980 63,765 22.75/24.00 
At December 31, 1981 44,118 22.75/24.00 
Shares available for stock option and other plans were 308,787 and 303,227 at 
December 31, 1981 and 1980, respectively. 
 Notes to Financial 
Statements 
Northwest AirU 
nes, Inc. 
Note D- Taxes on Earnings 
(Dollars In Thousands) 
Reconciliation of the Company's effective income tax rate and the statutory federa l 
income tax rate follows : 
Statutory rate applied to pre-tax income 
Add (deduct): 
Investment tax credit earned 
Rate change on timing d ifferences 
Other 
Total income tax expense (credit) 
1981 
S 3,637 
(4,837) 
(1,390) 
39 
$(2,551 ) 
Year Ended December 31 
1980 1979 
S( 16,607) $38,806 
(24,554) 
(1,521 ) 
(505) 
$(43, 187) 
(27,396) 
(553) 
1,028 
$11 ,885 
Federal, foreign and state income taxes (credit) consisted of the following: 
1981 1980 1979 
Current Deferred 
Federal provision 
(credit) S 22 $(3,598) 
Foreign 788 
State (207) 444 
$603 $(3, 154) 
Current Deferred 
$9,274 $(52,222) 
620 
(825) (34) 
$9,069 $(52,256) 
Current Deferred 
$(14,516) $23,175 
695 
825 1,706 
- - - 
$(12,996) $24,881 
The deferred income tax expense (credit), which results from timing d ifferences in 
recognizing items for financial reporting and income tax purposes, consists of 
the following: 
1981 1980 1979 
Accelerated depreciation S 1,919 $ 3,273 $19,1 76 
Investment tax and other credits (11 ,064) (60,218) (2,431) 
Prepaid expenses 1,525 1,958 
Interest 5,452 6,217 6,101 
Deferred employee benefits (25) (1 ,893) 2,752 
Rate change on timing differences (1 ,160) (318) (553) 
Other 199 (1 ,275) ( 164) 
$(3, 154) $(52,256) 24,881 
Investment tax cred its of $72,924 not applied on tax returns but offset against 
deferred income taxes at December 31, 1981 will expire $535 in 1990; $1 ,268 in 1991; 
$7,878 in 1992; $6,320 in 1993; $27,395 in 1994; $24,732 in 1995; and $4,796 in 1996. 
Note E-Commitments 
The Company does not lease any aircraft or related flight equipment. 
Leased property consists of space in a ir terminals, land and buildings at a irports, 
and ticket, sales and reservation offices under noncancelable operating leases 
which expire in various years through 2029. Portions of these faci lities are subleased 
under noncancelable operating leases expiring in various years through 1991 . 
15 
 Notes to Financial 
Statements 
Northwest Airlines, Inc. 
16 
Note E-Commitments (continued) 
Future minimum rental commitments at December 31, 1981 for noncancelable 
operating leases with initial or remaining terms of one year or more, of which 
$263,774,000 is for air terminal and airport facilities, are as follows: 
1982 
1983 
1984 
1985 
1986 
Thereafter 
Sublease rental income 
Rental expense for all operating leases consisted of: 
1981 
Minimum $25,238,000 
Sublease rental income (917,000) 
$24,321,000 
Note F-Contingencies 
1980 
$24,352,000 
(988,000) 
$23,364,000 
S 18,435,000 
17,024,000 
16,243,000 
15,665,000 
14,666,000 
189,471,000 
271,504,000 
(6,426,000) 
$265,078,000 
1979 
$22,029,000 
(842,000) 
$21,187,000 
The Company is a defendant in a class action brought in 1970 in federal court in 
Washington, D.C. by certain of its female cabin attendants alleging violations of 
certain provisions of the Equal Pay Act of 1963 and the Civil Rights Act of 1964. The 
trial judge held that provisions of both statutes had been violated by the Company. 
The Company appealed that decision. The Court of Appeals for the District of 
Columbia affirmed the trial judge on all substantive issues and remanded the case 
for further consideration by the trial court. After a denial of a motion for rehearing by 
the Court of Appeals, the Company petitioned the Supreme Court of the United 
States to review the decision of the Court of Appeals. That petition was denied on 
February 21, 1978. The case was then remanded to the trial court. In subsequent 
proceedings, the Court of Appeals has held that the original decision by the trial 
court was not a final decision and both the rulings of the trial court and the Court of 
Appeals may be reconsidered under appropriate circumstances. 
On remand the trial court decided that a three year rather than a two year statute of 
limitations is applicable to the alleged Civil Rights Act violations thereby increasing 
the Company's potential liability for back pay by the additional year, has determined 
that plaintiffs under the Equal Pay Act are entitled to liquidated damages equal in 
amount to the back pay which the court had already awarded, has ruled that 
longevity acquired by plaintiffs prior to the effective dates of the Equal Pay Act and 
the Civil Rights Act should not be considered in calculating back pay, and has 
denied a motion by plaintiffs to award a higher rate of compound interest in place of 
lower simple interest originally awarded by the trial court. Other matters remain to be 
decided by the trial court before a final judgment can be entered. When a final 
judgment is entered, either party may seek appellate review of that final judgment. 
The ultimate outcome of the litigation cannot be predicted and, therefore, no 
specific amount of ultimate liability may be estimated as probable. The Company 
estimates that its ultimate liability may range from approximately $1 million to 
approximately $50 million. 
 Notes to Financial 
Statements 
Northwest Airlines, Inc. 
Note F-Contingencies (continued) 
The Company brought an action against the unions that represented the plaintiffs in 
the class action described above seeking contribution from the unions for any liability 
for which the Company may ultimately be held responsible. The Supreme Court held, 
in a decision dated April 20, 1981, that unions may not be held liable in a suit for 
contribution by an employer under either the Civil Rights Act of 1964 or the Equal Pay 
Act of 1963. 
The Company is also involved in other legal actions relating to environmental issues 
(primarily noise and a ir pollution), a lleged employee discrimination, and other 
matters relating to the Company's business. While the Company is unable to predict 
the ultimate outcome of these actions, it is the opinion of management that their 
disposition will not have a material adverse effect on the Company's financial position. 
Note G - Pension Plans 
The Company's pension expense was S27,254,000 in 1981, S33,692,000 in 1980 and 
S29,691,000 in 1979. 
Actuarial assumptions were revised in 1981 princ ipally to update rates of pay 
increase and investment return to levels more reflective of actual plan experience. 
These changes reduced pension expense for 1981 by approximately S9.8 million. 
Accumulated plan benefit information, as estimated by consulting actuaries using a 
7 % interest assumption, and plan net assets for the Company's plans are: 
Actuarial present value of accumulated plan 
benefits: 
Vested 
Non-vested 
Net assets available for benefits 
Note H-Export Sales 
Year Ended December 31 
1981 1980 
$323,205,000 
30,362,000 
$353,567,000 
$363,213,000 
$273,038,000 
41,988,000 
$315,026,000 
S343, 765,000 
Northwest Airlines, Inc. is a scheduled air carrier engaged in commercial 
transportation of passengers, freight and mail, and operates under certificates of 
public convenience and necessity issued by the Civil Aeronautics Board. Export 
sales were $453,000,000 in 1981, S375,000,000 in 1980 and S255,000,000 in 1979, 
principally associated with countries in Asia and Europe. Revenue from sales 
consummated in foreign countries is considered to be export sales. 
17 
 Notes to Financial 
Statements 
Northwest Airlines, Inc. 
18 
Note I-Quarterly Results of Operations (Unaudited) 
The following is a tabulation of the unaudited quarterly results of operations for the 
two years ended December 31 , 1981: 
(In Thousands) Earnings 
Net (Loss) Per 
Operating Operating Earnings Share of 
Revenues Expenses (Loss) Common 
Stock 
1981 
First quarter s 418,939 s 438,017 S (7,384) S (.34) 
Second quarter 470,802 467,461 3,402 .16 
Third quarter 527,322 498,174 17,537 .81 
Fourth quarter 437,227 448,891 (3,095) (.15) 
$1 ,854,290 $1 ,852,543 S 10,460 S .48 
1980 
First quarter s 358,104 s 389,923 S( 10,903) S (.50) 
Second quarter 382,056 401 ,002 (5,203) (.24) 
Third quarter 481 ,718 456,455 17,475 .81 
Fourth quarter 417,452 416,084 5,715 .26 
S 1,639,330 $1 ,663,464 s 7,084 s .33 
The changing c ircumstances in the airline industry caused by the impact of 
deregulation and increased fares resulted in a significant increase in advance ticket 
purchases and a corresponding increase in advance payment of related travel 
agent commissions. Accordingly, in the fourth quarter of 1980, the Company deferred 
$4,256,000 in commissions paid applicable to revenue to be realized in future 
periods. The impact on 1980 net earnings amounted to $2,149,000 (S .10 per share). 
Note J-Supplemental Information on the Effects of Changing Prices (Unaudited) 
AS REQUIRED BY FINANCIAL ACCOUNTING STANDARDS BOARD (FASB) STATEMENT NO. 
33, "FINANCIAL REPORTING AND CHANGING PRICES", THE COMPANY MUST PROVIDE 
SUPPLEMENTAL INFORMATION CONCERNING THE EFFECT OF CHANGING PRICES ON ITS 
FINANCIAL STATEMENTS. The disclosures are intended to address two different aspects 
of an inflationary environment: ( 1) the effect of a rise in the general price level on the 
exchange value or purchasing power of the dollar (called "general inflation") and 
(2) the specific price changes in the individual resources used by the Company. 
Because there is presently no consensus on which aspect of inflation (if any) should 
be reported, FASB has devised an experiment requiring certain large, publicly held 
companies to present supplemental information reflecting both types of inflation 
measurements. 
IT IS IMPORTANT THAT FINANCIAL STATEMENT USERS UNDERSTAND WHAT THE INFLATION 
ADJUSTED DATA IS INTENDED TO REPRESENT, AND ALSO RECOGNIZE ITS INHERENT 
LIMITATIONS. THE COMPANY HAS SERIOUS RESERVATIONS ABOUT THE USEFULNESS OF 
THIS DATA. 
The Company believes that the following information is essential for a proper 
understanding and assessment of the data presented: 
 Notes to Financial 
Statements 
Northwest Airlines, Inc. 
Note J-Supplemental Information on the Effects of Changing Prices (Unaudited) 
(continued) 
THE SUPPLEMENTAL INFORMATION ON CHANGING PRICES DOES NOT REFLECT A 
COMPREHENSIVE APPLICATION OF EITHER TYPE OF INFLATION ACCOUNTING. During the 
experimental period the FASB decided to focus on those items most affected by 
changing prices, that is: (1) the effect of both general inflation and specific price 
changes on properties and related depreciation expense, and (2) the effect of 
general inflation on monetary assets and liabilities. 
Statement of Earnings Adjusted for Changing Prices 
Year Ended December 31, 1981 
(Dollars In Thousands) 
Operating revenues 
Depreciation and amortization 
Other operating expenses 
Gain on sale of flight equipment 
Other expenses, net 
Earnings (loss) before income taxes 
Income tax credit 
Net earnings (loss) 
Other Information 
Purchasing power gain from holding net 
monetary liabilities during the year 
As Reported 
in the 
Primary 
Statements 
S 1,854,290 
133,489 
1,719,054 
(16,975) 
10,813 
1,846,381 
7,909 
2,551 
S 10,460 
Increase in specific prices (current costs) of 
property and equipment held during the 
year 
Less effect of increase in general price 
level 
Excess of increase in specific prices over 
increases in the general price level 
Adjusted 
for General 
Inflation 
$1,854,290 
223,392 
1,719,054 
(7,552) 
10,813 
1,945,707 
(91,417) 
2,551 
S (88,866) 
Adjusted 
for General 
Inflation 
S 38,876 
Adjusted for 
Changes in 
Specific 
Prices 
(Current 
Costs) 
S 1,854,290 
262,075 
1,719,054 
10,813 
1,991 ,942 
(137,652) 
2,551 
S (135,101) 
Adjusted for 
Changes in 
Specific 
Prices 
(Current 
Costs) 
S 38,876 
$316,474 
213,874 
S 102,600 
 At December 31, 1981, current cost of property and equipment, net of accumulated 
depreciation, was $2,530,814,000 (historical amount-$ 1,197,332,000). 
19 
 Notes to Financial Note J-Supplemental Information on the Effects of Changing Prices (Unaudited) 
Statements (continued) 
Northwest Airlines, Inc. Five Year Comparison of Selected Supplementary Financial Data Adjusted for 
Effects of Changing Prices 
In Average 1981 Dollars 
(In thousands of 
Year Ended December 31 
dollars, except 1981 1980 1979 1978 1977 
per share data) 
Operating revenues S 1,854,290 $1,809,374 $1,642,116 $1,101,536 S 1,570,397 
Historical Cost 
Information 
Adjusted for General 
Inflation 
Net earnings (loss) (88,866) (69,189) 16,335 
Per share data ( 4.10) (3.20) .75 
Net assets at 
year end 1,552,650 1,622,243 1,659,633 
Current Cost 
Information 
Net earnings (loss) (135,101) (98,758) (25,014) 
Per share data (6.23) (4.56) ( 1.15) 
Excess of increase in 
specific prices of 
property and 
equipment over 
increase in the 
general price level 102,600 - 150,280 42,699 
Net assets at 
year-end 2,1 79,059 2,223,397 2,182,717 
Other Information 
Purchasing power 
gain from holding net 
monetary liabilities 
during the year 38,876 58,209 59,315 
Cash dividends 
declared per 
common share .80 .88 1.00 1.05 .75 
Market price per 
common share 
at year-end 27.00 26.21 34.62 39.73 35.46 
Average consumer 
price index 272.4 246.8 217 .4 195.4 181 .5 
Statement of Earnings 
The accompanying supplemental statement of earnings presents income data under 
three measurement methods. These are: 
a . As Reported in the Primary Statements-This amount is net earnings as reported in 
the primary financial statements on the historical cost basis of accounting. Under 
generally accepted accounting principles the effects of changing prices generally 
are not recognized for assets and liabilities. 
20 
 Notes to Financial 
Statements 
Northwest Airlines, Inc. 
Note J-Supplemental Information on the Effects of Changing Prices (Unaudited) 
(continued) 
b. Adjusted for General Inflation-This represents the historical amounts of revenues 
and expenses stated in dollars of the same (constant) general purchasing power, as 
measured by the average level of the Consumer Price Index (CPI) for 1981. Under this 
measurement method, historical amounts of depreciation expense and the gain on 
the sale of properties are adjusted to reflect the change in the level of the CPI that 
has occurred since the date the related properties were acquired. The amounts of 
revenues and other costs and expenses already approximate average 1981 constant 
dollars and remain unchanged from those amounts presented in the primary 
financial statements. 
c . Adjusted for Changes in Specific Prices (Current Costs)-lncome under current 
cost accounting attempts to deal with a d ifferent issue than income adjusted for 
general inflation. The specific prices of the Company's property have risen at a 
d ifferent rate than the general inflation rate as measured by the CPI. Current cost 
accounting measures properties at their current cost (rather than their historical cost) 
at the balance sheet date; depreciation is computed on average current cost for 
the year. 
Income Taxes 
Current tax laws do not recognize deductions for current cost depreciation expense; 
therefore, no adjustments have been made to the provisions for income tax. 
Purchasing Power Gain From Holding Net Monetary liabilities During the Year 
When prices are increasing, the holding of monetary assets (e.g., cash and 
receivables) results in a loss of general purchasing power. Similarly, liabilities are 
associated with a gain of general purchasing power because the amount of money 
required to settle the liabilities represents dollars of d iminished purchasing power. 
The net gain in purchasing power is shown separately in the accompanying 
supplemental data. The amount has been calculated based on the Company's 
average net monetary liabilities for the year multiplied by the change in the CPI 
for the year. Such amount does not represent funds available for distribution 
to stockholders. 
Increases in Current Cost of Properties 
Under current cost accounting, increases in specific prices (current cost) of properties 
held during the year (including realized gains and losses on those sold) are not 
included in income from continuing operations but are presented separately. The 
current cost increase is reduced by the effect of general inflation measured by 
applying the annual rate of change in the CPI to the average current cost 
balances of properties. 
Current Cost Measurements 
The current cost of property and equipment has been estimated by management 
using pricing data furnished to the airline industry by the Air Transport Association . 
Flight equipment represents approximately 93% of the property and equipment. 
Current cost depreciation is based on the average current cost of properties during 
the year. The depreciation methods (straight-line), salvage values and useful lives are 
the same as those used in preparing the primary financial statements. 
Current cost calculations involve a substantial number of judgments as well as use 
of various estimating techniques that have been employed to limit the cost of 
accumulating the data. The data reported should not be thought of as precise 
measurements of the assets and expenses involved, but instead represent 
reasonable approximations of the price changes that have occurred in the business 
environment in which the Company operates. 
Current cost does not purport to represent the amount at which the assets could 
be sold. 
21 
 10 Year Summary Years Ended December 31 1981 1980 1979 1978 t 1977 1976 1975 1974 1973 1972t 
Northwest Airlines, Inc. Operating Revenues 
(Dollars In Thousa nds Passenger $ 1,521,856 s 1,347,830 s 1,067,214 s 557,401 s 861,053 s 786,414 s 659,849 s 628,488 s 476,794 s 277,891 
Except Per Share Figures) Freig ht 221,691 190,837 160,7 16 87,077 121,185 119,882 88,308 76,157 55,280 34,694 
Mail 59,786 57,305 38,685 18,944 29,894 25,137 23,280 22,91 1 18,415 13,309 
Charter and other transportation 21 ,766 16,303 15,093 10,997 25,87 1 25,955 29,019 27,322 28,517 20,009 
Nontransport 29,191 27,055 28,850 115,743 8,352 6,420 107 4,1 13 5,342 46,598 
TOTAL OPERATING REVENUES $ 1,854,290 s 1,639,330 s 1,310,558 s 790, 162 s 1,046,355 s 963,808 s 800,563 s 758,991 s 584,348 s 392,501 
Operating Expenses 
Depreciation a nd amortization $ 133,489 s 124,078 s 106,401 
. s 104,970 s 103,152 s 102,713 s 98,880 s 96,213 s 87,642 s 81,054 
Other 1,719,054 1,539,386 1,148,805 617,907 838,619 758,147 651,983 584,993 445,401 296,348 
TOTAL OPERATING EXPENSES $ 1,852,543 s 1,663,464 s 1,255,206 s 722,877 $ 941,771 $ 860,860 s 750,863 s 681,206 s 533,043 s 377,402 
Operating income (loss) $ 1,747 s (24,134) s 55,352 s 67,285 s 104,584 s 102,948 s 49,700 s 77,785 s 51 ,305 s 15,099 
Interest expense (14,135) (1?,831) (1,635) (3,376) (6,518) (14,035) (16,120) (19,554) (14,758) (8,356) 
Other income and (deductions)-net 20,297 3,862 30,643 45,126 55,078 9,351 13,509 40,148 19,133 10,510 
Earnings (loss) before taxes $ 7,909 s (36,103) s 84,360 s 109,035 s 153,144 s 98,264 s 47,089 s 98,379 s 55,680 s 17,253 
Income taxes ( credit) (2,551) (43,187) 11 ,885 47,194 60,425 46,527 3,693 33,631 3,830 (429) 
Net Earnings1 $ 10,460 s 7,084 s 72,475 s 61,841 s 92,7 19 s 51,737 s 43,396 s 64,748 s 51,850 s 17,682 
Earnings per average share1 $ .48 s .33 s 3.35 s 2.86 s 4.29 s 2.39 s 2.01 s 3.00 s 2.40 s .83 
Cash dividends 17,326 17,317 17,306 16,210 10,804 9,707 9,710 9,722 9,722 9,620 
Dividends per share .80 .80 .80 .75 .50 .45 .45 .45 .45 .45 
Stockholders' equity 832,510 839,042 849,122 793,691 747,672 665,744 623,677 589,991 534,965 492,837 
Number of shares outstanding at 
end of year 21 ,661 ,367 21 ,647,280 21 ,639,589 21 ,626,284 21,606,686 21 ,606,036 21,604,136 21 ,604,136 21 ,604,136 21,604,136 
Book value per share at end of year $ 38.43 s 38.76 s 39.24 s 36.70 $ 34.60 s 30.81 s 28.87 s 27 .31 s 24.76 s 22.81 
Assets and Long-Term Debt 
Flight property at cost $ 1,992,015 $ 1,995,168 s 1,779,770 $ 1,525,442 $ 1,510,447 s 1,448,402 s 1,420,670 s 1,282,556 $ 1,216,632 s 1,008,041 
Flight property at net book value 1,110,965 1,200,495 1,094,556 922,615 962,957 924,537 977,062 907,935 861 ,231 682,020 
Total assets 1,492,381 1,532,539 1,528,921 1,392,865 1,299,451 1,151,562 1,215,146 1,121 ,153 1,085,632 920,418 
Long-term debt 12,500 62,500 100,000 100,000 100,000 122,000 246,000 213,900 284,000 208,000 
Unit Expenses 
Per available ton-mile 41.0 37.0 29.4 27.9 22.9 21 .6 20.6 19.9 15.8 16.9 
Per revenue ton-mile 84.7 80.6 63.4 65.7 54.4 50.5 50.2 48.2 42.5 49.6 
Per cent of operating revenues 99.9% 101.5% 95.8% 91 .5% 90.0% 89.3% 93.8% 89.8% 91.2% 96.2% 
Statistics- Scheduled Services 
Revenue plane-miles (000) 120,139 120,709 116,105 66,420 111,271 108,474 104,104 105,295 108,853 79,025 
Available seat-miles (000) 24,813,981 24,904,355 24,028,928 14,302,037 22,968,489 22,228,259 20,910,966 20,016,107 19,593,379 12,963,054 
Revenue passenger-miles (000) 14,251 ,932 13,810,889 13,298,161 7,018,305 11 ,100,412 10,758,683 9,471,282 9,173,875 8,007,850 4,565,618 
Passenger load factor 57.4% 55.5% 55.3% 
. 49.1% 48.3% 48.4% 45.3% 45.8% 40.9% 35.2% 
Revenue passengers carried 11 ,144,785 11 ,501,148 11 ,636,170 6,574,901 10,354,808 9,818,343 8,865,263 8,948,373 7,987,299 5,150,636 
Freight and express ton-miles (000) 616,285 529,434 504,753 302,153 458,143 467,399 386,309 317,437 251,865 150,973 
Total revenue ton-miles (000) 2,186,815 2,048,349 1,956,217 1,079,681 1,676,470 1,647,317 1,428,381 1,330,803 1,140,983 672,035 
Statistics-Total Operations 
Revenue p lane-miles (000) 120,761 121,243 117,027 67,471 114,643 112,279 107,721 110,519 115,726 84,098 
Available ton-miles (000) 4,519,768 4,495,666 4,265,640 2,594,632 4,109,110 3,982,743 3,642,650 3,431 ,038 3,370,694 2,236,069 
 Not covered by Accountants' Report. 
tStrikes a dversely affected 1972 and 1978. 
1 See Financial Highlights pages 24 through 27 for Management's Discussion of the Summary of Operations. 
22 23 
 Financial 
Highlights and 
Management 
Discussion for 1981 
Revenues 
Total operating revenues 
increased 13% in 1981 
to a new record of 
$1,854,290,000. The prior 
year's revenue of 
$1,639,330,000 was a 25% 
improvement over 1979's 
$1,310,558,000 total. 
Scheduled passenger 
revenues for 1981 increased 
$174,026,000 due to a 3.2% 
increase in traffic and a 9.4% 
increase in yield (revenue per 
passenger mile) from 9.76 to 
10.68. In 1981 Northwest was 
one of only two major U.S. 
a irlines to achieve a traffic 
gain in the second con- 
secutive year of traffic 
decline for the industry. 
24 
Passenger 
- Cooch $1 ,388.0 74.9% 
Passenger 
- First Class 133.9 7.2 
- Freight 221.7 12.0 
- Mail 59.8 3.2 
- Charter and 
Other 50.9 2.7 
$1 ,854.3 100.0% 
- - - - - 
Sources of 1981 
Operating Revenues 
(Dollars in Millions) 
Northwest implemented 
passenger fare increases in its 
domestic markets during 1981 
including a 15% increase in 
the 48 states; a 15% increase 
Mainland-Alaska; and a 16% 
increase Mainland-Hawaii. 
Fare adjustments on inter- 
national routes were also 
implemented during the year 
with Atlantic fares increasing 
22% and Pacific fares 10%. 
However, offsetting these 
general fare increases was 
the increased availability of a 
greater number and variety 
of special d iscount fares 
resulting from continued price 
competition. The use of these 
special discounts during 1981 
increased dramatically over 
the prior.year with a depres- 
sive effect on revenue per 
passenger mile. 
Freight revenues increased 
by $30,854,000 to 
$221,691,000 during 1981 
which resulted entirely from a 
16.4 % increase in freight 
volume. Mail revenues 
increased by $2,481,000 over 
the prior year to $59,786,000 
and charter and other 
transportation revenues 
increased $5,463,000 to 
$21,766,000. 
Expenses 
Operating expenses for 1981 
totaled $1,852,543,000 
compared with 
$1,663,464,000 in 1980 and 
Fuel and Oil S702.7 37.9% 
Employee Wages 
and Benefits 444.0 24.0 
- Landing Fees. 
Rentals. Materials 
and Services 401 .7 21 .7 
- Commission 170.6 9.2 
- Depreciation and 
Amortization 133.5 7.2 
$1,852.5 100.0% 
- - - - - 
Distribution of 1981 
Operating Expenses 
(Dollars in Millions) 
$1 ,255,206,000 in 1979. As a 
result of Northwest's cost 
control the rate of increase in 
these expenses moderated 
during 1981. The current year 
total increase was 11.4% over 
the prior year. The increase in 
1980 operating expenses 
over 1979 was 32.5%. 
Operating expenses per 
available ton-mile increased 
to 41 .0 in 1981 from 37.0 
in 1980 and 29.4 in 1979. 
Northwest continues to be the 
most efficient trunk carrier in 
the industry. 
Northwest's jet fuel bill for 1981 
amounted to S 702,700,000 
compared to $631,273,000 in 
1980 and $395,260,000 in 
1979. The average cost of jet 
 1977 1978 1979 1980 1981 
Revenues 
in E cess 
of 
E penses 
- E penses 
in E cess 
of 
Re enues 
- 1977 1978 19791980 1981 
Equi 
in E cess 
of Deb 
Revenues and 
Expenses Deb 
- 
1900 
1800 
1700 
1600 
1500 
1400 
1300 
1200 
11 00 
1000 
900 
800 
700 
600 
Operating 
Revenues and Expenses 
(Dollars in Millions) 
fuel in 1981 was $1 .077 per 
gallon compared to SG.951 in 
1980, an increase of 13.2%. 
Fuel costs began to 
moderate in late 1981. The 
impact and effect of inflation 
and changing prices is 
discussed in Footnote J to 
the financial statements. 
Depreciation and 
amortization expenses 
totaled $133,489,000 in 1981 
compared with $124,078,000 
and $106,401,000 for 1980 
and 1979, respectively. This 
increase in depreciation and 
amortization expense reflects 
the addition of two new fuel 
efficient a ircraft in 1981 
following the purchase of 
seven new a ircraft in 1980. 
900 
0 
Stockholders' 
Equity vs. Long-Term Debt 
(Dollars in Millions) 
Earnings and Dividends 
Net earnings of $10,460,000 
in 1981 are up 47.7% from 
1980 earnings of S 7,084,000. 
1979 net earnings were 
$72,475,000. Earnings per 
average share of common 
stock outstanding were 48 
in 1981, 33 in 1980 and 
$3.35 in 1979. 
Gain from disposal of 
property was $16,975,000 
in the current year, up 
substantially from the 1980 
gain of $143,000. 1979 gains 
totaled S 15,544,000. The 1981 
gain reflects the sale of seven 
Boeing 727-100C aircraft. Five 
additional B-727-100C aircraft 
are scheduled for sale in 
1982. No a ircraft were sold 
in 1980. 
While Northwest achieved 
only a modest increase in net 
earnings during the year, a 
substantial improvement of 
$25,881,000 was made in 
operating income. The 
problems that plagued the 
industry in 1980 continued in 
1981, specifically higher 
operating costs and a 
deepening of the U.S. 
recession. The latter resulted 
in a traffic depression for the 
industry. However, despite 
increased competition 
systemwide, Northwest was 
able to achieve significant 
operating improvements in 
the Pacific and Domestic 
entities. Additional start up 
costs were incurred with the 
new Boston-London route in 
the Atla ntic. With fuel prices 
stable, reasonable traffic 
growth in the Domestic system 
a nd modest yield improve- 
ment, coupled with a strong 
competitive posture in the 
Pacific, further profit 
improvements should be 
made in 1982. 
Northwest Airlines continued 
its d ividend payment policy 
with q uarterly payments for 
the 27th consecutive year. 
A cash d ividend of 80 per 
share was paid in 1981 
which tota led $17,326,000. 
Common stock of Northwest is 
principally traded on the New 
York Stock Exchange. A table 
showing the sales prices a nd 
d ividends paid per share in 
1981 and 1980 is included 
in the accompanying g raphs 
a nd charts. 
Taxes on Earnings 
Income tax credits were 
$2,551,000 in 1981 and 
$43,187,000 in 1980. Income 
tax expense in 1979 was 
$11,885,000. Earned 
investment tax credits were 
$4,837,000 in 1981 compared 
to $24,554,000 in 1980 and 
$27,396,000 in 1979. 
Decreased earned invest- 
ment tax credits in 1981 
reflect the receipt of only two 
new a ircraft compared to 
seven in 1980. In 1982, 
earned investment tax credits 
will approximate 1981 levels. 
Investment tax credits are 
applied on tax returns as 
a llowed by income tax 
regulations. Credits not 
applied currently are offset 
against deferred taxes and 
as of December 31, 1981, 
these credits totaled 
$72,924,000. No investment 
tax credit benefits were "sold" 
during the year as the 
Company believes it will be in 
a position to apply all of its 
credits on tax returns. The 
Company continues to use 
25 
 Financial 
Highlights and 
Management 
Discussion for 1981 
(continued) 
accelerated depreciation 
methods for income tax 
purposes as provided by law. 
Cash Flow, Liquidity, and 
Capital Resources 
During 1981 funds generated 
from all sources totaled 
$146, 137;000 including 
$23,249,000 of proceeds from 
the sale of equipment. Also 
included in the total were the 
benefits from the Company's 
long-standing policy of 
owning its own fleet rather 
than leasing which provided 
funds through depreciation 
and amortization of 
Sales Price of Dividends 
Common Shares Per Share 
Quarter 1981 1980 1981 1980 
1st High 31 5/a 31 S.20 S.20 
Low 23 203/a 
2nd High 38 25 S.20 S.20 
Low 28 20 
3rd High 32 31 S.20 S.20 
Low 26 243/a 
4th High 33 27 S.20 S.20 
Low 26 225/a 
26 
Guam 
$133,489,000. Funds were 
used during 1981 to pay off 
S37,500,000 of long-term 
debt, to acquire over S50 
million of flight equipment 
and other property, and to 
pay over S 17 million in cash 
dividends to shareholders. 
The Company has no orders 
or commitments for the 
purchase of additional 
aircraft. Funds for working 
capital and capital expendi- 
ture requirements during the 
last three years have been 
provided primarily by on- 
going business operations. 
Capital expenditures during 
this period exceeded $390 
million and included the 
acquisition of eight 7 47 
aircraft and eight 727-200 
aircraft. With total debt of 
all kinds as of December 31 , 
1981, at only 13% of stock- 
holders' equity, and the 
Company's commercial 
paper rating of A-1/P-1, the 
highest quality, Northwest 
believes it will have no 
difficulty in generating 
adequate cash to meet 
corporate needs. Unused 
lines of credit at year-end 
totaled $79,449,000. 
The Company's remaining 
S12.5 million of long-term 
oebt is scheduled for 
repayment in January 1983. 
Stockholders' equity at 
December 31 , 1981, totaled 
$832,510,000 and the book 
value per share of common 
stock outstanding was $38.43. 
Traffic and Service 
During a year when overall 
demand for air transportation 
was again declining, 
Northwest's 1981 scheduled 
operations produced gains in 
both passenger and freight 
traffic compared to 1980 
and 1979. This growth was 
primarily the result of 
 
New Orleans 
Tampa 
St. Petersburg 
Ft. Myers  Ft. Lauderdale 
Miami 
Berg:n Oslo Helsinki 
.. 
. 
olm 
Northwest Orient Airlines authorized routes. 
improved international 
operations with the greatest 
growth in the Atlantic. 
Prospects for traffic growth in 
the Domestic 50 States are 
a function of a general 
economic upturn in the 
second ha If of the year. 
Northwest expects significant 
traffic increases in both the 
Pacific and the Atlantic . 
Overall the Company expects 
systemwide traffic growth 
exceeding the industry 
average. Northwest's 1981 
3.2% increase in system traffic 
also produced an increase in 
the Company's total system 
market share. This was 
accomplished profitably. 
During 1981 Northwest carried 
11,144,785 passengers. 
Financial Condition 
Despite the current economic 
recession and adverse 
Selected Financial Data (In Thousands) 
Year Ended December 31 1981 1980 1979 1978. 1977 
Operating Revenues S1 ,854,290 $1 ,639,330 S 1,310,558 s 790,162 S1 ,046,355 
Net Earnings 10,460 7,084 72,475 61 ,841 92,719 
Total Assets 1,492,381 1,532,539 1,528,921 1,392,865 1,299,451 
Long-Term Debt 12,500 62,500 100,000 100,000 100,000 
Per Common Share: 
Earnings .48 .33 3.35 2.86 4.29 
Cash Dividends .80 .80 .80 .75 .50 
operating results were affected by a major strike which extended from April 29 through August 15, 1978. 
conditions affecting the 
airline industry during 1981, 
Northwest posted a profit for 
the 33rd consecutive year. 
With its very small debt and 
large stockholders' equity, 
Northwest remains one of the 
strongest carriers in the entire 
airline industry. This strong 
balance sheet, excellent 
liquidity, and modern fleet of 
aircraft puts the Company in 
a position to respond to 
anticipated increases in 
demand with the recovery of 
the domestic economy. In 
the meantime, Northwest 
continues its long-standing 
history of efficient operation 
and stringent cost controls in 
an effort to combat the 
current period of soft traffic 
and cutthroat price 
competition. 
27 
- 
 Service Highlights 
28 
More comfortable slimline seating was added to Northwest's 727-200 fleet. 
Throughout 1981, Northwest 
Airlines continued to build on 
its sterling reputation for fine 
service and outstanding 
revenue leadership. 
Northwest's 13,096 employees 
exhibited enthusiastic 
dedication to customer 
satisfaction and contributed 
significantly to Northwest's 
1981 results. 
Automated Systems 
Northwest Airlines activated 
its new S15 million POLARIS 
computerized reservation 
system late in 1981. 
Recognized as one of the 
most advanced in the airline 
industry, POLARIS insures 
Northwest a leadership 
position in respect to full- 
function reservation systems. 
A major advantage of the 
new POLARIS system is its 
capability to display more 
than half-a-million schedules 
and to show availability status 
for virtually all direct and 
connecting flights throughout 
the world. 
Northwest's POLARIS 
comprehensive North 
American fares display data 
base is updated weekly by 
computer tape, and provides 
the most current fare infor- 
mation available. The new 
hardware and software has 
the vast expansion capacity 
needed as the airline adds 
routes, fares and services. 
The efficiency of POLARIS is 
unsurpassed, resulting in  
increased agent productivity. 
New reservations can be 
made and stored in a single 
input to the computer. The 
software in Northwest's new 
POLARIS system provides 
greater flexibility and ease 
of update to respond to 
changes in the marketplace. 
In late 1981, the company 
signed contracts for a new 
corporate wide video display 
screen communications 
system. 
This new system will be 
installed at all company 
locations during 1982. The 
system features new video 
display terminals with 
increased capabilities and 
larger screens, new admini- 
strative printers and new 
ATNIATA ticket printers. 
Major benefits will include 
improved communications 
capability at all levels of 
the company while at the 
same time significantly 
reducing line maintenance 
and energy costs. 
The sixth Automatic Call 
Distribution system was 
brought on-line in early 1982. 
These systems, costing more 
than S1 million each, are now 
located in reservation centers 
in the Twin Cities, Chicago, 
Cleveland, Seattle, New York 
and Los Angeles. The 
Automatic Call Distribution 
system reduces reservation 
response time, permits call 
load balancing, increases 
reservation sales productivity 
and insures reliability with its 
uninterruptible back-up 
power supply. 
Northwest installed new 
telecommunications equip- 
ment to accommodate the 
speech and hearing- 
impaired on its United States 
reservation system. The Tele- 
 communications Device for 
the Deaf provides a printed 
record of the conversation 
and accommodates yet 
another d imension for 
meeting the needs of the 
traveling public. 
The usage of MAPPER 
Automated Systems was 
widely expanded in 1981. 
This highly sophisticated data 
base and development 
system continues to tighten 
control of 115,000 expend- 
able items in Northwest's 
Purchasing and Stores 
Department. The MAPPER 
system has been used to 
generate statistical data 
and planning data used in 
marketing forecasts. In 
addition this year, a new 
accounts payable system 
was installed. 
Seating Capacity Improved 
Northwest began a program 
to improve 727-200 seating 
capacity while enhancing 
passenger comfort and 
enlarging carry-on luggage 
storage facilities. The a irline's 
727-200 capacity has moved 
from 128 to 146 seats. Total 
seat additions are equal to 
seven new 727-200 aircraft. 
During 1982, reconfiguration 
of the Northwest 7 47 fleet will 
improve capacity from 367 to 
394 seats with the addition of 
a tenth seat across in the 
airplane's tourist sectio~. This 
conforms to the most com- 
mon configuration among 
worldwide a irlines operating 
the 7 47 a ircraft. Northwest's 
747 executive class compart- 
ment will be made more 
spacious and comfortable 
with the addition of custom 
designed eight-abreast seats. 
Executive seating will be 
available on the main deck 
and the upper lounge of the 
aircraft. The luxurious 22 
sleeper seats in the first-class 
section will remain. The 7 47 
seating reconfiguration will 
provide increased capacity 
equal to two new 7 47 aircraft. 
Northwest has also 
developed a plan to 
reconfigure its DC-10 fleet 
throughout 1983. This will 
involve complete refurbishing 
of the aircraft's interior and 
improve seating capacity 
from the current 236 to 292 
seats. The objective will be 
achieved by reducing the 
first-class cabin size on the 
DC-10, limiting the number of 
first-class seats to 22 and 
installing 270 completely new, 
more comfortable, slimline 
lightweight seats in the 
expanded tourist section 
of the aircraft. 
The total conversion project to 
expand seating capacity in 
Northwest Airlines' passenger 
fleet will provide a gain of 
2,840 new seats, equivalent 
to 14 new a irplanes, at an 
overall cost of S33,000,000. 
The added seating in all of 
the a ircraft, plus the com- 
plete rework of the DC-10 
interiors, will require a low 
capital cost outlay of about 
S12,000 per seat compared 
with the new airplane cost 
of S150,000 to S200,000 
per seat. 
Weight reduction from 
installation of the new, more 
comfortable seating will 
recover modification costs 
over a short period of time. 
All of the reconfiguration and 
refurbishment work will be 
accomplished by Northwest 
maintenance personnel at 
the airline's main overhaul 
base in Minneapolis/St. Paul. 
- 
.. . 
~ 
. 
t t 
, 
t 
, t 
,, , t 
t t t t 
., 
t t , 
11 Ii 
29 
 Service Highlights 
(continued) 
30 
Executive Class Introduced 
E 
xecutive Class, a superior 
service class on Northwest's 
transatla ntic and transpacific 
flights, has had high accept- 
ance. This expanded service 
level provides Northwest with 
additional appeal to the full- 
fare economy passenger. 
Free headsets, movies, 
amenities kits and beverage 
service on international flights, 
a long with first-class standby 
transportation on connecting 
domestic flights are added 
attractive incentives in a 
competitive marketplace. 
New Routes/Services 
Northwest Airlines increased 
its systemwide market share 
of scheduled traffic in 1981 
and d id so profitably. New 
nonstop passenger service 
between Boston a nd London, 
Tokyo and Guam, Los 
Angeles and Tokyo, Taipei 
and Manila and the Twin 
Cities and Oslo was 
inaugurated in 1981. 
Contract Ratified 
Flight attendants and the 
airline agreed on a ll terms of 
a new 3-year labor agree- 
ment during 1981. This new 
agreement, effective August 
1, was ratified by a 
majority vote. 
Facilities 
Northwest ticket counters, 
baggage claim and airport 
facilities were fine-tuned for 
improved customer conveni- 
ence. Two additiona l loading 
bridges at the Boston gate- 
way, installation of first and 
executive class check-in 
facilities at the Los Angeles 
gateway and major 
baggage retrieval improve- 
ments at the Minneapolis/ 
St. Paul gateway functionally 
underscored Northwest's 
commitment to provide 
superior customer service. 
Training Continues 
Nearly 1,000 Northwest 
transportation agents 
Sunset over Tuman Boy, Gua m. 
completed an intense train- 
ing program emphasizing 
customer service oppor- 
tunities, sales techniques and 
teamwork. This ongoing 
investment in "people power" 
continues to show positive 
results in the area of 
customer relations. 
Fuel Conservation 
Fuel conservation efforts 
continue to be effective as 
fuel consumption decreased 
11 .6 million gallons despite 
the .5% growth in capacity. 
However, tota I fuel costs 
increased 11.3% as the 
average price per gallon 
rose 13.2% to $1.077. 
 The Directors of 
Northwest Orient 
Airlines 
(As of March 26, 1982) 
James H. Binger 
Former Chairman of the 
Executive Committee, 
Honeywell, Inc. 
Minneapolis, Minnesota 
Manufacturer of automation 
systems 
E. W Blanch, Jr. 
President & Chief Executive 
Officer 
E. W Blanch Company 
Minneapolis, Minnesota 
Re-insurance brokerage 
Raymond H. Herzog 
Former Chairman of the Board, 
3M Company 
St. Paul, Minnesota 
Multi-notional manufacturing 
Melvin R. Laird t 
Senior Counselor, 
Reader's Digest Association 
Washington, D.C. 
Magazine publishing 
James N. Land, Jr. 
Financia l Consultant 
New York, New York 
M. Joseph Lapensky 
President & Chief Executive 
Officer 
Northwest Airlines, Inc. 
St. Paul, Minnesota 
Donald G. McNeely 
Chairman of the Board, 
Space Center, Inc. 
St. Paul, Minnesota 
Logistics 
Donald W Nyrop 
President & Chief Executive 
Officer, 1954-1976; Chairman 
& Chief Executive Officer, 
1976-1978 
orthwest Airlines, Inc. 
S . Paul, Minnesota 
Member, Audit Committee 
The Officers of 
Northwest Orient 
Airlines 
(As of March 26, 1982) 
M. Joseph Lapensky 
President & Chief Executive 
Officer 
James A Abbott 
Vice President-Law 
Brent J. Baskfield 
Vice President-Public Relations 
Robert W Campbell 
Vice President-Budgets 
J. William Campion 
Vice President-Regulatory 
Proceedings 
Bruce H. Fillips 
Vice President-Comptroller 
Robert J. Glischinski 
Vice President-Communi- 
cations and Computer Services 
Benjamin G. Griggs, Jr. 
Vice President-Assistant to the 
President 
John F. Horn 
Vice President-Orient Region 
Thomas J. Koors 
Vice President-Transportation 
Services 
William A Kutzke 
Vice President- W:Jshington 
Ben H. Lightfoot 
Vice President-Maintenance 
and Engineering 
Thomas E. McGinnity 
Vice President-Purchasing 
and Stores 
Bryan G. Moon 
Vice President-Advertising 
James F. Redeske 
Vice President-Personnel 
Steven G. Rothmeier 
Vice President-Finance and 
Treasurer 
R. James Thorne 
Vice President-Properties 
Steven D. Wheeler 
Secretary 
Robert J. Wright 
Vice President-Sales 
31 
 Northwest Orient Airlines World Headquarters: Minneapolis-St. Paul International Airport, St. Paul, MN 55111