CORPORATE PROFILE 
NWA Inc. is the parent company of five transportation-related subsidiaries, the principal one 
being Northwest Airlines. This annual report deals directly with Northwest and its operations 
in 19 8 7 following its acquisition of Republic Airlines. 
The other NWA Inc. subsidiaries and their 1987 accomplishments are: 
 MLT Vacations, Inc., a leading wholesaler of vacation travel packages, named Edward 
Neer, formerly Northwest's western regional sales director, as president and chief executive 
officer. Neer and his staff sold MLT's retail division to Northwestern Business Travel and 
acquired Passage Tours, a highly regarded wholesaler of package tours to Europe. 
 Northwest Aerospace Training Corporation moved into its 246,000-square-foot head- 
quarters and has begun the 24-month process of installing ten new simulators and relocating 
12 existing simulators into the facility. Ground was broken in September at the University of 
North Dakota, Grand Forks, for a $6 million NATCO facility that will support an innovative 
program of training beginning pilots to meet airline standards. 
 Northwest Aircraft Inc. continued its aircraft lease activities as well as negotiated 
contracts with Boeing, Airbus and CFM International as part of Northwest's fleet expansion 
program. Key elements of that activity are described on pages 17 and 19. 
 Northwest PARS was involved in 19 87 in the marketing of the PARS computer reserva- 
tions system to travel agencies and in the comprehensive planning to adopt PARS as Northwest's 
internal reservations and passenger handling system. These programs are described on page 16. 
  CONTENTS 
HIGHLIGHTS 
3 
LETTER TO STOCKHOLDERS 
4 
OPERATIONS REVIEW 
9 
MANAGEMENT'S DISCUSSION AND ANALYSIS 
22 
FINANCIAL STATEMENTS 
28 
NOTES TO FINANCIAL STATEMENTS 
33 
REPORT OF INDEPENDENT ACCOUNTANTS 
41 
STOCK PRICE AND DIVIDEND INFORMATION 
41 
TEN-YEAR SUMMARY 
42 
DIRECTORS AND OFFICERS 
44 
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 NORTHWEST CITIFS 
 NORTHWEST AIRLINK CITIES ONLY 
 OP E RATED BY USAIR AS WORLD! INK 
 FLEET SCHEDULE 
Fleet as of o. of On 
February 1, 1988 Seats Owned Leased Total Order 
AIRBUS: 
A340 ::~ 20,: 
A320 146 1ow:- 
BOEING: 
757 184 6 22 28 5 
747-400 422 10 
747 400 27 5 32 
747F 5 3 8 
727-200 146 67 67 
727-100 118 9 9 
MCDONNELL DOUGLAS: 
DC-10-40 284 19 1 20 
MD-80 143 6 2 8 
DC-9-50 122 16 12 28 
DC-9-30 100 57 11 68 
DC-9-10 78 31 3 34 
CONVAIR 580 48 13 13 
TOTAL 256 59 315 135 
''The Company has entered into a preliminary agreement to 
purchase 20 A340 aircraft to be delivered between 1992 and 
1995. These aircraft are designed to carry between 262 and 
295 passengers. 
,,. ,: 
Twenty-five A320 are under firm order. Subject to 
confirmation by the Company, an additional 75 delivery 
positions are available between 1992 and 1995. 
TWO 
 HIGHLIGHTS 
1987 1986 
FI ANCIAL 
Operating Revenues $5,142,224,000 $3,589,174,000 
Operating Expenses 4,946,094,000 3,422,529,000 
Operating Income 196,130,000 166,645,000 
Operating Margin 3.8 % 4.6% 
Net Earnings 103,011,000 76,941,000 
Per Share 3.59 3.26 
Stockholders' Equity 1,523 126,000 1,105,916,000 
Per Share 52.32 46.29 
Dividends Paid 25,487,000 19,645,000 
Number of Shares Outstanding at Year End 29,110,000 ': 23,890,000 
STATISTICAL (SCHEDULED) 
Passengers 37,247,000 23,167,000 
Revenue Passenger Miles 39,549,501,000 28,814,957,000 
Available Seat Miles 61,420,541,000 48,408,440,000 
Passenger Load Factor 64.4% 59.5% 
Yield Per Revenue Passenger Mile 11.05a: 10.14a: 
Ton Miles-Mail, Freight and Express 1,442,455,000 1,253,847,000 
OPERATING EXPE SES 
Per Available Seat Mile 7.9a: 6.8a: 
Per Available Ton Mile 49.la: 41.2a: 
NUMBER OF EMPLOYEES AT YEAR E D 33,724 33,427 
Excludes 1,000,000 shares held in treasury. 
OPERATI G 
REYE UESA D 
EXPE SES OPERATf GI COME NET EARNINGS 
(In Billions) 
$4.5 
$3.0 
$1.5 
83 84 85 86 87 
Operating Revenues 
 Operating Expenses 
(In Millions) On Millions) 
83 84 85 86 87 
THREE 
83 84 85 86 87 
*After extraordinary loss 
of $30.9 million from the 
settlement of a lawsuit. 
Percent 
Change 
43.3 
44.5 
17.7 
(0.8 ) pts. 
33.9 
10.1 
37.7 
13.0 
29.7 
21.9 
60.8 
37.3 
26.9 
4.9 pts. 
9.0 
15.0 
16.2 
19.2 
0.9 
 TO OUR STOCKHOLDERS 
NWA Inc. earned $103 million, or $3.59 per share, in 1987-the highest earnings in the 
company's 61-year history and the 38th consecutive year of net profits. Revenues increased 
43.3 percent over 1986 to $5 .14 billion while expenses grew 44.5 percent to $4.95 billion, 
reflecting the first full year of financial results following the August 1986 acquisition of 
Republic Airlines. 
Your company substantially strengthened its balance sheet in 1987 by: 
 selling three million shares of common stock. Investors purchased the shares at $66.50, 
and the company received net proceeds of $197.6 million. 
 converting subordinated debentures. These debentures were converted into 3,070,022 
shares of common stock, reducing debt and adding $172.7 million to stockholders' 
equity. 
As a result, our long-term debt-to-equity ratio improved to .6 to 1 as of December 31, 
1987, from 1.3 to 1 at the end of 1986. 
In another move affecting our financial structure, NWA Inc. repurchased one million 
shares of common stock following the precipitous decline of the stock market in October 
1987. The average repurchase price was $38.50 per share, well below book value. These 
shares currently are held as treasury stock. 
The balance sheet was strengthened further in early 19 8 8 when the company redeemed 
$149 .4 million in high-interest equipment trust notes, a move that reduces interest cost by 
$22.2 million per year. The trust notes were inherited by Northwest in the acquisition of 
Republic and were redeemed at the earliest date provided for under terms of the notes. 
FOUR 
 These are impressive strides. Yet simpl being profitable is not enough. We must build 
a financial reserve to ensure our continued growth, and to accomplish this, we must offer 
high-quality products and services that engender customer lo alty. In these areas, we did not 
meet our 1987 objectives despite aggressive action and dedicated persistence. 
In 1987, our operating profit margin, calculated by di iding operating income by 
operating revenues, reached only 3. 8 percent. NWA Inc. should consistently earn a higher 
margin to, among other things, finance our planned fleet acquisition and expansion programs. 
Our ability to significantly improve the profit margin is contingent, in part, on the 
quality of the service we offer, an area where we stumbled in 19 87 as we integrated the opera- 
tions of Republic and Northwest. Our on-time reliability and customer service clearl lagged 
behind industry standards. Our performance was negatively affected by a number of factors, 
including an organized, coordinated work slowdown during the summer by a small cadre 
within our machinist union. 
Northwest's operational performance improved measurably during the last quaner 
of 1987 and into 1988, reflecting not only greater team spirit among our workforce but also 
significant enhancements to aircraft scheduling and facilities modernization. You will read 
more about these developments in the pages that follow both from a corporate perspective 
and as viewed through the eyes of some of our front-line service employees. 
Challenges remain to be addressed in 1988, particularly in the labor relations area as 
we continue negotiations with unions representing pilots, flight attendants, maintenance and 
ground service employees. As we address the concerns of each of our employee groups, it 
is important for you, as stockholders, to be aware that we are not seeking to undercut the 
quality of life Northwest workers have come to enjoy. Our unit costs need not be lower than 
competing airlines, but they must be in close relationship to them. We do not seek wage con- 
cessions. In fact, we seek to raise the wages of many of our former Republic employees. But 
to do so, we must commit ourselves to working harder and smarter than our competitors- 
in other words, improve our productivity. If we accept that challenge, we can use the strength 
of our balance sheet to buy high-technology aircraft and other equipment that will give us 
a competitive edge and ensure our long-term success. 
Fl E 
 Our goal for Northwest is nothing less than to become the preferred airline for domestic 
business travel and for international flying as well. To achieve the recognition, preference and 
repeat patronage we desire, we must follow six concrete strategies: 
 develop our domestic hubs, including addition of a traffic center in Milwaukee by 
mid-1988, to offer as many nonstop and one-stop travel opportunities as possible; 
 strengthen international service by expanding connecting opportunities at U.S. and 
overseas gateways; 
 provide dependable, stylish customer service through programs that emphasize employee 
training and inspire employee dedication; 
 enlarge our role as a major force in computer reservations systems by aggressively mar- 
keting our PARS travel agency network; 
 keep constant downward pressure on expenses and upward pressure on productivity to 
control seat-mile and ton-mile costs, and 
 develop freight and mail programs to increase cargo revenues. 
These strategies will enable us to attain our objectives over time. They will remain the 
focus of your company in the years ahead because they form the blueprint for our continued 
growth and success. 
Sincerely, 
Steven G. Rothmeier 
Chairman and Chief Executive Officer 
February 22, 1988 
JOHN F. HORN 
(LEFT) 
STEVEN G . ROTHMEIER 
(RIGHT) 
John F. Horn 
President and Chief Operating Officer 
   "I understand that we are com- 
peting against airlines like Con- 
tinental that have lower costs 
than ours. But this company 
made $103 million in 1987, and 
I think we can make a lot more 
when we settle union issues. 
We've got to strive to be the 
best and we can be the best:' 
MARK MCCOMBS 
STATION AGENT 
 Ill 
 STRE GTHE I G OUR COMMITME T TO QUALITY CUSTOMER SERVICE 
The spotlight of public attention was focused on the airline industry in 1987 as customers, 
legislators and the media questioned the flight dependability, schedule integrity and service 
standards of the nation's airlines. 
Among the manifestations of this attention was the creation in 19 87 of an industry 
scorecard issued monthly by the Department of Transportation. It records airline performance 
data in a number of key areas including complaints, on-time statistics and baggage handling. 
In industry comparisons, Northwest did not rank favorably. In fact, Northwest received 
more DOT customer complaints per 100,000 enplanements than any other major airline for 
the four consecutive months from August through November 19 87. Northwest also ranked 
near the bottom of 14 airlines measured in the areas of on-time reliability and baggage 
service. The reports for December 1987 and January 1988 showed an improving trend for 
Northwest in all major categories. 
Northwest has taken positive steps to improve its performance and restore customer 
confidence. Much of that effort has centered on training and motivation of front-line service 
employees, in addition to improving airport facilities. 
Greeters Northwest now employs customer service assistants at its three largest hubs to help 
customers by directing them to connecting flights, familiarizing them with airport facilities, 
escorting children traveling alone and roving the airports to offer information and assistance. 
This program was implemented in November and was especially effective during peak 
Thanksgiving and Christmas travel in allowing transportation agents extra time in ticketing, 
seat assignment and boarding customers. 
Idea Exchange Committee During 1987, every Northwest airport manager spent one week 
at the airline's headquarters to share ideas with senior management on plans and programs 
to improve the quality of customer service. The managers met in small-group forums, called 
Idea Exchange Committees, to improve communication between field and staff managers 
and give each station manager an opportunity to express concerns and suggestions directly to 
senior management. Idea Exchange Committees will continue in 1988 and will be broadened 
to involve other key managers. 
. 'I. 'E 
  "The new Northwest has the 
potential to be a great airline. 
Our increased size, while present- 
ing us with significant challenges, 
creates greater opportunities for 
the future. I'm confident that we 
are putting it together and that 
Northwest is emerging a stronger 
carrier." 
CAPTAIN MURRY J. PRUYN 
CHECK PILOT /INSTRUCTOR PILOT 
  Academies Customer-contact employees learned tactics and techniques for dealing 
effectively with Northwest customers during an eight-hour training course called "We Set 
the Standards;' an ongoing program of employee motivation and service improvement. 
Front-line supervisors are the focus of three Northwest training academies, each lasting 
five days. More than 1,500 Northwest employees have attended the equipment service chiefs 
academy, maintenance chiefs academy and transportation agent supervisors academy. Another 
1,300 workers took part in the airline's professional leadership program and more than 2,000 
participated in leadership knowledge series. 
The goal of each of these programs is to foster team spirit, develop customer service 
skills and ensure that each employee understands that Northwest's success is the result of the 
cumulative effect of thousands of individual efforts. 
In 19 8 8, this base of effective employee training and motivation will be expanded 
through development of "Quality First" programs in ground services, in-flight services and 
maintenance and through creation of a company-wide Quality Service College. 
Responsiveness In October, Northwest hired a highly regarded consumer advocate to head 
its customer relations division. The immediate goal was to clear a backlog of customer cor- 
respondence and respond to every customer inquiry within seven days. These objectives have 
been achieved and now each inquiry receives a response within three days. Similarly, Northwest is 
resolving baggage claims within 25 days, better than the industry-wide average of 35 days. 
During 1987, Northwest developed a program under which station managers and 
transportation agent supervisors are given additional authority to resolve customer service 
problems on the spot rather than directing customers to the company's headquarters. 
Northwest also established two hotlines for employees. One is Team Line for ground 
service workers to voice ideas for improved service and to get answers to customer service 
questions. The second, Clean Line, is for use by flight attendants and ground service workers 
to report aircraft in need of interior cleaning in addition to the normal service schedule. 
Northwest customers received improved responsiveness from the airline's reservations 
system. For the entire year, reservations agents answered more than 38 million calls. This per- 
formance is the result of increased automation and consolidation of the 12 reservations offices 
into seven state-of-the-art facilities. 
ELEVE 
  "Our next big challenge ts to 
become known as the number 
one airline. I want people to 
know us and like us for the qual- 
ity of service we offer as well as 
for our frequent flier program. 
And I think the customers are on 
our side. They are aware of the 
improvements we have made. 
They are telling us that our 
company ts coming together:' 
LY . PAHL 
TRANSPORTATION AGE T 
  NEW GROU D F CILITIES FOR GRO I G PASSE GER VOLU ES 
Key ingredients to quality customer service are the facilities at an airline's key traffic centers. 
Major revitalization programs were necessary at each Northwest hub to support the added 
passenger volume resulting from Northwest's acquisition of Republic. 
In total, Northwest has invested more than $90 million in facilities improvements at 
Detroit, Minneapolis/St. Paul, Memphis and Milwaukee since August 1986. 
Detroit As Northwest grew at Detroit Metropolitan Airport, the airline invested more than 
$50 million for facilities improvements. Some of these are apparent to customers traveling 
through the terminal: moving sidewalks, a new baggage claim area and improved access to it, 
a second WORLDCLUB lounge, doubling of ticket counter space and relocation of security 
checkpoints. Some important construction programs are not visible to customers but are ele- 
ments vital to the airline's infrastructure: baggage handling system, control tower to direct 
ramp operations, hydrant fueling system and flight kitchen. 
Minneapolis/ St. Paul The investment at Minneapolis/St. Paul exceeded $20 million with 
the centerpiece being expansion of the south terminal to increase ticket counter space, double 
baggage claim facilities and enlarge baggage service offices. Also planned is expanding the 
ramp control tower and upgrading the ticket counter baggage conveyor system. 
Memphis Six new passenger loading bridges, a hydrant fueling system, an aircraft heating 
and cooling system, a new baggage claim area and 7,200 additional square feet of customer 
seating areas are highlights of the $15 million construction effort at the Memphis airport. 
Future improvements, for which $33.2 million of bonds have been sold, include extensive 
remodeling of the west concourse, a new baggage handling system, 14 additional ticket 
counter positions, additional WORLDCLUB capacity and a walkway connecting the center 
and west concourses. 
Milwaukee Flight operations at Milwaukee's Mitchell International Airport will more 
than double by mid-1988 as Northwest develops Milwaukee as its fourth hub. To support the 
hub, Northwest spent $5 million to increase its gates from five to 12 and to fully modernize 
Concourse E. This included construction of a WORLDCLUB. 
T HI RTEE 
  "The biggest challenge in dealing 
with change is giving up the old, 
familiar way of doing things. 
We are experiencing that in 
reservations now as we pre- 
pare for PARS, our new res- 
ervations system. One of the 
best features of PARS is its pric- 
ing capabilities. It automati- 
cally calculates the lowest price 
that passenger qualifies for. This 
speed and automation wasn't 
available in our old system~' 
RHONA DAUPHI E-DRIGHT 
RESERVATIONS SALES AGENT 
 A 
~ 
[ill 
 Congestion The strain of hub operations on Northwest facilities was significantly eased 
during the summer and fall by a refining of the flight schedule that included selective flight 
reductions and lengthening of the time aircraft remained on the ground at traffic centers. The 
net effect was an improvement in on-time performance that resulted from giving the ground 
staff more time to service aircraft and process customers, baggage, freight and mail. 
AGGRESSIVELY MARKETING THE NEW NORTHWEST 
Northwest was saddled throughout 1987 with a troubled image in the eyes of some of the 
traveling public. Some of this reputation, flowing from merger difficulties with Republic, was 
warranted, while some of it related to declining industry-wide service levels brought on by 
capacity constraints within the nation's airport and airway system. 
Frequent Fliers One program that fostered customer loyalty among a key segment of pas- 
sengers was WORLDPERKS, Northwest's frequent flier program. Acknowledged as one of the 
industry's most innovative programs, WORLDPERKS continued to attract business travelers 
despite lagging on-time performance and related service issues. More than 3.5 million cus- 
tomers now are WORLDPERKS members, with the highest mileage fliers rewarded with extra 
benefits through WORLDPERKS Gold and WORLDPERKS Preferred status. 
Competing airlines introduced enhancements to their frequent flier programs in 
December to spur travel in the traditionally slow first quarter. These airlines are offering triple 
mileage awards throughout the year to members who fly during the first quarter. Northwest 
unveiled a similar promotion to maintain the competitiveness of its program. Fortunately, 
Northwest is able to effectively manage its inventory of free travel because WORLDPERKS 
automatically issues its members a free ticket for each 20,000 miles and that ticket expires in 
two years. Other airlines allow members to bank mileage for unlimited periods and thus 
perpetuate a free travel liability without forcing its redemption. While Northwest is concerned 
about excessive issuance of free tickets, the airline remains in a far better position than other 
carriers to withstand future developments because its accumulated earned mileage liability is 
much smaller than other airlines. 
F I FTEE 
 On-Time Guarantee Northwest inaugurated hourly shuttle service between Minneapolis/ 
St. Paul and Chicago in November and devised a promotion to draw attention to the service 
and to demonstrate to customers the airline's commitment to on-time performance. During 
the first month of the hourly shuttle, Northwest guaranteed that its flights would arrive within 
15 minutes of schedule or customers would receive their choice of a free, one-way ticket 
between those cities or bonus frequent flier mileage. The on-time commitment marked the 
first time since the industry was deregulated that a major airline had guaranteed its perform- 
ance and backed that guarantee with a tangible reward. 
The results proved the effectiveness of the promotion in building traffic as well as in 
inspiring Northwest teamwork to ensure these flights operated on-time, every time. 
PARS In addition to explaining traditional marketing programs to travel agents, Northwest 
sales personnel have been actively promoting PARS, a computer reservations system in which 
Northwest has acquired half ownership. More than 80 percent of an airline's customers book 
their flights through travel agents who use automated computer reservations systems. As a 
result, it is important for Northwest to convince travel agencies to adopt PARS. During the 
year, more than 1,100 travel agencies installed approximately 4,000 PARS computers in their 
offices, including PARS placements in England, Scotland, Finland, Denmark, Sweden and 
Norway. By promoting the use of PARS with existing subscribers and by enrolling new users, 
Northwest realized a 50 percent increase in PARS bookings iri 1987. As a result of the 
increased share of bookings through PARS, Northwest saved approximately $2 million in 
segment booking fees that would have been paid to competitors if PARS had not been used. 
PARS also received significant additional booking fees from other airlines as a result of 
the transportation arranged by new PARS subscribers. 
In 1988, another 1,300 PARS subscribers are expected to be enrolled. Also in 1988, 
Northwest will adopt PARS as its internal reservations and passenger-handling system. 
SIXTEEN 
 BUILDING A FLEXIBLE FLEET OF ADVANCED AIRCRAFT 
With orders and options for more than $7 billion of new aircraft, Northwest has one of the 
most well-conceived fleet development plans among the world's airlines. The plan is charac- 
terized by the broad flexibility it offers the airline to adjust its aircraft needs to correlate with 
changing economic and market conditions. 
Immediate Needs Northwest took delivery of eight Boeing 757s and two Boeing 747 
freighters during 1987. These aircraft, with a cost of $433.6 million, were financed with long- 
term leveraged leases. Northwest also took delivery of three used McDonnell Douglas 
DC-9-30s and a used MD-80. Northwest will take delivery of five more B757s in 1988, 
boosting the airline's fleet of high-technology, fuel-efficient B757s to 33. 
During 1988, Northwest expects to acquire 12 more used DC-9-30 aircraft. These 100- 
passenger jetliners will be used to support development of Milwaukee as the airline's fourth 
largest traffic center and will be employed on new routes to be opened from existing hubs. 
Northwest got a glimpse of its future in transpacific markets during January 1988 
rollout ceremonies for the Boeing 747-400. Northwest will be the first to fly this newest addi- 
tion to the jumbo jet family. The B747-400 is about 25 percent more fuel efficient per seat 
than current Northwest 747s, has greater range and, through the use of high-technology 
advancements, can be flown with two, rather than three, pilots. 
Northwest will take delivery of the first two of its 10 B747-400s in December and will 
operate the initial pair on New York-Tokyo nonstop service where the airplane's fuel and range 
advantages will allow the route to be operated nonstop at full payload year round. 
Consistent with its fleet modernization efforts, Northwest plans to reduce its Boeing 727 
fleet by seven aircraft in 1988. 
Long-Term Acquisitions Northwest advanced the delivery schedule for its initial order of 
10 Airbus A320-200s and firmed up deliveries for an additional 15 of the planes. The aircraft 
are part of a 100-plane agreement announced in October 1986. 
Delivery of the first A320 will be in June 1989, almost one year earlier than originally 
scheduled. By March 1992, Northwest will operate 25 of the new, high-technology airplanes. 
SEVENTEEN 
  ''What I enjay most about my job 
is the variety. It's never boring. 
There is always new equipment, 
new challenges. Northwest has 
always had a good fleet of air- 
craft. We can see by the high 
prices we get when we sell our 
planes that we have good main- 
tenance. The other airlines are 
happy to buy from Northwesf' 
GEORGE BENSON 
INSPECTOR 
MAfN BASE ENGINE SHOP 
 ~ f 
 Northwest also reached agreement with Airbus in April 1987 under which the airline 
can purchase up to 20 Airbus A340 aircraft to be delivered between 1992 and 1995. The 
$2. 7 billion agreement also includes an option for 10 A330s. 
The A340 with its long-range, low seat-mile cost and underfloor cargo capability 
is an _ 
ideal aircraft for Northwest's Pacific, Atlantic and domestic routes. It also offers a high 
degree of commonality with the A320, resulting in savings for maintenance and parts pro- 
visioning costs. The A340, designed to carry between 262 and 295 passengers, will provide 
Northwest with flexibility to replace older, mid- to long-range aircraft in the Northwest fleet, 
to begin new services that would not be economically viable with the current fleet, and to 
provide additional frequencies over long-haul routes. 
DEVELOPING A THREE-CONTINENT ROUTE SYSTEM 
Northwest's three-continent route system proved a key advantage during 1987 as the airline 
was able to adjust seat allocation to meet geographic travel demands. Thus, when domestic 
yield (revenue per passenger mile) softened in early 1987, Northwest was able to shift capacity, 
based on strong international traffic projections, to Europe and Asia. This strategy worked 
well as the passenger load factor on Atlantic sectors reached 68.7 percent in 1987, up from 
61.3 percent in 1986. A 70 percent load factor was recorded in the Pacific, while domestic 
service registered a 61. 8 percent mark. 
Transatlantic In 1987, Northwest began augmenting its Boeing 747 service across the 
Atlantic with its McDonnell Douglas DC-10s. These 284-seat aircraft allow the airline to 
offer added flight frequencies on a year-round basis-a schedule attractive to international 
business travelers. Concurrent with the use of DC-10s, Northwest selected Boston as its prin- 
cipal gateway for transatlantic flights, although New York Kennedy and Minneapolis/St. Paul 
retain gateway status. Boston-Frankfurt nonstop service was launched, and frequencies were 
increased in other markets. This focus on Boston will be expanded in 1988 when Amsterdam, 
The Netherlands, joins the Northwest system on June 1 with four roundtrips weekly from 
Boston. Boston-Copenhagen nonstops also will commence in the summer. As a result, 
Northwest will be the leading transatlantic carrier from Boston. 
N I NETEEN 
  ':.-\.s an interpreter, my role is 
to en:ure good communication 
betioeen flight attendants and 
passengers on flight~ beti(;een my 
home in Seoul and the United 
States. I welcome passengers in 
my traditional Korean clothing 
and explain cabin features and 
menu choices. I am busiest dur- 
ing in-flight duty free shopping, 
a popular attraction, especially 
for Koreans returning home:' 
NHOHEJU G 
IN-FLIGHT SER \'ICE 
REPRESE TATIVE, 
INTERPRETER 
SEOUL, KOREA 
  Transpacific In 1987, Northwest marked several major transpacific accomplishments. 
The airline celebrated 40 years of service across the Pacific. Northwest pioneered the Great 
Circle, or polar route, to Asia on July 15, 194 7, becoming the first airline to operate regularly 
scheduled flights between the United States and Japan. 
In 1987, Northwest flew more customers across the Pacific than any other U.S. airline, the 
third consecutive year Northwest has earned that distinction. The company opened two new 
Pacific routes in 1987-Detroit to Tokyo and Tokyo to Bangkok, Thailand-and increased 
frequencies on a number of other key flight sectors. As a result, Northwest provided 152 
weekly transpacific crossings during the summer of 1987 and offered more seats across 
the Pacific than any other airline. 
A prolonged, illegal strike by Northwest workers in Korea forced flights to and from 
Seoul to be canceled from September 25, 1987, until January 4, 1988. The work stoppage was 
part of general labor unrest affecting Korean and non-Korean companies in the politically 
charged election year. 
Domestic Flights were inaugurated from U.S. hubs to four cities: Jackson, Miss.; Lansing, 
Mich.; Montego Bay, Jamaica; and Steamboat Springs, Colo. 
In addition, other Northwest cities were linked to the airline's hubs, giving customers in 
those feed markets greater access to the Northwest system. For example, Denver, Las Vegas 
and Fort Myers were linked with Detroit while Baltimore, Des Moines, Madison, Omaha, 
West Palm Beach, Tucson and San Diego were connected with Memphis. Receiving non- 
stop service to Minneapolis/St. Paul were Buffalo, Baltimore, Fort Lauderdale, Hartford/ 
Springfield, Pittsburgh and West Palm Beach. 
The addition of Milwaukee as a fourth domestic traffic center will be a major focus of 
the domestic route network for 1988. Initial service plans call for 43 daily flights to 15 desti- 
nations. The Milwaukee hub will relieve some of the traffic and facilities congestion at Detroit 
and Minneapolis/St. Paul and will increase Northwest's presence in its traditional home terri- 
tory, the Upper Midwest. 
T W ENTY ONE 
 MANAGEMENT'S DISCUSSION AND ANALYSIS OF 
FINANCIAL CONDITION AND RE SUL TS OF OPERA TIO NS 
NWA Inc. (NWA), a Delaware corporation, is the 
parent of Northwest Airlines, Inc. (Northwest), its 
principal subsidiary. Airline operations comprise 
more than 98% of consolidated operating revenues 
and expenses. 
In October 1985 NWA purchased MLT Vacations, 
Inc. (MLT), formerly Mainline Travel, Inc. MLT is a 
major wholesaler of vacation travel packages. 
On August 12, 1986, NWA purchased all of 
the outstanding stock of Republic Airlines, Inc. 
(Republic), a major U.S. air carrier. Airline opera- 
tions of Northwest and Republic were combined on 
October 1, 1986, and Republic was merged into 
Northwest in November 1986. 
Consolidated financial statements of the Company 
include results of operations for Republic since 
August 12, 1986, which accounts for the majority 
of the increase in revenues and expenses from 1985 
to 1986 and 1986 to 1987. Other significant fac- 
tors affecting NWA's consolidated results are dis- 
cussed below. 
RESULTS OF OPERATIONS 
Earnings and Dividends NWA's 1987 consolidated 
net earnings totaled $103,011,000 ($3.59 per share) 
and compare with net earnings of $76,941,000 
($3.26 per share) in 1986 and $73,119,000 ($3.18 per 
share) in 1985. Total operating revenues increased 
43.3% to $5,142,224,000 during 1987, primarily 
from substantial growth in passenger revenue. Oper- 
ating expenses grew 44.5% to $4,946,094,000 
resulting in operating income of $196,130,000 com- 
pared with $166,645,000 in 1986. In 1985, operating 
income was $77,087,000. The 1987 operating mar- 
gin of 3.8% decreased from 4.6% in 1986. The 
1985 operating margin was 2.9%. 
In 1987 NWA paid dividends to shareholders 
totaling $25,487,000 (90a: per share) continuing an 
unbroken string of quarterly cash dividends paid for 
more than 32 years. This compares with $19,645,000 
(90a: per share) in 1986 and $19,586,000 (90a: per 
share) in 1985. 
NWA common stock is principally traded on the 
New York Stock Exchange. A table showing sales 
prices and dividends paid per share in 1987 and 1986 
is included on page 41. 
Operating Revenues Passenger revenue for 1987 
rose 49.7% to $4,371,624,000, representing 85% of 
total operating revenues. This resulted from a 3 7.3 % 
increase in traffic (revenue passenger miles) and a 
9 .0% increase in yield (revenue per passenger mile) 
from 10.14a: in 1986 to 11.05a: in 1987. Yield increased 
partially due to the integration of the long-haul 
Northwest and shorter-haul/ higher yield Republic 
route systems, as well as fare increases which have 
taken place since the spring of 1987. Passenger reve- 
nue of $2,920,458,000 in 1986 was 35.6% greater 
than 1985 due to a 29 .0% increase in traffic and a 
5.2% increase in yield. 
The 37.3% increase in revenue passenger miles in 
1987 compares with a 26.9% increase in capacity 
(available seat miles), resulting in an increase in pas- 
senger load factor to 64. 4 % from 5 9. 5 % in 19 8 6. 
Load factor in 1985 was 60.1%. Break-even pas- 
senger load factors were 61.5% in 1987, 56.0% in 
1986 and 58.0% in 1985. 
Freight revenue increased 11.4 % to $453,160,000 
in 1987 due to a 19.2% increase in freight ton miles 
partially offset by a 4.1% decrease in revenue per ton 
mile. Freight revenue totaled $406,726,000 in 1986 
and was 23.9% higher than 1985, due to a 15.4% 
increase in freight ton miles and 7.2% increase in 
revenue per ton mile. The increases in freight ton 
miles were attributable to the 1986 acquisition of 
Republic and the addition in 1987 of two 747 
freighter aircraft. Mail revenue increased 15.9% 
to $101,393,000 in 1987 and compares with 
$87,459,000 in 1986 and $80,126,000 in 1985. 
Charter and other transportation revenue 
decreased 10.9% to $69,589,000 in 1987, primarily 
due to decreased military charters as the Company 
chose to deploy charter resources to scheduled 
service markets. Charter and other transportation 
revenue totaled $78,110,000 in 1986 and $55,959,000 
in 1985, with the 1986 increase primarily due to 
combined airline operations and increased charters. 
TWE TY TWO 
 Other revenue totaled $146,458,000 in 1987, 
$96,421,000 in 1986 and $36,612,000 in 1985. The 
increase from 1986 to 1987 is primarily attributable 
to a full year of combined airline operations in 1987 
compared with a partial year in 1986 (from August 12 
forward). This also accounts for part of the increase 
from 1985 to 1986. Revenues of MLT subsequent to 
its purchase in October 1985 are included in other 
revenue and account for the majority of the remain- 
ing increase in 19 8 6. 
Operating Expenses Salaries and benefits, which 
represent 30.8% of operating expenses in 1987, 
increased $494,451,000, or 48.1 % , in 1987 and 
$313,306,000, or 43.8%, in 1986. The increases 
were largely due to the increased number of employ- 
ees from the acquisition of Republic and higher pay 
rates. Full-time equivalent employees totaled 33,724 
at December 31, 1987; 33,427 at December 31, 1986, 
and 16,864 at December 31, 1985. The Company 
adopted Statement of Financial Accounting Stan- 
dards No. 87, "Employers' Accounting for Pensions;' 
during the first quarter of 1987. Pension expense 
for 1987 reflected a $4.8 million decrease due to 
this change. 
Fuel, oil and taxes increased $198,685,000, or 
31.2%, in 1987 due to a 1.7% increase in the average 
fuel price and a 28 .1 % increase in gallons consumed. 
The 11.4% decrease in 1986 fuel expense reflects a 
3 2. 9 % decline in the average fuel price partially off- 
set by a 17.0% increase in gallons consumed. Expan- 
sion of service, together with the net addition of 3 
aircraft in 1987 and 181 aircraft in 1986 (including 
171 from the Republic acquisition) resulted in the 
additional fuel consumption. Fuel prices averaged 
56.72<t in 1987; 55.78<t in 1986 and 83.07<t in 1985. 
Commissions increased $243,286,000, or 51.3%, 
from 1986 to 1987, and $146,090,000, or 44.6%, 
from 1985 to 1986. Increases in both years were due 
to increased revenues, higher levels of sales by com- 
mission agents and increased commission rates. 
Increased rentals and landing fees in 1987 and 
1986 primarily reflect additional operating leases 
and an increase in departures. The Company entered 
into 15 aircraft operating leases during 1987. The 
Company also assumed 15 aircraft operating leases 
from Republic and entered into 9 additional oper- 
ating lease agreements in 1986. There were no 
operating leases for aircraft in 19 85. The increase 
was partially offset by the disposition of six aircraft 
under operating leases in 19 8 7 and three in 19 8 6. 
Departures, which impact the amount of landing fees 
paid, increased 55.8% in 1987 and 81.9% in 1986. 
Aircraft maintenance materials and repairs 
increased $91,588,000, or 52.7%, in 1987 and 
$62,117,000, or 55 .6%, in 1986 with the acquisition 
of Republic, higher level of operations, aircraft 
modifications and increased spare engine repairs. 
Depreciation and amortization rose 40. 5 % in 19 8 7 
to $340,338,000 compared with $242,213,000 in 
1986 and $182,563,000 in 1985. The increases were 
primarily the result of additional depreciation for 
assets acquired in the Republic purchase and for 
ETEARNI GS 
PER SHARE 
CAPACITY AND 
ThAFFIC- SCHEDULED 
FREIGHT TO 
MILES-SCHEDULED 
S3 
S2 
S1 
83 g4 85 86 87 
~After extraordinary 
loss of 51.30 per share 
from the settlement of 
a lawsuit. 
60 
40 
20 
On Billions) 
83 84 85 86 87 
 Revenue Passenger M iles 
Available Seat Miles 
T'w E . 'TY THREE 
(In Billions) 
1.2 
.8 
.4 
83 84 85 86 87 
 MANAGEMENT'S DISCUSSION AND ANALYSIS OF 
FINANCIAL CONDITION AND RES UL TS OF OPERA TIO NS 
(Continued) 
amortization of nine additional 7 57 s under capital 
leases added in 1986. These were partially offset by 
the conversion to operating leases of two aircraft in 
1987 and four aircraft in 1986, the sale of three 
727-200 aircraft in 1987, and the loss of one MD-80 
due to an August 1987 accident. 
Other operating expenses increased $290,946,000, 
or 43.0%, in 1987 and $259,542,000, or 62.2%, in 
1986. The increases reflect a higher level of opera- 
tions due to the combination with Republic, partic- 
ularly in marketing and passenger service expenses. 
In addition, 1986 includes a full year, and 1985 a 
partial year, of MLT expenses. 
Other Income (Expense) Other income (expense) in 
1986 includes $17,231,000 of integration expense, 
representing nonrecurring costs associated with the 
combination of Northwest and Republic. Interest 
expense totaled $105,005,000 in 1987 compared 
with $76,537,000 in 1986 and $19,873,000 in 1985. 
Increases in 1987 and 1986 reflect higher levels of 
debt and capital lease obligations assumed in the 
acquisition of Republic and capital lease obligations 
for new aircraft acquisitions. These were partially 
offset by reductions in debt, including the conversion 
into common stock of $100 million and $17 5 million 
of convertible debentures, called in December 1986 
and June 1987, respectively. 
Investment income was $13,031,000 in 1987; 
$5,501,000 in 1986 and $4,741,000 in 1985. The 
increase from 1986 to 1987 primarily relates to inter- 
est earned on proceeds from a public stock offering 
in February 1987. Of the proceeds, $171,656,000 had 
been earmarked for the early payment in February 
1988 of 14.625% and 15.125% equipment trust 
notes due in 1990 and 199 3, respectively. 
The gain on disposition of assets totaled 
$61,269,000 in 1987; $14,722,000 in 1986 and 
$2,780,000 in 1985. The 1987 gains resulted pri- 
marily from the sale of aircraft, gates and landing 
slots which were surplus to the Company's opera- 
tions after the combination with Republic. The 
1985 and 1986 gains resulted from the sale of 
miscellaneous assets. 
Income Taxes Income taxes were $73,346,000 in 
1987 compared with $25,300,000 in 1986 and a 
credit of $8,376,000 in 1985. Earned investment tax 
credits totaled $511,000 in 1987, $22,266,000 in 
1986 and $37,749,000 in 1985. The Company also 
passed the benefit of approximately $26.0 million of 
investment tax credits in 1987 and $22.5 million in 
1986 to lessors of certain of its aircraft in return for 
lower future rental charges. Investment tax credits 
are applied on tax returns as allowed by income tax 
regulations. Credits not currently applied are offset 
against deferred taxes for accounting purposes. As 
of December 31, 1987, unused investment tax credits 
totaled $3,681,000, and under the Tax Reform Act 
of 1986, will be reduced by 17% in 1988. 
The Tax Reform Act of 1986 affects cash flows, 
results of operations and the Company's financial 
position. Certain provisions of the Act, such as the 
repeal of investment tax credits, the reduction of 
investment tax credit carryforwards, the lengthening 
of depreciable lives for property and equipment and 
the new alternative minimum tax, result in larger 
future U.S. income tax payments for the Company. 
Partially offsetting these negative provisions, however, 
is the reduction in corporate income tax rates. The 
change in depreciable lives and the new alternative 
minimum tax generally only affects the timing of 
U.S. income tax payments while the repeal of invest- 
ment tax credits, the reduction of investment tax 
credit carryforwards and the reduction in corporate 
tax rates result in permanent tax differences as com- 
pared to previous tax laws. 
As of December 31, 1987, the Company had on 
order approximately $656 million worth of equip- 
ment which will qualify as transition property under 
the Tax Reform Act of 19 8 6. As transition property, 
this equipment will qualify for investment tax 
credits, as reduced by the Act, and shorter deprecia- 
tion lives than would otherwise be allowed under 
the new tax law. 
In December 1987 the Financial Accounting 
Standards Board issued Statement of Financial 
Accounting Standards No. 96, "Accounting for 
Income Taxes;' which adopts significant changes that 
apply to all taxable companies. One of the main pro- 
visions of the Statement enables companies to reduce 
TWENTY FOUR 
 deferred tax liabilities to reflect the lower rates of 
the 1986 Tax Act. Although the ultimate impact is 
unknown, adoption of this Statement will reduce the 
Company's deferred income tax liability and have a 
positive impact on financial results in the year of 
adoption. Part or all of that benefit could be offset 
by future rate increases. 
The Statement is effective for fiscal years begin- 
ning after December 15, 19 8 8, but earlier adoption is 
permitted. The Company elected not to adopt the 
Statement for calendar year 1987. 
INFLATION AND CHANGING PRICES 
The Company is capital intensive, with flight equip- 
ment and related inventory as major assets. Because 
property, equipment and inventory are recorded at 
cost, depreciation would be understated during 
inflationary periods and net income overstated to 
the extent current costs exceed original cost. The 
acquired assets and liabilities of Republic were 
written up to fair market value in accordance with 
generally accepted accounting principles, thereby 
eliminating some of this impact. 
FINANCIAL CONDITION 
Stockholders' equity at December 31, 1987, 
totaled $1,523,126,000, up $417,210,000 from 
December 31, 1986. This represented a book value per 
share of $52.32 and $46.29 at December 31, 1987 
and 1986, respectively. Increases in equity resulted 
primarily from 19 87 net earnings, the conversion of 
$175 million of 7.5% subordinated debentures, and 
the sale of three million shares of common stock. 
The increases were partially offset by dividend pay- 
ments of $25,487,000 and the Company's purchase 
of one million shares of its outstanding common 
stock at an average price of $38.50 per share. 
Long-term debt, excluding current maturities, 
totaled $386,977,000 at December 31, 1987, and 
long-term obligations under capital leases were 
$562,082,000. These debt and lease obligations 
were $808,684,000 and $577,548,000, respectively, 
at December 31, 1986. The 1986 balances include 
debt and lease obligations of $412,447,000 assumed 
in the acquisition of Republic. The former Republic 
debt is secured by certain aircraft and engines, while 
the remaining NWA and Northwest obligations 
(other than leases) are unsecured. Primarily because 
of the sale of common stock, the conversion of sub- 
ordinated debentures, the transfer to current maturities 
of equipment trust notes retired in February 19 8 8, 
and 1987 net earnings, the long-term debt to equity 
ratio improved from 1.3 to 1 at December 31, 1986, 
to .6 to 1 at December 31, 1987. 
LIQUIDITY AND CAPITAL RESOURCES 
Cash and short-term investments were $154,730,000 
at December 31, 1987, compared with $126,096,000 
and $45,842,000 at December 31, 1986 and 
19 8 5, respective! y. Operation provided cash of 
$454,246,000 in 1987, $310,794,000 in 1986 
and $221,432,000 in 1985. 
PASSE GER 
REVENUES LONG TERM DEBT,. 
VS. STOCKHOLDERS' 
EQUITY 
60 
40 
20 
PASSENGER LOAD 
FACTOR 
(Percent) 
 Break-Even Actual 
BY GEOGRAPHIC 
REGION 
(In Billions) 
83 84 85 86 87 
 Domestic Atlantic 
Pacific 
TWE. 'TY Fl VE 
(In Billions) 
83 84 85 86 87 
 Debt Equity 
,. Includes capital lease 
obligations. 
 MANA MENT'S DISCUSSION AND ANALYSIS OF 
FlNAN IAL ONDITION AND RESULTS OF OPERATIONS 
(Continued) 
Additional fund were pr vided by the ale 
of rhr e million hares of common 'tock to th 
public in hJwu;:iry 1987, pro iding net proceed of 
$19 , 10 000. The mpan had segregat d, and 
subscqucnrl utilized $171,65 000 of the proceeds 
for earl pa ment in Februar 1988 of 14.625% and 
15.125% equipment tru t notes due in 1990 and 
199 1, respcctivcl . The Stgregated 1 set were held in 
an in vtmcnt account (with no v ithdrawal restric- 
t ion), and cla. sifi ~ 
d as ca, hand hort-term invest- 
ments ~ 
tt year end. A ain, which was n t material , 
, ;1 realized n the earl debt retirement. The 
6~ 
1 
bnce )f the proceed, was u ed for general 
orp rate purpose '. 
N\1 A enteraI into a rcvol ing credit agreement 
in April l 8 . T his agn.:emcnt with a roup of 
major banks pro ide , for the a ailabilit of up to 
00 million in un ecured hort-term borrowin s to 
Jul I, 1989, ith the a ailable amount periodically 
dccn::_1sin thereafter until the final termination date 
of Jul I, l l. N rthv l'. t also has a r vol in credit 
focilit ith a group of m~ 
1jor banks hich provides 
for ~111 addition~ 
1l $500 million of uns cured b r- 
ro inp;s r June 0, 19 8. Thi amount de rea es 
pcri di -all rhereaft r to the termination d3te of 
90 
60<t 
J()<t 
AVERAGE PRLC PER 
GALL N OF FUEL 
July 1, 1994. There were no amounts outstanding 
under either agreement at December 31, 1987. The 
$50 million balance outstanding at December 31, 
1986, was repaid during the first quarter of 1987. 
Terms of the revolving credit agreements provide 
that available borrowings shall be reduced by any 
amounts of commercial paper outstanding. Commercial 
paper decreased $253,795,000 during 1987 resulting in 
a balance of $137,204,000 at December 31, 1987. As 
of December 31, 1987, there was $862,796,000 avail- 
able for borrowing under the two revolving credit 
agreements. 
In June 1987, the Company called for redemption 
all of its outstanding 7.5% convertible subordinated 
debentures due 2010. As a result of the call for 
redemption, $174,012,000 principal amount was 
converted into 3,052,689 shares of the Company's 
common stock. In addition, 17,333 shares were 
issued to an underwriter in connection with a 
standby purchase arrangement. 
Purchases of property and equipment totaled 
$640,786,000 in 1987, primarily due to the delivery 
of eight new Boeing 7 57 passenger aircraft and two 
new Boeing 7 4 7 freighter aircraft and the payment of 
additional advance deposits on new aircraft. These 
ALL -CAR: 0 
0PERATI 
(In Billions) 
8J 84 85 86 87 
 R,z 
c1w,To11Milcs 
A1a1/,1hlc To11 Al zlcs 
1 \ r, 1 ) s l \. 
 aircraft were sold and leased back under 22 to 
24-year operating leases. 
The sale/leaseback transactions, the loss of one 
MD-80 aircraft in August 1987, and the sale of three 
727-200 aircraftprimarilycomprisethe$505,229,000 
net book value of property and equipment disposi- 
tions during the year. 
As of December 31, 1987, additional aircraft 
on order consisted of five Boeing 7 57 aircraft to be 
delivered in 19 8 8 and ten new-generation Boeing 
7 4 7-400 passenger aircraft for delivery in 19 8 8 
through 1990. Also on order are 25 Airbus A320 air- 
craft scheduled for delivery in 1989 through 1992. 
Deposits of $256,704,000 have been made with the 
manufacturers, and additional committed expendi- 
tures for these aircraft and related equipment will be 
approximately $472,553,000 in 1988; $551,576,000 
in 1989; $468,126,000 in 1990; $170,776,000 in 
1991 and $120,557,000 in 1992. 
In April 19 87 the Company entered into a 
preliminary agreement to purchase 20 Airbus A340 
aircraft to be delivered from 19 9 2 through 19 9 5, 
with an option to purchase 10 A330 aircraft. The 
Company has until 1989 to confirm the purchase. 
The Company may, at its option, convert up to ten 
of the A340 aircraft to A330 aircraft if done no later 
than three years before scheduled delivery. The antic- 
ipated cost for the 20 A340 aircraft and spare parts is 
approximately $1.9 billion. Additional expenditures 
of approximately 5800 million may be incurred 
should the Company decide to purchase the 
option aircraft. 
Passenger $4,371,624 
85.0% 
Cargo 5554,553 
10.8% 
Charter and Ocher $216,047 
4.2% 
1987 SOURCES OF 
OPERATI G 
REVE T 
UES 
On Thousands) 
The Company also has options to purchase up 
to 75 additional Airbus A320 aircraft for delivery 
in 1992 through 1995. Deposits of $17,183,000 have 
been paid on these, of which $750,000 are non- 
refundable. Amounts to be paid under these options, 
assuming all aircraft are purchased, will approximate 
$2. 7 billion. 
Capital commitments for 1988 and thereafter 
principally consist of scheduled aircraft acquisitions. 
In addition, the Company continues to acquire prop- 
erty and equipment to support its airline operations 
and to make improvements to ground facilities 
including terminal improvements and modifications 
to office buildings. Major additions planned include 
10 new flight simulators and upgrades for 12 existing 
simulators; expansion of facilities at Memphis, 
Detroit, Los Angeles, Chicago, and Minneapolis/ 
St. Paul; and additional ground support and com- 
puter equipment to replace and upgrade existing 
equipment. 
The Company believes that internally generated 
funds, lease financings and borrowings will provide 
sufficient capital to meet all present commitments. 
The Company has substantial assets that are unen- 
cumbered, which could provide collateral for future 
financings if needed. 
On August 16, 1987, a Northwest MD-80 air- 
craft crashed at the Wayne County Airport in Detroit. 
It was the first Northwest accident in 24 years in 
which passenger lives were lost. The Company is 
adequately insured for all claims arising from 
the disaster. 
1987 DISTRIBUTIO 
OFOPERATI G 
EXPENSES 
$1,522,929 Salaries and Benefits 
30.8% 
S 834,622 Fuel, Oil and Taxes 
16.9% 
S 717,084 Commissions 
14.5% 
S340,338 Depreciarion and 
~---6_.9_%__ Amortization 
Sl ,531,121 Rentals, Landing Fees, 
30.9% Materials and Other 
~ - - - - - - - - - 
TWE. TY SEVE,. 
 NWA INC. CONSOLIDATED BALANCE SHEETS 
(Dollars in thousands) 
December 31 
ASSETS 
Current Assets 
Cash and short-term investments 
Accounts receivable, less allowances (1987- $4,500; 1986- $4,500) 
Flight equipment spare parts, less allowances (1987- $60,053; 
1986- $44,450) 
Maintenance and operating supplies 
Prepaid expenses 
Property and Equipment 
Flight equipment 
Less accumulated depreciation 
Advance payments for flight equipment 
Other property and equipment 
Less accumulated depreciation 
Flight Equipment Under Capital Leases- ote D 
Flight equipment 
Less accumulated amortization 
Other Assets 
Investments in affiliated companies- Note B 
Other 
TWE TY EIGHT 
1987 1986 
$ 154.730 $ 126,096 
436,053 467,843 
95 .011 108,581 
44.078 33,395 
50,682 44,527 
780,554 780,442 
3,513.432 3,485,972 
1.695 ,790 1,493,838 
1,817,642 1,992,134 
273,887 237,406 
2,091,529 2,229,540 
742,103 695,350 
224,138 179,257 
517,965 516,093 
616,620 623,581 
65,204 22,322 
551 ,416 601,259 
147,900 144,537 
130,133 50,983 
278,033 195,520 
$4,219,497 $4,322,854 
 LIABILITIES AND STOCKHOLDERS' EQUITY 
Current Liabilities 
Commercial paper 
Revolving line of credit-Note C 
Accounts payable and other liabilities 
Air traffic liability 
Accrued compensation and benefits 
Current maturities of long-term debt 
Current obligations under capital leases 
Long-Term Debt- T 
ote C 
Long-Term Obligations Under Capital Leases- ate D 
Deferred Credits and Other Liabilities 
Income taxes-Note F 
Deferred gain on aircraft sale and leaseback-Note D 
Other 
Stockholders' Eauitv- ate E 
Preferred stock, $1.00 par value, authorized 5,000,000 shares; 
outstanding-none 
Common stock, $2.00 par value, authorized 60,000,000 shares; 
issued-30,110,325 shares in 1987 and 23,890,095 shares in 1986 
Additional paid-in capital 
Retained earnings 
Unearned compensation 
Treasury stock, 1,000,000 shares 
Commitments and Contingencies- ates D, G and H 
The accompanying notes are an integral part of these statements. 
T\Y.' E TY I E 
December 31 
19 ..., 1986 
$ 137.204 $ 390,999 
50,000 
413 . 3 495,177 
263.205 298,819 
216.015 186,820 
196,346 16,725 
17 855 17,844 
1,244,158 1,456,384 
386 977 808,684 
562 082 577,548 
283 961 237,853 
145.981 77,936 
~3.:1: 58,533 
503 .154 374,322 
60.220 47,780 
577.290 212,580 
926,954 849,430 
(2.841 ) (3,874) 
{38l497} 
1.523.126 1,105,916 
$4.219.497 $4,322,854 
 NWA INC. CONSOLIDATED STATEMENTS 
OF EARNINGS 
(Dollars in thousands, except per share data) 
Year Ended December 31 
1987 1986 1985 
OPERATING REVENUES 
Passenger $4,371,624 $2,920,458 $2,154,394 
Freight 453,160 406,726 328,400 
Mail 101.393 87,459 80,126 
Charter and other transportation 69.589 78,110 55,959 
Other 146-458 96,421 36,612 
5,142 224 3,589,174 2,655,491 
OPERATING EXPENSES 
Salaries and benefits 1,522,929 1,028,478 715,172 
Fuel, oil and taxes 834,622 635,937 717,870 
Commissions 717,084 473,798 327,708 
Rentals and landing fees 298,057 191,573 106,220 
Aircraft maintenance materials and repairs 265,447 173,859 111,742 
Depreciation and amortization 340,338 242,213 182,563 
Other 967,617 676,671 417,129 
4,946,094 3,422,529 2,578,404 
Operating Income 196,130 166,645 77,087 
OTHER INCOME (EXPENSE) 
Integration expense (17,231) 
Interest expense, net of capitalized interest (1987- 
$21,024 1986-$18,145; 1985-$7,799) (105,005) (76,537) (19,873) 
Investment income 13.031 5,501 4,741 
Gain on disposition of assets 61.269 14,722 2,780 
Other-net 10.932 9,141 8 
(19,773) (64,404) (12,344) 
Earnings Before Income Taxes 176,357 102,241 64,743 
INCOME ThX EXPENSE (CREDIT)-NOTE F 73,346 25,300 (8,376) 
et Earnings $ 103 ,011 $ 76,941 $ 73,119 
1 et Earnings per Common and Common Equivalent 
Share-Primary and Fully Diluted $ 3.59 $ 3.26 $ 3.18 
The ace om panying note are an integral part of these statements. 
THIRTY 
 NWA I C . CONSOLIDATED STATEME TS OF 
CHA GES I FI A CIAL POSITIO 
(Dollars in thousands) 
Year Ended December 31 
19 7 1986 
FUNDS PROVIDED 
Net earnings 103,011 $ 76,941 
Add (deduct) non-cash item : 
Depreciation and amortization 340 338 242,213 
Increase (decrease) in deferred income taxes 46 108 (8,360) 
Gain from asset exchange (22 114) 
Other (13,097) 
Total From Operations 454,246 310,794 
Net book value of property dispositions 505 229 395,282 
Sale of common stock, net of costs 197,610 
Issuance of common stock upon debenture conversion, 
net of costs 172,667 98,964 
Increase in deferred gain on aircraft sale and leaseback 73 ,436 77,936 
Increase (decrease) in accrued compensation and benefits 29 195 27 916 
Decrease (increase) in accounts receivable 31 790 (34,832) 
Decrease (increase) in flight equipment spare parts 1,700 (33,027) 
Increase in capita! lease obligations 309,761 
Issuance of long-term debt 284,679 
Other 21 552 (16,324) 
Total Funds Provided 1,487 425 1,421,149 
Fu DS USED 
Additions to property and equipment 640,786 668,906 
Decrease (increase) in commercial paper 253,795 (238,808 ) 
Reduction and conversion of long-term debt 232 156 124,943 
Decrease (increase) in accounts payable and other liabilities 81 ,644 2,948 
Increase in other assets-other 67,933 452 
Decrease (increase) in revolving line of credit 50 000 (50 000) 
Acquisition of treasury stock 38,497 
Decrease (increase) in air traffic liability 35,614 (25,192) 
Dividends 25,487 19,645 
Reduction of capital lease obligations 15,455 8,727 
Investment in PARS 140,000 
Acquisition of Republic: 
Flight equipment and other property 1,422,807 
Debt and lease obligations (455,753 ) 
Other long-term liabilities (55,336) 
Working capital other than cash (237,770) 
Net acquisition cost 673,948 
Other 17,424 15,326 
Total Funds Used 1 458,791 1,340,895 
CREASE (DECREASE) I CASH AND SHORT-TERM 
INVESTMENTS 28,634 80,254 
Cash and short-term investments at the beginning 
of the year 126,096 45,842 
Cash and short-term investments at the end of the year 154,730 $ 126,096 
The accompanying notes are an integral part of these statements. 
THIRTY O E 
1985 
$ 73,119 
182 563 
(34 250) 
221,432 
775 
(35,776) 
(51,958) 
(5,502) 
167,290 
236,988 
27 338 
560 587 
693,116 
(134,357) 
(12,894) 
24,946 
(28,012) 
19,586 
1,924 
564,309 
(3,722) 
49,564 
$ 45 842 
 NWA INC. CONSOLIDATED STATEMENTS OF 
STOCKHOLDERS' EQUITY 
(In thousands, except per share data) 
Additional 
Common Stock Paid-In Unearned 
Shares Amount Capital Compensation 
Balance January 1, 1985 21,750 $43,499 $110,823 $ 
Exercise of stock options 30 60 753 
Net earnings for 1985 
Cash dividends-$.90 
per share 
Other ( 6) (10) (258) 
Balance December 31, 1985 21,774 43,549 111,318 
Exercise of stock options 74 148 2,603 
Conversion of debentures 1,970 3,940 95,024 
Restricted stock grant 78 155 3,977 (3,874) 
Net earnings for 1986 
Cash dividends-$.90 
per share 
Other (6) (12) (342) 
Balance December 31, 1986 23,890 47,780 212,580 (3,874) 
Exercise of stock options 159 319 6,602 
Issuance of common 
stock 3,000 6,000 191,610 
Conversion of debentures 3,070 6,140 166,527 
Amortization of unearned 
compensation 1,033 
Net earnings for 1987 
Cash dividends-$.90 
per share 
Purchase of 1,000 
treasury shares 
Other (9) (19) (29) 
Balance December 31, 1987 30,110~- $60,220 $577,290 $(2,841) 
" 
"Includes one million shares held in treasury. 
The accompanying notes are an integral part of these statements. 
THIRTY TWO 
Retained Treasury 
Earnings Stock 
$738,601 $ 
73,119 
(19,586) 
792,134 
76,941 
(19,645) 
849,430 
103,011 
(25,487) 
(38,497) 
$926,954 $(38,497) 
 NWA INC. NOTES TO CONSOLIDATED 
FINANCIAL STATEMENTS 
NOTE A-SUMMARY OF SIGNIFICANT 
ACCOUNTING POLICIES 
Basis of Presentation: The consolidated finan- 
cial statements include the accounts of NWA Inc., 
Northwest Airlines, Inc. and all other wholly owned 
subsidiaries after elimination of intercompany 
accounts and transactions. 
Short-Term Investments: Short-term investments 
are stated at cost which approximates market and 
amounted to $171,791,000 and $95,023,000 at 
December 31, 1987 and 1986, respectively. 
Flight Equipment Spare Parts: Flight equipment 
spare parts are priced at average cost. An allowance 
for depreciation is provided at rates which depreciate 
cost, less residual value, over the estimated useful 
lives of the related aircraft. 
Property, Equipment and Depreciation: Owned 
property and equipment are stated at cost. Property 
and equipment acquired under capital leases are 
stated at the lower of the present value of minimum 
lease payments or fair market value at the inception 
of the lease. Provision for depreciation is computed 
by the straight-line method over the estimated useful 
lives of the assets. Estimated useful lives range from 5 
to 15 years for flight equipment and 3 to 32 years for 
other property and equipment; residual values range 
from zero to 15%. Property and equipment under 
capital leases and leasehold improvements are amor- 
tized over the lease terms or the estimated useful lives 
of the assets, whichever is less. 
Pension Plans: The Company has several non- 
contributory and contributory pension plans cover- 
ing substantially all of its employees. The benefits for 
these plans are based primarily on years of service 
and/ or employee compensation. It is the Company's 
policy to annually fund at least the minimum pen- 
sion contribution as required by the Employees 
Retirement Income Security Act. 
Effective January 1, 1987, the Company adopted 
Statement of Financial Accounting Standards No. 87, 
"Employers' Accounting for Pensions;' for all of its 
pension plans (see Note I). 
Income Taxes: Income taxes are provided at stat- 
utory rates applied to earnings before income taxes 
regardless of when such taxes are paid. Deferred 
income taxes arise principally from timing dif- 
ferences between financial and tax methods of 
accounting for depreciation, capitalized interest 
and deferred gains. 
The Company uses the flow-through method 
of accounting for investment tax credits. Investment 
tax credits not applied currently on tax returns are 
offset against deferred income taxes to the extent 
they are applicable to deferred taxes becoming pay- 
able in the investment tax credit carryover periods. 
Operating Revenues: Passenger and freight revenues 
are recognized when the transportation is provided. 
The value of sold but unused tickets is included in 
current liabilities. 
Earnings Per Share: Primary earnings per share were 
based on the weighted average number of common 
and common equivalent shares outstanding of 
29,631,000 in 1987; 26,915,000 in 1986 and 
25,360,000 in 1985. This included shares for the 
assumed conversion of the 7.5% convertible sub- 
ordinated debentures due in 2007 and 2010 totaling 
1,526,000 in 1987; 5,035,000 in 1986 and 3,552,000 
in 1985. The 7.5% convertible subordinated deben- 
tures due in 2007 and 2010 were called for redemp- 
tion in December 1986 and June 1987, respectively. 
Common equivalent shares also included the dilutive 
effect of the assumed exercise of stock options. 
Earnings were adjusted for interest relating to 
the debentures, net of income taxes, amounting 
to $3,444,000 in 1987; $10,793,000 in 1986 and 
$7,423,000 in 1985. Fully diluted earnings per share 
were equivalent to primary earnings per share. 
Reclassifications: Certain amounts for 1986 and 
1985 have been reclassified to conform with the 1987 
financial statement presentation. 
T HIR TY T HR EE 
 NWA INC. NOTES To CONSOLIDATED 
FINANCIAL STATEMENTS 
(Continued) 
NOTE B-BUSINESS ACQUISITIONS 
Republic: On August 12, 1986, the Company 
acquired all of the outstanding stock of Republic 
Airlines, Inc., a major U.S. air carrier, for approxi- 
mately $862,000,000. After deducting Republic's 
cash, the acquisition resulted in a net cash outlay of 
approximately $674,000,000. The acquisition was 
recorded using the purchase method of accounting 
and, accordingly, the purchase price was allocated 
to the assets and liabilities acquired based on their 
estimated fair market value at the date f acquisi- 
tion, largely determined by an independent appraisal. 
The fair market value of the net assets acquired was 
in excess of the acquisition cost which resulted in a 
reduction of the amount assigned to property and 
equipment. The consolidated financial statements 
of the Company include results of operations for 
Republic since August 12, 1986. 
On October 1, 1986, the airline operations of 
the Company's two major operating subsidiaries, 
Northwest and Republic, were combined. As a result, 
the Company accrued $17,231,000 of nonrecurring 
costs associated with the combination. In November 
1986 Republic was merged into Northwest. 
The following presents the unaudited pro forma 
results of operations of the Company and its subsid- 
iaries, for the years ended December 31, 1986 and 
1985, as if Republic had been acquired at the begin- 
ning of each year. Actual results for the year ended 
December 31, 1987, are shown for comparative 
purposes (in thousands, except per share data): 
Year Ended December 31 
1987 1986 1985 
Operating 
revenues $5,142,224 $4,694,412 $4,389,888 
Net earnings 103,011 95,231 47,499 
Net earnings 
per share 3.59 3.94 2.17 
The above table includes additional interest 
expense as if funds borrowed in connection with the 
acquisition had been outstanding from the beginning 
of 1986 and 1985. Not included in the table is a 1985 
extraordinary gain of $62,175,000 ($2.45 per share) 
resulting from a pension plan termination by 
Republic. The proforma financial information is not 
intended to reflect results of operations which would 
have actually occurred had the purchase of Republic 
been effective on the dates indicated and is not 
intended to be indicative of future results. 
P 
ARS: On December 29, 1986, the Company 
acquired a 50% interest in the PARS computerized 
reservations system, previously wholly owned by 
Trans World Airlines, Inc., for $140,000,000 which is 
included in Other Assets. The reservations system 
serves over 5,000 subscribing travel agencies. 
MLT: On October 1, 1985, the Company acquired 
all of the common stock of MLT Vacations, Inc., 
formerly Mainline Travel, Inc., a wholesaler of vaca- 
tion travel packages. The transaction, which was not 
material to the Company's financial results, was 
accounted for as a purchase. 
NOTE C-LONG-TERM DEBT AND CREDIT 
AGREEMENTS 
Long-term debt consisted of the following at 
December 31 (in thousands): 
1987 1986 
8.625% notes due 1996 $200,000 $200,000 
9% notes due 1992 50,000 50,000 
9.15% notes due 1998 50,000 50,000 
7.5% convertible subordinated 
debentures due 2010 (a) 175,000 
Installment notes (b) 58,953 107,137 
Equipment trust notes (band c): 
14.625% due 1990 74,400 75,000 
15.125% due 1993 75,000 75,000 
9% due 1993 17,250 20,400 
Other 41,080 45,510 
Debt premium (b) 16,640 27,362 
Total long-term debt 583,323 825,409 
Less current maturities (c) 196,346 16,725 
$386,977 $808,684 
THIRTY FOUR 
 On July 1, 1984, Northwest Airlines, Inc. entered 
into a revolving credit agreement with a group of 
major banks which provides for unsecured borrow- 
ings up to $500,000,000 through June 30, 1988. 
This amount decreases periodically thereafter to the 
termination date of July 1, 1994. Interest on borrow- 
ings is, at the Company's election, the lower of vari- 
ous formula rates or the prin1e rate until June 30, 
1991, and the formula rate or prime rate plus  % 
thereafter. Commitment fees ranged from _6 
% to 
1/s % per annum on the unused credit and amounted 
to $604,000 in 1987. There were no outstanding 
borrowings at December 31, 1987 and 1986. 
On April 3, 1986, NWA Inc. entered into a 
revolving credit agreement with a group of major 
banks which provides for unsecured borrowings 
up to $500,000,000 to July 1, 1989. This amount 
decreases periodically thereafter to the termination 
date of July 1, 1992. Interest on borrowings is, at the 
Company's election, the lower of various formula 
rates or the prime rate until July 1, 1992. Commit- 
ment fees ranged from _ 6 
% to 1/s % per annum on 
the unused credit and amounted to $625,000 in 
1987. There were no outstanding borrowings at 
December 31, 1987. The balance outstanding 
at December 31, 1986, which was classified as a cur- 
rent liability, totaled $50,000,000 at an interest rate 
of 6.985%. The balance was paid in February 1987. 
The terms of the revolving credit agreements 
provide that available borrowings shall be reduced by 
any amounts of commercial paper outstanding. 
(a) In June 1985 the Company issued $175,000,000 
of 7.5% convertible subordinated debentures due in 
2010. The debentures were convertible into common 
stock at a rate of $57.00 per share. In June 1987 the 
Company called the debentures for redemption. As a 
result of the call for redemption, $174,012,000 
principal amount of the debentures was converted 
into 3,052,689 shares of the Company's common 
stock. In addition, 17,333 shares were issued to an 
underwriter in connection with a standby purchase 
arrangement. 
(b) The installment notes and equipment trust 
notes were assumed with the acquisition of Republic. 
The debt was revalued as of the acquisition date using 
market interest rates ranging from 8.8% to 12.5%. The 
resulting adjustment has been recorded as a debt 
premium and is being amortized as a reduction of 
interest expense over the term of the debt. These 
notes are secured by certain aircraft and engines. 
The installment notes have final maturity dates 
from 1988 through 1998 at a weighted average interest 
rate of 15%. 
The 9% equipment trust notes due 1993 require 
semiannual sinking fund payments of $1,575,000 
from 1988 through 1992 and $1,500,000 at maturity 
plus interest. The Company may make additional 
semiannual sinking fund payments up to $1,575,000 
and may pay off the remaining balance in full on or 
after May 1, 1988, at a premium. 
(c) Current maturities of long-term debt due for 
the next five years are as follows (in thousands): 
1988 $196,346 
1989 10,669 
1990 10,209 
1991 15,479 
1992 61 ,414 
Exercising its early redemption option, the 
Company retired the 14.625% and 15.125% equip- 
ment trust notes due 1990 and 1993, respectively, 
in February 1988. The $159,870,000 redemption 
price is included in the 1988 current maturities stated 
above. 
The Company was in compliance with the 
covenants of all debt agreements at the end of 
the year. Dividends are restricted to 3 % of stock- 
holders' equity at the beginning of the year. 
NOTED-LEASES 
The Company leases space in air terminals; land and 
buildings at airports; ticket, sales and reservations 
offices; and other property and equipment under 
noncancelable operating leases which expire in 
various years through 2025. Portions of these 
facilities are subleased under noncancelable oper- 
ating leases expiring in various years through 2020. 
At December 31, 1987, the Company leased 59 
of its 316 aircraft, 29 of which were capital leases. 
Under 3 8 of the lease agreements, the Company has 
the option to purchase the aircraft at prices approx- 
imating fair market value at the end of the lease term, 
with 14 other lease agreements providing for pur- 
chase options ranging from approximately 10% to 
20% of the lessor's cost. The remaining seven lease 
agreements contain no purchase option provisions. 
TH IR TY F I VE 
 NWA INC. NOTES To CONSOLIDATED 
FINANCIAL STATEMENTS 
(Continued) 
During 1987 the Company sold eight Boeing 
757-200 aircraft and two 747-200 freighter aircraft 
and leased them back under operating leases. The 
proceeds from the sales, which totaled $504,800,000, 
exceeded the net book value of the aircraft by 
$73,436,000. In 1986 the Company sold six Boeing 
747-200 aircraft and leased them back under oper- 
ating leases. The proceeds from these sales, which 
totaled $465,415,000, exceeded the net book value 
of the aircraft by $77,936,000. These gains have 
been deferred and are being amortized over the terms 
of the leases. 
Rental expense for all operating leases consisted of 
(in thousands): 
1987 1986 1985 
Gross $194 ,233 $101,619 $44,330 
Sublease rental 
mcome (12,632) (6,816) (1,818) 
$181 ,601 $ 94,803 $42,512 
At December 31, 1987, future minimum lease 
payments under capital leases and noncancelable 
operating leases with initial or remaining terms of 
more than one year were as follows (in thousands): 
1988 
1989 
1990 
1991 
1992 
Thereafter 
Less sublease rental 
income 
Less amounts representing 
interest 
Present value of future 
minimum capital lease 
payments and minimum 
$ 
Capital 
Leases 
56,529 
60,285 
59,080 
57,089 
56,490 
717,999 
1,007,472 
427,535 
Operating 
Leases 
$ 161,343 
154,564 
172,001 
148,017 
141,835 
2,213,938 
2,991,698 
38,980 
rental commitments $ 579,937 $2,952,718 
NOTE -STOCKHOLDERS' EQUITY 
The Company has stock option and incentive 
plans for officers and certain key employees. At 
December 31, 1987, the Company had 1,137,150 
shares of common stock reserved for issuances under 
stock option and incentive plans. There were 541,800 
and 914,400 shares of common stock available for 
future stock option grants at December 31, 1987 and 
1986, respectively. All of the options granted expire 
on various dates through 1997. Grants during 1987 
are exercisable as either stock options or stock appre- 
ciation rights. The exercise of either a stock option or 
stock appreciation right serves to cancel the other. 
Common stock options at prices that were not less 
than 100% of market at the date of grant were 
as follows: 
Price Per 
Shares Share 
Outstanding at 
December 31, 1985 297,737 $23.31 - $44.06 
Granted 205,500 47.69 - 48.50 
Exercised (73,881) 23.31 - 47.69 
Canceled or expired (500) 42.19 
Outstanding and 
exercisable at 
December 31, 1986 428,856 23.31 - 48.50 
Granted 376,250 64.81 
Exercised (159,331) 23.31 - 48.50 
Canceled or expired (50,425)~ 42.19 - 64.81 
Outstanding and 
exercisable at 
December 31, 1987 595,350 42.19 - 64.81 
,:Includes 46,275 options canceled upon exercise of 
stock appreciation rights. 
During 1986 the Company granted 77,600 
shares of restricted common stock to certain officers 
of NWA Inc. and Northwest Airlines. Until 1990, 
certain restrictions limit the ability of the officers 
to dispose of the stock. The estimated value of the 
restricted stock is being amortized as additional 
compensation expense over the term of the grant. 
T H I R TY SIX 
 In February 1987 the Company sold 3,000,000 
shares of previously unissued common stock to 
the public, with net proceeds of $197,610,000. At 
December 31, 1987, the Company had segregated 
$171,656,000 of the proceeds for early payment in 
February 1988 of 14.625% and 15 .125% equipment 
trust notes due in 1990 and 1993, respectively, plus 
premium and interest. The segregated assets were 
held in an investment account ( with no withdrawal 
restriction), which was classified as Cash and Short- 
Term Investments. The balance of the proceeds was 
used for general corporate purposes. 
In October 1987 the Company authorized the pur- 
chase of up to 1,000,000 shares of its outstanding 
common stock. As of December 31, 1987, the Com- 
pany had purchased 1,000,000 shares of treasury 
stock at an average cost of $38.50. 
NOTE F-INCOME TAXES 
Reconciliation of the Company's effective income tax 
rate is as follows (in thousands): 
Year Ended December 31 
1987 1986 1985 
Statutory rate applied 
to earnings 
before tax $70 543 $47,031 $29,782 
Add (deduct): 
Investment tax 
credit earned (511 ) (22,266) (37,749) 
Rate change on 
timing differences (5 436) (1,390) (1,444) 
State income tax 
net of federal 
benefit 4,879 3,165 1,009 
Other 3,871 (1,240) 26 
Total income tax 
expense (credit) $73 ,346 $25,300 $ (8,376) 
Federal, foreign and state income tax expense 
(credit) consists of the following (in thousands): 
1987 1986 1985 
Current: 
Federal $28,2J7 $20,791 $(6,039) 
Foreign 2,022 866 1,855 
State 8,452 5,519 (868) 
$38,691 $27,176 $(5,052) 
Deferred: 
Federal $34,975 $ (2,219) $(6,061) 
State (3 20) 343 2,737 
$34,655 $ (1,876) $(3,324) 
The deferred income tax expense ( credit) consists 
of the following (in thousands): 
19 7 1986 1985 
Settlement payment $ $ $ 28,094 
Accelerated 
depreciation 47,732 15,255 12,526 
lnve tment ta and 
other credits 42 009 20,117 (54,891) 
Deferred gain on 
sale and 
leaseback l 028) (33 ,604) 
Interest 8,409 7,608 3,588 
Deferred employee 
benefits (1 611) (10,313) (923 ) 
Deferred 7 57 
training costs (954) 265 4,346 
Deferred revenue (2,220) 2,220 
Rate change on 
timing differences (5 436) (1,390) (1,444) 
Prepaid commissions ( 76) 5,709 443 
Leases (15,3 17) (4,702) 648 
Other (8,273) 1,399 2 069 
$ 34 6 5 $ (1,876) $ (3,324) 
Investment tax credits of $3,681,000 not applied on 
tax returns but offset against deferred income taxes 
at December 31, 1987, will expire if not used in the 
amount of $3,170,000 in 2001 and $511,000 in 2002. 
In December 1987 the Financial Accounting 
Standards Board issued Statement of Financial 
Accounting Standards No. 96, '.ccounting for 
Income Taxes;' which adopts significant changes that 
apply to all taxable companies. One of the main pro- 
visions of the Statement enables companies to reduce 
deferred tax liabilities to reflect the lower rates of the 
1986 Tax Act. Although the ultimate impact is 
unknown, adoption of this Statement will reduce the 
Company's deferred income tax liability and have a 
positive impact on financial results in the year 
of adoption. 
The Statement is effective for fiscal years begin- 
ning after December 15, 1988, but earlier adoption 
of the Statement is permitted. The Company has 
elected not to adopt the Statement for calendar 
year 1987. 
THIR T Y SE V EN 
 NWA INC. NOTES To CONSOLIDATED 
FINANCIAL STATEMENTS 
(Continued) 
NOTE G-COMMITMENTS 
As of December 31, 1987, the Company had con- 
tracted to purchase 5 Boeing 757-200 aircraft for 
delivery in 1988; 10 Boeing 747-400 aircraft for 
deli ery from 1988 through 1990 and 25 Airbus 
A3 20-200 aircraft for delivery from 19 8 9 through 
1992. Deposits of $256,704,000 have been made 
with the manufacturers, and additional committed 
expenditures for these aircraft and related equipment 
will be approximately $472,553,000 in 1988; 
$551,576 000 in 1989; $468,126,000 in 1990; 
$170,776 000 in 1991 and $120,557,000 in 1992. 
The Company has options to purchase up to 75 
additional Airbus A320 aircraft for delivery from 
1992 through 1995, on which refundable deposits of 
$16,433,000 and nonrefundable deposits of 
$750 000 have been paid. These aircraft are subject 
to periodic reconfirmation or cancellation. Amounts 
to be paid under these options, assuming all aircraft 
are purchased, will approximate $2,700,000,000. 
In April 1987 the Company entered into a pre- 
liminary agreement to purchase 20 Airbus A340 air- 
craft to be delivered from 1992 through 1995, with 
an option to purchase 10 A330 aircraft. The Com- 
pany has until 1989 to confirm the purchase. The 
Company may, at its option, convert up to ten of the 
A340 aircraft to A330 aircraft if done no later than 
three years before scheduled delivery. The anticipated 
cost for the 20 A340 aircraft and spare parts is 
approximately $1,900,000,000. Additional expendi- 
tures of approximately $800,000,000 may be 
incurred should the Company decide to purchase the 
option aircraft. 
In addition, the Company signed a letter of intent 
to lease four McDonnell Douglas DC-9-30 aircraft 
for a term of five years, with delivery in 1988. 
NOTE H-LITIGATION AND CONTINGENCIES 
The Company is involved in legal actions relating to 
environmental issues (primarily noise and air pollu- 
tion), trade practices, alleged employee discrimina- 
tion, 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 I-RETIREMENT BENEFITS 
Effective January 1, 1987, the Company changed 
its method of accounting for pension costs in accor- 
dance with the provisions of Statement of Financial 
Accounting Standards No. 87. The Company's pen- 
sion expense was $42,440,000 in 1987; $24,613,000 
in 1986 and $23,242,000 in 1985. Pension expense 
for 1987 reflected a $4,800,000 decrease due to the 
adoption of Statement No. 87. Pension expense for prior 
years has not been restated. 
The net periodic pension cost of defined benefit 
plans for 1987 included the following (in thousands): 
Service cost-benefits earned during 
the penod 
Interest cost on projected benefit obligation 
Actual return on plan assets 
Net amortization and deferral 
Net periodic pension cost 
$ 37,651 
86,848 
(89,217) 
(3,244) 
$ 32,038 
THIRTY EIGHT 
 At December 31, 1987, the funded status of the 
Company's defined benefit plans was as follows 
(in thousands): 
Plans Where Plans Where 
Assets Exceeded Accumulated 
Accumulated Benefits 
Benefits Exceeded Assets 
Actuarial present 
value of: 
Vested benefit 
obligation $535,794 $235,024 
Nonvested benefit 
obligation 26,067 13,394 
Accumulated bene- 
fit obligation 561,861 248,418 
Effect of projected 
future salary 
mcreases 188,442 7,560 
Projected benefit 
obligation $750,303 $255,978 
Plan assets at fair 
value* $825,110 182,017 
Less projected 
benefit obligation 750,303 255,978 
Plan assets greater 
than (less than) 
the projected 
benefit obligation 74,807 (73,961 ) 
Unrecognized net 
(asset) liability (96,901 ) 43,480 
Unrecognized net 
gain during the 
year (15,072) (6,948 ) 
Accrued pension cost 
at December 31, 1987 $ (37,166) $ (37,429) 
'-Plan assets were invested primarily in equity and 
debt securities. 
At December 31, 1986, the actuarial present value 
of accumulated benefits for all defined benefit plans 
was $746,267,000 (of which $706,054,000 was 
vested), compared with a fair value of net plan assets 
available for benefits of $997,439,000. The interest 
rates used in computing the present value of accu- 
mulated plan benefits were either 8% or 8.5% for 
all plans except for certain retired plan participants 
where a 13.75% rate was used. The rate for retired 
plan participants was based upon the actual earnings 
of a dedicated securities portfolio established for the 
payment of their benefits. 
At December 31, 1987, the weighted average dis- 
count rate and rate of increase in future com- 
pensation levels used in determining the actuarial 
present value of projected benefit obligations were 
9 .5% and 5%, respectively. The expected long-term 
rate of return on plan assets was 9% in 1987. 
The Company also has defined contribution pen- 
sion plans covering former Republic pilots and flight 
attendants. Company contributions to the plans, 
which totaled $10,402,000 for 1987 and $2,541,000 
for 1986, are based on employee compensation. 
In addition to providing pension benefits, the 
Company provides certain health care and life insur- 
ance benefits for certain retired employees. The cost 
of providing those benefits, which is not material, is 
expensed when paid. 
OTE ]-SALES TO CUSTOMERS IN FOREIG 
COU TRIES 
The operations of the Company consist primarily of 
holding stock in orthwest Airlines, Inc., which is a 
scheduled air carrier engaged in commercial trans- 
portation of passengers, freight and mail. Sales by 
Northwest Airlines to customers in foreign countries, 
principally in Asia and Europe, were approximately 
$965,000,000 in 1987; $733,000,000 in 1986 and 
$658,000,000 in 1985. 
THIRTY NI ' E 
 NWA INC. NOTES To CONSOLIDATED 
FINANCIAL STATEMENTS 
(Continued) 
NOTE K-QUARTERLY RESULTS OF OPERATIONS (UNAUDITED ) 
Quarterly results of operations for the years ended December 31, 1987 and 1986, are summarized below 
(in thousands, except per share data): 
First Second Third Fourth 
Quarter Quarter Quarter;' Quarter*" 
1987: 
Operating revenues $1,169,215 $1,315,487 $1,443,712 $1,213,810 
Operating expenses 1,206,251 1,216,793 1,301,537 1,221,513 
Operating income (loss) (37,036) 98,694 142,175 (7,703) 
Net earnings (loss) (34,993) 50,647 87,336 21 
Net earnings (loss) per common and common 
equivalent share (1.38) 1.73 2.89 
1986: 
Operating revenues 638,439 702,472 1,099,349 1,148,914 
Operating expenses 689,221 674,937 950,534 1,107,837 
Operating income (loss) (50,782) 27,535 148,815 41,077 
Net earnings (loss) (16,444) 23,894 59,729 9,762 
Net earnings (loss) per common and common 
equivalent share (.75) .99 2.32 .45 
'' The Company acquired all the outstanding stock of Republic Airlines, Inc. on August 12, 1986. Expense of 
$1 . 2 million for nonrecurring costs associated with the combination of Northwest's and Republic's operations was 
recorded in 1986. 
'' ,; et earnings were reduced by approximately $12. 0 million in 1986 due to a change in tax laws which limited 
allowable 1986 investment tax credits. 
FORTY 
 REPORT OF I DEPE DE T ACCOU TA TS 
To the Stockholders and Board of Directors 
WA Inc. 
Saint Paul, Minnesota 
We have examined the consolidated balance sheets 
of NWA Inc. and subsidiaries as of December 31, 1987 
and 19 8 6, and the related consolidated statements of 
earnings, stockholders' equity and changes in finan- 
cial position for each of the three years in the period 
ended December 31, 1987. Our examinations were 
made in accordance with generally accepted auditing 
standards and, accordingly, included such tests of the 
accounting records and such other auditing proce- 
dures as we considered necessary in the 
circumstances. 
In our opinion, the financial statements referred to 
above present fairly the consolidated financial position 
of NWA Inc. and subsidiaries at December 31, 1987 
and 19 8 6, and the consolidated results of their opera- 
tions and changes in their financial position for each 
of the three years in the period ended December 31, 
1987, in conformity with generally accepted account- 
ing principles applied on a consistent basis. 
f6~~w7- 
saint Paul, Minnesota 
February 19, 1988 
STOCKHOLDERS' lNFORMATIO 
Stock Prices and Dividends 
Sales Price of Dividends 
Common Shares Per Share 
Quarter 1987 1986 1987 1986 
1st High $76 $547 
/2 $.225 $.225 
Low 59 43 
2nd High 755/s 53 .225 .225 
Low 58 47 
3rd High 73 52 .225 .225 
Low 54 41  
4th High 59 623/s .225 .225 
Low 305 
/2 52 
Securities Listed 
The Company's common stock is listed on the ew 
York Stock Exchange, Pacific Stock Exchange, and 
Midwest Stock Exchange. There were 5,827 share- 
holders of record as of February 19, 19 8 8. 
Registrars and Transfer Agents 
Norwest Bank Minnesota, N.A. 
South Saint Paul, Minnesota 55075 
Norwest Trust Company 
New York, ew York 10005 
Annual M eeting 
The 1988 Annual Shareholders' Meeting will be held 
at NWA Inc. World Headquarters, 2700 Lone Oak 
Parkway, Eagan, Minnesota on Monday, May 16, 
1988, at 9:30 A.M. 
FORTY 0 , E 
 NWA I NC. TEN-Y EA R SUMMARY 
(Dollars in thousands except per share figures-unaudited) 
1987 1986 1985 1984 1983 1982t 1981 1980 1979 1978t 
OPERATING REVENUES 
Passenger $4,371,624 $2,920,458 $2,154,394 $1,984,999 $1,812,227 $1,567,986 $1,521,856 $1,347,830 $1,067,214 $ 557,401 
Freight 453,160 406,726 328,400 355,336 289,170 205,018 221,691 190,837 160,716 87,077 
Mail 101 ,393 87,459 80,126 58,339 55,585 60,451 59,786 57,305 38,685 18,944 
Charter and other transportation 69,589 78,110 55,959 38,559 36,198 34,758 21,766 16,303 15,093 10,997 
Other 146,458 96,421 36,612 7,741 2,856 9,355 29,191 27,055 28,850 115,743 
Total Operating Revenues 5,142,224 3,589,174 2,655,491 2,444,974 2,196,036 1,877,568 1,854,290 1,639,330 1,310,558 790,162 
OPERA TING EXPENSES 
Depreciation and amortization 340,338 242,213 182,563 167,203 146,908 136,651 133,489 124,078 106,401 104,970 
Other 4,605,756 3,180,316 2,395,841 2,181,495 1,980,242 1,749,292 1,719,054 1,539,386 1,148,805 617,907 
Total Operating .Expenses 4;946,094 3,422,529 2,578,404 2,348,698 2,127,150 1,885,943 1,852,543 1,663,464 1,255,206 722,877 
OPERATING INCOME (LOSS) 196,130 166,645 77,087 96,276 68,886 (8,375) 1,747 (24,134) 55,352 67,285 
Interest expense (105,005 ) (76,537) (19,873) (4,268) (3,548) (7,216) (14,135) (15,831) (1,635) (3,376) 
Other income (expense)-net 85,232 12,133 7,529 25,380 8,265 16,279 20,297 3,862 30,643 45,126 
Earnings (loss) before taxes and extraordinary item 176,357 102,241 64,743 117,388 73,603 688 7,909 (36,103) 84,360 109,035 
Income tax expense (credit) 73,346 25,300 (8,376) 30,521 23,530 (4,331) (2,551) (43,187) 11,885 47,194 
NET EARNINGS $ 103,011 $ 76,941 $ 73,119 $ 55,964tt $ 50,073 $ 5,019 $ 10,460 $ 7,084 $ 72,475 $ 61,841 
Net earnings per share $ 3.59 $ 3.26 $ 3.18 $ 2.44tt $ 2.19 $ .23 $ .48 $ .33 $ 3.35 $ 2.86 
Cash dividends 25,487 19,645 19,586 17,933 17,367 17,332 17,326 17,317 17,306 16,210 
Dividends per share .90 .90 .90 .825 .80 .80 .80 .80 .80 .75 
Stockholders' equity 1,523 ,126 1,105,916 947,001 892,923 854,189 820,605 832,510 839,042 849,122 793,691 
Number of shares outstanding at year end 29,110,325tH 23,890,095 21,774,251 21,749,667 21,715,995 21,678,458 21,661,367 21,647,280 21,639,589 21,626,284 
Book value per share at year end 52.32 46.29 43.49 41.05 39.33 37.85 38.43 38.76 39.24 36.70 
ASSETS AND LONG-TERM DEBT 
Flight equipment at cost $4,130,052 $4,109,553 $2,784,553 $2,356,048 $2,080,299 $1,996,925 $1,992,015 $1,995,168 $1,779,770 $1,525,442 
Flight equipment at net book value 2,369,058 2,593,393 1,427,114 1,151,930 976,501 1,019,071 1,110,965 1,200,495 1,094,556 922,615 
Total assets 4,219,497 4,322,854 2,320,006 1,754,233 1,602,236 1,377,387 1,492,381 1,532,539 1,528,921 1,392,865 
Long-term debt and capital lease obligations 949,059 1,386,232 494,093 100,000 100,000 12,500 62,500 100,000 100,000 
STATISTICS-SCHEDULED SERVICES 
Revenue plane miles ( 000) 356,142 246,711 159,337 143,410 133,699 119,189 120,139 120,709 116,105 66,420 
Revenue passenger miles ( 000) 39,549,501 28,814,957 22,341,334 19,772,355 17,711,929 15,675,194 14,251,932 13,810,889 13,298,161 7,018,305 
Available seat miles ( 000) 61 ,420,541 48,408,440 37,148,562 32,663,660 29,511,287 26,257,466 24,813,981 24,904,355 24,028,928 14,302,037 
Passenger load factor 64.4% 59.5% 60.1% 60.5% 60.0% 59.7% 57.4% 55.5% 55.3% 49.1% 
Passengers 37,246,682 23,167,120 14,538,744 13,215,907 12,718,468 11,356,165 11,144,785 11,501,148 11,636,170 6,574,901 
Freight ton miles (000) 1,219,456 1,022,864 886,355 965,868 835,197 600,198 616,285 529,434 504,753 302,153 
Passenger and cargo revenue ton miles ( 000) 5,397,405 4,135,343 3,334,257 3,103,799 2,750,946 2,307,475 2,186,815 2,048,349 1,956,217 1,079,681 
Yield per revenue passenger mile 11.05<t 10. l 4<t 9.64<t 10.04<t 10.23<t 10.00<t 10.68<t 9.76<t 8.03<t 7.94<t 
STATISTICS-TOTAL OPERATIONS 
Revenue plane miles ( 000) 357,047 249,168 161,186 144,568 134,870 120,378 120,761 121,243 117,027 67,471 
Available ton miles (000) 9,882,269 8,123,450 6,450,509 5,837,972 5,255,086 4,635,415 4,519,768 4,495,666 4,265,640 2,594,632 
Operating expenses per available ton mile 49. l<t 41.2<t 39 .8<t 40.2<t 40.S<t 40.7<t 41.0<t 37.0 29.4 27.9 
Number of employees at year end 33 ,724 33,427 16,864 15,185 14,187 13,754 13,096 12,748 12,814 10,680 
tStrikes adversely affected 1978 and 1982. 
ttAfter extraordinary loss of $30,903 or $1.30 per share resulting from the settlement of a lawsuit. 
tttExcludes 1,000,000 shares held in treasury. 
FORTY THREE 
FOR TY TWO 
 BOARD OF DIRECTORS 
OFNWAI C.A D 
NORTHWEST AIRLINE , I C. 
James A. Abbott 
Vice Chairman of the 
Board and General 
Counsel 
WA Inc. and orthwe t 
Airlines, Inc. 
St. Paul Minnesota 
James H. Binger 
Former Chairman of the 
Executive Committee 
Honeywell Inc. 
Minneapoli , Minne ota 
Manufacturer of 
aut0mation ystem 
E.W Blanch, Jr. 
Chief Executive Officer 
and General Partner 
E.W. Blanch Company 
Minneapolis Minne ota 
Rein urance brokerage 
firm 
Robert A. Charpie 
Chairman of the Board 
Cabot Corporation 
Bo tan Mas achusetts 
Producer of chemical , 
metal oil and ga 
,: 
-Raymond H. Herzog 
Former Chairman of the 
Board 
3M Company 
t. Paul, Minne ota 
Multinational 
manufacturing 
John F. Horn 
President and Chief 
Operating Officer 
WA Inc. and orthwe t 
Airlines, Inc. 
t. Paul Minne ota 
,:- Melvin R. Laird 
Senior Counsellor 
Reader' Digest Inc. 
Washingt0n, D.C. 
Magazine publishing 
,: 
} ames . Land, Jr. 
Financial Consultant 
Short Hills, ew Jersey 
M. Joseph Lapensky 
Chairman of the Board 
Retired 
NWA Inc. and orthwest 
Airlines, Inc. 
St. Paul, Minnesota 
Steven G. Rothmeier 
Chairman of the Board 
and Chief Executive 
Officer 
NWA Inc. and orthwest 
Airline , Inc. 
St. Paul Minne ota 
Richard A. Trippeer, Jr. 
Chairman of the Board 
Union Planters 
Corporation 
Memphis, Tenne see 
Bank holding company 
,: 
-Wm. Bew White, Jr. 
Counsel 
Bradley, Arant, Ro e & 
White 
Birmingham, Alabama 
Law firm 
Gary L. Wilson 
Executive Vice President 
and Chief Financial 
Officer 
The Walt Disney Company 
Burbank, California 
''Mem bers of the Audit Committee 
OFFICERS OF NORTHWEST 
AIRLINES, INC. 
,: 
-Steven G. Rothmeier 
Chairman of the Board 
and Chief Executive 
Officer 
,: 
}ohn F. Horn 
President and Chief 
Operating Officer 
,: 
}ames A. Abbott 
Vice Chairman of the 
Board and General 
Counsel 
'}ohn A. Edwardson 
Executive Vice President- 
Finance and Chief 
Financial Officer 
Benjamin G. Griggs, Jr. 
Executive Vice President- 
Operations 
Thomas]. Koors 
Executive Vice President- 
Customer Services 
A.B. Magary 
Executive Vice President- 
Marketing 
William H. Sitter 
Executive Vice President- 
Administration and 
Chief Information 
Officer 
Brent ]. Baskfield 
Vice President-Ground 
Services 
David W Behrends 
Vice President-Cargo 
G. Edward Bollinger 
Vice President- 
Purchasing and Stores 
John W Campion 
Vice President-Corporate 
Planning 
Terry M. Erskine 
Vice Pre idem-Law & 
Labor Relations 
,: 
-Bruce H. Fillips 
Vice President- 
Comptroller 
Raymond G. Foss 
Vice President-Sales and 
Marketing Systems 
Roger D. Hauge 
Vice President-Atlantic 
Region 
Allen W Johnson 
Vice President-Pacific 
Region 
Benjamin H. Lightfoot 
Vice President-Technical 
Services 
,:- Robert A. Magnuson 
Vice President-Treasurer 
A.L. Maxson 
Vice President-Financial 
Planning 
Donald F. elson 
Vice President-Flight 
Operations 
Walter H. Pemberton 
Vice President- 
Communications & 
Computer Services 
Allan K. Pray 
Vice President-Assistant 
to the Chairman 
James F. Redeske 
Vice President-Personnel 
Administration 
R. Terrence Rendleman 
Vice President- 
Maintenance & 
Engineering 
Paul E. Schoellhamer 
Vice President- 
Government Affairs 
John W Temple 
Vice President-Marketing 
Programs 
R. James Thorne 
Vice President-Properties 
Lloyd R. Warren 
Vice President- 
In-Flight Services 
,:-Steven D. Wheeler 
Corporate Secretary 
William C. Wren 
Vice President-Corporate 
Relations 
'Also officers of WA Inc. 
FOR TY FOUR 
 OFFICERS OF OTHER 
PRINCIPAL SUBSIDIARIES 
MLT Vacations, Inc. 
Edward A. Neer,Jr. 
President and Chief 
Executive Officer 
Richard A. Bjork 
Vice President-Planning 
Stanley D. Phillips 
Vice President-Sales and 
Marketing 
Thomas M. Schmidt 
Vice President-Finance 
and Administration and 
Treasurer 
R. Carol Spalding 
Vice President-Operations 
Northwest Aerospace 
Training Corporation 
Benjamin G. Griggs, Jr. 
President 
H. Tom Nunn 
Executive Vice President 
and Managing Director 
David V. Prentice 
Vice President-Flight 
Simulation 
Gary L. Smith 
Vice President-Computer 
Services 
Northwest Aircraft Inc. 
Thomas E. McGinnity 
President and Chief 
Executive Officer 
 Corporate Mailing Address: 
NWAinc. 
Minneapolis/ St. Paul 
International Airport 
St. Paul, MN 5 51ll 
( 612) 726-21ll