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Northwest Writes Off $213 Million Purchase

Posted on: Friday, 8 August 2008, 18:00 CDT

Northwest Airlines of Eagan, Minn., has written off its $213 million purchase of Midwest Airlines but hasn't given up on the airline, the company said.

Northwest purchased 47 percent of Midwest Air Partners LLC in January, joining forces in the $451.8 million deal with TPG Capital of Fort Worth, Texas.

But, Northwest's now claims the purchase as a write-off, the Milwaukee Journal Sentinel reported Friday.

Midwest is close to bankruptcy, analyst said. The carrier laid off 1,200 of its 3,000 employees in July and eliminated flights to about 20 cities.

But, "the write-off is the result of the application of accounting rules relating to the probability that we will recover our investment," Northwest spokeswoman Tammy Lee said in a statement.

The write-off "does not imply any judgment on our part on the viability of Midwest," Lee said.

Industry analysts said the purchase was strategic, as it kept Orlando, Fla., carrier AirTran from establishing a new hub in Milwaukee.

AirTran had been attempting a hostile takeover of Midwest when it was trumped by a higher bid from TPG/Northwest.

The purchase "was cheap to keep AirTran out of Milwaukee," said airline industry analyst Scott Hamilton.

Source: United Press International

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