NWA Northwest Airline

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K/A

(Amendment No. 1)

Commission file number 0-23642

NORTHWEST AIRLINES CORPORATION

(Exact name of registrant as specified in its charter)

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

Securities registered pursuant to Section 12(b) of the Act:

Securities registered pursuant to Section 12(g) of the Act:  None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes   x     No   o

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes   o      No   x

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes   x      No   o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. x

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

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes   o      No   x

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes   x      No   o

The aggregate market value of the voting stock held by non-affiliates of the registrant as of June 29, 2007 was $4.3 billion.

As of March 31, 2008, there were 236,427,388 shares of the registrant’s Common Stock outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

EXPLANATORY NOTE

On February 29, 2008, Northwest Airlines Corporation (“NWA Corp., and together with its consolidated affiliates, the “Company”) filed its Annual Report on Form 10-K for the fiscal year ended December 31, 2007. NWA Corp. hereby amends its 2007 Form 10-K to provide the information called for in Part III of the Report.  No other amendments or changes are, or were, made to the 2007 Form 10-K.

PART III

Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

Information Concerning Directors

NWA Corp. currently has 12 directors, each of whom was on the slate of directors approved by the creditors of the Company in connection with the approval of the Company’s Plan of Reorganization, which was confirmed by the Bankruptcy Court on May 18, 2007.  Information with respect to the business experience and affiliations of NWA Corp.’s directors is set forth below:

Roy J. Bostock , age 67, has served as a director of NWA Corp. since April 2005.  Since 2002, he has served as a principal of Sealedge Investments, LLC (diversified private investment company), the Chairman of the Partnership for a Drug-Free America (not-for-profit organization based in New York City), and the Chairman of the Committee for Economic Development (Washington, D.C.-based public policy group).  From 2000 to 2002, Mr. Bostock served as Chairman of B/Com3 (advertising), and from 1996 to 2000 he served as Chairman and Chief Executive Officer of the McManus Group (communications services).  Prior to 1996, Mr. Bostock served in a variety of senior executive positions in the advertising agency business, including Chairman and Chief Executive Officer of D’Arcy Masius Benton & Bowles, Inc. from 1990 to 1996.  Mr. Bostock also serves as a director of Yahoo! Inc. and Morgan Stanley.

David A. Brandon , age 55, has served as a director of NWA Corp. since May 31, 2007. Since 1999, Mr. Brandon has served as Chairman and Chief Executive Officer of Domino’s Pizza, Inc. (worldwide pizza chain). From 1989 to 1998, he served as President and Chief Executive Officer of Valassis, Inc. (international marketing services and sales promotion company), and Chairman of the Board of Directors of Valassis from 1997 to 1998.  Prior to joining Valassis, Mr. Brandon served in a variety of sales management positions at Procter & Gamble. He also serves on the Board of Directors of the TJX Companies, Inc., Burger King Corporation and Kaydon Corporation.

Michael J. Durham , age 57, has served as a director of NWA Corp. since May 31, 2007. Since 2000, Mr. Durham has been founder, President and Chief Executive Officer of Cognizant Associates, Inc. (consulting firm).  From October 1996 to October 1999, Mr. Durham served as a director, President and Chief Executive Officer of Sabre, Inc. (computer reservation company).  Prior to joining Sabre, he served as Senior Vice President and Treasurer of AMR (airline holding company) and as Senior Vice President of Finance and Chief Financial Officer of American Airlines (airline).  Mr. Durham serves as the non-executive Chairman of the Board of Asbury Automotive Group and Acxiom Corporation.  He also serves on the Board of Directors of AGL Resources, Inc. and Hertz Global Holdings, Inc.

John M. Engler, age 59, has served as a director of NWA Corp. since 2003. Since 2004, Mr. Engler has served as President & Chief Executive Officer of the National Association of Manufacturers (trade association).  From 2003 to 2004, Mr. Engler was President of State and Local Government and Vice President of Government Solutions for North America for Electronic Data Systems Corporation (information technology). Mr. Engler served as Michigan’s 46 ^th governor for three terms from 1991 to 2003. He also serves on the Board of Directors of Universal Forest Products Inc. and Munder Capital Management.

Mickey P. Foret , age 62, has served as a director of NWA Corp. since May 31, 2007. Since September 2002, Mr. Foret has served as President of Aviation Consultants LLC (consulting firm). From September 1998 to September 2002, he served as Executive Vice President and Chief Financial Officer of Northwest Airlines, Inc., NWA Corp.’s principal operating subsidiary (“Northwest”), and, from May 1999 to September 2002, he also served as Chairman and Chief Executive Officer of Northwest Cargo. From June 1996 to September 1997, Mr. Foret served as President and Chief Operating Officer of Atlas Air, Inc. (cargo airline), and from 1993 to 1996 he served as Executive Vice President and Chief Financial Officer of Northwest. Prior to 1993, Mr. Foret served in a variety of senior executive positions at several companies including Continental Airlines, Inc. and KLH Computers, Inc. He also serves on the Board of Directors of ADC Telecommunications, Inc., Nash Finch Company and URS Corporation.

Robert L. Friedman, age 65, has served as a director of NWA Corp. since 2002. Since 1999, Mr. Friedman has served as a Senior Managing Director of The Blackstone Group L.P. (private investment firm). In February 2003, he also became Chief Administrative Officer and Chief Legal Officer of Blackstone. Prior to 1999, he was a partner of the law firm of Simpson Thacher & Bartlett LLP. He also serves on the Board of Directors of Axis Capital Holdings Ltd. and TRW Automotive Holdings Corp.

Doris Kearns Goodwin, age 65, has served as a director of NWA Corp. since 1997. Ms. Goodwin is a historian and author and has received numerous awards including the Pulitzer Prize in history in 1995 and the Lincoln Prize for history in 2006. She served as a member of the Harvard University Board of Overseers for a six-year term ending in 2005 and was a Professor of Government at Harvard University from 1969 to 1977.

Jeffrey G. Katz , age 52, has served as a director of NWA Corp. since April 2005.  Since June 2005, Mr. Katz has served as President and Chief Executive Officer of LeapFrog Enterprises, Inc. (manufacturer of electronic learning products).  From 2000 to 2004, he served as Chairman, President and Chief Executive Officer of Orbitz Inc. (online travel distribution). Prior to joining Orbitz, Mr. Katz was President and Chief Executive Officer of Swissair Group’s Swissair (airline) from 1997 until 2000. Prior to April 1997, Mr. Katz spent 17 years at American Airlines (airline) in a variety of executive roles including President of the Global Distribution System Division of Sabre Inc. (global travel distribution system).

James J. Postl , age 62, has served as a director of NWA Corp. since May 31, 2007. In 2002, Mr. Postl retired as President and Chief Executive Officer of Pennzoil-Quaker State Company (automotive consumer products), a position he held from 2000 to 2002. From 1998 to 2000, he served as President and Chief Operating Officer of Pennzoil; from 1996 to 1998, he served as President of Nabisco Biscuit Company (manufacturer of food products); and from 1994 to 1996, he served as President of Nabisco International. Prior to 1996, Mr. Postl spend 19 years at PepsiCo in a variety of management roles. He also serves on the Board of Directors of Centex Corporation, Cooper Industries and the American Balanced Fund.

Rodney E. Slater , age 53, has served as a director of NWA Corp. since May 31, 2007.  Mr. Slater serves as a partner in the law firm of Patton Boggs LLP (law firm), and the head of the firm’s Public Policy and Transportation Practice Group.  From 1997 to 2001, he served as U.S. Secretary of Transportation.  From 1993 to 1996, Mr. Slater served as Director of the U.S. Highway Administration.  He also serves on the Board of Directors of ICX Technologies, Kansas City Southern and Southern Development Bancorp.

Douglas M. Steenland, age 56, has served as a director of NWA Corp. since 2001 and as President and Chief Executive Officer of NWA Corp. and Northwest since October 2004.  Mr. Steenland has served in a number of executive positions since joining Northwest in 1991, including President from April 2001 to October 2004, Executive Vice President and Chief Corporate Officer from September 1999 to April 2001, Executive Vice President—Alliances, General Counsel and Secretary from January 1999 to September 1999, Executive Vice President, General Counsel and Secretary from June 1998 to January 1999, and Senior Vice President, General Counsel and Secretary from 1994 to 1998. Prior to joining Northwest, Mr. Steenland was a senior partner at the Washington, D.C. law firm of Verner, Liipfert, Bernhard, McPherson and Hand.

William S. Zoller , age 59 , has served as a director of NWA Corp. since April 2006.  Captain Zoller has been a Northwest pilot for over 25 years, previously served as an Executive Vice President of the Air Line Pilots Association, International from 2000 to 2002, and served as Chairman of the Northwest Airlines Master Executive Council of ALPA from 1996 to 2000. He also serves as a member of the Industrial Relations Center Advisory Council for the Carlson School of Management at the University of Minnesota.

Director Independence

Each year, the Corporate Governance Committee reviews the relationships between each of our directors and the Company. On the basis of its review, the Corporate Governance Committee delivers a report to the full Board of Directors and the Board makes its independence and “audit committee financial expert” determinations based upon the report of the Corporate Governance Committee. As a result of this review, the Board affirmatively determined that Messrs. Bostock, Brandon, Durham, Engler, Friedman, Katz, Postl and Slater and Ms. Goodwin (constituting a majority of the Board) qualify as “independent directors,” as currently defined under the rules of the New York Stock Exchange; and that Messrs. Foret, Steenland, and Zoller do not qualify as “independent directors.” Messrs. Steenland and Zoller are not considered independent given that each of them is currently an employee of Northwest and Mr. Foret is not considered independent given that he served as a consultant to the Company during the period following his resignation as Executive Vice President and Chief Financial Officer of NWA Corp. and Northwest until September 2005 and received more than $100,000 per year for his services during this period.

In making its independence determinations, the Board considered that in the ordinary course of business transactions may occur between the Company and companies or other entities at which some of our directors are or have been officers.  In 2007, the Company’s defined benefit pension plans master trust made a $50 million investment in a Blackstone real estate investment fund. Mr. Friedman is a principal of The Blackstone Group L.P., which is an affiliate of the investment fund in which the master trust made an investment. The Audit Committee approved the transaction pursuant to the Company’s policy regarding related party transactions and, upon review, the Board re-affirmed Mr. Friedman’s independence.

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Information Concerning Executive Officers

The information regarding executive officers of the Company is included in Part I of this Annual Report on Form 10-K under the caption “Executive Officers of the Registrant.”

Information about Our Audit Committee

The current members of the Audit Committee are Messrs. Durham (Chair), Engler and Katz.  Our Board of Directors has determined that each of the members of the Audit Committee is independent as defined by the rules of the New York Stock Exchange. The Committee provides assistance to the Board of Directors in fulfilling its responsibility to stockholders and the investment community relating to corporate accounting, reporting practices of the Company, and the quality and integrity of the financial reports of the Company. The Committee met ten times during 2007. The Board of Directors also has determined that Messrs. Durham and Katz qualify as “audit committee financial experts” as defined by the rules of the SEC. The Company’s Audit Committee charter can be found under “Governance” in the Investor Relations section of our web site at www.nwa.com, and we will furnish copies of the charter to interested stockholders without charge, upon request. Written requests for such copies should be addressed to:

Northwest Airlines Corporation

Attention:  Corporate Secretary

2700 Lone Oak Parkway

Dept. A1180

Eagan, MN  55121

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Securities Exchange Act of 1934 requires our directors, our executive officers and holders of more than 10% of NWA Corp.’s voting securities to file reports of holdings and transactions in NWA Corp.’s equity securities with the SEC. Based on our records and other information, we believe that in 2007 our directors, our executive officers and our beneficial holders who are subject to Section 16(a) met all applicable SEC filing requirements.

Code of Ethics

Northwest’s Code of Business Conduct can be found under “Governance” in the Investor Relations section of our web site at www.nwa.com.  A copy of the Code of Business Conduct may also be obtained free of charge from the Company upon a written request addressed as set forth above under “Information about Our Audit Committee.” Northwest’s Code of Business Conduct is applicable to members of the Board of Directors and all employees of Northwest, including the Company’s principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions. If in the future the Company were to amend or grant a waiver from the Code of Business Conduct, such information would be posted on our website.

Item 11. EXECUTIVE COMPENSATION

Compensation Discussion and Analysis

Overview

The Compensation Committee of our Board of Directors, which is presently comprised of Messrs. Bostock (Chairman), Brandon and Postl, administers Northwest’s executive compensation programs. The role of the Committee is to oversee the Company’s compensation and benefit plans and policies, administer NWA Corp.’s stock plans, and review and approve all compensation decisions relating to executive officers of the Company, including the President and Chief Executive Officer and the other executive officers named in the Summary Compensation Table included below in this Item 11 (the “Named Executive Officers”). The Committee also reviews from time to time the Company’s compensation and benefits programs applicable generally to management employees of the Company. The Committee’s charter reflects these responsibilities and is periodically reviewed by the Committee and the Board. Our President and Chief Executive Officer, together with our Senior Vice President – Human Resources & Labor Relations, makes recommendations to the Committee regarding compensation of the other executive officers. The Committee’s charter can be found under “Governance” in the Investor Relations section of our web site at www.nwa.com.

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Company Performance in 2007

The Company successfully completed its Chapter 11 restructuring and emerged from bankruptcy on May 31, 2007. As a result of its restructuring efforts since the Company filed for bankruptcy protection in September 2005, the Company has significantly reduced its overall debt, reduced its annual aircraft ownership expenses and put in place a debtor-in-possession and exit financing facility that has provided significant interest expense savings for the Company. The Company also right-sized and re-optimized its fleet and now operates the world’s largest Airbus 330 fleet and the youngest international fleet of any U.S. carrier, has affirmed its position as the North American launch carrier of the new Boeing 787 aircraft, and has begun taking deliveries of the 72 76-seat regional jets ordered by the Company in 2006. The Company also achieved its cost savings goals for both labor and non-labor costs.

As a result of executing its restructuring plans, the Company achieved significant improvement in its financial results for 2007. The Company reported a pre-tax profit of $764 million (excluding reorganization items), which represents a 154 percent improvement over its pre-tax profit for 2006. 2007 represents the second consecutive year of profitability for the Company since the U.S. network carrier environment began to deteriorate in 2000, and the third highest annual pre-tax profit in the Company’s history. The Company’s pre-tax margin for 2007 was 6.1 percent, the highest among all U.S. network carriers.

As a result of the Company’s strong financial performance during 2007, the Company has distributed over $125 million in profit sharing, performance incentives and reliability payments to union and salaried employees of Northwest at the manager level and below. This was the highest employee incentive payout in Company history. A more detailed analysis of our financial and operating performance in 2007 is contained in the “Management’s Discussion and Analysis” section of this Annual Report on Form 10-K.

General Compensation Philosophy

We believe that compensation paid to executive officers should be closely aligned with the Company’s performance, and that such compensation should assist the Company in attracting and retaining key executives critical to its long term success. We also believe compensation should be structured to ensure that a significant portion of compensation opportunity will be directly related to Company stock performance and other factors that directly and indirectly influence stockholder value.

The Company’s executive compensation programs are designed to achieve three principal objectives:

·                  Attract, motivate and retain talent.   Northwest operates in an intensely competitive environment and believes its success is closely related to the retention of highly talented employees and a strong management team.  Northwest’s employees are the key to differentiating the airline in the marketplace.  A competitive executive compensation program is essential to creating a business that produces sustainable profitability.

·                  Link pay to performance. A cornerstone of Northwest’s compensation philosophy is the close linkage between executive pay and the overall performance of Northwest.  At Northwest, individual performance and relative industry performance based on key performance indicators are significant factors in determining executive compensation.

·                  Align management’s interests with stockholder interests.   In order to properly align the interests of management with stockholders, Northwest has historically delivered a portion of its executive compensation in the form of long term equity-based compensation subject to vesting schedules that require continued service with the Company.

Northwest’s Executive Compensation Program

The principal elements of Northwest’s executive compensation program are described below.

·                  Base Salary.    In 2005 and 2006, base salaries for Northwest officers were reduced on average by 23.5% as a result of labor cost reductions associated with Northwest’s bankruptcy restructuring efforts.  Five percent of the salary reductions were temporary reductions to continue in effect during the Company’s bankruptcy proceedings.  In connection with the Company’s emergence from bankruptcy on May 31, 2007, the Company discontinued the five percent temporary salary reductions for all Northwest officers, including the Named Executive Officers. In addition, Mr. Davis’ base salary was increased from $332,500 to $423,938 in connection with his promotion to Executive Vice President and Chief Financial Officer in June 2007. None of the other Named Executive Officers received base salary increases during 2007. In the future, changes in the base salaries of executive officers of Northwest, including the Named Executive Officers, will be considered annually by the Committee and in connection with a promotion or other change in responsibilities. Base salaries are influenced by individual performance, experience in the position and scope of responsibilities, results achieved, future potential, internal equity and salary levels for similar positions at comparable companies.

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·                  Annual Cash Incentive Plan. Approximately 370 management employees of Northwest, including the Named Executive Officers, participate in the Annual Cash Incentive Plan. Compensation provided under the Annual Cash Incentive Plan depends on the achievement of an income contribution target established by the Committee at the beginning of each year based on the annual budget approved by the Board of Directors, and an assessment of individual performance at the end of the year in accordance with Northwest’s performance measurement system for salaried employees. The Company’s actual adjusted income contribution is defined as the Company’s operating income (excluding depreciation, amortization and aircraft rental expense) adjusted to exclude the impact of any extraordinary, unusual or special items and other items that are deemed to be outside of management’s control such as increases or decreases in operating expense due to the price of fuel and foreign currency exchange. In addition, the Company must meet a minimum profitability threshold for the year in order for there to be payouts in excess of target payout amounts. Target payouts under the Annual Cash Incentive Plan are established as a percentage of the participant’s base salary. Mr. Steenland’s target payout percentage is 100% of his annual salary and the target payout percentage for the other Named Executive Officers is 60% of their annual salary. The annual incentive payment for individual participants in the plan, including the Named Executive Officers, may be increased or decreased based on individual performance; however, the total pool available for annual incentive payments to participants in any year is fixed based on the level of Company performance and the total base salary amounts for all participants. At the end of each year, the Compensation Committee reviews performance data with management and determines the extent to which the Company’s financial goals have been achieved. An individual’s potential payout may range from 0% to 200% of his or her target payout amount depending on Company and individual performance.

For 2007, the Company’s income contribution target was $2,306 million and the minimum profitability threshold for the year was $1. The potential payouts for 2007 under the Annual Cash Incentive Plan for the Named Executive Officers are set forth below in the Grants of Plan-Based Awards in 2007 table. The Company’s actual adjusted income contribution performance for the year was $2,318 million, which was 100.5% of the income contribution target. Based on the Company’s performance, the payout percentage for the financial performance component for 2007 was 104.9% of such target. The 2007 Annual Cash Incentive Plan payout amounts for the Named Executive Officers are included in the Summary Compensation Table under the “Non-Equity Incentive Plan Compensation” column. In January 2008 the Committee approved an income contribution target for 2008 based on the 2008 budget approved by the Board of Directors.

·                  Long Term Cash Incentive Plan.   Officers of Northwest selected by the Compensation Committee to receive an award are eligible to participate in the Long Term Cash Incentive Plan. This plan provides for cash payments based on the relative adjusted operating margin performance of Northwest during two-year performance periods measured against five other major U.S. network airlines, including American, United, Delta, Continental and US Airways. Adjusted operating margin for each airline is defined as operating income as a percentage of revenue with operating income adjusted to exclude the impact of fuel prices and any extraordinary, unusual or special items. Mr. Steenland’s target payout percentage under the Long Term Cash Incentive Plan is 150% of his annual salary and the target payout percentage for the other Named Executive Officers is 70% of their annual salary.

Actual payout amounts under the Long Term Cash Incentive Plan are approved by the Committee each year and may range between 0% and 200% of the target payout level, based on the Company’s adjusted operating margin performance relative to the airline peer group during the performance period and the Company’s satisfaction of a net profitability threshold for each year during the performance period, as shown below. Payouts are also conditioned on the participant maintaining a minimum individual performance rating during the applicable performance period.

The Company’s relative operating margin performance during the two year performance period ended December 31, 2007 resulted in a payout of 200% of target payout levels. The net profitability threshold established for 2006 and 2007 was $1.

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The incentive payments for the two year performance period ended December 31, 2007 earned by each of the Named Executive Officers are included in the Summary Compensation Table under the “Non-Equity Incentive Plan Compensation” column. In early 2007, each of the Named Executive Officers was granted an award under the Long Term Cash Incentive Plan for the two year performance period ending on December 31, 2008. These awards are set forth below in the Grants of Plan Based Awards in 2007 table.

·                  E-Commerce Incentive Compensation Program.    In 2000, the Board of Directors adopted the Northwest Airlines Corporation E-Commerce Incentive Compensation Program (the “E-Commerce Plan”) as an incentive to management to create, develop and maximize the value of specified equity investments of Northwest and its affiliates.  The program has been highly successful for the Company. Management was instrumental in developing a number of e-commerce or internet-based businesses, including Orbitz, LLC and Hotwire, Inc. To date, as a result of the sale of a number of these investments, Northwest has generated aggregate cash proceeds of approximately $190 million and a return on the group of investments of approximately 442%. The $190 million in cash investment proceeds is separate and apart from any revenues generated by Northwest’s operations. Under the E-Commerce Plan, 200 Points or 20% of the value of the investments in excess of the sum of the cost of such investments plus a minimum compounded annual return of 15% was set aside for awards to key employees of Northwest.

The Company has disposed of all of the investments covered by the E-Commerce Plan; however, in 2007 certain redemption amounts with respect to awards granted in prior periods continued to be subject to vesting based on the participant’s continued employment with the Company. 2007 earnings on redemption amounts under outstanding awards that remain subject to vesting for each of the Named Executive Officers are included in the Summary Compensation Table under the “Non-Equity Incentive Plan Compensation” column. In addition, in November 2007, the Committee granted to Mr. Cohen an award of 2 points out of the remaining points available for allocation under the E-Commerce Plan in recognition of Mr. Cohen’s leadership and contributions to the successful formation of Northwest’s regional carrier group, including the commencement of revenue service in May 2007 by Northwest’s wholly-owned subsidiary, Compass Airlines, Inc., and Northwest’s acquisition in April 2007 of Mesaba Aviation, Inc. Vesting of the award was subject to Mr. Cohen’s continued employment until April 1, 2008. The payout amount under Mr. Cohen’s award is included in the Summary Compensation Table under the “Non-Equity Incentive Plan Compensation” column and is also set forth below in the Grants of Plan Based Awards in 2007 Table.

·                  Equity Based Compensation.

Under the Company’s Plan of Reorganization, all outstanding stock awards previously granted under NWA Corp.’s stock incentive plans were cancelled on May 31, 2007, the effective date of the Plan of Reorganization.  In connection with the Company’s emergence from bankruptcy and after consultation with the official committee of unsecured creditors appointed in the Company’s bankruptcy case, the Board of Directors approved the 2007 Stock Incentive Plan (the “Stock Plan”). The Bankruptcy Court approved the Stock Plan in connection with its confirmation of the Company’s Plan of Reorganization and in doing so, complimented the Company’s management on its performance during the bankruptcy case. Under the Stock Plan, the Committee has the authority to grant cash awards and/or equity-based awards including stock options, stock appreciation rights, restricted stock, restricted stock units and other stock-based awards, including performance-based awards, to employees of the Company. A total of 21,333,248 shares of Common Stock or approximately 8% of the total shares of Common Stock to be issued in connection with the Company’s emergence from bankruptcy were made available for grant pursuant to the Stock Plan, as such number may be adjusted pursuant to the provisions of the Stock Plan.

In connection with the Company’s emergence from bankruptcy, the Committee approved the grant of awards covering a total of approximately 13,597,834 shares of Common Stock in the form of stock options, stock appreciation rights and restricted stock units to approximately 400 employees of Northwest and certain subsidiaries of Northwest, including the Named Executive Officers.  Approximately 60% of these awards were granted in the form of restricted stock units and approximately 40% were granted in the form of non-qualified stock options and stock appreciation rights. The stock options, restricted stock units and stock appreciation rights will vest, subject to the participant’s continued employment with Northwest or a subsidiary of Northwest, in equal semi-annual installments over four years.  The Committee also approved the grant of restricted stock units covering a total of approximately 1,618,583 shares of Common Stock to approximately 5,400 employees worldwide at the manager level and below. These awards will vest in full one year after the date of grant.

Each of the Named Executive Officers was granted restricted stock units and stock options as part of the emergence awards granted in connection with the Company’s emergence from bankruptcy. These awards are included below in the Grants of Plan-Based Awards in 2007 table. The Committee intended, and the Stock Plan provides, that the individuals receiving emergence awards, including the Named Executive Officers, would not receive any additional awards under the Stock Plan

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during the four years following the effective date of the Plan of Reorganization, except in the case of a promotion, a material increase in the employee’s job responsibilities or in special circumstances determined by the Committee to be in the best interests of the Company. In determining the size of restricted stock unit and stock option awards to the Named Executive Officers and other management employees, the Committee considered the amount of equity-based awards held by individuals holding similar positions at comparable companies, Company performance and achievement of the Company’s restructuring objectives, individual performance and leadership potential, as well as the allocation of the total pool of shares available for grant in connection with the emergence awards among the individuals holding positions at various levels in the Company.

·                   Retirement Benefits. Northwest maintains the following retirement plans, in which some or all of its Named Executive Officers participate:

·                   Retirement Savings Plan for Salaried Employees. The Retirement Savings Plan for Salaried Employees (the “Retirement Savings Plan”) is a funded and tax-qualified 401(k) retirement plan that is offered to all salaried employees of Northwest, including the Named Executive Officers. The plan permits employees to contribute a portion of their pay for the year to the plan on a pretax or after tax basis. Effective September 1, 2005, as a result of freezing pension benefit accruals under Northwest’s defined benefit pension plans (see “Frozen Defined Benefit Pension Plans” below), Northwest began making Company contributions to participants’ accounts in the Retirement Savings Plan to replace benefit accruals under the defined benefit plans for service on and after September 1, 2005. The Company contributions are a percentage of pay (salary and cash incentive compensation) that varies based on the participant’s age and years of service. The following table shows the rates of Company contributions to the Retirement Savings Plan in effect during 2007.

The amounts contributed by Northwest in 2007 to the accounts of the Named Executive Officers under the Retirement Savings Plan are shown below in the All Other Compensation Table that follows the Summary Compensation Table and included in the Summary Compensation Table. Benefits under the plan are payable to participants upon retirement or termination of employment.

·                   Excess 401(k) cash payments.   Contributions that cannot be made to the Retirement Savings Plan due to limits on contributions under the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”) are made to each executive in cash on a semi-monthly basis. These cash payments are not entitled to the deferred tax benefit associated with the Retirement Savings Plan. Northwest provides this benefit so that executives and other employees who are subject to the Internal Revenue Code limits obtain the same rate of Company contributions, as a percentage of pay, as all other salaried employees. The excess 401(k) cash payments made to the Named Executive Officers in 2007 are shown in the All Other Compensation Table that follows the Summary Compensation Table and included in the Summary Compensation Table.

·                   Frozen Defined Benefit Pension Plans.  Historically, the Named Executive Officers participated in three defined benefit pension plans — the Northwest Airlines Pension Plan for Salaried Employees (the “Salaried Pension Plan”) (a qualified plan under which benefits are subject to Internal Revenue Code limitations, the Northwest Airlines Excess Pension Plan for Salaried Employees (the “Excess Pension Plan”) (a nonqualified, unfunded plan that provides retirement benefits that would otherwise be provided under the Salaried Pension Plan but for the Internal Revenue Code limitations), and the Supplemental Executive Retirement Plan (the “SERP”), which is described below. Historically, under these plans salaried employees hired on or before January 1, 2001 receive benefits based on the higher of a “final average earnings” formula and a “cash balance” formula. Benefits for salaried employees hired after

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January 1, 2001 are based solely on a “cash balance” formula, which provides a benefit based on “career pay” rather than “final average earnings.” The formula used to compute participant benefits under the final average earnings formula is 60% of a participant’s final average earnings less 15% of participant’s covered compensation multiplied by actual service divided by 30 years. Final average earnings are the highest consecutive 60 months of pay during the participant’s employment. Under the cash balance formula, a percentage of a participant’s pay was credited to a hypothetical account which grows with interest. A participant’s pay credit under the cash balance formula was based on the participant’s age plus vesting service and ranges from 6% to 18% of pay. Interest is credited at 1% over the one-year Treasury bill rate with a floor rate of 3.5%. Pension benefit accruals under both the Salaried Pension Plan and the Excess Pension Plan were frozen effective August 31, 2005 and replaced by an employer contribution to Northwest’s Retirement Savings Plan and related excess cash payments. The present values of each Named Executive Officer’s accumulated pension benefits as of December 31, 2007 under the Salaried Pension Plan and the Excess Pension Plan are included in the 2007 Pension Benefits table set forth below.

·                   Supplemental Executive Retirement Plan. The SERP is a nonqualified, unfunded plan, under which Northwest provides eligible executives, including Messrs. Steenland, Cohen, Griffin and Roberts, supplemental pension benefits over and above the executive’s benefits under the Salaried Pension Plan and the Excess Pension Plan. The SERP was designed to attract mid-career senior executives by granting executives additional credited years of service or additional pay credits during specified periods of time as provided in individual agreements entered into with the particular executive. The additional benefit accruals are earned by the executive over a period of years if the executive remains employed by Northwest during such period, and, in the case of Mr. Steenland, if his employment is terminated in specified circumstances. In the case of Mr. Steenland, Northwest agreed to provide up to six additional years of service credit to him over the six year period commencing April 1, 2006, so long as he remains employed by Northwest during such period. Under the SERP, participants’ final average compensation for purposes of determining pension benefits under the final average earnings formula is defined as the average of the executive’s monthly earnings for the highest 36 months (whether or not consecutive) during the participant’s employment. The present value of each Named Executive Officer’s accumulated pension benefit under the SERP as of December 31, 2007 is included in the 2007 Pension Benefits table set forth below. Historically, benefit accruals under the SERP were determined based on the final average earnings formula and the cash balance formula used to determine benefit accruals under the Salaried Pension Plan and the Excess Pension Plan. Consistent with the Salaried Pension Plan and the Excess Pension Plan, benefits accumulated under the final average earnings formula and the cash balance formula were frozen effective August 31, 2005. Benefit accruals under the SERP for service on and after September 1, 2005 are determined by a formula based on pay and interest credits, as provided in the executive’s individual agreement entered into pursuant to the SERP. Vested pension benefits under the SERP are payable as a lump sum upon the participant’s termination of employment. All benefits under the SERP are unfunded and are payable by Northwest from its general assets.

·               Perquisites. We provide our Named Executive Officers with other personal benefits that we believe are reasonable, competitive and consistent with the Company’s overall executive compensation program. In 2007 these benefits included reimbursement payments for specified medical expenses; positive space airline pass travel benefits on Northwest and other airlines for the personal use of each Named Executive Officer, his eligible family members and other individuals designated by the Named Executive Officer; excess liability insurance coverage; reimbursement for the cost of specified club memberships; financial and tax planning services; car allowances and an annual physical examination for each Named Executive Officer. In addition, from time to time the Company makes tickets to cultural and sporting events available to the Named Executive Officers for business purposes. If not utilized for business purposes, they are made available to the Named Executive Officers and other employees for personal use. The incremental costs incurred by the Company in 2007 to provide these benefits to the Named Executive Officers are shown in the All Other Compensation Table that follows the Summary Compensation Table and included in the Summary Compensation Table.

New Plans and Arrangements Adopted in Connection with Potential Merger

On April 14, 2008, NWA Corp. and Delta Air Lines, Inc. (“Delta”) entered into an Agreement and Plan of Merger (the “Merger Agreement”), pursuant to which NWA Corp. and Delta will combine their businesses through a merger (the “Merger”). In connection with the execution of the Merger Agreement, in April 2008 the Committee and the Board of Directors approved various amendments to existing compensation plans and arrangements applicable to employees of Northwest, and some new compensation plans and arrangements in which the Named Executive Officers will participate.  A description of these amendments and the new plans and arrangements follows. As part of considering a potential merger transaction with Delta, the Committee evaluated the compensation and benefit arrangements in which Delta’s senior management participates and compared those arrangements to similar arrangements applicable to the Company’s senior management. The Committee also considered the retention issues the Company is expected to face in light of the required regulatory review period for the proposed Merger and the anticipated relocation of the combined companies’ headquarters to Atlanta following the Merger. The Committee retained Towers Perrin to assist it in reviewing the types of

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arrangements implemented for senior management in other change of control transactions and the range of costs associated with such arrangements. The Committee evaluated the projected costs associated with the plans and arrangements considered by the Committee under various assumptions and compared those costs to the range of cost estimates associated with the implementation of similar plans and arrangements by other companies in similar change of control transactions. Following an extensive evaluation, the Committee and the Board of Directors determined that the proposed plans and arrangements were appropriate and necessary in the context of the Merger.

Amendments to Management Compensation Agreements .  The Company entered into amendments to the existing management compensation agreements with its officers, including each of the Named Executive Officers other than Mr. Steenland.  Under the amendments, the definition of “good reason” was modified to be more protective of certain elements of the officer’s compensation and benefits following a “change of control.”  In addition to the existing events that constitute “good reason,” the definition of “good reason” was amended to include, following a change of control: (1) a material reduction in the officer’s short-term or long-term cash incentive compensation opportunities; (2) if Northwest or its successor does not keep in effect compensation, incentive, retirement, health and welfare benefits, or perquisite programs, under which the officer receives benefits substantially comparable in the aggregate to those in effect prior to the change of control (other than a reduction pursuant to an equivalent reduction in such benefits for all full time domestic salaried employees); and (3) the relocation of the officer’s principal place of employment by more than 50 miles.  In addition, those Named Executive Officers whose previously granted post-employment confirmed space pass travel privileges have not yet vested (Messrs. Cohen and Davis) will become vested in those privileges on an accelerated basis in the event their employment with Northwest is terminated without “cause” or by the officer for “good reason” (each, as defined in the amended agreements) within two years after a change of control.  In addition, under the amendments, certain officers (including the Named Executive Officers) who would be retiree-eligible at the time of their termination of employment will be entitled to receive tax gross-up payments for the imputed income resulting from their use of such pass travel privileges following termination of employment.  Following a change of control, the officer will be entitled to receive from Northwest, any successor of Northwest and their affiliates post-employment pass travel privileges on terms and conditions no less favorable than those to which the officer was entitled immediately prior to the change of control.  The amendments also provide for a gross-up payment not to exceed $1,000,000 for excise taxes incurred by any officer under Code Sections 280G and 4999, subject to specified limitations (including a cutback (that is, no gross-up payment) if the amount of the payments subject to the excise tax exceed the applicable safe harbor by less than 10% (within the meaning of Code Sections 280G and 4999 and the applicable regulations thereunder)).

Amendments to Stock Incentive Plan and Outstanding Equity Awards.   The Company amended the Stock Plan and the outstanding awards under the Stock Plan to provide, among other things, for the automatic vesting of all outstanding awards that are unvested or subject to lapse restrictions upon the occurrence of a change of control.  In addition, the amendments provide that, if a participant’s employment is terminated without cause or for good reason (each, as defined in the Stock Plan) within two years after a change of control, the participant will have up to three years following such termination to exercise the option.  In all cases, however, the post-termination exercise period remains subject to the award’s original 10-year term.

Amendments to Existing Incentive Compensation Plans .   The Company amended the terms of the Annual Cash Incentive Plan and the Long Term Incentive Plan in order to provide some protections to participants in those plans (including the Named Executive Officers) in the event of a change of control.  The amendments provide that, in the event of a change of control, the administrator of the plans may not reduce any amounts otherwise payable under the plan for any performance periods in which the change of control occurs or terminate any outstanding incentive opportunity for such performance periods.  In addition, the amendments provide that the administrator of each plan will, in good faith, make any adjustment that it reasonably determines to be equitable to the performance measures for the performance period in which a change of control occurs, to reflect any change in the business of Northwest or its successor.  The amendment to the Annual Cash Incentive Plan also provides that in the event of a change of control, subject to the participant’s continued employment with Northwest through the date the annual incentive compensation becomes payable to such participant, Northwest will pay to the participant the greater of his or her target incentive payment or the amount of his or her incentive payment based on the Company’s actual performance for the performance period.

Retention Agreement and Amendment to CEO Management Compensation Agreement .  The Company entered into a Retention Agreement and Amendment to Mr. Steenland’s Management Compensation Agreement (the “Retention Agreement”).  Under Mr. Steenland’s previously existing Management Compensation Agreement (the “Existing Agreement”), which is described under “Management Compensation Agreements” below, Mr. Steenland was entitled to resign for any reason during the thirty day period commencing on May 31, 2008, which is the first anniversary of the effective date of the Company’s plan of reorganization, and receive the severance payments and benefits set forth in his Existing Agreement.  Under the Retention Agreement, Mr. Steenland waived his right to resign during this period and receive such severance benefits in exchange for the grant to Mr. Steenland of 375,000 restricted retention units, each of which represents the right to receive, subject to the terms and conditions set forth in the Retention Agreement, an amount in cash equal to the fair market value of a share of common stock of the Company (not to exceed $22.00 per share for this

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purpose) multiplied by the number of vested units pursuant to the terms of the Retention Agreement.  The restricted retention units will vest subject to Mr. Steenland’s continued employment as follows: (1) if the Merger Agreement is terminated without the Merger having occurred, then the units will vest in installments of 25% each on the first four anniversaries of the date of the termination of the Merger Agreement, and (2) if Mr. Steenland’s employment is terminated by Northwest other than for cause or by Mr. Steenland for good reason (each as defined in the Retention Agreement) or due to Mr. Steenland’s death or disability, or if the Merger is consummated, then the unvested portion of the units will become immediately vested in full.  If Mr. Steenland’s employment is terminated for any other reason, any unvested units will be forfeited.  The Retention Agreement provides that Mr. Steenland will be obligated to re-pay to Northwest a pro-rated portion of any payments received by him upon the vesting of any of the restricted retention units in the event Mr. Steenland joins specified competitors of Northwest within the one year period following his termination of employment with Northwest, based upon the percentage of such one year period that had not elapsed as of such date, and contains a provision prohibiting Mr. Steenland from soliciting employees of Northwest for employment with another entity during such period.  The Retention Agreement also provides that, in the event of a change of control, Mr. Steenland will be entitled to receive from Northwest, any successor of Northwest and their affiliates post-employment pass travel privileges on terms and conditions no less favorable than those to which Mr. Steenland was entitled to immediately prior to the change of control, and Mr. Steenland’s post-termination medical and dental benefits will be provided on an after-tax basis with Mr. Steenland paying, until age 65, the same percentage of the premium cost as that payable by active officers of Northwest from time to time, but in any event not to exceed 25% of the premium cost for such coverage.

The Merger Agreement contemplates that the headquarters of the combined company will be located in Atlanta and the Chief Executive Officer of the combined company will be Richard H. Anderson, the current Chief Executive Officer of Delta. In the event the Merger is consummated in 2008 and Mr. Steenland’s employment with Northwest is terminated on January 1, 2009, the total estimated payments and benefits that Mr. Steenland would be entitled to receive would be $18,309,865, which includes $6,212,347 of estimated pension benefits and the value of outstanding restricted stock units based on the closing sale price of a share of Common Stock on April 22, 2008 ($7.47).

Compensation Committee Report

The Compensation Committee has reviewed and discussed with management the Compensation Discussion and Analysis included in this report and, based on such review and discussions, we recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this Annual Report on Form 10-K for filing with the Securities and Exchange Commission.

Compensation Committee

Roy J. Bostock (Chair)

David A. Brandon

James J. Postl

Summary Compensation Table

The following table sets forth information regarding the compensation of the Company’s Named Executive Officers in 2007 and 2006:

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(1)           The amounts set forth in these columns do not represent any amounts that the Named Executive Officers are entitled to receive; rather they represent the compensation expense recognized by the Company for financial statement reporting purposes with respect to 2007 for the grant date fair value of the awards granted to each of the Named Executive Officers in 2007 in accordance with Statement on Financial Accounting Standards No. 123 (revised 2004), “Share Based Payments.” As stated in footnote (6) to the Grants of Plan-Based Awards in 2007 Table, the value of the restricted stock unit awards granted to the Named Executive Officers in 2007 based on the closing sales price of a share of Common Stock on April 22, 2008 ($7.47) is substantially lower than the grant date value of such awards and the intrinsic value of the stock options granted to each of the Named Executive Officers in 2007 based on the April 22, 2008 closing stock price would be zero because the exercise price of each option was higher than the stock price on such date. The restricted stock units and the stock options will vest, subject to the executive’s continued employment with Northwest or a subsidiary of Northwest, in equal semi-annual installments over four years. The stock options were granted with an exercise price equal to the closing price of a share of Common Stock on the date of grant and have a ten year term.

Pursuant to SEC rules, the amounts shown under “Option Awards” reflect (A) a deduction of the 2006 compensation expense recognized by the Company for outstanding stock options previously held by the Named Executive Officers, which were cancelled pursuant to the Company’s Plan of Reorganization, and (B) exclude for both years the impact of estimated forfeitures related to service-based vesting conditions. See note 10 to NWA Corp.’s consolidated financial statements for the year ended December 31, 2007 for a discussion of the assumptions used in the valuation of the stock option awards.

(2)           This column includes: (A) the following amounts earned under the Annual Cash Incentive Plan for 2007: Mr. Steenland ($565,094), Mr. Cohen ($263,711), Mr. Davis ($263,711), Mr. Griffin ($263,711) and Mr. Roberts ($263,711); (B) the following amounts earned pursuant to previously granted awards under the Long Term Cash Incentive Plan for the two year performance period ending December 31, 2007: Mr. Steenland ($1,635,189), Mr. Cohen ($593,513), Mr. Davis ($423,938), Mr. Griffin ($593,513) and Mr. Roberts ($593,513); (C) the redemption value of an award granted to Mr. Cohen in November 2007 under the E-Commerce Plan of 2 points, which, when vested, equaled $277,506 ; and (D) 2007 earnings on outstanding unvested awards previously granted under the E-Commerce Plan as follows: Mr. Steenland ($38,810), Mr. Cohen ($26,910) and Mr. Roberts ($26,910). See “Northwest’s Executive Compensation Program” under the Compensation Discussion and Analysis section above for a description of the incentive compensation plans referred to in this footnote.

(3)           This column represents the increase in the present value of accumulated pension benefits for each of the Named Executive Officers under the Salaried Pension Plan, the Excess Pension Plan, and, for Messrs. Steenland, Cohen, Griffin and Roberts, the SERP. See “Northwest’s Executive Compensation Program – Retirement Benefits” under the Compensation Discussion and Analysis section above for a description of these plans. A description of the assumptions used to determine these amounts is included below in footnote 2 to the 2007 Pension Benefits table.

(4)           See the table below under the caption All Other Compensation Table for details regarding the amounts disclosed in the “All Other Compensation” column.

(5)           The amounts shown for Mr. Cohen reflect retention payments in the amount of $100,000 each paid to him in 2007 and 2006 pursuant to his Management Compensation Agreement. The agreement entered into in connection with Mr. Cohen’s hiring provides that he will receive annual retention payments equal to $100,000 each on May 1 of 2006, 2007, 2008, 2009 and 2010 so long as he is employed by Northwest on such dates.

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All Other Compensation Table

The following table describes each component of the “All Other Compensation” column of the Summary Compensation Table.

(1)           As discussed in footnote (3) to the Summary Compensation Table, effective August 31, 2005, Northwest amended the Salaried Pension Plan and the Excess Pension Plan to freeze future benefit accruals under those plans and amended the Retirement Savings Plan to provide for a Company contribution to participants’ accounts for service on and after September 1, 2005.

(2)           This column includes Company contributions that would have been made for the benefit of the Named Executive Officers under Northwest’s Retirement Savings Plan but are in excess of the limitations imposed by the Internal Revenue Code. In connection with the amendments to the Retirement Savings Plan discussed in footnote (1) above, beginning September 1, 2005, all Company contribution amounts to Northwest’s Retirement Savings Plan that are in excess of the limitations under the Internal Revenue Code are payable to employees in cash on a semi-monthly basis. See “Northwest’s Executive Compensation Program – Retirement Benefits – Excess 401(k) cash payments” under the Compensation Discussion and Analysis section above.

(3)           This column represents the incremental cost incurred by the Company in providing perquisites to the Named Executive Officers in 2007. These perquisites include reimbursement payments for certain medical expenses, complimentary travel benefits on Northwest and other airlines for the personal use of each Named Executive Officer, his eligible family members and other individuals designated by the Named Executive Officer, excess liability insurance coverage, club memberships, financial and tax planning services, car allowances and an annual physical examination for each Named Executive Officer. The incremental cost of airline travel benefits provided for the personal use of the Named Executive Officer and their eligible family members is based on the methodology previously used by the Company to estimate, for financial reporting purposes under an incremental cost approach, the cost of carrying a passenger flying on a frequent flyer mileage award, which is based on the average cost per passenger for food and beverage, fuel, insurance, security, miscellaneous claims and Northwest’s frequent flyer distribution and administration expenses. The incremental cost of the airline travel benefits the Named Executive Officers are entitled to make available for other individuals is based on the lowest published fare for the particular Northwest flight plus an additional fee for first or business class service. Many of our officers who are entitled to such benefits choose to donate these benefits to charitable organizations. The incremental cost of the airline travel benefits provided to Mr. Steenland in 2007 was $25,736. See “Northwest’s Executive Compensation Program – Perquisites” under “Compensation Discussion and Analysis” above.

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Grants of Plan-Based Awards in 2007

The following table provides information about awards granted to our Named Executive Officers during 2007 under the Annual Cash Incentive Plan, the Long Term Cash Incentive Plan, the E-Commerce Plan and the Stock Plan. These incentive compensation plans are described in the Compensation Discussion and Analysis section under “Northwest’s Executive Compensation Programs.”

(1)             These columns show the potential value of the payout for each Named Executive Officer with respect to awards granted under the Annual Cash Incentive Plan, the Long Term Cash Incentive Plan and the E-Commerce Plan if the threshold, target or maximum goals under each plan are achieved. The potential payouts under the Annual Cash Incentive Plan and the Long Term Cash Incentive Plan are performance-driven and therefore at risk. These incentive plans are described above in the Compensation Discussion and Analysis section under “Northwest’s Executive Compensation Programs.”

(2)             These awards were granted for 2007 under the Annual Cash Incentive Plan. The plan provides for different payout amounts based on the Company’s achievement of an income contribution target established by the Compensation Committee at the beginning of the year and an assessment of individual performance during the year, as well as achievement of a net profitability threshold for payouts in excess of target payout amounts. Target payout amounts are established as a percentage of the participant’s annual salary. The amounts shown are based on the executives’ current annual salary levels; however, actual payouts will be based on the executives’ annual salaries in effect at the time of the payout.

(3)             These awards were granted pursuant to the Long Term Cash Incentive Plan for the two year performance period beginning January 1, 2007. The plan provides for different payout amounts based on Northwest’s rank among the companies in its industry peer group in average operating margin during the two years included in the performance period and Northwest’s achievement of a net profitability threshold in each year included in the performance period. The payouts are also contingent upon the participant maintaining a minimum individual performance rating during the performance period. The amounts shown are based on the executives’ current annual salary levels; however, actual payouts will be based on the executives’ annual salaries in effect at the time of the payout.

(4)             Amounts in this column represent restricted stock unit awards granted under the Stock Plan on May 31, 2007 in connection with the Company’s emergence from bankruptcy. The FAS123R grant date value of these awards is $25.15 per share.

(5)             Amounts in this column represent stock options granted under the Stock Plan to the Named Executive Officers in 2007 in connection with the Company’s emergence from bankruptcy. The FAS123R grant date fair value of the stock option awards granted on June 14, 2007, June 28, 2007 and July 13, 2007 is $12.89 per share, $12.62 per share and $11.94 per share, respectively.

(6)             The amounts shown in the table represent the grant date fair value of the awards granted to the Named Executive Officers. Based on the closing sales price of a share of Common Stock on April 22, 2008 ($7.47), the intrinsic value of the stock options granted to each of the Named Executive Officers in 2007 would be zero because the

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exercise price of each option was higher than such stock price and the value of the restricted stock unit awards granted to each of the Named Executive Officers in 2007 would be as follows: Mr. Steenland ($5,347,183), Mr. Cohen ($2,605,910), Mr. Davis ($1,844,694), Mr. Griffin ($2,247,469), and Mr. Roberts ($2,452,005).

(7)             In November 2007, the Company granted an award to Mr. Cohen pursuant to the E-Commerce Plan relating to equity investments by Northwest in a number of e-commerce or internet-based businesses. Each Point represents, when vested, the right to receive a payment equal to 0.1% of the market value attributable to the group of investments for which the Points were awarded. The Points subject to the award vested on April 1, 2008. The amount shown represents the potential aggregate payout amount attributable to the disposition of Northwest’s investment in Orbitz, one of the e-commerce businesses covered by the award. In November 2004, Northwest sold its shares of common stock of Orbitz to an indirect wholly owned subsidiary of Cendant Corporation in connection with a tender offer to purchase all of the outstanding shares of class A and class B common stock of Orbitz.

Management Compensation Agreements

Northwest has entered into management compensation agreements with each of the Named Executive Officers. The agreements have no set terms and the executive’s employment under his agreement is terminable by either party for any reason upon 30 days written notice. The following description of these agreements does not include the modifications that were adopted in April 2008 in connection with the Company’s execution of the Merger Agreement with Delta. These modifications are described in the Compensation Discussion and Analysis section under the caption “New Plans and Arrangements Adopted in Connection with Potential Merger.”

The agreement with Mr. Steenland, which was entered into on September 14, 2005, provides that Mr. Steenland will receive a base salary and will participate in Northwest’s compensation and benefit plans. He is also entitled to lifetime positive space travel benefits on Northwest’s flights for the personal use of Mr. Steenland, his spouse, dependent children and other individuals designated by Mr. Steenland, specified life insurance benefits, coverage under Northwest’s medical and dental plans for the remainder of his and his spouse’s lifetimes, and reimbursement for medical expenses not covered under Northwest’s medical plans. In addition, as stated above, Northwest has agreed to provide Mr. Steenland under the SERP up to six additional years of service credit over the six year period commencing April 1, 2006, so long as he remains employed by Northwest during such period or if his employment is terminated in specified circumstances.

On April 14, 2008, Northwest entered into new management compensation agreements with Messrs. Cohen, Davis and Roberts.  In general, the prior management compensation agreements entered into with these executives were updated to conform them to similar agreements entered into with other senior officers and, in the case of Messrs. Davis and Roberts, to reflect their promotions to executive vice president positions. In the case of Messrs. Cohen and Davis, their agreements were also updated to delete certain provisions that relate to benefits each executive received when he joined Northwest and therefore are no longer applicable.

The agreements with Messrs. Cohen, Davis, Griffin and Roberts entitle each executive to receive a base salary and to participate in Northwest’s compensation and benefit plans. Each of these executives is entitled, for the remainder of their lifetimes, to positive space travel benefits on Northwest’s flights and coverage under Northwest’s medical and dental plans following termination of employment, subject, in the case of Messrs. Cohen and Davis, to the executive remaining employed by Northwest through a specified date or if the executive’s employment is terminated prior to such date without cause or for good reason. In addition, in connection with his joining Northwest in May 2005, Northwest agreed to pay Mr. Cohen annual retention payments of $100,000 each on May 1 of each of five years beginning in 2006 so long as he continues to be employed by Northwest on those dates.

Under the Management Compensation Agreements entered into with each of the Named Executive Officers, Northwest has agreed to provide each executive with specified severance payments and benefits in the event the executive’s employment is terminated under various circumstances. A description of the potential payments and benefits that each of the Named Executive Officers would be entitled to receive in these circumstances is included below under the caption “Potential Payments upon Termination or Change in Control.”

Outstanding Equity Awards at 2007 Fiscal Year-End

The following table summarizes the unexercised option awards and unvested stock awards to our Named Executive Officers that were outstanding as of December 31, 2007.

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(1)              The stock options become exercisable in nine equal installments commencing on the grant date of each option (June 14, 2007, June 28, 2007 and July 13, 2007, respectively) and on each six month anniversary thereof.

(2)              The restricted stock unit awards vest in nine equal installments commencing on the grant date of the awards (May 31, 2007) and on each six month anniversary thereof.

Option Exercises and Stock Vested

The following table sets forth information regarding the value realized by the Named Executive Officers in connection with the exercise of stock options and the vesting of restricted stock units during 2007.

(1)  These columns show the number and value of restricted stock units that vested on May 31, 2007 and November 30, 2007 at a value of $25.15 and $18.18 per share, respectively, which represent the closing sale price of a share of Common Stock on each vesting date.

(2)  The amount for Mr. Steenland does not represent any cash payments to Mr. Steenland. Mr. Steenland has elected to hold the shares of Common Stock issued to him upon the vesting of his restricted stock award. As of April 22, 2008, these shares had a value of $1,188,148 based on the closing sales price of a share of Common Stock on such date ($7.47).

2007 Pension Benefits

The following table shows the present value of accumulated benefits at December 31, 2007 for the Named Executive Officers under the Salaried Pension Plan, the Excess Pension Plan and the SERP based on the assumptions described in note (2) below. These retirement plans are described in the Compensation Discussion and Analysis section under “Northwest’s Executive Compensation Program – Retirement Plans.” All benefits under the Excess Pension Plan and the SERP are unfunded and are payable by Northwest from its general assets.

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(1)           For salaried employees hired by Northwest on or before January 1, 2001 and for rehired employees who were previously employed by Northwest on or before January 1, 2001, which includes all of the Named Executive Officers, the accumulated benefits under the Salaried Pension Plan are the greater of the benefits calculated under the final average earnings formula and those calculated under the cash balance formula. An employee may retire at the normal retirement age of 65 regardless of years of service with Northwest, or may retire as early as age 55 with 10 years of service.

The years of service credited under the Salaried Pension Plan and the Excess Pension Plan for each of the Named Executive Officers shown in the table above represent actual service with Northwest through August 31, 2005, the date on which future benefit accruals under the Salaried Pension Plan and the Excess Pension Plan were frozen. As of December 31, 2007, each of the Named Executive Officers who participate in the SERP was credited under the SERP with continuing service plus the additional number of years of service shown in the table below. The present value of the benefit attributable to the additional years of service granted to each Named Executive Officer in the SERP is also shown in the table below.

(2)           As discussed in the Compensation Discussion and Analysis section under “Northwest’s Executive Compensation – Retirement Benefits – Frozen Defined Benefit Pension Plans”, effective August 31, 2005, Northwest amended the Salaried Pension Plan and the Excess Pension Plan to freeze future benefit accruals under those plans and amended the Retirement Savings Plan to provide for a Company contribution to participants’ accounts for service on and after September 1, 2005. Contributions to the Retirement Savings Plan for each of the Named Executive Officers in 2007 are included in the “All Other Compensation” column of the Summary Compensation Table.

An actuarial present value of the benefits is calculated by estimating expected future payments starting at an assumed retirement age, weighting the estimated payments by the estimated probability of surviving to each post-retirement age, and discounting the weighted payments at an assumed discount rate to reflect the time value of money. The actuarial present value represents an estimate of the amount which, if invested as of December 31, 2007 at the assumed discount rate, would be sufficient on an average basis to provide estimated future payments based on the current accumulated benefit. Estimated future payments are assumed to be in the form of a single lump-sum payment at retirement determined using interest rate and mortality table assumptions applicable under current Internal Revenue Service regulations for qualified pension plans. The assumed retirement age for each executive is the earliest age at which the executive could retire without any benefit reduction due to age. Actual benefit present values will vary from these estimates depending on many factors, including an executive’s actual retirement age, final service, future compensation levels, interest rate movements and regulatory changes. The assumptions on which the present values of accumulated benefits shown in the 2007 Pension Benefits Table above are based are those used in determining our annual pension benefit obligation in the Company’s consolidated financial statements and are summarized in the table below. These assumptions were also used to determine the change in pension value included in the Summary Compensation Table.

Pension Plan Assumptions