Northwest Airlines files reorganization plan

"Over the past 16 months, we have achieved the three key objectives we set for our restructuring," Northwest Chief Executive Doug Steenland said in a statement.

"We have removed $2.4 billion in annual costs from the business; we have restructured our fleet and entered into new aircraft purchase agreements; and we have significantly strengthened our balance sheet," he said. "We remain on track to report a pretax profit for the full year 2006."

Gropper has yet to rule on a request by a group of Northwest shareholders, who hold about 18.6 percent of the airline's outstanding common stock, to appoint an official committee of equity holders to represent their interests after the U.S. Trustee denied their request on December 26. A hearing on that matter is set for February 14.

Shares of Northwest tumbled 83 cents, or 15 percent, to $4.71 in over-the-counter trading.

Northwest's plan gives it the option to raise money by selling equity in the restructured company and possibly raise capital from private equity firms. The company also plans to convert its existing bankruptcy financing into new forms of debt.

The new debt would include a $175 million revolving credit facility and a $1.05 billion loan, including a $75 million letter of credit, each with a maturity date of August 2013, the airline said.

Northwest has not commented publicly on its likely role in any industry consolidation, but it has hired investment bank Evercore Group LLC to help evaluate its strategy.

(Additional reporting by Paritosh Bansal and John Crawley)