<PAGE>
Pursuant to Rule 424(b)(2)
Registration No. 333-79215
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED JUNE 7, 1999)
$125,000,000
NORTHWEST AIRLINES, INC.
9 1/2% SENIOR QUARTERLY INTEREST BONDS DUE 2039 (QUIBS)*
FULLY AND UNCONDITIONALLY GUARANTEED BY
NORTHWEST AIRLINES CORPORATION
------------
INTEREST PAYABLE ON NOVEMBER 15, FEBRUARY 15, MAY 15 AND AUGUST 15.
-------------------
THE BONDS WILL MATURE ON AUGUST 15, 2039. NORTHWEST WILL HAVE THE RIGHT TO
REDEEM THE BONDS IN CERTAIN CIRCUMSTANCES IF NORTHWEST IS UNABLE TO DEDUCT
INTEREST PAID ON THE BONDS. NORTHWEST MAY ALSO REDEEM ANY OF THE BONDS BEGINNING
AUGUST 27, 2004 AT 100% OF THEIR PRINCIPAL AMOUNT PLUS ACCRUED INTEREST. BONDS
MAY BE PURCHASED IN DENOMINATIONS OF $25 AND INTEGRAL MULTIPLES OF $25.
NORTHWEST HAS MADE AN APPLICATION TO LIST THE BONDS ON THE NEW YORK STOCK
EXCHANGE. IF APPROVED FOR LISTING, TRADING OF THE BONDS IS EXPECTED TO COMMENCE
WITHIN A 30-DAY PERIOD AFTER INITIAL DELIVERY OF THE BONDS.
-------------------
INVESTING IN THE BONDS INVOLVES RISKS. SEE "RISK FACTORS" BEGINNING ON PAGE S-6.
-------------------
PRICE 100% AND ACCRUED INTEREST, IF ANY
-------------------
<TABLE>
<CAPTION>
UNDERWRITING
PRICE TO DISCOUNTS AND PROCEEDS TO
PUBLIC COMMISSIONS NORTHWEST
------------------ ------------------ ------------------
<S> <C> <C> <C>
PER BOND................................................. 100% 3.15% 96.85%
TOTAL.................................................... $125,000,000 $3,937,500 $121,062,500
</TABLE>
THE SECURITIES AND EXCHANGE COMMISSION AND STATE SECURITIES REGULATORS HAVE NOT
APPROVED OR DISAPPROVED THESE SECURITIES, OR DETERMINED IF THIS PROSPECTUS
SUPPLEMENT OR THE ACCOMPANYING PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
NORTHWEST HAS GRANTED THE UNDERWRITERS AN OPTION TO PURCHASE UP TO AN ADDITIONAL
$18,750,000 AGGREGATE PRINCIPAL AMOUNT OF BONDS, SOLELY TO COVER
OVER-ALLOTMENTS.
MORGAN STANLEY & CO. INCORPORATED EXPECTS TO DELIVER THE BONDS TO PURCHASERS ON
AUGUST 27, 1999.
-------------------
*QUIBS IS A SERVICEMARK OF MORGAN STANLEY DEAN WITTER & CO.
-------------------
MORGAN STANLEY DEAN WITTER
GOLDMAN, SACHS & CO.
MERRILL LYNCH & CO.
PAINEWEBBER INCORPORATED
PRUDENTIAL SECURITIES
SALOMON SMITH BARNEY
BANC OF AMERICA SECURITIES LLC U.S. BANCORP PIPER JAFFRAY INC.
AUGUST 19, 1999
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PROSPECTUS SUPPLEMENT PROSPECTUS
<S> <C> <C> <C>
PAGE PAGE
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</TABLE>
<TABLE>
<S> <C>
Presentation of Information........... S-3
Summary Consolidated Financial and
Operating Data...................... S-4
Risk Factors.......................... S-6
Use of Proceeds....................... S-11
Capitalization........................ S-11
The Company........................... S-12
Description of the Bonds and Parent
Guaranty............................ S-17
Underwriters.......................... S-21
Legal Matters......................... S-23
Experts............................... S-23
About this Prospectus................. 2
Incorporation of Certain Documents by
Reference........................... 3
Disclosure Regarding Forward-looking
Statements.......................... 3
The Company........................... 4
Use of Proceeds....................... 4
Ratio of Earnings to Fixed Charges.... 4
Description of Debt Securities........ 5
Description of Warrants............... 18
Plan of Distribution.................. 20
Legal Opinions........................ 21
Experts............................... 21
</TABLE>
------------------------
YOU SHOULD RELY ONLY ON THE INFORMATION PROVIDED IN THIS PROSPECTUS
SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS, INCLUDING THE INFORMATION
INCORPORATED BY REFERENCE. WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH
INFORMATION DIFFERENT FROM THAT CONTAINED OR INCORPORATED BY REFERENCE IN THIS
PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS. NORTHWEST AIRLINES, INC.
IS OFFERING TO SELL THE BONDS AND SEEKING OFFERS TO BUY THE BONDS, ONLY IN
JURISDICTIONS WHERE OFFERS AND SALES ARE PERMITTED. THE INFORMATION CONTAINED IN
OR INCORPORATED BY REFERENCE IN THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING
PROSPECTUS IS ACCURATE ONLY AS OF THE DATE OF THIS PROSPECTUS SUPPLEMENT,
REGARDLESS OF THE TIME OF DELIVERY OF THIS PROSPECTUS SUPPLEMENT AND THE
ACCOMPANYING PROSPECTUS OR OF ANY SALES OF THE BONDS. IN THIS PROSPECTUS
SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS, "NORTHWEST" REFERS TO NORTHWEST
AIRLINES, INC., "NWA CORP." TO NORTHWEST AIRLINES CORPORATION AND THE "COMPANY,"
"WE," "US" OR "OUR" TO NWA CORP. AND ITS CONSOLIDATED SUBSIDIARIES.
S-2
<PAGE>
PRESENTATION OF INFORMATION
These offering materials consist of two documents: (a) this prospectus
supplement, which describes the terms of the bonds that Northwest Airlines, Inc.
is currently offering, and (b) the accompanying prospectus, which provides
general information about Northwest Airlines, Inc. debt securities, some of
which may not apply to the bonds that Northwest Airlines, Inc. is currently
offering. THE INFORMATION IN THIS PROSPECTUS SUPPLEMENT REPLACES ANY
INCONSISTENT INFORMATION INCLUDED IN THE ACCOMPANYING PROSPECTUS.
At varying places in this prospectus supplement and the prospectus, we refer
you to other sections of such documents for additional information by indicating
the caption heading of such other sections. The page on which each principal
caption included in this prospectus supplement and the prospectus can be found
is listed in the Table of Contents on the previous page. All such cross
references in the prospectus supplement are to captions contained in this
prospectus supplement and not in the accompanying prospectus, unless otherwise
stated.
S-3
<PAGE>
SUMMARY CONSOLIDATED FINANCIAL AND OPERATING DATA
The following table presents summary consolidated financial data and
operating statistics of the Company. The annual historical financial data were
derived from NWA Corp.'s audited consolidated financial statements and the notes
thereto and the quarterly historical data were derived from NWA Corp.'s
unaudited consolidated financial statements, both of which are incorporated by
reference in this prospectus supplement. The quarterly historical data may not
be indicative of results for the year as a whole. See "Incorporation of Certain
Documents by Reference" in the accompanying prospectus.
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
JUNE 30, YEAR ENDED DECEMBER 31,
-------------------- -------------------------------
1999 1998 1998 1997 1996
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA (IN MILLIONS):
Operating revenues
Passenger............................................... $ 4,105 $ 4,173 $ 7,607 $ 8,822 $ 8,598
Cargo................................................... 322 329 634 789 746
Other................................................... 451 402 804 615 537
--------- --------- --------- --------- ---------
4,878 4,904 9,045 10,226 9,881
--------- --------- --------- --------- ---------
Operating expenses(1)..................................... 4,628 4,628 9,236 9,069 8,827
--------- --------- --------- --------- ---------
Operating income (loss)................................... 250 276 (191) 1,157 1,054
--------- --------- --------- --------- ---------
Income (loss) before extraordinary item(2)................ $ 91 $ 120 $ (285) $ 606 $ 536
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
OTHER DATA (IN MILLIONS EXCEPT FINANCIAL RATIO DATA):
Ratio of earnings to fixed charges........................ 1.36x 1.78x (3) 3.05x 2.74x
Cash provided by operating activities..................... $ 790 $ 490 $ 88 $ 1,607 $ 1,372
Cash used in investing activities......................... (426) (218) (1,113) (886) (1,242)
Cash provided by (used in) financing activities........... (226) (114) 765 (540) (422)
EBIT(4)................................................... 334 318 (118) 1,219 1,135
EBITDA(5)................................................. 567 524 309 1,615 1,513
EBITDAR (6)............................................... 736 697 654 1,974 1,859
EBIT/interest expense..................................... 1.8x 2.6x (.4x) 5.2x 4.3x
EBITDA/interest expense................................... 3.1 4.3 1.0 6.9 5.8
EBITDAR/interest expense and aircraft rentals............. 2.1 2.4 1.0 3.3 3.1
OPERATING STATISTICS (7):
Scheduled Service:
Available seat miles (millions) (8)..................... 48,209 47,594 91,311 96,964 93,914
Revenue passenger miles (millions)(9)................... 35,526 35,153 66,738 72,031 68,639
Passenger load factor (%) (10).......................... 73.7 73.9 73.1 74.3 73.1
Revenue passengers (millions)........................... 26,890 26,380 50.5 54.7 52.7
Revenue yield per passenger mile (cents)(11)............ 11.41 11.73 11.26 12.11 12.53
Passenger revenue per scheduled ASM (cents)............. 8.41 8.66 8.23 9.00 9.16
Operating revenue per total ASM (cents)(12)............... 9.22 9.49 9.12 9.76 9.85
Operating expense per total ASM (cents)(12)............... 8.70 8.89 9.21 8.63 8.78
Cargo ton miles (millions)(13)............................ 1,056 991 1,954 2,283 2,216
Cargo revenue per ton mile (cents)........................ 30.48 33.14 32.39 34.54 33.66
Fuel gallons consumed (millions).......................... 983 977 1,877 1,996 1,945
Average fuel cost per gallon (cents)...................... 46.75 56.15 53.60 64.86 67.21
Number of operating aircraft at end of period............. 417 415 409 405 399
Full-time equivalent employees at end of period........... 51,583 51,332 50,565 48,984 47,536
</TABLE>
(TABLE CONTINUES AND FOOTNOTES APPEAR ON THE FOLLOWING PAGE.)
S-4
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<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1999 1998
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<S> <C> <C>
BALANCE SHEET DATA (IN MILLIONS):
Cash, cash equivalents and unrestricted short-term investments......................... $ 618 $ 480
Total assets........................................................................... 11,202 10,281
Long-term debt, including current portion.............................................. 4,169 4,001
Long-term obligations under capital leases, including current obligations.............. 626 655
Mandatorily redeemable preferred security of subsidiary................................ 527 564
Redeemable preferred stock............................................................. 251 261
Common stockholders' equity (deficit).................................................. (255) (477)
</TABLE>
- ------------------------
(1) The Company recorded a fleet disposition charge of $66 million ($42 million
after tax) related to its seven oldest Boeing 747 aircraft in the fourth
quarter of 1998. The Company has made provisions for out-of-period charges
related to both collective bargaining agreements that were ratified in 1998
and estimated provisions for the Company's remaining amendable collective
bargaining agreements of $151 million ($95 million after tax) for the year
ended December 31, 1998, including $67 million ($42 million after tax) for
IAM retroactive pay in the six months ended June 30, 1998. The Company
recorded a non-recurring credit of $27 million ($17 million after tax) in
the second quarter of 1999).
(2) The 1997 extraordinary loss was $9 million. In February 1999, the Company
sold a portion of its interest in Equant N.V. and recorded a gain of $28
million ($18 million after taxes) related to this transaction.
(3) Earnings did not cover fixed charges by $452 million for the year ended
December 31, 1998.
(4) EBIT represents income (loss) before extraordinary item plus the sum of
interest expense (net of capitalized interest) and income tax expense
(benefit).
(5) EBITDA represents EBIT, as defined in (4) above, plus depreciation and
amortization.
(6) EBITDAR represents EBITDA, as defined in (5) above, plus aircraft rentals.
EBIT, EBITDA and EBITDAR are presented because each is a widely accepted
financial indicator of a company's ability to incur and service debt.
However, EBIT, EBITDA and EBITDAR should not be considered in isolation, as
a substitute for net income or cash flow data prepared in accordance with
generally accepted accounting principles or as a measure of a company's
profitability or liquidity.
(7) All statistics exclude Express Airlines I, Inc.
(8) "Available seat miles" ("ASMs") represent the number of seats available for
passengers multiplied by the number of scheduled miles the seats are flown.
(9) "Revenue passenger miles" ("RPMs") represents the number of miles flown by
revenue passengers in scheduled service.
(10) "Passenger load factor" is calculated by dividing revenue passenger miles
by available seat miles, and represents the percentage of aircraft seating
capacity utilized.
(11) "Revenue yield per passenger mile" represents the average revenue received
from each mile a passenger is flown in scheduled service.
(12) Excludes the estimated revenues and expenses associated with the operation
of Northwest's fleet of 747 freighter aircraft, MLT Inc. and gain/loss on
disposition of assets.
(13) "Cargo ton miles" represents the tonnage of freight and mail carried
multiplied by the number of miles flown.
S-5
<PAGE>
RISK FACTORS
YOU SHOULD READ CAREFULLY THIS ENTIRE PROSPECTUS SUPPLEMENT, THE
ACCOMPANYING PROSPECTUS AND THE DOCUMENTS INCORPORATED BY REFERENCE IN THIS
PROSPECTUS SUPPLEMENT AND THE PROSPECTUS BEFORE INVESTING IN THE BONDS.
THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS INCLUDE
"FORWARD-LOOKING STATEMENTS" WITHIN THE MEANING OF SECTION 27A OF THE SECURITIES
ACT OF 1933 AND SECTION 21E OF THE SECURITIES EXCHANGE ACT OF 1934. ALL
STATEMENTS OTHER THAN STATEMENTS OF HISTORICAL FACTS INCLUDED OR INCORPORATED BY
REFERENCE IN THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS,
INCLUDING STATEMENTS REGARDING OUR FUTURE FINANCIAL POSITION, ARE
FORWARD-LOOKING STATEMENTS. ALTHOUGH WE BELIEVE THAT THE EXPECTATIONS REFLECTED
IN SUCH FORWARD-LOOKING STATEMENTS ARE REASONABLE, WE CANNOT ASSURE YOU THAT
SUCH EXPECTATIONS WILL BE CORRECT. IMPORTANT FACTORS THAT COULD CAUSE ACTUAL
RESULTS TO DIFFER MATERIALLY FROM SUCH EXPECTATIONS ARE DISCLOSED BELOW AND
ELSEWHERE IN THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS.
RISK FACTORS RELATING TO NORTHWEST AND NWA CORP.
INDEBTEDNESS
The Company has substantial levels of indebtedness. As of June 30, 1999, we
had long-term debt, capital lease obligations and current maturities of $4.80
billion. Of this indebtedness, 43% bears interest at floating rates. The amount
of our long-term debt that matures in 1999 is $178 million. Additionally, $294
million matures in 2000, $176 million matures in 2001 and $734 million matures
in 2002. As of June 30, 1999, future minimum lease payments under capital leases
were $33 million for 1999, $60 million for 2000, $62 million for 2001 and $229
million for 2002. These levels of indebtedness do not include our mandatory
obligations to redeem $251 million of our preferred stock in 2003 and
non-recourse mandatorily redeemable preferred securities of one of NWA Corp.'s
subsidiaries of $527 million.
At June 30, 1999, Northwest had $4.35 billion of long-term debt and capital
lease obligations that would rank equally in right of payment with the bonds, of
which $3.17 billion was secured by Northwest's assets, and no long-term debt or
capital lease obligations that would rank senior in right of payment to the
bonds. As of the same date, NWA Corp. had $1.98 billion of indebtedness which
would rank equally in right of payment with the full and unconditional guarantee
by NWA Corp. of the bonds (the "Parent Guaranty"), none of which was secured by
NWA Corp.'s assets, and no long-term debt that would rank senior in right of
payment to the Parent Guaranty.
The bonds will rank equally in right of payment with all other unsecured and
unsubordinated indebtedness of Northwest, and the Parent Guaranty will rank
equally with all other unsecured and unsubordinated indebtedness of NWA Corp.
The bonds are effectively subordinated to the claims of Northwest's secured
lenders, and the Parent Guaranty is effectively subordinated to the claims of
NWA Corp.'s secured lenders and claims against NWA Corp.'s subsidiaries.
In addition, Northwest operates in a capital intensive industry.
Periodically, Northwest is required to make significant capital expenditures for
new aircraft and related equipment. We cannot assure you that sufficient
financing will be available for all aircraft and other capital expenditures not
covered by commercial financing.
ABSENCE OF CERTAIN COVENANTS
The terms of the bonds and NWA Corp.'s Parent Guaranty do not limit
Northwest's or NWA Corp.'s ability to incur additional indebtedness that may
rank equally in right of payment to the bonds or such Parent Guaranty, to incur
liens or to pay dividends or make distributions on, or redeem or repurchase, NWA
Corp.'s capital stock. In addition, the bonds do not contain provisions that
would give holders of the bonds the right to require Northwest to repurchase
their bonds in the event of a
S-6
<PAGE>
change of control of Northwest or a decline in the credit rating of Northwest's
or NWA Corp.'s debt securities from a takeover, recapitalization or similar
restructuring, or any other reason.
LABOR AGREEMENTS
Unions represent approximately 90% of our employees. Consequently, labor
wage rates and costs are subject to collective bargaining. The current status of
Northwest's principal labor agreements is as follows:
PILOTS. In September 1998, our pilots ratified a four-year agreement that
becomes amendable in September 2002. Ratification followed a strike by our
pilots which resulted in an 18-day cessation of flight operations.
METEOROLOGISTS, TECHNICAL WRITERS, AND DISPATCHERS. These employees
ratified new five-year and six-year agreements during the fourth quarter of
1998.
FLIGHT ATTENDANTS. On June 10, 1999, Northwest and the International
Brotherhood of Teamsters reached a new five-year tentative agreement that has
been submitted to the union membership for a ratification vote, the results of
which will not be available until late August 1999. We cannot predict the
outcome of the vote.
MECHANICS AND RELATED EMPLOYEES, CUSTOMER SERVICE AGENTS, EQUIPMENT SERVICE
EMPLOYEES, CLERKS, RESERVATION AGENTS AND STOCK CLERKS. Our agreement with our
ground employees became amendable in October 1996. Negotiations began at that
time with the International Association of Machinists and Aerospace Workers
("IAM"), who represented our ground employees. In June 1998, we reached a
tentative agreement with the IAM, which was not ratified by the union
membership. In November 1998, the mechanics and related employees authorized the
Aircraft Mechanics Fraternal Association ("AMFA") to be their
collective-bargaining representative. The National Mediation Board certified the
results of the representative election on June 1, 1999. Contract negotiations
are expected to commence with AMFA as soon as AMFA organizational matters are
resolved. The remaining ground employees continue to be represented by the IAM.
The IAM membership ratified a new four-year agreement in February 1999.
We estimate the increased costs under the six ratified agreements will be
approximately $145 million for 1999 based on current levels of employment.
Because the terms of the new labor agreements are determined by collective
bargaining, we cannot predict the outcome of the remaining negotiations at this
time. We believe that our labor costs will remain competitive in comparison to
other large U.S. airlines.
RISKS REGARDING NORTHWEST/JUSTICE DEPARTMENT LITIGATION
In November 1998, Northwest and Continental Airlines, Inc. ("CONTINENTAL")
began implementing their long-term global alliance involving extensive
code-sharing, frequent flyer program reciprocity and other cooperative
activities. In a related transaction, the Company acquired from Continental's
principal shareholder and certain other parties securities representing 11.8% of
Continental's equity as of June 30, 1999 and, together with additional
Continental shares for which NWA Corp. holds a limited voting proxy, 51.2% of
the fully-diluted voting power of Continental. On October 23, 1998, the U.S.
Department of Justice commenced a civil antitrust action against us and
Continental challenging our acquisition of the Continental securities. The
Justice Department is seeking to have us divest the Continental securities we
acquired or to impose additional terms and restrictions on us with respect to
the Continental securities acquired. Although we cannot predict the outcome of
litigation, we intend to defend the lawsuit vigorously. The lawsuit did not
challenge the alliance between Northwest and
S-7
<PAGE>
Continental, although the Justice Department has indicated that it will continue
to monitor the alliance.
ASIA ECONOMIC ISSUES
Our results of operations are affected by the level of economic activity in
the United States and foreign markets that we serve. The general economic
environment in Asia adversely impacted our Pacific revenues in 1998. In response
to the continued weak economic environment and lower demand in the Pacific,
Northwest reduced its capacity in the region. Northwest cannot predict the
extent and the length of the weakened Asian economy and the degree to which it
will continue to adversely impact its Pacific revenues.
RISKS REGARDING ALLIANCES
Northwest is currently a party to numerous alliances with other airlines,
and may enter into additional alliances in the future. Northwest's ability to
grow its route network by entering into alliances depends upon the availability
of suitable alliance candidates and the ability of Northwest and its alliance
partners to meet business objectives and to perform their obligations under the
alliance agreements. Northwest's ability to successfully achieve the anticipated
benefits of its alliances depends upon many factors including:
- Disapproval or delay by regulatory authorities or adverse regulatory
developments.
- Competitive pressures.
- Customer acceptance of the alliance.
- Northwest and its alliance partners' ability to modify certain contracts
that may restrict certain aspects of the alliance.
We cannot predict the extent to which we will benefit from Northwest's
alliances.
YEAR 2000
Computerized systems are essential to our operations. Many computer programs
in use around the world use only two digits to identify the applicable year and
do not take account of the change in century that will occur in the year 2000.
If this problem is not corrected, computer applications could fail or create
mistakes. As a result, we have implemented a Year 2000 project to modify our
computer systems to function properly in 2000 and in the years after that. Our
Year 2000 project should be completed in 1999, and we believe that the Year 2000
issue will not pose significant operational problems for our computer systems.
We have also contacted our significant suppliers, vendors and other airlines
with whom our systems interface or upon whom our business depends. We are
working with these parties to minimize the extent to which our business will be
vulnerable to their failure to remedy their Year 2000 issues. Our business also
depends upon foreign governments and agencies and certain United States
governmental agencies, such as the Federal Aviation Administration ("FAA"), that
provide essential services to the aviation industry. We cannot predict whether
the systems of such third parties that our business relies on will be modified
on a timely basis.
Our business, financial condition and results of operations could be
materially adversely affected if our systems, or those operated by other parties
on which our business depends, fail to operate properly beyond 1999.
S-8
<PAGE>
FOREIGN CURRENCY EXPOSURE
Northwest conducts a significant portion of its operations in foreign
locations. As a result, Northwest has operating revenues and, to a lesser
extent, operating expenses, as well as assets and liabilities, denominated in
foreign currencies. Fluctuations in such foreign currencies, especially the
Japanese yen, can significantly affect Northwest's operating performance. From
time to time, Northwest uses financial instruments to hedge its exposure to the
Japanese yen. Currently, Northwest has entered into $351 million (40.3 billion
yen) in forward contracts to hedge a portion of its anticipated yen-denominated
ticket sales for the next 12 months.
POSSIBLE LIMITATION ON NET OPERATING LOSS CARRYFORWARDS
We used net operating loss carryforwards ("NOLS") of approximately $1.20
billion from 1994 through 1996 and alternative minimum tax net operating loss
carryforwards ("AMTNOLS") of approximately $588 million from 1993 through 1996.
The Internal Revenue Code of 1986, as amended (the "CODE"), and Treasury
regulations limit the amounts of NOLs and AMTNOLs that can be used to offset
taxable income (or used as a credit) in any single tax year if the corporation
has more than a 50% ownership change (as defined in the Code) over a three-year
testing period ending on the testing date. In general, if an "ownership change"
occurs, Sections 382 and 383 limit the amount of NOLs, AMTNOLs and credits that
can be carried forward and used in any one year after the ownership change
occurs to an amount equal to the product of the value of the corporation's stock
for tax purposes immediately before the change multiplied by the "long-term
tax-exempt rate" as determined by the Internal Revenue Service (the "IRS") for
the month of the change. Management believes that an offering of outstanding
common stock by existing stockholders in November 1995 triggered an ownership
change, but that no ownership change occurred before that time. If an ownership
change did occur as a result of that offering, management believes that, even as
limited by the Code, the Company would use the NOLs, AMTNOLs and credits
significantly earlier than their expiration and the annual limitations would not
adversely impact the Company. However, if the IRS were to successfully assert
that an ownership change had occurred on any date prior to November 1995
(including August 1, 1993 when the Company entered into labor agreements that
provided stock for labor cost savings) our ability to use our NOLs, AMTNOLs and
credits would be significantly impaired because the value of Old NWA Corp.'s
stock on certain prior testing dates was relatively low. Such value would
adversely affect the annual limitation described above.
NEGATIVE NET WORTH
As of June 30, 1999, our common stockholders' deficit was $255 million.
Certain investors and lenders will not invest in or lend to, or will limit their
investments in or loans to a company with a stockholders' deficit. As a result,
our ability to obtain additional financing may be adversely affected.
RISK FACTORS RELATED TO THE AIRLINE INDUSTRY
INDUSTRY CONDITIONS AND COMPETITION
The airline industry is highly competitive. Airline profit levels are highly
sensitive to adverse changes in fuel costs, average fare levels and passenger
demand. Passenger demand and fare levels have historically been influenced by,
among other things, the general state of the economy, international events,
airline capacity and pricing actions taken by other airlines. For example, from
1990 to 1993, the weak U.S. economy, turbulent international events and
extensive price discounting by carriers resulted in unprecedented losses for
U.S. airlines, including us. Since then, the U.S. economy has improved and
broadly available, deep price discounting has ceased. We cannot predict the
extent to which these industry conditions will continue.
S-9
<PAGE>
Northwest's competitors include all the other major domestic airlines, as
well as foreign, national, regional and new entrant airlines, some of which have
more financial resources or lower cost structures than Northwest. Northwest uses
yield inventory management systems to vary the number of discount seats offered
on each flight in an effort to maximize revenues while remaining price
competitive with lower-cost carriers. These competitors' low-cost fares could
affect our operating results.
In recent years, the major U.S. airlines have formed marketing alliances
with other U.S. and foreign airlines. Such alliances generally provide for
"code-sharing," frequent flyer program reciprocity, coordinated scheduling of
flights to permit convenient connections and other joint marketing activities.
Such arrangements permit an airline to market flights operated by other alliance
members as its own. This increases the destinations, connections and frequencies
offered by the airline, which provide an opportunity to increase traffic on that
airline's segment of flights connecting with alliance partners. Other major U.S.
airlines have alliances or planned alliances that may be more extensive than
Northwest's alliances. We cannot predict the extent to which we will be
disadvantaged by competing alliances.
AIRCRAFT FUEL
Because fuel costs are a significant portion of our operating costs (11.9%
for 1998), significant changes in fuel costs would materially affect our
operating results. Fuel prices continue to be susceptible to, among other
factors, political events, and we cannot control near or longer-term fuel
prices. We may experience higher fuel prices or have to curtail scheduled
services due to a fuel supply shortage that may result from a disruption of oil
imports or other events. A one cent change in the cost of a gallon of fuel
(based on 1998 consumption) would impact our operating expenses by approximately
$1.6 million per month. Changes in fuel prices may have a greater impact on
Northwest than some of its competitors because of the composition of its fleet.
REGULATORY MATTERS
Airlines are subject to extensive regulatory requirements. In the last
several years, the FAA has issued a number of maintenance directives and other
regulations. These requirements impose substantial costs on airlines. We expect
to continue to incur expenditures to comply with the FAA's noise and aging
aircraft regulations.
Additional laws, regulations, taxes and airport rates and charges have been
proposed from time to time that could significantly increase the cost of airline
operations or reduce revenues. Congress and the Department of Transportation
have also proposed the regulation of airlines' actions taken in response to
their competitors' activities. Restrictions on the ownership and transfer of
airline routes and takeoff and landing slots have also been proposed. The
ability of U.S. carriers to operate international routes is subject to change
because the applicable arrangements between the United States and foreign
governments may be amended from time to time, or because appropriate slots or
facilities may not be available. We cannot assure you that laws or regulations
enacted in the future will not adversely affect us.
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<PAGE>
USE OF PROCEEDS
We will use the net proceeds from the sale of the bonds for general
corporate purposes.
CAPITALIZATION
The following table sets forth the capitalization of NWA Corp. on a
consolidated basis at June 30, 1999. The table should be read in conjunction
with NWA Corp.'s consolidated financial statements and the notes thereto
incorporated by reference in the accompanying prospectus. See "Incorporation of
Certain Documents by Reference" in the accompanying prospectus.
<TABLE>
<CAPTION>
AT JUNE 30,
1999
---------------
<S> <C>
(IN MILLIONS)
Cash, cash equivalents and unrestricted short-term investments................................... $ 618
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-------
Short-term debt:
Short-term borrowings.......................................................................... $ 12
Current maturities of long-term debt........................................................... 330
Current obligations under capital leases....................................................... 57
-------
Total short-term debt...................................................................... $ 399
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Long-term debt and capital lease obligations:
Revolving credit facilities.................................................................... $ 425
Equipment pledge notes......................................................................... 195
Secured notes due through 2009................................................................. 349
Sale-leaseback financing obligations........................................................... 223
Unsecured notes due 2004 through 2008.......................................................... 846
NWA Trust No. 1 Notes.......................................................................... 171
NWA Trust No. 2 Notes.......................................................................... 246
Long-term obligations under capital leases..................................................... 569
Term loans..................................................................................... 160
Secured notes due through 2016................................................................. 240
Aircraft notes................................................................................. 826
Other.......................................................................................... 158
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Total long-term debt and capital lease obligations......................................... 4,408
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Mandatory Redeemable Preferred Security of Subsidiary Which Holds Solely
Non-Recourse Obligation of Company............................................................. 527
Series C Preferred Stock, $.01 par value; 25,000,000 shares authorized; 5,410,794 shares issued
and outstanding................................................................................ 251
Common stockholders' equity (deficit):
Common Stock, $.01 par value; 315,000,000 shares authorized; 109,290,169 shares issued......... 1
Additional paid-in capital..................................................................... 1,432
Accumulated deficit............................................................................ (558)
Accumulated other comprehensive income......................................................... 25
Treasury stock; 27,655,323 shares.............................................................. (1,155)
-------
Total common stockholders' equity (deficit)................................................ (255)
-------
Total capitalization....................................................................... $ (4,931)
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-------
</TABLE>
S-11
<PAGE>
THE COMPANY
NWA Corp. is the indirect parent corporation of Northwest. Northwest
operates the world's fourth largest airline (as measured by strike adjusted 1998
RPMs) and is engaged in the business of transporting passengers and cargo.
Northwest's business focuses on the development of a global airline network
through its strategic assets that include:
- domestic hubs at Detroit, Minneapolis/St. Paul and Memphis;
- an extensive Pacific route system with hubs at Tokyo and Osaka;
- a trans-Atlantic alliance with KLM Royal Dutch Airlines ("KLM"), which
operates through a hub in Amsterdam and, subject to regulatory approvals,
with Alitalia which operates through hubs in Rome and Milan; and
- a global alliance with Continental.
RECENT ALLIANCE DEVELOPMENTS
During 1998, Northwest and Continental entered into a thirteen-year global
strategic commercial alliance that connects the two carriers' networks and
includes extensive code-sharing, frequent flyer program reciprocity and other
cooperative activities. The airlines will continue operating their two networks
under separate identities. The combined network will result in a domestic
presence comparable to that of either United Air Lines ("UNITED") or American
Airlines, Inc. (based on 1998 ASMs), provide Northwest access to Latin America
and increase its Pacific presence.
In December 1998, Northwest and Continental began implementing their
alliance. Since then, they have initiated code-sharing to several points in
Asia, Canada, Central America and the Caribbean and to many domestic cities.
Northwest anticipates that it will continue to add additional code-sharing with
Continental in 1999; however, further international code-sharing is subject to
certain regulatory approvals. Through increased domestic and international
connections, Northwest has increased its market share and enhanced its revenue.
Other joint activities to be implemented include airport facility coordination,
joint purchasing, certain coordinated sales programs, and the inclusion of
Continental in Northwest's trans-Atlantic joint venture alliance with KLM.
Through combined purchasing power and increased efficiencies in airport
operations, Northwest also anticipates reducing its operating costs.
In November 1998, KLM and Alitalia announced a strategic commercial alliance
and began code-sharing. KLM and Alitalia are developing a European multi-hub
network based in Amsterdam, Rome and Milan. Continental and Alitalia currently
code-share between the U.S. and Italy. In May 1999, Northwest, KLM and Alitalia
announced that Alitalia will join the Northwest/KLM trans-Atlantic joint venture
alliance. As part of this alliance, the three airlines have jointly applied to
the DOT for immunity from the U.S. antitrust laws. If consummated, the addition
of Alitalia and Continental to the Northwest/KLM trans-Atlantic joint venture
alliance would create a combination comparable in scale and scope to other
global alliances, resulting in over a 15% trans-Atlantic share (based on 1998
ASMs) with service to 48 countries.
OPERATIONS AND ROUTE NETWORK
Northwest operates substantial domestic and international route networks and
directly serves more than 150 cities in 21 countries in North America, Asia and
Europe. Northwest had more than 50.5 million enplanements and flew over 66.7
billion RPMs in 1998. Northwest began operations in 1926.
Northwest has expanded its network and provides greater service to its
customers through the use of domestic and international alliances and code-share
agreements with other airlines. Code-sharing is an agreement under which an
airline's flights can be marketed under the two-letter designator code of
S-12
<PAGE>
another airline. By coordinating flight schedules, product development and
marketing, Northwest and its alliance partners provide a global network to 90
countries and over 500 cities in the U.S., Canada, Asia, India, the South
Pacific, Mexico and the Caribbean, Europe, the Middle East, Africa and Latin
America.
DOMESTIC SYSTEM
Northwest's domestic route system serves 47 states in the U.S., the District
of Columbia, Mexico, Canada and the Caribbean. Northwest operates its domestic
system through its hubs at Detroit, Minneapolis/St. Paul and Memphis. The hub
system gathers passengers from the hub and cities surrounding the hub and
provides more frequent local and connecting service than if each route were
served on a nonstop point-to-point basis. As part of its alliance with
Continental, Northwest's passengers are able to connect through Continental's
hubs in Newark, Houston and Cleveland to additional cities not previously served
by Northwest.
Northwest's hubs provide connections to feed traffic into its ten gateway
cities for international service. Northwest operates international flights from
its Detroit and Minneapolis/St. Paul hubs as well as from Anchorage, Boston,
Honolulu, Las Vegas, Los Angeles, New York, Philadelphia, San Francisco, Seattle
and Washington D.C. In addition, KLM operates flights to Amsterdam from Memphis,
Atlanta, Chicago and Houston.
Northwest has exclusive marketing agreements with two regional carriers:
Mesaba Aviation, Inc. ("MESABA") and Express Airlines I, Inc. ("EXPRESS"), a
wholly-owned indirect subsidiary of NWA Corp. Under these agreements, these
regional carriers operate their flights under the Northwest "NW" code and are
identified as Northwest Airlink carriers. The primary purpose of these marketing
agreements is to provide more frequent service to smaller cities, which
increases connecting traffic at our hubs. Currently these carriers exclusively
serve 78 airports.
DETROIT. Northwest and Mesaba together serve over 130 cities from Detroit.
For the 12 months ended June 30, 1998, Northwest and Mesaba enplaned 66% of
originating passengers from this hub, while the next largest competitor enplaned
5%. Detroit, which is the sixth largest origination/ destination hub in the
U.S., is Northwest's largest international gateway from the continental U.S.,
offering nonstop flights to 17 foreign cities, including 20 nonstop flights to
Japan per week.
MINNEAPOLIS/ST. PAUL. Northwest and Mesaba together serve over 140 cities
from Minneapolis/St. Paul. For the 12 months ended June 30, 1998, Northwest and
Mesaba enplaned 73% of originating passengers from this hub, while the next
largest competitor enplaned 5%. Minneapolis/St. Paul is the eleventh largest
origination/destination hub in the U.S.
MEMPHIS. Northwest, Express and Mesaba together serve over 80 cities from
Memphis. For the 12 months ended June 30, 1998, Northwest enplaned 56% of
originating jet passengers from this hub, while the next largest competitor
enplaned 23%.
Northwest has additional marketing agreements with Alaska Airlines, Horizon
Air, Trans States Airlines, Inc., America West Airlines, Inc., and Big Sky
Airlines for code-sharing on some of these carriers' routes in the western U.S.
The primary purpose of the arrangements with these airlines is to provide
increased connections between Northwest's route network and their route networks
to generate increased traffic into Northwest's domestic system and international
gateways to the Pacific.
Northwest and Mesaba together serve seven cities in Mexico, 12 cities in
Canada and five cities in the Caribbean. Through its alliance with Continental,
Northwest has begun code-sharing on flights to Canada, Central America and the
Caribbean and, subject to foreign governmental approval, plans to implement
code-sharing to Mexico. Continental serves more destinations to Mexico and
Central America than any other U.S. airline.
S-13
<PAGE>
INTERNATIONAL SYSTEM
Northwest has a comprehensive route network to the Pacific, providing
extensive service to Japan and China, and also serves destinations to Europe and
India. The Company has joint marketing alliances and code-share agreements with
other foreign carriers that allow it to expand its service and enter additional
markets with minimal capital outlay.
PACIFIC. Northwest has served the Pacific market since 1947 and has one of
the world's largest Pacific route networks, with over 470 weekly flights.
Northwest's Pacific operations are concentrated at its Tokyo hub. Northwest has
the largest slot portfolio of any non-Japanese airline at Tokyo's
slot-constrained Narita International Airport, with 316 weekly takeoff and
landing slots. Northwest uses its route certificate and slot portfolio to
operate a network linking eight U.S. gateways and ten Asian and Micronesian
destinations via Tokyo. Northwest has also developed a hub at Osaka's Kansai
airport, where it holds 108 takeoff and landing slots. Northwest currently
operates 49 weekly departures from Osaka, which includes service between five
U.S. gateways and three Asian destinations. Effective October 31, 1999 the
Company will reduce the number of weekly flights between Seattle and Osaka from
seven to four.
Northwest provides passenger service between various points in the U.S. and
Japan and operates flights between Japan and Korea, Taiwan, the Philippines,
Thailand, Singapore, Northern Mariana Islands, and China, including Hong Kong.
Northwest's Japan presence results from the 1952 U.S.-Japan bilateral aviation
agreement, as amended, which establishes rights to carry traffic between Japan
and the U.S. and extensive "fifth freedom" rights between Japan and India, the
South Pacific and other Asian destinations. "Fifth freedom" rights allow
Northwest to operate service from any gateway in Japan to points beyond Japan
and carry Japanese originating passengers. Northwest and United are the only
U.S. passenger carriers that have "fifth freedom" rights from Japan. On March
14, 1998, the U.S. and Japan expanded their aviation agreement. Primary benefits
of the new agreement for Northwest included unlimited rights and frequencies to
operate between any point in the U.S. and Japan and the ability to code-share
with Japanese carriers. The agreement confirmed and expanded Northwest's "fifth
freedom" rights and the U.S. received assurances that Northwest will retain all
its weekly takeoff and landing slots at Tokyo and Osaka and will have access to
new slots as they become available. In 1998, the Company added nonstop service
between Detroit and Nagoya, Las Vegas and Tokyo, Anchorage and Tokyo, and Nagoya
and Manila. In 1999, Northwest began nonstop service between Kaohsiung, Taiwan
and Osaka and Kuala Lumpur, Malaysia and Osaka.
Northwest continues to expand its Pacific presence through additional
alliances. Northwest is currently implementing an alliance with Japan Air
System, which has approximately 25% of Japan's domestic traffic. The alliance
includes coordinated flight connections, traffic servicing, reciprocal frequent
flyer programs, code-sharing and other cooperative activities. Northwest also
has code-sharing and marketing agreements with Hawaiian Airlines and Pacific
Island Aviation.
In October 1998, the Company began code-sharing with Air China as part of a
minimum four-year alliance entered into in May 1998. The alliance connects the
two carriers' networks and also includes frequent flyer program reciprocity and
joint marketing. Northwest and Air China currently provide 17 flights each week
between the U.S. and China, including five Northwest nonstop flights between
Detroit and Beijing. This is the only regularly scheduled nonstop service
between the U.S. and China's capital operated by a U.S. carrier. In June 1999,
Northwest was tentatively awarded four additional flights under the new
U.S.-China aviation agreement, with two more effective in April 2000. Northwest
alliance partners, Alaska Airlines, America West Airlines and Continental, have
entered into alliance agreements with Air China. Northwest and its partners
collectively provide the most nonstop and one-stop service between the U.S. and
China.
On February 2, 1999, Northwest and Malaysia Airlines entered into a
Memorandum of Understanding ("MOU") designed to lead to an operational and
marketing alliance. The MOU
S-14
<PAGE>
provides for coordinated flight connections, code-sharing, frequent flyer
program reciprocity and other coordinated activities.
ATLANTIC. Northwest provides passenger service from seven U.S. gateway
cities to Amsterdam, Paris, Frankfurt, London (Gatwick) and Oslo with 105 weekly
nonstop flights. Northwest also provides service to Mumbai and Delhi, India from
Amsterdam. Daily nonstop service from Minneapolis/St. Paul to Amsterdam began in
April 1999. Effective October 30, 1999 the Company will suspend its
Minneapolis/St. Paul-Oslo and Philadelphia-Amsterdam service.
Northwest and KLM operate their trans-Atlantic flights pursuant to a
commercial and operational joint venture alliance. Northwest and KLM have
expanded their trans-Atlantic presence by operating joint service between 13
U.S. cities and Amsterdam, KLM's hub airport. Code-sharing between Northwest and
KLM has been implemented on flights to 61 European, eight Middle Eastern, seven
African, three Asian and over 185 U.S. cities. The Northwest/KLM joint venture
alliance benefits from antitrust immunity that facilitates coordinated pricing,
scheduling, product development and marketing.
In September 1997, Northwest and KLM expanded their joint venture alliance
for a minimum term of 13 years and expanded their areas of cooperation to
include services between Europe and Canada, India and Mexico. In addition, the
two companies plan to increase the level of cooperation between their respective
cargo divisions and will explore extending their alliance to include additional
partners and to further develop strategies for joint marketing and product
development. In February 1998, a leading aviation trade magazine, Air Transport
World, awarded its "1997 Airline of the Year" honor to the Northwest/KLM joint
venture alliance.
To further enhance Northwest's service in Europe, India, and Southeast Asia,
Northwest also has marketing agreements with Eurowings, Braathens, KLM uk, KLM
exel, Jet Airways Private Ltd., Kenya Airways and Martinair. KLM has similar
agreements with Air Alps Aviation, Air Engiadina of Switzerland, CSA Czech,
Regionale Air of France and Cyprus Airways. Northwest expects to enter into
similar agreements with these airlines. Northwest has a marketing agreement with
Business Express Airlines for code-sharing in the Boston area to feed its
trans-Atlantic and domestic route network.
In September 1992, the U.S. and the Netherlands entered into an "open-skies"
bilateral aviation treaty which authorizes the airlines of each country to
provide international air transportation between any U.S.-Netherlands city pair
and to operate connecting service to destinations in other countries. Based
primarily on the open-entry market created by this treaty and the limited
competitive overlap between route systems, Northwest and KLM petitioned the
Department of Transportation for joint immunity from the U.S. antitrust laws
and, under conditions imposed by the Department of Transportation, were granted
such immunity in January 1993. Northwest and KLM resubmitted their alliance
agreement to the Department of Transportation in January 1998. The European
Commission ("EC") has commenced a review of all trans-Atlantic airline
alliances, including Northwest/KLM. The EC is considering imposing certain
regulatory conditions that may restrict the areas of permissible cooperation.
LATIN AMERICA. Through Northwest's alliance with Continental, Northwest
expects to increase its presence in South America. Subject to foreign
governmental approval, Northwest and Continental will begin code sharing to
South America. Continental flies to eight cities in South America and offers
additional connecting service through alliances with foreign carriers.
CARGO
In 1998, cargo accounted for 7% of the Company's operating revenues, with
the majority of its cargo revenues originating in or destined for Asia. Through
its Tokyo and Anchorage cargo hubs, Northwest serves most major air freight
markets between the U.S. and the Pacific with eight Boeing 747 freighter
aircraft. Northwest is one of only two U.S. passenger airlines to operate a
dedicated
S-15
<PAGE>
all-cargo freighter fleet. In May 1999, Northwest acquired a ninth freighter,
which is scheduled to enter service in September 1999.
HOLDING COMPANY REORGANIZATION
On November 20, 1998 NWA Corp. effected a holding company reorganization. As
a result, Northwest Airlines Holding Corporation (formerly known as Northwest
Airlines Corporation and, prior to the reorganization, the publicly traded
holding company, "OLD NWA CORP.") became a direct wholly-owned subsidiary of NWA
Corp. NWA Corp. is now the publicly traded holding company, which owns directly
Old NWA Corp. and indirectly the holding and operating subsidiaries of Old NWA
Corp. References in this prospectus supplement to NWA Corp. for time periods
prior to November 20, 1998 refer to Old NWA Corp.
S-16
<PAGE>
DESCRIPTION OF THE BONDS AND PARENT GUARANTY
THE FOLLOWING DESCRIPTION OF THE PARTICULAR TERMS OF THE BONDS OFFERED
(REFERRED TO IN THE ACCOMPANYING PROSPECTUS AS THE "SENIOR DEBT SECURITIES")
SUPPLEMENTS THE DESCRIPTION OF THE GENERAL TERMS AND PROVISIONS OF SENIOR DEBT
SECURITIES SET FORTH IN THE ACCOMPANYING PROSPECTUS TO WHICH DESCRIPTION YOU
SHOULD REFER. YOU SHOULD REFER TO THE PROSPECTUS AND THE SENIOR INDENTURE UNDER
WHICH THE BONDS WILL BE ISSUED FOR THE DEFINITIONS OF CERTAIN CAPITALIZED TERMS
USED IN THIS PROSPECTUS SUPPLEMENT.
GENERAL
The bonds will mature on August 15, 2039, referred to as the "MATURITY
DATE," and will be limited in aggregate principal amount to $143,750,000 (if the
Underwriters exercise their over-allotment option). The bonds will be issued as
a single series of Senior Debt Securities under the Senior Indenture, dated as
of March 1, 1997, among Northwest, Old NWA Corp. and State Street Bank and Trust
Company, as trustee (the "TRUSTEE"), as supplemented by the Supplemental
Indenture, dated as of November 20, 1998, among Northwest, NWA Corp., Old NWA
Corp., and the Trustee and the Second Supplemental Indenture, dated as of
February 25, 1999, among Northwest, NWA Corp., Old NWA Corp. and the Trustee (as
so supplemented, the "SENIOR INDENTURE"). The bonds will be issued in fully
registered book-entry form only, without coupons, in denominations of $25 and
integral multiples thereof. Each bond will bear interest at the rate per annum
shown on the cover page of this prospectus supplement from and including August
27, 1999 or from and including the most recent Interest Payment Date to which
interest has been paid or provided for, payable quarterly on November 15,
February 15, May 15 and August 15 of each year, commencing November 15, 1999
(each, referred to as an "INTEREST PAYMENT DATE"), to the person in whose name
the bond is registered, referred to as the "HOLDER," at the close of business on
the date fifteen days prior to such Interest Payment Date, referred to as the
"REGULAR RECORD DATE."
If any Interest Payment Date or the Maturity Date falls on a day that is not
a Business Day, the interest or principal payment shall be made on the next day
that is a Business Day, and no interest on such payment shall accrue for the
period from and after the Interest Payment Date or the Maturity Date. Interest
on the bonds will be computed on the basis of a 360-day year of twelve 30-day
months.
TRADING CHARACTERISTICS
The bonds are expected to trade at a price that takes into account the
value, if any, of accrued but unpaid interest; thus, purchasers will not pay and
sellers will not receive accrued and unpaid interest with respect to the bonds
except as included in the trading price thereof. Any portion of the trading
price of a bond received that is attributable to accrued interest will be
treated as ordinary interest income for federal income tax purposes and will not
be treated as part of the amount realized for purposes of determining gain or
loss on the disposition of the bonds.
OPTIONAL REDEMPTION
Except as described below under "--Redemption for Tax Reasons," the bonds
will not be redeemable prior to August 27, 2004. Thereafter, the bonds will be
subject to redemption on any date at the option of Northwest, as a whole or from
time to time in part, upon not less than 30 nor more than 60 days' notice, at a
redemption price equal to 100% of the principal amount redeemed plus accrued and
unpaid interest to the date of redemption.
S-17
<PAGE>
REDEMPTION FOR TAX REASONS
If as a result of:
(A) any actual or proposed change in or amendment to the laws (or any
regulations or rulings promulgated thereunder) of the United States, or any
change in the application, official interpretation or enforcement of such
laws, regulations or rulings;
(B) any action taken by a taxing authority, which action is generally
applied or is taken with respect to Northwest;
(C) a decision rendered by a court of competent jurisdiction in the
United States, whether or not such decision was rendered with respect to
Northwest; or
(D) a technical advice memorandum or letter ruling or other
administrative pronouncement issued by the National Office of the United
States Internal Revenue Service, on substantially the same facts as those
pertaining to Northwest;
which change, amendment, action, decision, memorandum, letter ruling or
pronouncement becomes effective, is proposed to become effective or is issued on
or after August 27, 1999, there is a substantial likelihood that Northwest will
not be entitled to deduct currently for United States federal income tax
purposes the full amount of interest accrued in respect of the bonds, Northwest
at its option may redeem the bonds in whole, but not in part, at any time at a
redemption price equal to 100% of the principal amount of the bonds, together
with interest accrued and unpaid to the date fixed for redemption. Notice of
such redemption of the bonds will be given to the holders of the bonds not more
than 60 nor fewer than 30 days prior to the date fixed for redemption.
GUARANTY
NWA Corp. will unconditionally guarantee on a senior basis the due and
punctual payment of principal of and interest on the bonds, when and as the same
shall become due and payable, whether at the Maturity Date, by declaration of
acceleration or otherwise.
BOOK-ENTRY SYSTEMS, FORM AND DELIVERY
The bonds will be represented by one or more Global Securities registered in
the name of Cede & Co., the nominee of The Depository Trust Company, as
Depositary, and the provisions set forth under "Description of Debt
Securities--Global Debt Securities" in the accompanying prospectus, as
supplemented hereby, will apply to the bonds.
The Depositary is a limited-purpose trust company organized under the New
York Banking Law, a "banking organization" within the meaning of the New York
Banking Law, a member of the Federal Reserve System, a "clearing corporation"
within the meaning of the New York Uniform Commercial Code, and a "clearing
agency" registered pursuant to the provisions of Section 17A of the Securities
Exchange Act of 1934. The Depositary holds securities that its participants,
referred to as the "Participants," deposit with the Depositary. The Depositary
also facilitates the settlement among Participants of securities transactions,
such as transfers and pledges, in deposited securities through electronic
computerized book-entry changes in Participants' accounts, thereby eliminating
the need for physical movement of securities certificates. Direct participants,
referred to as the "Direct Participants," include securities brokers and
dealers, banks, trust companies, clearing corporations and certain other
organizations. The Depositary is owned by a number of its Direct Participants
and by The New York Stock Exchange, Inc., the American Stock Exchange, Inc., and
the National Association of Securities Dealers, Inc. Access to the Depositary's
system is also available to others such as securities brokers and dealers, banks
and trust companies that clear through, or maintain a custodial relationship
with a Direct Participant, either directly or indirectly, referred to as the
"Indirect Participants." The rules
S-18
<PAGE>
applicable to the Depositary and its Participants are on file with the
Securities and Exchange Commission.
Purchases of the bonds under the Depositary's system must be made by or
through Direct Participants, which will receive a credit for the bonds on the
Depositary's records. The ownership interest of each actual purchaser of each
bond, referred to as a "Beneficial Owner," is in turn to be recorded on the
Direct and Indirect Participants' respective records. Beneficial Owners will not
receive written confirmation from the Depositary of their purchase, but
Beneficial Owners are expected to receive written confirmations providing
details of the transaction, as well as periodic statements of their holdings,
from the Direct or Indirect Participant through which the Beneficial Owner
entered into the transaction. Transfers of ownership interest in the bonds are
to be accomplished by entries made on the books of Participants acting on behalf
of Beneficial Owners. Beneficial Owners will not receive certificates
representing their ownership interest in bonds except in the event that use of
the book-entry system for the bonds is discontinued.
To facilitate subsequent transfers, all bonds deposited by Participants with
the Depositary will be registered in the name of Cede & Co. The deposit of the
bonds with the Depositary and their registration in the name of Cede & Co.
effect no change in beneficial ownership. The Depositary has no knowledge of the
actual Beneficial Owners of the bonds; the Depositary's records reflect only the
identity of the Direct Participants to whose accounts such bonds are credited,
which may or may not be the Beneficial Owners. The Participants will remain
responsible for keeping account of their holdings on behalf of their customers.
Conveyance of notices and other communications by the Depositary to Direct
Participants, by Direct Participants to Indirect Participants, and by Direct
Participants and Indirect Participants to Beneficial Owners will be governed by
arrangements among them, subject to any statutory or regulatory requirements as
may be in effect from time to time.
Neither the Depositary nor Cede & Co. will consent or vote with respect to
the bonds. Under its usual procedures, the Depositary mails an omnibus proxy,
referred to as an "Omnibus Proxy," to Northwest as soon as possible after the
record date. The Omnibus Proxy assigns Cede & Co.'s consenting or voting rights
to those Direct Participants to whose accounts the bonds are credited on the
record date (identified in a listing attached to the Omnibus Proxy).
Principal and interest payments on the bonds will be made to Cede & Co. The
Depositary's practice is to credit Direct Participants' accounts on the relevant
payment date in accordance with their respective holdings shown on the
Depositary's records unless the Depositary has reason to believe that it will
not receive payment on such payment date. Payments by Participants to Beneficial
Owners will be governed by standing instructions and customary practices, as is
the case with securities for the accounts of customers in bearer form or
registered in "street-name," and will be the responsibility of such Participant
and not of the Depositary, the underwriters, or Northwest, subject to any
statutory or regulatory requirements as may be in effect from time to time.
Payment of principal and interest to Cede & Co. is the responsibility of
Northwest or the respective trustees. Disbursement of such payments to Direct
Participants is the responsibility of the Depositary, and disbursement of such
payments to the Beneficial Owners is the responsibility of Direct and Indirect
Participants.
The Depositary may discontinue providing its services as securities
depository with respect to the bonds at any time by giving reasonable notice to
Northwest. Under such circumstances and in the event that a successor securities
depository is not obtained, certificates for the bonds are required to be
printed and delivered. In addition, Northwest may decide to discontinue use of
the system of book-entry transfers through the Depositary (or a successor
securities depository). In that event, certificates will be printed and
delivered.
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<PAGE>
Northwest will not have any responsibility or obligation to Participants or
the persons for whom they act as nominees with respect to the accuracy of the
records of the Depositary, its nominee or any Direct or Indirect Participant
with respect to any ownership interest in the bonds, or with respect to payments
to or providing of notice for the Direct Participants, the Indirect Participants
or the Beneficial Owners.
The Depositary's management is aware that some computer applications,
systems and the like for processing data that are dependent upon calendar dates,
including dates before, on and after January 1, 2000, may encounter "Year 2000
problems." The Depositary has informed its Participants and other members of the
financial community that it has developed and is implementing a program so that
its security holders, book-entry deliveries and settlements of trades within the
Depositary, continue to function appropriately. This program includes a
technical assessment and a remediation plan, each of which is complete. In
addition, the Depositary's plan includes a testing phase, which is expected to
be completed within appropriate time frames.
However, the Depositary's ability to perform properly its services is also
dependent upon other parties, including but not limited to issuers and their
agents, as well as third party vendors from whom the Depositary licenses
software and hardware, and third party vendors on whom the Depositary relies for
information or the provision of services, including telecommunication and
electrical utility service providers, among others. The Depositary has informed
its Participants and other members of the financial community that it is
contacting, and will continue to contact, third party vendors from whom the
Depositary acquires services to (1) impress upon them the importance of such
services being Year 2000 compliant and (2) determine the extent of their efforts
for year 2000 remediation (and, as appropriate, testing) of their services. In
addition, the Depositary is in the process of developing such contingency plans
as it deems appropriate.
The information contained in this prospectus supplement under the caption
"Description of the Bonds and Parent Guaranty--Book-Entry System, Form and
Delivery" concerning the Depositary and the Depositary's book-entry system has
been obtained from sources that Northwest believes to be reliable. Neither
Northwest, the Trustee nor the underwriters, dealers or agents take
responsibility for the accuracy or completeness of such information.
S-20
<PAGE>
UNDERWRITERS
Subject to the terms and conditions set forth in the Underwriting Agreement
dated the date hereof (the "UNDERWRITING AGREEMENT") among NWA Corp., Northwest
and the Underwriters listed below (the "UNDERWRITERS"), Northwest has agreed to
sell to each of the Underwriters, and each of the Underwriters has severally
agreed to purchase the principal amount of bonds set forth opposite its name
below:
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT
UNDERWRITER OF BONDS
- ---------------------------------------------------------------------------- ----------------
<S> <C>
Morgan Stanley & Co. Incorporated........................................... $ 14,875,000
Goldman, Sachs & Co......................................................... 14,800,000
Merrill Lynch, Pierce, Fenner & Smith
Incorporated...................................................... 14,800,000
PaineWebber Incorporated.................................................... 14,800,000
Prudential Securities Incorporated.......................................... 14,800,000
Salomon Smith Barney Inc.................................................... 14,800,000
Banc of America Securities LLC.............................................. 9,250,000
U.S. Bancorp Piper Jaffray Inc.............................................. 9,250,000
ABN AMRO Incorporated....................................................... 750,000
A.G. Edwards & Sons, Inc.................................................... 750,000
Bear, Stearns & Co. Inc..................................................... 750,000
Dain Rauscher Incorporated.................................................. 750,000
Deutsche Bank Securities Inc................................................ 750,000
Everen Securities, Inc...................................................... 750,000
First Union Capital Markets Corp............................................ 750,000
Schroder & Co. Inc.......................................................... 750,000
SG Cowen Securities Corporation............................................. 750,000
Advest, Inc................................................................. 375,000
Robert W. Baird & Co. Incorporated.......................................... 375,000
BB&T Capital Markets, A Division of Scott & Stringfellow.................... 375,000
J.C. Bradford & Co.......................................................... 375,000
Crowell, Weedon & Co........................................................ 375,000
Davenport & Company LLC..................................................... 375,000
Fahnestock & Co. Inc........................................................ 375,000
Ferris, Baker Watts, Incorporated........................................... 375,000
Fifth Third Securities, Inc................................................. 375,000
First Albany Corporation.................................................... 375,000
Gibraltar Securities Co..................................................... 375,000
Gruntal & Co., L.L.C........................................................ 375,000
Janney Montgomery Scott Inc................................................. 375,000
John G. Kinnard and Company, Incorporated................................... 375,000
Legg Mason Wood Walker, Incorporated........................................ 375,000
Mesirow Financial, Inc...................................................... 375,000
Miller, Johnson & Kuehn, Incorporated....................................... 375,000
Morgan Keegan & Company, Inc................................................ 375,000
Parker/Hunter Incorporated.................................................. 375,000
Pershing/A Division of Donaldson, Lufkin & Jenrette......................... 375,000
Raymond James & Associates, Inc............................................. 375,000
The Robinson-Humphrey Company, LLC.......................................... 375,000
Roney & Co.................................................................. 375,000
Southwest Securities, Inc................................................... 375,000
Sterne, Agee & Leach, Inc................................................... 375,000
Stifel, Nicolaus & Company, Incorporated.................................... 375,000
Tucker Anthony Incorporated................................................. 375,000
Wachovia Securities, Inc.................................................... 375,000
Wedbush Morgan Securities................................................... 375,000
----------------
Total................................................................... $ 125,000,000
----------------
----------------
</TABLE>
S-21
<PAGE>
The Underwriting Agreement provides that the obligation of the several
Underwriters to pay for and accept delivery of the bonds is subject to the
approval of certain legal matters by their counsel and to certain other
conditions. The Underwriters are obligated to take and pay for all of the bonds
if any are taken.
The Underwriters initially propose to offer part of the bonds directly to
the public at the public offering price set forth on the cover page hereof and
part to certain dealers at such price less a concession not in excess of $0.50
per $25 bond. Any Underwriter may allow, and any such dealer may reallow, a
concession to certain other dealers not to exceed $0.45 per $25 bond. After the
bonds are released to the public, the offering price and other selling terms may
from time to time be varied by the Underwriters named on the cover page of this
prospectus supplement.
Northwest has granted the Underwriters an option, exercisable until
September 17, 1999 to purchase up to an additional $18,750,000 aggregate
principal amount of bonds at the public offering price set forth on the cover
page of this prospectus supplement. The Underwriters may exercise the option
solely for the purpose of covering over-allotments, if any, made in connection
with the offering of the bonds. To the extent the option is exercised, each
Underwriter will become obligated to purchase approximately the same percentage
of the additional bonds as the Underwriter purchased in the original offering.
Northwest and NWA Corp. have agreed to indemnify the several Underwriters
against certain liabilities, including liabilities under the Securities Act of
1933, as amended.
The bonds are a new issue of securities with no established trading market.
The bonds are expected to be listed on the New York Stock Exchange, subject to
official notice of issuance. Trading of the bonds on the New York Stock Exchange
is expected to commence within a 30-day period after the initial delivery of the
bonds. Northwest has been advised by the Underwriters that they intend to make a
market in the bonds, however, they are not obligated to do so and may
discontinue the market making at any time without notice. No assurance can be
given as to the liquidity of the trading market for the bonds.
In order to facilitate the offering of the bonds, the Underwriters may
engage in transactions that stabilize, maintain or otherwise affect the price of
the bonds. Specifically, the Underwriters may overallot in connection with the
offering, creating a short position in the bonds for their own account. In
addition, to cover overallotments or to stabilize the price of the bonds, the
Underwriters may bid for, and purchase, the bonds in the open market. Finally,
the Underwriters syndicate may reclaim selling concessions allowed to an
Underwriter or a dealer for distributing the bonds in this offering, if the
syndicate repurchases previously distributed bonds in transactions to cover
syndicate short positions, in stabilization transactions or otherwise. Any of
these activities may stabilize or maintain the market prices of the bonds above
independent market levels. The Underwriters are not required to engage in these
activities, and may end any of these activities at any time.
Certain of the Underwriters and their respective affiliates have, from time
to time, performed various investment or commercial banking and financial
advisory services for the Company.
S-22
<PAGE>
LEGAL MATTERS
The validity of the bonds offered hereby will be passed upon for NWA Corp.
and Northwest by Simpson Thacher & Bartlett, New York, New York, and for the
Underwriters by Shearman & Sterling, New York, New York. In rendering its
opinion, Simpson Thacher & Bartlett will rely as to matters of Minnesota law on
an opinion from the Office of the General Counsel of NWA Corp. and Northwest.
EXPERTS
Ernst & Young LLP, independent auditors, have audited NWA Corp.'s
consolidated financial statements and schedule included in NWA Corp.'s Annual
Report on Form 10-K for the year ended December 31, 1998, as set forth in their
report, which is incorporated by reference in the prospectus accompanying this
prospectus supplement. NWA Corp.'s consolidated financial statements and
schedule are incorporated by reference in reliance on Ernst & Young LLP's
report, given on their authority as experts in accounting and auditing.
S-23
<PAGE>
PROSPECTUS
$1,500,000,000
NORTHWEST AIRLINES, INC.
DEBT SECURITIES AND WARRANTS TO PURCHASE DEBT SECURITIES
------------------
Payment of Principal, Premium, if any, and Interest Fully and Unconditionally
Guaranteed by
NORTHWEST AIRLINES CORPORATION
---------------
Northwest Airlines, Inc. may from time to time offer its debt securities and
warrants to purchase debt securities. The debt securities will be fully and
unconditionally guaranteed by Northwest Airlines Corporation, the indirect
parent of Northwest Airlines, Inc.
When we decide to sell a particular series of securities, we will provide
specific terms of the offered securities in a prospectus supplement. You should
read this prospectus and any prospectus supplement carefully before you invest.
------------------------
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
adequacy or accuracy of this prospectus. Any representation to the contrary is a
criminal offense.
------------------------
The date of this prospectus is June 7, 1999
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
About this Prospectus...................................................................................... 2
Incorporation of Certain Documents by Reference............................................................ 3
Disclosure Regarding Forward-looking Statements............................................................ 3
The Company................................................................................................ 4
Use of Proceeds............................................................................................ 4
Ratio of Earnings to Fixed Charges......................................................................... 4
Description of Debt Securities............................................................................. 5
Description of Warrants.................................................................................... 18
Plan of Distribution....................................................................................... 20
Legal Opinions............................................................................................. 21
Experts.................................................................................................... 21
</TABLE>
YOU SHOULD RELY ONLY ON THE INFORMATION PROVIDED IN THIS PROSPECTUS AND ANY
PROSPECTUS SUPPLEMENT, INCLUDING THE INFORMATION INCORPORATED BY REFERENCE. WE
HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH DIFFERENT INFORMATION. NORTHWEST
AIRLINES, INC. WILL OFFER TO SELL THE SECURITIES AND SEEK OFFERS TO BUY THE
SECURITIES, ONLY IN JURISDICTIONS WHERE OFFERS AND SALES ARE PERMITTED. THE
INFORMATION CONTAINED IN OR INCORPORATED BY REFERENCE IN THIS PROSPECTUS IS
ACCURATE ONLY AS OF THE DATE OF THIS PROSPECTUS, REGARDLESS OF THE TIME OF
DELIVERY OF THIS PROSPECTUS OR OF ANY SALES OF THE SECURITIES.
ABOUT THIS PROSPECTUS
This prospectus is part of registration statements that we filed with the
Securities and Exchange utilizing a "shelf" registration process. Under this
shelf process, we may sell any combination of debt securities and warrants to
purchase debt securities described in this prospectus in one or more offerings
up to a total dollar amount of $1,500,000,000 or the equivalent of this amount
in foreign currencies or foreign currency units.
This prospectus provides you with a general description of the securities we
may offer. Each time we offer securities, we will provide you with a prospectus
supplement that will describe the specific amounts, prices and terms of the
offered securities. The prospectus supplement may also add, update or change
information contained in this prospectus. You should read both this prospectus
and any prospectus supplement together with additional information described
below under "Incorporation of Certain Documents by Reference."
This prospectus does not contain all of the information in the registration
statements. Statements we make in this prospectus about the contents of any
contract, agreement or other document are not necessarily complete. If that
contract, agreement or other document has been filed as an exhibit to the
registration statements, we refer you to the exhibit for a more complete
description. The information in this prospectus is accurate only as of the date
of this prospectus, regardless of the time of delivery of this prospectus or any
sale of the securities.
In this prospectus, "Northwest" refers to Northwest Airlines, Inc., "NWA
Corp." to Northwest Airlines Corporation and the "Company," "we," "us" or "our"
to NWA Corp. and its consolidated subsidiaries.
2
<PAGE>
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
NWA Corp. files annual, quarterly and current reports, proxy statements and
other information with the SEC. You may read and copy any document we file at
the SEC's public reference rooms in Washington, D.C., New York, New York and
Chicago, Illinois. Please call the SEC at 1-800-SEC-0330 for further information
on the public reference rooms. Our SEC filings are also available to the public
over the internet at the SEC's web site at http://www.sec.gov. Northwest is not
required to file separate reports, proxy and information statements or other
information with the SEC pursuant to the Securities Exchange Act of 1934.
Instead, we have provided information with respect to Northwest, to the extent
required, in filings made by NWA Corp.
The SEC allows us to "incorporate by reference" the information we file with
them, which means that we can disclose important information to you by referring
you to those documents. The information incorporated by reference is considered
to be a part of this prospectus, and information that we file later with the SEC
will automatically update and supersede this information. We incorporate by
reference the documents listed below and any future filings made with the SEC
under Sections 13(a), 13(c), 14, or 15(d) of the Securities Exchange Act of 1934
until we complete our offering of the securities:
- Annual Report on Form 10-K for the year ended December 31, 1998;
- Quarterly Report on Form 10-Q for the quarter ended March 31, 1999; and
- Current Reports on Form 8-K filed on January 22, 1999, February 24, 1999
and April 19, 1999.
You may request a copy of these filings (other than exhibits to them) at no
cost, by writing or telephoning us at the following address:
Secretary's Office
Northwest Airlines Corporation
5101 Northwest Drive, Dept. A1180
St. Paul, Minnesota 55111-3034
Telephone: (612) 726-2111
DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. These forward-looking statements are subject to a number
of risks and uncertainties, all of which are difficult to predict and many of
which are beyond the Company's control. Forward-looking statements are typically
identified by the words "may," "will," "believe," "expect," "anticipate,"
"intend," "estimate" and similar expressions. Actual results could differ
materially from those contemplated by these forward-looking statements as a
result of a number of factors. It is not reasonably possible to itemize all of
the many factors and specific events that could affect the outlook of an airline
operating in the global economy. Some factors that could significantly impact
expected capacity, load factors, revenues, expenses and cash flows include the
airline pricing environment, fuel costs, labor negotiations both at the Company
and other carriers, low-fare carrier expansion, capacity decisions of other
carriers, actions of the U.S. and foreign governments, foreign currency exchange
rate fluctuation, inflation, the general economic environment in the U.S. and
other regions of the world and other factors discussed herein.
In light of these risks and uncertainties, there can be no assurance that
the results and events contemplated by the forward-looking statements contained
in this prospectus will in fact be realize. Potential investors are cautioned
not to place undue reliance on these forward-looking statements. The Company
does not undertake any obligation to update or revise any forward-looking
statements. All subsequent written or oral forward-looking statements
attributable to the Company or persons acting on behalf of the Company are
expressly qualified in their entirety by the factors described above.
3
<PAGE>
THE COMPANY
Northwest, the principal wholly-owned indirect subsidiary of NWA Corp.,
operates the world's fourth largest airline (as measured by 1997 revenue
passenger miles ("RPMs")) and engages principally in commercial transportation
of passengers and cargo. Northwest's business focuses on the development of a
global airline network through its strategic assets that include:
- domestic hubs at Detroit, Minneapolis/St. Paul and Memphis;
- an extensive Pacific route system with hubs at Tokyo and Osaka;
- a transatlantic alliance with KLM Royal Dutch Airlines which operates
through a hub in Amsterdam and, subject to regulatory approvals, with
Alitalia which operates through hubs in Rome and Milan; and
- a global alliance with Continental Airlines, Inc.
Northwest operates substantial domestic and international route networks and
directly serves more than 150 cities in 21 countries in North America, Asia and
Europe. Northwest had more than 50.5 million enplanements and flew over 66.7
billion RPMs in 1998. Northwest began operations in 1926.
On November 20, 1998, NWA Corp. effected a holding company reorganization.
As a result, Northwest Airlines Holdings Corporation (formerly known as
Northwest Airlines Corporation and, prior to the reorganization, the publicly
traded holding company, "Old NWA Corp.") became a direct wholly-owned subsidiary
of NWA Corp. NWA Corp. is now the publicly traded holding company, which owns
directly Old NWA Corp. and indirectly the holding and operating subsidiaries of
Old NWA Corp. References in this prospectus to NWA Corp. for time periods prior
to November 20, 1998 refer to Old NWA Corp.
Our principal executive offices are located at 2700 Lone Oak Parkway, Eagan,
Minnesota 55121; our mailing address is 5101 Northwest Drive, St. Paul,
Minnesota 55111-3034 and our telephone number is (612) 726-2111.
USE OF PROCEEDS
Unless the applicable prospectus supplement indicates otherwise, net
proceeds from the sale of the offered securities will be added to Northwest's
working capital. We will use the proceeds for general corporate purposes,
including the repayment of outstanding indebtedness and financing of capital
expenditures. We do not currently expect to discharge any indebtedness or
finance any capital expenditures with the proceeds of the sale of the offered
securities.
RATIO OF EARNINGS TO FIXED CHARGES
We have set forth below the ratio of earnings to fixed charges for NWA Corp.
and its consolidated subsidiaries for the periods indicated. The ratio of
earnings to fixed charges represents the number of times that fixed charges were
covered by earnings. In computing the ratio, earnings represent consolidated
earnings (loss) before income taxes, cumulative effect of accounting change and
fixed charges (excluding capitalized interest). Fixed charges consist of
interest expense (including capitalized interest), one-third of rental expense,
which is considered representative of the interest factor, and amortization of
debt discount and expense.
<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
- ------------------------------------------------------- ----------------------
<S> <C> <C> <C> <C> <C> <C>
1994 1995 1996 1997 1998 1998 1999
- --------- --------- --------- --------- ----- --------- -----
1.88..... 1.90 2.74 3.05 (a) 2.01 (b)
</TABLE>
- ------------------------
(a) Earnings were inadequate to cover fixed charges by $452 million for the year
ended December 31, 1998.
(b) Earnings were inadequate to cover fixed charges by $69 million for three
months ended March 31, 1999.
4
<PAGE>
DESCRIPTION OF DEBT SECURITIES
The debt securities offered pursuant to this prospectus ("Debt Securities")
may be issued as unsecured and unsubordinated debt securities ("Senior Debt
Securities") or as unsecured and subordinated debt securities ("Senior
Subordinated Debt Securities"). The following description of the terms of the
Debt Securities summarizes certain general terms and provisions of the Debt
Securities to which any prospectus supplement may relate. The applicable
prospects supplement will describe the particular terms and provisions of the
Debt Securities offered by that prospectus supplement and the application of
these general terms and provisions to them.
The Senior Debt Securities will be issued under an Indenture among
Northwest, as issuer, NWA Corp., as guarantor, Old NWA Corp. and State Street
Bank and Trust Company, as trustee (the "Trustee") (the "Senior Indenture"). The
Senior Subordinated Debt Securities are to be issued under an Indenture among
Northwest, as issuer, NWA Corp., as guarantor, and the Trustee (the
"Subordinated Indenture"). We refer to the Senior Indenture and the Subordinated
Indenture each as an "Indenture" and together as the "Indentures." A copy of the
form of each Indenture is filed as an exhibit to the registration statement of
which this prospectus is a part.
Northwest may offer a series of Debt Securities at the same time that it
makes an offer of warrants ("Warrants") to purchase an additional portion of the
same or another series of Debt Securities. Northwest also may offer Warrants to
purchase a series of Debt Securities independently of any offering of Debt
Securities. See "Description of Warrants."
The statements in this prospectus relating to the Debt Securities and the
Indentures are summaries. You should refer to the Indentures for the complete
terms of the Debt Securities and the Indentures, including the definitions of
certain capitalized terms in this prospectus. Where we make no distinction
between the Senior Debt Securities and the Senior Subordinated Debt Securities
or between the Senior Indenture and the Subordinated Indenture, those summaries
refer to any Debt Securities and either Indenture. Whenever we refer to
particular defined terms of the Indentures in this prospectus or in a prospectus
supplement, those defined terms are incorporated by reference in this prospectus
or in that prospectus supplement.
The applicable prospectus supplement will set forth the anticipated market
for the Debt Securities and the specific use of proceeds of an offering of them.
TO THE EXTENT THAT ANY PROVISION IN ANY PROSPECTUS SUPPLEMENT IS
INCONSISTENT WITH ANY PROVISION IN THIS SUMMARY, THE PROVISION OF THE PROSPECTUS
SUPPLEMENT WILL CONTROL.
GENERAL
The Indentures do not limit the aggregate principal amount of Debt
Securities which may be issued under those Indentures. Northwest may issue from
time to time Debt Securities in one or more series under those Indentures. The
Senior Debt Securities will be unsecured and unsubordinated obligations of
Northwest and will rank equally with all other unsecured and unsubordinated
indebtedness of Northwest. The Senior Subordinated Debt Securities will be
unsecured obligations of Northwest and, as set forth below under "Subordination
of Senior Subordinated Debt Securities," will be subordinated in right of
payment to all Senior Indebtedness of Northwest.
You should refer to the prospectus supplement which accompanies this
prospectus for a description of the specific series of Debt Securities that
Northwest is offering by that prospectus supplement or, if Northwest is offering
Warrants, the Debt Securities that it will issue upon exercise of those
Warrants. These terms may include:
(1) the specific designation of the Debt Securities, including whether
they are Senior Debt Securities or Senior Subordinated Debt Securities;
5
<PAGE>
(2) any limit upon the aggregate principal amount of the Debt
Securities;
(3) the maturity date or dates of the principal of the Debt Securities
or the method of determining the maturity date or dates;
(4) the rate or rates (which may be fixed or variable) at which the Debt
Securities will bear interest, if there is any interest, or the method of
calculating the interest rate or rates;
(5) the date or dates on which interest, if any, will accrue or the
method of determining that date or dates;
(6) the date or dates on which interest, if any, will be payable and the
record date or dates for the interest payment date or dates;
(7) the place or places where principal of or, premium, if any, and
interest, if any, on the Debt Securities will be payable;
(8) if Northwest may redeem, at its option, the Debt Securities in whole
or in part, (A) the period or periods, (B) the price or prices, (C) the
currency or currencies (including currency units) and (D) the terms and
conditions for the optional redemption or redemptions;
(9) if Northwest is obligated to redeem or purchase the Debt Securities
in whole or in part, pursuant to any sinking fund or similar provisions,
upon the happening of specified events or at the option of a holder of the
Debt Securities, (A) the period or periods, (B) the price or prices and (C)
the terms and conditions for the mandatory redemption or redemptions;
(10) the denominations of the Debt Securities that Northwest is
authorized to issue;
(11) regarding the currency or currency units,
- the currency or currency units for which the Debt Securities may be
purchased or in which the Debt Securities may be denominated, and/or
- the currency or currency units in which principal of, premium, if
any, and /or interest, if any, on the Debt Securities will be payable or
redeemable, and
- whether Northwest or the holders of any Debt Securities may elect
to pay or receive payments in a currency or currency units other than the
currency in which the Debt Securities are stated to be payable or
redeemable;
(12) if other than the principal amount, the portion of the principal
amount of the Debt Securities which will be payable upon declaration of the
acceleration of the maturity, or the method by which that portion will be
determined;
(13) the person to whom any interest on any Debt Security will be
payable, if other than the person in whose name that Debt Security is
registered on the applicable record date;
(14) any addition to, or modification or deletion of, any Event of
Default or any covenant of Northwest or NWA Corp. specified in the Indenture
with respect to the Debt Securities;
(15) the application, if any, of the means of defeasance or covenant
defeasance specified for the Debt Securities and coupons, if any;
(16) whether the Debt Securities are to be issued in whole or in part in
the form of one or more temporary or permanent global securities and, if so,
the identity of the depositary for such global security or securities;
(17) the terms and conditions relating to Warrants issued by Northwest,
if any, in connection with or for the purchase of the Debt Securities;
6
<PAGE>
(18) any index used to determine the amount of payments of principal of,
and premium, if any, and interest, if any, on the Debt Securities;
(19) any provisions relating to the exchange of the Debt Securities; and
(20) any other special terms of the Debt Securities.
Unless the applicable prospectus supplement specifies otherwise, the Debt
Securities will not be listed on any securities exchange.
Unless the applicable prospectus supplement specifies otherwise, Northwest
will issue Debt Securities in fully registered form without coupons. If
Northwest issues Debt Securities of any series in bearer form, the applicable
prospectus supplement will describe the special restrictions and considerations,
including special offering restrictions and special Federal income tax
considerations, applicable to those Debt Securities and to payment on and
transfer and exchange of those Debt Securities. Bearer Securities will be
transferable by delivery.
Debt Securities may be sold at a substantial discount below their stated
principal amount, bearing no interest or interest at a rate which at the time of
issuance is below market rates. Certain Federal income tax consequences and
special considerations applicable to those Debt Securities will be described in
the applicable prospectus supplement.
The applicable prospectus supplement also will set forth the foreign
currency or currency units and describe the restrictions, elections, certain
Federal income tax considerations, specific terms and other information with
respect to the issue of Debt Securities, if:
- the purchase price of any Debt Securities is payable in one or more
foreign currencies or currency units,
- any Debt Securities are denominated in one or more foreign currencies
or currency units, or
- the principal of, premium, if any, or interest, if any, on any Debt
Securities is payable in one or more foreign currencies or currency units.
DENOMINATIONS, PAYMENT, REGISTRATION, TRANSFER AND EXCHANGE
Northwest will issue Registered Securities in denominations of $1,000 and
integral multiples of $1,000, and Bearer Securities in denominations of $5,000.
In each case, Northwest may issue Debt Securities in other denominations and
currencies as may be in the terms of the Debt Securities of any particular
series. Subject to any applicable laws or regulations, Northwest will make
payments on the Debt Securities in the designated currency at the designated
office or agency of Northwest, unless the applicable prospectus supplement sets
forth otherwise. However, Northwest at its option may make interest payments, if
any, on Debt Securities in registered form:
- by checks mailed by the Trustee to the holders of Debt Securities
entitled to interest payments at their registered addresses, or
- by wire transfer to an account maintained by the Person entitled to
interest payments as specified in the Register.
Unless the applicable prospectus supplement indicates otherwise, Northwest will
pay any installment of interest on Debt Securities in registered form to the
Person in whose name the Debt Security is registered at the close of business on
the regular record date for that installment of interest.
Subject to any applicable laws and regulations, Northwest will make payments
on Debt Securities in bearer form in the currency and in the manner designated
in the applicable prospectus supplement at the paying agencies outside the
United States as it may appoint from time to time. The applicable prospectus
supplement will name the paying agents outside the United States initially
appointed by
7
<PAGE>
Northwest for a series of Debt Securities. Northwest may at any time designate
additional paying agents or rescind the designation of any paying agents.
However, if Debt Securities of a series are issuable as Registered Securities,
Northwest will be required to maintain at least one paying agent in each Place
of Payment for that series, and if Debt Securities of a series are issuable as
Bearer Securities, Northwest will be required to maintain a paying agent in a
Place of Payment outside the United States where the Debt Securities of that
series and any related coupons may be presented and surrendered for payment. In
connection with the payment of the principal of, premium, if any, and interest,
if any, on the Debt Security, Northwest will have the right to require a holder
of any Debt Security to certify information to Northwest. In the absence of that
certification, Northwest will be entitled to rely on any legal presumption to
enable Northwest to determine its duties and liabilities, if any, to deduct or
withhold taxes, assessments or governmental charges from that payment.
Unless the applicable prospectus supplement sets forth otherwise, Registered
Securities will be transferable or exchangeable at the agency of Northwest
designated by it from time to time. Debt Securities may be transferred or
exchanged without service charge, other than any tax or other governmental
charge imposed in connection with the transfer or exchange.
If Northwest redeems any Debt Securities in part, Northwest will not be
required:
(1) to issue, register the transfer of or exchange Debt Securities of
any series during a period beginning at the opening of business 15 days
before any selection of Debt Securities of the series to be redeemed and
ending at the close of business on
- the day of mailing of the relevant notice of redemption, if the
Debt Securities of that series are issuable only as Registered
Securities,
- the day of the first publication of the relevant notice of
redemption, if the Debt Securities of that series are issuable only as
Bearer Securities, or
- the day of mailing of the relevant notice of redemption, if the
Debt Securities of that series are issuable both as Bearer Securities and
as Registered Securities and there is no publication;
(2) to register the transfer or exchange of any Registered Securities,
or their portion, called for redemption or otherwise surrendered for
repayment, except the unredeemed or unrepaid portion of any Registered
Security being redeemed or repaid in part; or
(3) to exchange any Bearer Security called for redemption, except to
exchange that Bearer Security for a Registered Security of that series and
like tenor which is immediately surrendered for redemption.
SUBORDINATION OF SENIOR SUBORDINATED DEBT SECURITIES
As set forth in the Subordinated Indenture, the obligation of Northwest to
pay the principal of, premium, if any, and interest, if any, on the Senior
Subordinated Debt Securities will be subordinated and junior in right of payment
to the prior payment in full of all Senior Indebtedness of Northwest. The Senior
Subordinated Debt Securities will rank equally with any future Indebtedness of
Northwest which by its terms states that it will rank equally with the Senior
Subordinated Debt Securities. The Senior Subordinated Debt Securities will rank
senior to all other existing and future subordinated Indebtedness or other
subordinated obligations of Northwest. However, payment from the money or the
proceeds of U.S. Government Obligations held in any defeasance trust described
under "Defeasance" below is not subordinate to any Senior Indebtedness or
subject to the restrictions described in this prospectus.
"Senior Indebtedness" of Northwest means all Indebtedness of Northwest
(other than the Senior Subordinated Debt Securities) unless the Indebtedness, by
its terms or the terms of the instrument
8
<PAGE>
creating or evidencing it, is subordinate in right of payment to or equal with
the Senior Subordinated Debt Securities. Senior Indebtedness, however, does not
include:
(a) any Indebtedness, guarantee or other obligation of Northwest that is
subordinated or junior in any respect to any other Indebtedness of
Northwest, or
(b) any Indebtedness of Northwest to any of its Subsidiaries or to any
Person of which Northwest is a Subsidiary.
"Indebtedness" of any Person means, without duplication, the principal of,
premium, if any, and any accrued and unpaid interest (including post-petition
interest, whether or not allowable as a claim in bankruptcy) on:
(1) indebtedness of that Person for money borrowed;
(2) guarantees by that Person of indebtedness for money borrowed by any
other Person;
(3) indebtedness of that Person evidenced by notes, debentures, bonds or
other instruments of indebtedness, for payment of which that Person is
responsible or liable;
(4) obligations for the reimbursement of any obligor on any letter of
credit, banker's acceptance or similar credit transaction;
(5) obligations of that Person under Capital Leases and Flight Equipment
leases;
(6) obligations under interest rate and currency swaps, caps, collars
options, forward or spot contracts or similar arrangements or with respect
to foreign currency hedges or aircraft fuel hedges;
(7) commitment and other bank financing fees under contractual
obligations associated with bank debt;
(8) any indebtedness representing the deferred and unpaid purchase price
of any property or business; and
(9) all deferrals, renewals, extensions and refundings of any of these
indebtedness or obligations.
However, Indebtedness does not include:
(a) amounts owed to trade creditors in the ordinary course of business,
(b) nonrecourse indebtedness secured by real property located outside
the United States, or
(c) operating lease rental payments (other than Flight Equipment lease
rental payments) in the ordinary course of business.
Northwest may not pay the principal of, premium, if any, or interest on the
Senior Subordinated Debt Securities or deposit pursuant to the provisions
described under "Defeasance" below if:
(1) any Senior Indebtedness is not paid when due (following the
expiration of any applicable grace period); or
(2) any other default on Senior Indebtedness occurs and the maturity of
any Senior Indebtedness is accelerated in accordance with its terms,
unless, in either case,
(a) the failure to pay or the acceleration relates to Senior
Indebtedness in an aggregate amount equal to or less than $20 million;
(b) the default has been cured or waived or has ceased to exist;
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(c) the acceleration has been rescinded; or
(d) the Senior Indebtedness has been paid in full.
A failure to make any payment with respect to the Senior Subordinated Debt
Securities as a result of the foregoing provisions will not limit the right of
the holders of the Senior Subordinated Debt Securities to accelerate the
maturity as a result of the payment default.
If any distribution of the assets of Northwest is made upon any dissolution,
total or partial liquidation or reorganization of or similar proceeding relating
to Northwest, the holders of Senior Indebtedness will be entitled to receive
payment in full before the holders of the Senior Subordinated Debt Securities
are entitled to receive any payment. Because of this subordination, in the event
of insolvency, creditors of Northwest who are holders of Senior Indebtedness or
of other unsubordinated Indebtedness may recover more, ratably, than the holders
of the Senior Subordinated Debt Securities.
THE PARENT GUARANTY
NWA Corp. will unconditionally guarantee, pursuant to the Indentures, the
due and punctual payment of the principal of, premium, if any, and interest, if
any, on the Debt Securities when they become due, whether by acceleration or
otherwise. The Parent Guaranty will be enforceable without any need first to
enforce Debt Securities against Northwest. As set forth in the Subordinated
Indenture, the Parent Guaranty of the Senior Subordinated Debt Securities will
be subordinated and junior in right of payment to the prior payment in full of
all Senior Indebtedness of NWA Corp. The terms of the subordination will
parallel the subordination terms applicable to the Senior Subordinated Debt
Securities as set forth above under "Subordination of Senior Subordinated Debt
Securities." For purposes of the Parent Guaranty, Senior Indebtedness of NWA
Corp. means all Indebtedness of NWA Corp. other than the Parent Guaranty, unless
the Indebtedness, by its terms or by the terms of the instrument creating or
evidencing it, is subordinate in right of payment to or equal with the Parent
Guaranty. However, the Senior Indebtedness of NWA Corp. does not include any
Indebtedness of NWA Corp. to any of its subsidiaries. The Parent Guaranty of the
Senior Subordinated Debt Securities will rank equally with any future
Indebtedness of NWA Corp. which by its terms states that it will rank equally
with the Parent Guaranty of the Senior Subordinated Debt Securities. The Parent
Guaranty of the Senior Subordinated Debt Securities will rank senior to all
other existing and future subordinated Indebtedness or other subordinated
obligations of NWA Corp.
GLOBAL DEBT SECURITIES
Northwest may issue Debt Securities of a series in whole or in part as one
or more fully registered global securities (a "Registered Global Security") that
will be deposited with a depositary (the "Depositary") or with a nominee for the
Depositary identified in the applicable prospectus supplement. In that case,
Northwest will issue one or more Registered Global Securities in a denomination
or aggregate denominations equal to the portion of the aggregate principal
amount of outstanding Debt Securities of the series to be represented by those
Registered Global Security or Securities. Unless and until it is exchanged in
whole or in part for Debt Securities in definitive certificated form, a
Registered Global Security may not be registered for transfer or exchange except
in the circumstances described in the applicable prospectus supplement and
except as a whole,
- by the Depositary for the Registered Global Security to a nominee of
that Depositary,
- by a nominee of the Depositary to the Depositary or another nominee of
the Depositary, or
- by the Depositary or any nominee of the Depositary to a successor
Depositary for that series or a nominee of the successor Depositary.
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The applicable prospectus supplement will describe the specific terms of the
depositary arrangement with respect to any portion of a series of Debt
Securities to be represented by a Registered Global Security. Northwest expects
that the following provisions will apply to depositary arrangements.
Upon the issuance of any Registered Global Security and the deposit of that
Registered Global Security with or on behalf of the Depositary for that
Registered Global Security, the Depositary will credit, on its book-entry
registration and transfer system, the respective principal amounts of the Debt
Securities represented by that Registered Global Security to the accounts of
institutions ("participants") that have accounts with the Depositary or its
nominee. The accounts to be credited will be designated by the underwriters or
agents engaging in the distribution of the Debt Securities or by Northwest, if
Northwest directly offers and sells the Debt Securities. Ownership of beneficial
interests in a Registered Global Security will be limited to participants or
persons that may hold interests through participants. Ownership of beneficial
interests by participants in a Registered Global Security will be shown on, and
the transfer of that ownership interest will be effected only through, records
maintained by the Depositary for that Registered Global Security or by its
nominee. Ownership of beneficial interests in a Registered Global Security by
persons that hold through participants will be shown on, and the transfer of
that ownership interest within such participant will be effected only through,
records maintained by such participant. The laws of some jurisdictions require
that certain purchasers of securities take physical delivery of the securities
in certificated form. These limitations and laws may impair the ability to
transfer beneficial interests in the Registered Global Securities.
So long as the Depositary for a Registered Global Security, or its nominee,
is the registered owner of that Registered Global Security, the Depositary or
its nominee, as the case may be, will be considered the sole owner or holder of
the Debt Securities represented by that Registered Global Security for all
purposes under the Indentures. Unless the applicable prospectus supplement
specifies otherwise and except as specified below, owners of beneficial
interests in a Registered Global Security will not be entitled to have Debt
Securities of the series represented by that Registered Global Security
registered in their names, will not receive or be entitled to receive physical
delivery of Debt Securities of that series in certificated form and will not be
considered the holders of the Debt Securities for any purposes under the
Indentures. Accordingly, each person who owns a beneficial interest in a
Registered Global Security must rely on the procedures of the Depositary and, if
such person is not a participant, on the procedures of the participant through
which that person owns its interest, to exercise any rights of a holder under
the Indentures. The Depositary may grant proxies and otherwise authorize
participants to give or take any request, demand, authorization, direction,
notice, consent, waiver or other action which a holder is entitled to give or
take under the Indentures. Northwest understands that, under existing industry
practices, if Northwest requests any action of holders or an owner of a
beneficial interest in a Registered Global Security desires to give any notice
or take any action a holder is entitled to give or take under the Indentures,
the Depositary would authorize the participants to give the notice or take the
action, and participants would authorize beneficial owners who own through the
participants to give the notice or take the action or would otherwise act upon
the instructions of beneficial owners who own through them.
Unless the applicable prospectus supplement specifies otherwise, payments
with respect to principal, premium, if any, and interest, if any, on Debt
Securities represented by a Registered Global Security registered in the name of
a Depositary or its nominee will be made to such Depositary or its nominee, as
the case may be, as the registered owner of the Registered Global Security.
Northwest expects that the Depositary for any Debt Securities represented by
a Registered Global Security, upon receipt of any payment of principal, premium
or interest, will immediately credit participants' accounts with payments in
amounts proportionate to their respective beneficial interests in the principal
amount of that Registered Global Security as shown on the records of the
Depositary. Northwest also expects that payments by participants to owners of
beneficial interests in a Registered
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Global Security held through the participants will be governed by standing
instructions and customary practices, as is now the case with the securities
held for the accounts of customers registered in "street names," and will be the
responsibility of the participants. None of Northwest, NWA Corp., Old NWA Corp.,
the Trustee or any agent of Northwest shall have any responsibility or liability
for any aspect of the records relating to or payments made on account of
beneficial ownership interests of a Registered Global Security, or for
maintaining, supervising or reviewing any records relating to the beneficial
ownership interests.
Unless the applicable prospectus supplement specifies otherwise, if the
Depositary for any Debt Securities represented by a Registered Global Security
is at any time unwilling or unable to continue as Depositary and a successor
Depositary is not appointed by Northwest within ninety days, Northwest will
issue those Debt Securities in definitive certificated form in exchange for that
Registered Global Security. In addition, Northwest may at any time and in its
sole discretion determine not to have any of the Debt Securities of a series
represented by one or more Registered Global Securities and, in that event, will
issue Debt Securities of that series in definitive certificated form in exchange
for all of the Registered Global Securities representing those Debt Securities.
Further, if Northwest so specifies with respect to the Debt Securities of a
series, an owner of a beneficial interest in a Registered Global Security
representing Debt Securities of that series may, on terms acceptable to
Northwest and the Depositary for that Registered Global Security, receive Debt
Securities of that series in definitive form registered in the name of that
beneficial owner or its designee.
CONSOLIDATION, MERGER OR SALE BY NORTHWEST OR NWA CORP.
Each Indenture provides that neither Northwest nor NWA Corp. may merge or
consolidate with or into any other corporation or sell, convey, transfer, lease
or otherwise dispose of all or substantially all of its assets to any Person,
unless:
(1) (A) in the case of a merger or consolidation, Northwest or NWA Corp.
is the surviving corporation, as the case may be, or
(B) (i) in the case of a merger or consolidation where Northwest or
NWA Corp. is not the surviving corporation or (ii) in the case of the sale,
conveyance or other disposition of all or substantially all of the assets,
- the resulting, successor or acquiring Person is a corporation
organized and existing under the laws of the United States of America or
its State or the District of Columbia, and
- that corporation expressly assumes by supplemental indenture all
the obligations of Northwest under the Debt Securities, any related
coupons and the Indentures, or all the obligations of NWA Corp. under the
Parent Guaranty and the Indentures, as the case may be;
(2) immediately after giving effect to the merger or consolidation, or
the sale, conveyance, transfer, lease or other disposition (including,
without limitation, any Debt directly or indirectly incurred or anticipated
to be incurred in connection with or in respect of that transaction), no
Default or Event of Default will have occurred and be continuing; and
(3) certain other conditions are met.
If a successor corporation assumes the obligations of Northwest or NWA
Corp., as the case may be, then that successor corporation will succeed to and
be substituted for Northwest or NWA Corp., as the case may be, under the
Indentures and under the Debt Securities and any related coupons or under the
Parent Guaranty, as the case may be, and all obligations of Northwest or NWA
Corp., as the case may be, will terminate. If any permitted consolidation,
merger, sale, conveyance, disposition or other change of control transaction
(including a highly leveraged transaction), the holders of the Debt Securities
will not have the right to require redemption of those Debt Securities or
similar rights unless the applicable prospectus supplement sets forth otherwise.
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EVENTS OF DEFAULT, NOTICE AND CERTAIN RIGHTS ON DEFAULT
Events of Default with respect to Debt Securities of any series issued under
the Indentures are defined in the Indentures as:
(1) default for thirty days in payment of any interest on any Debt
Security of that series or any related coupon or any additional amount
payable with respect to Debt Securities of that series as specified in the
applicable prospectus supplement when due;
(2) default in payment of principal or premium, if any, on redemption or
otherwise, or in the making of a mandatory sinking fund payment of any Debt
Securities of that series when due;
(3) default for sixty days after notice to Northwest and NWA Corp. by
the Trustee, or to Northwest, NWA Corp. and the Trustee by the holders of
25% or more in aggregate principal amount of the Debt Securities of that
series then outstanding, in the performance of any other agreement
applicable to the Debt Securities of that series, in the Indenture or in any
supplemental indenture or board resolution referred to therein under which
the Debt Securities of that series may have been issued; and
(4) certain events of bankruptcy, insolvency or reorganization of
Northwest or NWA Corp.
The applicable prospectus supplement will describe any other Events of
Default applicable to a specified series of Debt Securities. An Event of Default
with respect to a particular series of Debt Securities will not necessarily be
an Event of Default with respect to any other series of Debt Securities.
If an Event of Default specified in the Indentures occurs with respect to
the Debt Securities of any series issued under the Indentures and is continuing,
either the Trustee for that series or the holders of 25% or more in aggregate
principal amount of all of the outstanding Debt Securities of that series, by
written notice to Northwest and NWA Corp., may declare (a) the principal of all
the Debt Securities of that series to be due and payable or (b) in the case of
original issue discount Debt Securities or indexed Debt Securities, the portion
of the principal amount specified in the applicable prospectus supplement to be
due and payable. If the holders of Debt Securities give notice of the
declaration of acceleration to Northwest and NWA Corp., then they are also
required to give notice to the Trustee for that series.
The Trustee for any series of Debt Securities is required to give notice to
the holders of the Debt Securities of that series of all uncured Defaults within
ninety days after the occurrence of a Default known to it with respect to Debt
Securities of that series. However, that notice will not be given until 60 days
after the occurrence of a Default with respect to Debt Securities of that series
involving a failure to perform a covenant other than the obligation to pay
principal, premium, if any, or interest, if any, or make a mandatory sinking
fund payment. In addition, the Trustee may withhold that notice if and so long
as a committee of its Responsible Officers in good faith determines that
withholding that notice is in the interest of the holders of the Debt Securities
of that series, except in the case of a default in payment on the Debt
Securities of that series. "Default" means any event which is, or, after notice
or passage of time or both, would be, an Event of Default.
The Trustee will be under no obligation to exercise any of its rights or
powers under the Indentures at the request or direction of any of the holders of
Debt Securities, unless those holders have offered the Trustee reasonable
indemnity. Subject to those provisions for indemnification of the Trustee, the
holders of not less than a majority in aggregate principal amount of the Debt
Securities of each series affected (with each series voting as a class) may
direct the time, method and place of conducting any proceeding for any remedy
available to the Trustee for that series, or exercising any trust or power
conferred on that Trustee.
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Each of NWA Corp. and Northwest will file annually with the Trustee a
certificate as to its compliance with all conditions and covenants of the
applicable Indenture.
The holders of not less than a majority in aggregate principal amount of any
series of Debt Securities by notice to the Trustee for that series may waive, on
behalf of the holders of all Debt Securities of that series, any past Default or
Event of Default with respect to that series and its consequences, and may
rescind and annul a declaration of acceleration with respect to that series,
unless a judgment or decree based on that acceleration has been obtained and
entered. However, a Default or Event of Default in the payment of the principal
of, premium, if any, or interest, if any, on any Debt Security (and any
resulting acceleration) and certain other defaults may not be waived.
MODIFICATION OF THE INDENTURES
Northwest, NWA Corp. and the Trustee may enter into one or more supplemental
indentures, without the consent of the holders of any of the Debt Securities, in
order to:
(1) evidence the succession of another corporation to Northwest or NWA
Corp. and the assumption of the covenants of Northwest or NWA Corp. by a
successor;
(2) (A) add to the covenants of Northwest or NWA Corp. or surrender any
right or power of Northwest or NWA Corp., and
(B) make the occurrence, or the occurrence and continuance, of a
default in any of those additional covenants, restrictions or conditions a
Default or an Event of Default that permits the enforcement of all or any of
the remedies provided in the Indentures.
However, in respect of any of those additional covenants,
restrictions or conditions, the supplemental indenture may:
- provide for a particular period of grace after default, which
period may be shorter or longer than the period allowed in the case of
other defaults,
- provide for an immediate enforcement upon that default, or
- limit the remedies available to the Trustee upon that default;
(3) add additional Events of Default with respect to any series;
(4) add or change any provisions to permit or facilitate the issuance of
Debt Securities in bearer form or in global form;
(5) under certain circumstances, add, change or eliminate any provision
affecting Debt Securities not yet issued;
(6) secure the Debt Securities;
(7) add to the conditions, limitations and restrictions on the
authorized amount, terms or purposes of issue, authentication and delivery
of Debt Securities as set forth in the Indentures, other conditions,
limitations and restrictions to be observed after that addition;
(8) establish the form or terms of Debt Securities;
(9) evidence and provide for successor Trustees;
(10) if allowed without penalty under applicable laws and regulations,
permit payment in respect of Debt Securities in bearer form in the United
States;
(11) correct or supplement any inconsistent provisions or add any other
provisions, on the condition that this action does not adversely affect the
interests of any holder of Debt Securities of any series issued under the
Indentures in any material respect;
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(12) cure any ambiguity or correct any mistake; or
(13) supplement any of the provisions of the Indentures to permit or
facilitate the defeasance and discharge of any series of Debt Security, on
the condition that this action does not adversely affect the interests of
the holders of that series or any other series of Debt Securities or any
related coupons in any material respect.
Northwest, NWA Corp. and the Trustee, with the consent of the holders of not
less than a majority in aggregate principal amount of the outstanding Debt
Securities of each series affected by the supplemental indenture, may execute
supplemental indentures adding any provisions to or changing or eliminating any
of the provisions of the Indentures or any supplemental indenture or modifying
the rights of the holders of Debt Securities of that series. However, no
supplemental indenture may, without the consent of the holder of each Debt
Security that is affected,
(1) change the time for payment of principal or interest on any Debt
Security;
(2) reduce the principal of, or any installment of principal of, or
interest on any Debt Security;
(3) reduce the amount of premium, if any, payable upon the redemption of
any Debt Security;
(4) reduce the amount of principal payable upon acceleration of the
maturity of an Original Issue Discount Debt Security;
(5) change the coin or currency in which any Debt Security or any
premium or interest is payable;
(6) impair the right to institute suit for the enforcement of any
payment on or with respect to any Debt Security;
(7) reduce the percentage in principal amount of the outstanding Debt
Securities of any series required to:
- consent to modify or amend the Indentures,
- waive compliance with certain provisions of the Indentures, or
- waive certain defaults;
(8) change the obligation of Northwest to maintain an office or agency
in the places and for the purposes specified in the Indentures;
(9) modify the obligations of NWA Corp. to make payment under the Parent
Guaranty; or
(10) modify any of the provisions in (1) through (9) above.
DEFEASANCE
If the applicable prospectus supplement so indicates, Northwest may elect
either to:
(1) defease and be discharged from any and all obligations with respect
to the Debt Securities of or within any series, except as described below
("defeasance"), or
(2) be released from its obligations with respect to certain covenants
applicable to the Debt Securities of or within any series ("covenant
defeasance"),
when Northwest deposits, in trust for the above mentioned purpose, with the
Trustee for that series of Debt Securities (or other qualifying trustee) money
and/or Government Obligations which through the payment of principal and
interest in accordance with their terms will provide money in the amount
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sufficient to pay the principal of, premium, if any, and interest, if any, on
the Debt Securities to Maturity or redemption, as the case may be, and any
mandatory sinking fund or similar payments.
When a defeasance occurs, Northwest will be deemed to:
(1) have paid and discharged the entire indebtedness represented by the
Debt Securities and any related coupons, and
(2) have satisfied all of its other obligations under the Debt
Securities and any related coupons.
However, it will not be deemed to have satisfied:
(a) its obligations with respect to the rights of holders of the Debt
Securities to receive, solely from the trust funds deposited to defease the
Debt Securities, payments in respect of the principal of, premium, if any,
and interest, if any, on the Debt Securities or any related coupons when the
payments are due, and
(b) certain other obligations as provided in the Indentures.
When a covenant defeasance occurs, Northwest will:
(1) be released only from its obligations to comply with certain
covenants contained in the Indentures relating to the Debt Securities,
(2) continue to be obligated in all other respects under those Debt
Securities, and
(3) continue to be contingently liable with respect to the payment of
principal, premium, if any, and interest, if any, with respect to those Debt
Securities.
Unless the applicable prospectus supplement specifies otherwise and except
as described below, the conditions to both defeasance and covenant defeasance
are as follows:
(1) the defeasance or covenant defeasance must not result in a breach or
violation of, or constitute a Default or Event of Default under, the
applicable Indenture, or result in a breach or violation of, or constitute a
default under, any other material agreement or instrument of Northwest or
NWA Corp.;
(2) certain bankruptcy related Defaults or Events of Default with
respect to Northwest or NWA Corp. must not have occurred and be continuing
during the period commencing on the date of the deposit of the trust funds
to defease the Debt Securities and ending on the 91st day after that date;
(3) Northwest must deliver to the Trustee an Opinion of Counsel to the
effect that the holders of the Debt Securities:
- will not recognize income, gain or loss for Federal income tax
purposes as a result of the defeasance or covenant defeasance, and
- will be subject to Federal income tax on the same amounts and in
the same manner and at all the same times as would have been the case if
the defeasance or covenant defeasance had not occurred.
In the case of defeasance, the Opinion of Counsel must refer to and
be based upon a ruling of the Internal Revenue Service or a change in
applicable Federal income tax law occurring after the date of the
Indentures;
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(4) Northwest must deliver to the Trustee an Officers' Certificate and
an Opinion of Counsel with respect to:
- compliance with the conditions precedent to the defeasance or
covenant defeasance, and
- certain registration requirements under the Investment Company Act
of 1940; and
(5) any additional conditions to the defeasance or covenant defeasance
which may be imposed on Northwest pursuant to the applicable Indenture.
The Indentures require that a nationally recognized firm of independent
public accountants deliver to the Trustee a written certification as to the
sufficiency of the trust funds deposited for the defeasance or covenant
defeasance of the Debt Securities. Holders of the Debt Securities do not have
recourse against that firm under the Indentures. If the applicable prospectus
supplement so indicates, in addition to obligations of the United States or an
agency or instrumentality of the United States, Government Obligations may
include obligations of the government or any agency or instrumentality of the
government issuing the currency in which Debt Securities of that series are
payable. If the Government Obligations deposited with the Trustee for the
defeasance of the Debt Securities decrease in value or default subsequent to
their being deposited, Northwest will have no further obligation, and the
holders of the Debt Securities will have no additional recourse against
Northwest, as a result of the decrease in value or default. As described above,
in the event of a covenant defeasance, Northwest remains contingently liable
with respect to the payment of principal, premium, if any, and interest, if any,
with respect to the Debt Securities.
Northwest may exercise its defeasance option with respect to the Debt
Securities even if it has previously exercised its covenant defeasance option.
If Northwest exercises its defeasance option, payment of the Debt Securities may
not be accelerated because of a Default or an Event of Default. If Northwest
exercises its covenant defeasance option, payment of the Debt Securities may not
be accelerated by reason of a Default or an Event of Default with respect to the
covenants to which the covenant defeasance is applicable. However, if
acceleration were to occur, the realizable value at the acceleration date of the
money and Government Obligations in the defeasance trust could be less than the
principal and interest then due on the Debt Securities, because the required
deposit in the defeasance trust is based upon scheduled cash flow rather than
market value, which will vary depending upon interest rates and other factors.
The applicable prospectus supplement may further describe the provisions, if
any, applicable to defeasance or covenant defeasance with respect to Debt
Securities of a particular series.
THE TRUSTEE
State Street Bank and Trust Company is the Trustee under the Indentures.
Northwest and NWA Corp. also maintain banking and other commercial relationships
with State Street Bank and Trust Company and its affiliates in the ordinary
course of business and State Street Bank and Trust Company acts as Trustee under
several other indentures for NWA Corp. and Northwest.
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DESCRIPTION OF WARRANTS
Northwest may issue Warrants to purchase Debt Securities. Northwest may
issue Warrants together with or separately from any Debt Securities offered by
any prospectus supplement and, if it issues Warrants together with Debt
Securities, the Warrants may be attached to or separate from the Debt
Securities. Northwest will issue the Warrants under one or more separate Warrant
Agreements (each, a "Warrant Agreement") to be entered into between Northwest
and State Street Bank and Trust Company, as warrant agent (the "Warrant Agent"),
all as set forth in the prospectus supplement relating to the particular issue
of Warrants.
The statements in this prospectus relating to the Warrants and the Warrant
Agreements are summaries. You should refer to the Warrant Agreements for the
complete terms of the Warrants and the Warrant Agreements. A form of Warrant
Agreement for Warrants Sold Attached to Debt Securities and a form of Warrant
Agreement for Warrants Sold Alone have been incorporated by reference as
exhibits to the registration statement of which this prospectus is a part.
GENERAL
If Northwest offers Warrants, you should refer to the applicable prospectus
supplement which accompanies this prospectus for a description of the specific
terms of the Warrants, including:
(1) the specific designation and aggregate number of the Warrants;
(2) the offering price and the currency or composite currencies for
which the Warrants may be purchased,
(3) the designation (including whether the Debt Securities are Senior
Debt Securities or Senior Subordinated Debt Securities), aggregate principal
amount, currency or composite currencies and terms of the Debt Securities
purchasable upon exercise of the Warrants;
(4) if Warrants are issued together with any Debt Securities,
- the designation and terms of the Debt Securities with which the
Warrants are issued, and
- the number of Warrants issued with the minimum denomination of each
Debt Security;
(5) if Warrants are issued together with any Debt Securities, the date
on and after which the Warrants and the related Debt Securities will be
separately transferable;
(6) - the principal amount of Debt Securities purchasable upon exercise
of one Warrant, and
- the price or the manner of determining the price and currency or
composite currencies or other consideration, which may include Debt
Securities, for which that principal amount of Debt Securities may be
purchased;
(7) - the date on which the right to exercise the Warrants will
commence, and
- the date on which the right shall expire (the "Expiration Date");
(8) the terms of any mandatory or optional redemption by Northwest;
(9) certain Federal income tax consequences;
(10) whether the certificates for Warrants will be issued in registered
or unregistered form; and
(11) any other special terms of the Warrants.
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Unless the applicable prospectus supplement specifies otherwise, the Warrants
will not be listed on any securities exchange.
Holders of Warrant certificates may exchange them for new Warrant
certificates, may present them (if in registered form) for registration of
transfer and exchange, and may exercise them at an office or agency of the
Warrant Agent maintained for that purpose (the "Warrant Agent Office"). No
service charge will be made for any transfer or exchange of Warrant
certificates, but Northwest may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection with the transfer or
exchange. Prior to the exercise of their Warrants, holders of Warrants will not
have any of the rights of holders of the Debt Securities that they may purchase
upon the exercise of the Warrants. These rights include the right to receive
payments of principal of, premium, if any, or interest, if any, on the Debt
Securities purchasable upon the exercise or to enforce covenants in the
Indenture.
EXERCISE OF WARRANTS
Each Warrant will entitle its holder to purchase the principal amount of
Debt Securities (a) at the exercise price, (b) for the consideration and (c)
during the period or periods, in each case as set forth in, or calculable from,
the prospectus supplement relating to the Warrants. Holders of Warrants may
exercise their Warrants at any time during the specified period up to 5:00 P.M.
New York City time on the Expiration Date set forth in the applicable prospectus
supplement. After the close of business on the Expiration Date, or a later date
to which the Expiration Date may be extended by Northwest, unexercised Warrants
will become void.
Holders of Warrants may exercise their Warrants by:
(1) paying the Warrant Agent the amount provided in the applicable
prospectus supplement required to purchase the Debt Securities purchasable
upon the exercise of the Warrants, and
(2) providing the Warrant Agent with certain information set forth on
the reverse side of the Warrant certificate.
Unless the applicable prospectus supplement specifies otherwise, when the
Warrant Agent receives the payment and the Warrant certificate properly
completed and duly executed at the Warrant Agent Office or any other office or
agency indicated in the applicable prospectus supplement, Northwest will, as
soon as practicable, issue and deliver the Debt Securities purchasable upon the
exercise. If fewer than all of the Warrants represented by the Warrant
certificate are exercised, a new Warrant certificate will be issued for the
amount of unexercised Warrants.
MODIFICATION OF WARRANT AGREEMENTS
Northwest and the Warrant Agent may supplement or amend the Warrant
Agreement, without the consent of any Warrantholder, in order to:
(1) cure any ambiguity;
(2) correct or supplement any provision contained in the Warrant
Agreement, which may be defective or inconsistent with any other provisions;
or
(3) make other provisions in regard to matters or questions arising
under the Warrant Agreement, which Northwest and the Warrant Agent may deem
necessary or desirable and which do not adversely affect the interests of
the Warrantholders.
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WARRANT AGENT
State Street Bank and Trust Company will act as the Warrant Agent under the
Warrant Agreement. Northwest and NWA Corp. maintain banking and other commercial
relationships with State Street Bank and Trust Company and its affiliates in the
ordinary course of business. The Warrant Agent will act solely as an agent of
Northwest in connection with the Warrants and will not assume any obligation or
relationship of agency or trust for or with any holders of Warrants or
beneficial owners of Warrants.
PLAN OF DISTRIBUTION
Northwest may sell Securities (a) through underwriters, (b) directly to
investors or other persons or (c) through dealers or agents. The applicable
prospectus supplement will name any underwriter, dealer or agent involved in the
offer and sale of the Offered Securities.
The Offered Securities may be sold (a) at a fixed price or prices, which may
be changed, (b) from time to time at market prices prevailing at the time of
sale, (c) at prices related to those market prices, or (d) at negotiated prices.
Dealer trading may take place in certain of the Offered Securities, including
Offered Securities not listed on any securities exchange.
Northwest may, from time to time, authorize underwriters acting as
Northwest's agents to offer and sell the Offered Securities upon the terms and
conditions set forth in any prospectus supplement. In connection with the sale
of Offered Securities, underwriters may be deemed to have received compensation
from Northwest in the form of underwriting discounts or commissions and may also
receive commissions from purchasers of Offered Securities for whom they may act
as agent. Underwriters may sell Offered Securities to or through dealers, and
those dealers may receive compensation in the form of discounts, concessions or
commissions from the underwriters and/or commissions, which may be changed from
time to time, from the purchasers for whom they may act as agent.
If Northwest directly uses a dealer in the sale of Offered Securities,
Northwest will sell the Offered Securities to the dealer, as principal. The
dealer may then resell the Offered Securities to the public at varying prices to
be determined by the dealer at the time of resale. The applicable prospectus
supplement will name any dealer and set forth the terms of any of those sales.
Northwest may offer and sell Offered Securities through agents designated by
Northwest from time to time. The applicable prospectus supplement will name any
agent involved in the offer or sale of the Offered Securities and set forth any
commissions payable by Northwest to that agent. Unless the applicable prospectus
indicates otherwise, the agent will be acting on a best efforts basis for the
period of its appointment.
Northwest may directly solicit offers to purchase Offered Securities and
sell them directly to institutional investors or others who may be deemed to be
underwriters within the meaning of the Securities Act of 1933 with respect to
any resale of the Offered Securities. The applicable prospectus supplement will
describe the terms of any of those sales. Except as set forth in the applicable
prospectus supplement, no director, officer or employee of Northwest or NWA
Corp. will solicit or receive a commission in connection with direct sales by
Northwest of the Offered Securities, although these persons may respond to
inquiries by potential purchasers and perform ministerial and clerical work in
connection with any of these direct sales.
The applicable prospectus supplement will set forth any underwriting
compensation paid by Northwest to underwriters, dealers or agents in connection
with the offering of Offered Securities, and any discounts, concessions or
commissions allowed by underwriters to participating dealers. Underwriters,
dealers and agents participating in the distribution of the Offered Securities
may be deemed to be underwriters, and any discounts and commissions received by
them and any profit
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realized by them on resale of the Offered Securities may be deemed to be
underwriting discounts and commissions under the Securities Act of 1933.
Underwriters, dealers and agents may be entitled, under agreements with
Northwest and NWA Corp., to indemnification against and contribution toward
certain civil liabilities, including liabilities under the Securities Act of
1933, and to reimbursement by Northwest and NWA Corp. for certain expenses.
Underwriters, dealers and agents may engage in transactions with, or perform
services for, NWA Corp., Northwest and NWA Corp.'s other subsidiaries in the
ordinary course of business.
If the applicable prospectus supplement so indicates, subject to existing
market conditions, Northwest will authorize dealers acting as Northwest's agents
to solicit offers by certain institutions to purchase Offered Securities from
Northwest at the public offering price set forth in the applicable prospectus
supplement pursuant to Delayed Delivery Contracts ("Contracts") that provide for
payment and delivery on the date or dates stated in the applicable prospectus
supplement. Each Contract will be for an amount not less than, and the aggregate
principal amount of Offered Securities sold pursuant to Contracts shall not be
less nor more than, the respective amounts stated in the applicable prospectus
supplement. Institutions with whom Contracts may be made include commercial and
savings banks, insurance companies, pension funds, investment companies,
educational and charitable institutions and other institutions, but will in all
cases be subject to the approval of Northwest. Contracts will not be subject to
any conditions, except the purchase by an institution of the Offered Securities
covered by its Contracts will not at the time of delivery be prohibited under
the laws of any jurisdiction in the United States to which the institution is
subject. The applicable prospectus supplement will indicate the commission that
will be granted to underwriters and agents soliciting purchases of Offered
Securities pursuant to Contracts accepted by Northwest. Agents and underwriters
will have no responsibility in respect of the delivery or performance of
Contracts.
The Offered Securities may or may not be listed on a national securities
exchange or a foreign securities exchange. If Northwest uses an underwriter or
underwriters in the sale of any Offered Securities, the applicable prospectus
supplement will contain a statement as to the underwriters' intention, if any,
at the date of the prospectus supplement to make a market in the Offered
Securities. No assurances can be given that there will be a market for the
Offered Securities.
The applicable prospectus supplement will set forth the place and time of
delivery for the Offered Securities. Northwest will issue the Debt Securities
that are issuable upon exercise of Warrants upon payment of the exercise and
otherwise in accordance with the relevant terms applicable to the Warrants and
described in the applicable prospectus supplement.
LEGAL OPINIONS
Unless the applicable prospectus supplement indicates otherwise, the
validity of the Debt Securities, the Parent Guaranty and Warrants offered by
this prospectus will be passed upon for Northwest and NWA Corp. by Simpson
Thacher & Bartlett, New York, New York. In rendering that opinion, Simpson
Thacher & Bartlett will be relying as to matters of Minnesota law on an opinion
from the Office of the General Counsel of NWA Corp. and Northwest.
EXPERTS
Ernst & Young LLP, independent auditors, have audited the consolidated
financial statements and schedule of NWA Corp. included in NWA Corp.'s Annual
Report on Form 10-K for the year ended December 31, 1998, as set forth in their
report on the consolidated financial statements and schedule incorporated by
reference in this prospectus. Those consolidated financial statements and
schedule are incorporated by reference in this prospectus in reliance on Ernst &
Young LLP's report, given on their authority as experts in accounting and
auditing.
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