updated 10/2/2006 6:35:20 PM ET 2006-10-02T22:35:20

Northwest Airlines Corp. on Monday predicted a “modest profit” for the year as it reorganizes in bankruptcy, but also said it will lose money through the end of the year. And its profit prediction did not include bankruptcy expenses.

Northwest reported a net loss of $943 million for August. However, it said it would have made $167 million if not for $1.07 billion in reorganization items in the month. Most of the reorganization expenses were charges Northwest took as it implemented new contracts with several of its unions.

Eagan-based Northwest filed for Chapter 11 bankruptcy protection in September 2005. On Monday it said it hopes to emerge from bankruptcy in mid-2007, and to propose a reorganization plan by the end of this year. It has already lined up proposed debtor-in-possession financing.

Northwest said it had an operating profit of $272 million excluding reorganization expenses during July and August, when travel is usually strong. But it said revenue softened beginning in September, and that it expects to lose money through the end of the year.

The carrier said it expects $12 billion in revenue for the full year excluding reorganization items, and that it would have a 2 percent pretax profit margin. The company’s margin goal is 6 percent to 7 percent, Chief Executive and President Doug Steenland said in a statement.

“This expected modest full year profit is testament to the success of our ongoing restructuring efforts and the substantial sacrifices made by our employees and other Northwest stakeholders,” Steenland said. He also said Northwest got a profit boost by cutting 2006 capacity about 8 percent versus last year.

Northwest said it is aiming to save about $400 million a year on its fleet costs by renegotiating aircraft leases. On Monday it said it had agreements for the majority of those savings.

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