Capital Advisors helps Northwest

[HenryTo]

Yesterday was a good day for Northwest airlines - a bankruptcy candidate. Please note that Steve Cohen is a legend in the hedge fund business - and is featured as one of the "Stock Market Wizards" in the latest Jack Schwager book of the same name.
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Capital Advisors helps Northwest

By Kevin Allison in New York
Monday, August 01, 2005
Posted: 04:00 PM EDT (21:00 London)

Shares in Northwest Airlines (NASDAQ:NWAC) jumped 6 per cent on Monday, buoyed by news that SAC Capital Advisors, a hedge fund, had taken a 5.7 per cent stake in the struggling US carrier.

In a filing with US regulators after the close of trading on Friday, SAC revealed that it held 4.9m shares in Northwest, worth $23.3m at Friday's closing price.

The shares rose 5.6 per cent to close at $4.91 in New York.

Northwest, which is considered to be among the weakest US carriers financially, last week repeated warnings that it might face bankruptcy unless it secured pensions relief and $1.1bn in labour cost savings this year. The warnings came as Northwest reported a widened quarterly loss of $225m.

The carrier's hopes were lifted last week after the Senate finance committee approved a draft bill that would extend the time airlines have to make up for funding gaps in their pension plans from the current four years to 14 plus a 7-year transition period. Northwest called the draft bill a "workable solution".

Some analysts have said that Northwest remains a candidate for additional financing in spite of its mounting losses.

SAC Capital Advisors manages $6bn and is known for its aggressive trading style. Its manager, Steven Cohen, is thought to have made $450m last year after the company's funds returned an average of about 23 per cent.

Northwest's improved share price is in contrast to that of Delta Air Lines, its Atlanta-based rival. Shares in Delta, which faces fixed cash obligations of more than $1bn over the next six months, plunged almost 15 per cent last week amid fears that a Chapter 11 filing could be imminent. The shares closed down slightly at $2.97 on Monday.