May Declare Chapter 11 Wednesday
Right at the heels of similarly troubled Delta Airlines, there
are reports that Northwest may be ready to file for Chapter 11 as
early as Wednesday.
Northwest's board of directors was scheduled to meet Wednesday
to decide on a Chapter 11 filing, said Will Holman, a spokesman for
the Air Line Pilots Association union, to the Associated Press.
Anonymous sources claim such a filing could come as soon as
Wednesday afternoon, in US Bankruptcy Court in New York
Already in the national spotlight over its continuing conflict
with striking members of the Aircraft Mechanics Fraternal
Association, Northwest has also been under increased scrutiny
lately as reports surfaced claiming the airline attempted to
suppress an FAA memo citing overlooked maintenance issues by the
replacement mechanics NWA brought onboard in the strike’s
Issues seem to be mounting for the troubled carrier. On Saturday
a DC-9 was forced to make an emergency landing in St. Louis due to
the loss of power in one of its engines. While it may prove to be
nothing more than an ill-timed coincidence, this problem -- as well
as an additional issue with lowering the same plane’s nose
gear -- has done nothing to quiet the voices questioning if
Northwest is monitoring safety issues as closely as it claims.
Adding to speculation
of an impending bankruptcy filing the airline willfully failed pay
$42 million in payments to creditors this week, according to media
reports, as well as an $18.7 million payment to Northwest Airlink
commuter operator Mesaba Aviation. If the payment is not made by
next Tuesday, Mesaba may take action against Northwest, according
to a regulatory filing by the regional carrier.
Filing for Chapter 11, although seen as a last resort in almost
every circumstance, might help address some immediate issues facing
the troubled carrier. The filing would allow the airline to ask for
– and likely receive – immediate concessions from its
employees, possibly adding influence to its negotiating position
with AMFA. Northwest could also legally delay payments to several
of its contractors, including Mesaba.
Balancing these benefits is the need for the airline to submit a
reorganization plan to its creditors and shareholders within 18
months from the date bankruptcy is filed. However, submitting such
a plan may be delayed under current bankruptcy guidelines due to
expire on October 17th -- an added incentive for Northwest to file