Pilots To Create Retirement Savings Plan With Proceeds
Northwest's CEO Doug
Steenland gave the company's pilots permission to sell 20% of the
their $888 million bankruptcy claim early.
As Aero-News reported last
month, pilots had asked permission for the sale on
reports the airline's stock was selling at over 80 cents on the
dollar -- 90 cents on some days.
The pilots based their request on the fact they had taken
double-digit pay cuts to help Northwest reduce costs in the
company's effort to emerge from bankruptcy. They took part of those
cuts in the form of unsecured debt on the airline and hold
approximately $888 million.
The pilots plan to sell 20% of that debt to get back some of
their losses in cash and start a retirement savings plan.
In a memo to members, the chairman of Northwest's chapter of the
Air Line Pilots Association (ALPA) said, "Our investment banker
tells us that these claims have been selling at unusually high
prices in recent weeks, especially due to recent merger
In the past few weeks
three major merger bids have rocked the airline market. US Airways
made a bid for Delta, United and Continental are reportedly getting
very cozy and AirTran is wooing Midwest -- and that's just in the
US. Merger mania is erupting all over the world as airlines
weakened by the last half-decade of decline seek ways to climb out
Steenland told the Associated Press he believes Northwest's
stock is selling so well because the company's restructuring plan
has gone so well.
The company also authorized its ground workers including
dispatchers, meteorologists and simulator techs to sell off 20% of
"Our pilots and our ground employees and our airport employees
have sacrificed to help the company restructure, and we wanted to
make sure that they had the opportunity to participate in this
(claims) benefit when the benefit was at the high level," Steenland
Curiously absent from mention in Steenland's statement were
Northwest's flight attendants. They also hold an unsecured claim on
the company in bankruptcy court, but an ongoing bitter labor
dispute has left them without a contract. With no contract, the
amount of their claim remains in dispute.
Talks between the airline and its flight attendants adjourned
this past Wednesday without an agreement.