ALPA Sells 20% Of $888 Million Claim Against Northwest

The Air Line Pilots Association says it's found a buyer for a fifth of its nearly $900 million claim against bankrupt Northwest Airlines.

ALPA negotiated the claim as part of its labor contract with the airline earlier this year. Northwest is currently under protection from its creditors in federal bankruptcy court.

Northwest's ground workers are also seeking permission to sell a portion of the $181 million the airline owes them.

Typically, whoever owns claims against a bankrupt company gets the money back in the form of shares of ownership when it emerges from bankruptcy -- usually pennies on the dollar. In some cases, such as this, an investment group purchases claims to trade or keep as shares in the new company.

ALPA says the sale will mitigate the 39 percent cuts in wages and benefits Northwest's pilots have endured over the past two years to help the airline reorganize.

"While we are pleased with the pending claim sale, we would prefer the opportunity to sell more, and there remains much more to be done towards restoring the careers and quality of life for Northwest pilots," said Dave Stevens, who leads the pilots union at Northwest. "A sale of part of the ALPA claim does not allow our pilots to be at home with their families more or work less hours per day."

The pay out per pilot for the sold claim is to be based on a formula factoring seniority and current wages. Payees can opt for a direct payment, or a deposit in a retirement account.

According to the Detroit Free Press, if all 6000 eligible Northwest pilots were to receive an equal share, the amount would be about $25,000 each.

Previous estimates on share values for Northwest's unsecured claims hovered around 10 to 15 cents on the dollar. Changes in market outlook for the airline industry -- driven in part by a US Airways merger bid for Delta -- has pushed stocks higher across the board.

ALPA's buyer reportedly will pay 85 cents on the dollar for the shares.

FMI: www.alpa.org, www.northwest.com