May Emerge From Bankruptcy As Soon As End Of Month
ANN REALTIME REPORTING
05.18.07 1500 EDT: Not a bad way to end the week. On
Friday, US Bankruptcy Court Judge Allan Gropper gave beleaguered
carrier Northwest Airlines his approval to exit bankruptcy, with
some $2.5 billion in cost savings.
Northwest spokesman Roman Blahoski told Reuters Gropper hadn't
signed off on the ruling -- which will start an 11-day
"administrative period" for Northwest to notify shareholders and
other affected parties -- but the judge did voice his approval in
"We are pleased to have completed our restructuring
successfully. We are now focused on emerging from Chapter 11 as a
strong, publicly traded company, which will provide excellent
service to our global customer base," said Northwest CEO Doug
Steenland. "I want to thank our customers and creditors for their
understanding and cooperation during the past 20 months as we
completed the restructuring process.
"Most importantly, I want to thank our employees for their hard
work and sacrifices that helped Northwest attain its goal of
repositioning the airline for long-term success. I am pleased that
we plan to share with our employees some $1.6 billion in claims
payments and anticipated profit sharing through 2010," Steenland
Those words may sound a tad hollow to Northwest's workers,
however. Pilots and other Northwest employees have joined in a
series of protests, to show their extreme displeasure for
the roughly $300 million in bonuses airline executives are due
to receive -- including a one-time $26.6 million stock bonus for
CEO Steenland -- upon the carrier's exit from
"This award goes beyond the obscene -- it is so extraordinarily
large," Association of Flight Attendants lawyer Robert Clayman told
the Associated Press. "Even in the perverse world of executive
compensation, it cannot withstand scrutiny." Flight attendants were
among the most vocal voices of protest against Northwest's
reorganization plan in court this week.
As ANN reported, Northwest
entered Chapter 11 reorganization September 14, 2005, along with
similarly troubled competitor Delta Air Lines. Over the past 22
months, the carrier struck a hard bargain with its employees,
forcing steep cost cuts and other labor concessions in order to
regain its solvency.
The airline has reached contract deals with all its workers,
except for the flight attendants. Representatives on both
sides approved a tentative agreement last
month, after two other TAs were soundly rejected by
union membership. A vote on that third TA is expected shortly...
and it's not yet clear whether the third time will be the
Northwest had stated it hoped to emerge from bankruptcy in June.
Providing shareholders don't throw up any last-minute objections,
however, the carrier could exit Chapter 11 as soon as May 31.
Whenever that happens, it will mark the first time in over
five years a major US carrier hasn't been in bankruptcy,
according to Reuters. The times, they are a'changin'...