One Down... One To Go

On Tuesday, Northwest Airlines won the first of two needed victories in its quest to purchase regional operator Mesaba Airlines. Judge Allan Gropper, who is presiding over Northwest's reorganization effort in US Bankruptcy court, gave his approval to the deal.

"Based upon the record before me and the lack of objection from any party, I'll approve the agreement," Gropper said at the hearing, reports Bloomberg.

Under Northwest's plan, Mesaba's creditors would lose their remaining claims to existing stock in the regional operator... but they would pick up a new $145 million claim against Northwest. The Eagan, MN-based airline intends to make Mesaba, which already flies short routes for Northwest, a wholly-owned regional subsidiary.

But the deal isn't done just yet. The judge handling Mesaba's bankruptcy hearing still needs to sign off on the plan. A spokeswoman for the airline said it expected Judge Gregory Kishel to approve the documentation Mesaba creditors will use to decide whether to vote on the company's bankruptcy plan.

"These were arrived at after extensive, arm's-length negotiations," Northwest lawyer Nathan Haynes told Gropper. "The operations would become part of Northwest."

Kishel has already approved Mesaba's sale of its claim against Northwest to a Goldman Sachs Group affiliate. The transaction price was $124.9 million, or 86 percent of its value.

FMI: www.nwa.com, www.mesaba.com