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 speculation."

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 of debt.

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 their claims.

"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 said.

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.

FMI: www.northwest.com