Northwest Airlines files bankruptcy reorganization plan
(AP) - Northwest Airlines Corp. filed its bankruptcy reorganization plan on Friday, another step toward its planned emergence from Chapter 11 protection in the second quarter of this year.
The plan did not address perhaps the largest question surrounding Northwest right now: Whether it will merge with another airline. Northwest has hired a merger advisory firm, although it has not commented publicly on its plans.
The 66-page plan also didn't include cited several schedules to be filed later, including management compensation. Northwest's bankruptcy judge in New York extended until Feb. 15 its time to file disclosures related to the plan.
Northwest said its shares, which had continued to trade over the counter, would be canceled once it emerges. It said its unsecured creditors would not be paid in full.
Northwest, the nation's fifth-largest carrier, had filed for Chapter 11 protection on Sept. 14, 2005, and had until Tuesday to file its own reorganization plan. After that, other parties such as creditors could have proposed their own reorganization plan.
Northwest Chief Executive Doug Steenland said Northwest has cut $2.4 billion in annual costs and is on track to report a pre-tax profit for 2006.
More than half of those cost savings came from employee pay cuts and less-restrictive work rules.
Steenland said that will pay off in the long run.
"For our employees, a healthy Northwest will ensure a future of job security, pension and retirement benefits, profit-sharing payments and access to a valuable claim" in the bankruptcy estate, he said, in a news release issued alongside the reorganization plan.
Union workers who agreed to pay cuts got unsecured claims in Northwest's bankruptcy, and pilots have already sold some of their claims for cash.
Flight attendants have not received an agreed-upon claim because they never approved a new negotiated contract. Instead, they're working under a contract Northwest imposed, with a judge's permission.
Northwest said on Friday that flight attendants could get a claim, too, if they ratify a new contract.
(Copyright 2007 by The Associated Press. All Rights Reserved.)