Association Of Flight Attendants Distribution Completes Post Bankruptcy Unsecured Claims Paid To Northwest Contract Employees
Northwest Airlines (NYSE: NWA), on behalf of the Association of Flight Attendants-CWA (AFA), has distributed cash and 401(K) contributions generated from the sale of the $182 million unsecured claim included in the union’s recently approved labor contract.
This allocation of funds to Northwest’s flight attendants completes the sale of all contract employee unsecured claims negotiated during the carrier’s Chapter 11 restructuring. These unsecured claims totaled $1.25 billion.
Commencing in February 2007 when the company unilaterally gave its unions the right to sell a portion of their claims earlier than their collective bargaining agreements otherwise permitted, each of the unions has been monetizing its claim dollars. In the aggregate, the total dollar amount in cash and Northwest stock to be distributed to contract employees is $960 million.
“When we originally negotiated the claims, the expected sale price was 15 cents on the dollar. If that price had stayed, the total claims distribution would have been $180 million. Instead, as a result of our successful restructuring, those unsecured claims are worth $960 million, a $780 million improvement over what was expected,” said Doug Steenland, Northwest Airlines president and chief executive officer.
Incentive Plans Offer More
The claims are in addition to a separate gain sharing program also included in the new labor contracts that could see contract employees and non-executive salaried staff receive an additional $500 million in profit sharing through the end of 2010.
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