Judge Approves Northwest Labor Deals, Compensation for Attorneys

A bankruptcy judge on Wednesday approved two more concession agreements from Northwest Airlines employee unions, deals that could clear the way for nearly $750 million in cost savings from the carrier's new labor pacts.

The flight attendants and flight simulator technicians were the last remaining groups that had not reached a deal to cut costs. Judge Allan Gropper's acceptance of the motions is needed for the carrier to implement other concession deals with pilots, baggage handlers, and ground and clerical workers.

Before the plans are implemented, though, flight attendants must approve the deal. They are scheduled to finish voting on the deal by Monday. It was announced at Wednesday's hearing that the technicians union, which represents 42 employees, had ratified its agreement.

All the labor agreements include a clause that required all new deals to be implemented simultaneously. Worth about $550 million (euro436.96 million), the deals with pilots and baggage handlers were approved by the court last month.

Gropper also approved payment of 80 percent of about $20 million (euro15.89 million) in fees to attorneys and financial advisers. The law firm of Cadwalader, Wickersham and Taft LLP had filed the largest claim, of about $6.5 million (euro5.16 million) in compensation and expenses for its work in the case.

"Enormous amounts of hardship are being imposed on many parties," Gropper said. "And I don't look at a holdback to be even a serious hardship on a firm that is earning a great deal of fees on the case, and properly so."

The U.S. trustee's office had objected to certain charges but reached an agreement over the objections before the hearing.

Under the deal with flight attendants, the company will enact wage cuts and work rule changes that were agreed upon in last-minute negotiations on July 17. The company had threatened to use court authorization to impose the wage and work rule changes, while the flight attendants had threatened to strike. The latest agreement followed intense negotiations that began July 6, when flight attendants abandoned their old union to join the Association of Flight Attendants. The AFA had promised to fight for a better contract than the one 80 percent of flight attendants had rejected in June.

The plan is estimated to cut about $195 million (euro154.92 million) in costs, which was what Northwest had originally sought.

The company also reached concession deals worth $358 million (euro284.42 million) from pilots and another $190 million (euro150.95 million) annually from 12,200 baggage, ground and clerical workers.

Northwest Airlines Corp., the fifth-largest U.S. carrier, filed for Chapter 11 bankruptcy protection in September.


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