Northwest Says Deal Near With AMEX

Oct. 4, 2005
Northwest filed a lawsuit last week against American Express, claiming the financial services company's travel business was withholding payments worth about $63.4 million for tickets on its flights.

Northwest Airlines Corp. is close to settling a lawsuit with American Express Corp., lawyers for the nation's fourth-largest airline told a bankruptcy judge on Monday.

Northwest filed a lawsuit last week against American Express, claiming the financial services company's travel business was withholding payments worth about $63.4 million for tickets on its flights _ which could pose even greater financial distress for Northwest, which filed for bankruptcy protection on Sept. 14. Such an interruption of cash flow also could complicate the company's reorganization.

"I'm pleased that the parties are talking," U.S. Bankruptcy Judge Allan L. Gropper told the airline's attorneys.

Northwest, based in Eagan, Minn., has recently been seeking $1.4 billion in concessions from workers. So far, talks have resulted in a preliminary deal with pilots and a mechanics strike.

Northwest executives on Friday outlined plans to their creditors committee for bringing the carrier out of bankruptcy, including cost savings of up to $2.5 billion, job cuts and plans for a subsidiary that would fly smaller planes.

Also at Monday's hearing, in a routine motion, Gropper said Northwest would not have to repay debt for certain utilities. Because some other utilities issues have been objected to and no objectors were present at the hearing, he said those matters would be postponed to later hearing.

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