Nortwest's IAM Plans to Sell Part of its Claim Against Carrier

The Northwest Airlines ground workers union plans to sell part of a bankruptcy claim that will generate about $30 million to be distributed to union members.

"It will provide some immediate relief for some of our members who are struggling to keep up after the pay cuts," Stephen Gordon, an official of the International Association of Machinists and Aerospace Workers (IAM), said Thursday.

The IAM represents Northwest equipment service employees, customer service agents, clerical staff and other workers who took 11.5 percent pay cuts under labor deals approved this year.

Under those contracts, the IAM negotiated a $181 million unsecured claim against Northwest in its bankruptcy case.

Such claims are often converted to stock when a company emerges from bankruptcy, but claims typically are settled for a fraction of their original worth.

Northwest filed a motion Thursday seeking the bankruptcy court's permission for the IAM to sell 20 percent of its claim. That action allows the union to lock in a sale for 84 to 85 cents on the dollar, Gordon said.

The Northwest pilots union recently was able to get 85 cents on the dollar for 20 percent of its claim, providing about $150 million to pilots. The buyer has not been disclosed.

Dave Stevens, pilots union chairman, said in a recent memo that last spring some people thought the pilots' claim would be worth zero to 10 cents on the dollar.

Instead, Stevens wrote, "We took advantage of the remarkably high price for NWA claims."

Gordon said he hopes that about 11,600 IAM members will receive direct cash payments as early as January.

"We will let the membership choose what they want to do with their money," Gordon said. Some may use it for current living expenses, while others may put the money into retirement accounts.

Gordon said union leaders want to conduct the sale "while the getting is good," a reference to high values on claims.

In a message to employees Thursday, Northwest CEO Doug Steenland said, "The high valuation being put on these claims reflects the confidence investors feel in Northwest's future - confidence that Northwest employees have instilled by their hard work and sacrifice."

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