Flying Upright: Northwest Emerges from Bankruptcy

Following on the heels of Delta, the airline announces it's officially free of Chapter 11 protection.

Northwest Airlines is the latest airline to emerge from bankruptcy protection.

With CEO Doug Steenland and several Northwest employees ringing the opening bell, Northwest’s shares began trading on the New York Stock Exchange Thursday morning. Steenland then made the first buy of new NWA common stock. “Today is a landmark day in the 81-year history of Northwest Airlines,” he said. “We have successfully repositioned the company as a stronger, globally focused airline with a great route network, a revitalized fleet, a competitive cost structure, and a recapitalized balance sheet.”

On May 18, Northwest completed its restructuring process when Judge Allan L. Gropper of the U.S. Bankruptcy Court for the Southern District of New York signed the order confirming Northwest’s plan for reorganizing.

On May 9, Northwest had announced that 96.9 percent of the airline’s creditors who voted — representing 98.4 percent of the total dollar amount claimed — approved the Northwest plan.

The Associated Press pointed out that Northwest has pared debt by $4.2 billion, cut $400 million a year in the cost of its fleet, dumped unprofitable routes and cut $1.4 billion a year in labor costs. Like most other airlines, Northwest has blamed its troubles on a slowing economy and rising fuel prices. The airline filed for bankruptcy protection 20 months ago, the same day as Delta Air Lines, which emerged from bankruptcy on April 30.

The AP pointed out that Northwest’s new labor contracts lock workers into lower pay rates and more company-friendly work rules through the end of 2011, longer than those of its U.S. competitors.


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