Northwest Airlines said that creditors overwhelmingly approved its reorganization plan. The unofficial vote tally indicates that 96.9 percent of the airline’s creditors who voted — representing 98.4 percent of the total dollar amount claimed — approved the plan. The final voting results will be filed late this week with the U.S. Bankruptcy Court for the Southern District of New York.
“Today’s creditor approval is another step in Northwest’s efforts to complete its restructuring next month and to move forward as a strong, fully-competitive airline,” said Doug Steenland, president and chief executive officer, in a statement. A confirmation hearing on the Plan is scheduled for May 16.
Northwest filed an application with the New York Stock Exchange to trade its new common stock after the airline emerges from Chapter 11 bankruptcy protection. The plan calls for $1.4 billion in annual labor savings. The airline earlier reached permanent labor agreements with unions representing pilots, mechanics, aircraft technical support works, machinists, meteorologists and the Transport Workers Union. Just last week, Northwest reached a new, tentative agreement with its flight attendants.
Northwest’s secured creditors will be paid in full, according to reports from the Associated Press. In addition, most of the company’s unsecured creditors are expected to be paid about 74 cents on the dollar, payable in shares in the newly reorganized company. As is generally the case in bankruptcy reorganizations, the plan also calls for its existing shares to be canceled, and those shareholders would receive nothing in the settlement.
On Monday, the AP reported that that the three biggest unions at Northwest objected to the reorganization plan, saying that the company’s proposal to give its top 400 executives almost 5 percent of the company is too expensive. What’s more, last Friday, the company stunned unions when it said that Steenland would get $26.6 million in restricted shares and options after the airlines emerges from bankruptcy protection, the AP noted.