Northwest Flight Attendants Sell Equity Claim
May 31, 2007
Washington, DC - Northwest Airlines flight attendants, represented by the Association of Flight Attendants-CWA (AFA-CWA), today sold a $182 million equity claim, just two days after ratifying a bankruptcy-driven contract which included the claim. In addition, some flight attendants will receive new stock in Northwest Airlines as a result of a settlement from an earlier dispute over Series C stock issued in the 1990s.
"The sale of the equity claim will provide some much needed cash and 401(k) contributions to our flight attendants," said Jay Hong, AFA-CWA president at Northwest. "But we should be clear: this sale recoups only a small fraction of the financial sacrifices our members have made in this bankruptcy. Our fight to rebuild our contract and recover what management has taken from us has already begun."
AFA-CWA reported that its broker, Athena Advisory Group, LLC, completed the sale of 100 percent of the Northwest flight attendants' $182 million bankruptcy equity claim to a group of buyers led by JP Morgan Chase Bank, N.A. Based on market conditions, the claim brought a gross price of approximately 64.75 cents on the dollar. That should yield about $14,500 per eligible flight attendant before taxes. The proceeds from the sale will be distributed 40 percent in cash and 60 percent as a 401(k) contribution.
Distributions are expected to take place within two or three weeks.
Some Northwest flight attendants are also due to receive stock in the reorganized Northwest Airlines upon exit from bankruptcy. Flight attendants had received Series C stock in return for contract concessions made in the 1990s. When the company later refused to pay off that stock, the union then representing the group sued and won a $65 million judgment.
The airline filed for bankruptcy before paying off that judgment. AFA-CWA argued successfully that the judgment should be treated as an allowed claim, entitling flight attendants who still held Series C stock to receive new stock as compensation. That claim was allowed and will be paid on the same terms as the claims of other unsecured creditors.
"This resolves a long-running dispute created by management when they refused to pay off the Series C stock," said Hong. "Flight attendants who earned this stock with their concessions will finally receive a significant portion of that value."
For over 60 years, the Association of Flight Attendants has been serving as the voice for flight attendants in the workplace, in the aviation industry, in the media and on Capitol Hill. More than 55,000 flight attendants at 20 airlines come together to form AFA-CWA, the world's largest flight attendant union. AFA is part of the 700,000-member strong Communications Workers of America (CWA), AFL-CIO. Visit us at www.afanet.org.