Northwest tries for more cost cuts

Northwest
Airlines has revealed it filed
documents with the U.S. Bankruptcy Court for the Southern District of New York
related to the refinancing of some of its existing bank obligations.The agreement will allow Northwest to refinance $1.125 billion
of existing bank obligations at more favorable terms and provide access to $250
million in incremental liquidity.  In
addition, the airline is seeking court approval, as part of the agreement, to
allow this new facility to be converted to permanent exit financing, securing
part of the debt financing the company will need to emerge from Chapter 11
reorganization.
  The availability of this facility to the company is subject to
certain legal and financial requirements, including Bankruptcy Court approval and
finalized and fully implemented permanent labor cost savings. To secure exit
financing, in addition to court approval of the new facility agreement and
realization of needed labor cost savings, the company must obtain a satisfactory
resolution of its pension funding obligations and maintain minimum liquidity as part
of an overall
plan of reorganization.
  “Since beginning its restructuring last September,
Northwest has remained focused on its plan to realize $2.5 billion in annual
business improvements in order to return the airline to profitability on a
sustained basis. This restructuring plan is centered on three goals:  resizing and
optimization of the airline’s
fleet to better serve Northwest’s markets; realizing competitive labor and
non-labor costs; and restructuring and recapitalization of the airline’s
balance sheet,“said Neal Cohen,
executive vice president and chief financial officer.
  “This proposed financing will allow
Northwest to make additional progress on its goal of restructuring and
recapitalizing its balance sheet by lowering its costs and improving the
company’s long-term liquidity.”

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