Flight attendants at Northwest Airlines have formally objected to the payment of 'enhanced fees' to several consultants and legal firms that represented the airline during its bankruptcy restructuring. The flight attendants, represented by their union, were joined by the U.S. Trustee and representatives of Northwest's bondholders in formally objecting to the payment of additional fees to four firms. Judge Alan Gropper of the U.S. Bankruptcy Court for the Southern District of New York agreed with them, at least in part, by denying two of the fee applications. The hearing on two others has been delayed.
Northwest flight attendants are represented by the Association of Flight Attendants (AFA). A news release on the AFA website about this most recent court action says:
The four firms, Cadwalader, Wickersham & Taft LLP; Otterbourg, Steindler, Houston & Rosen, P.C.; FTI Consulting, Inc; and Lazard Freres & Co. have already received tens of millions in fees. The cost of their professional services soaked up a significant portion of the lost wages and benefits for all Northwest employees. Flight attendants alone are working under 40 percent wage and benefit reductions.Commenting on the flight attendants' position in this matter, Kevin Griffin, president of the Northwest MEC of AFA said, "If AFA-CWA had not objected today, more millions of dollars of our concessions would have been wasted on these outrageous fees. Management did not object to these fees, so the money is clearly available. Since they will not have to pay these ridiculous bonuses, we think it is far better spent on returning some of the pay and workrules the Northwest flight attendants have sacrificed."
The Court recognized that it was the sacrifice of the employees and other factors -- not just the work of these firms -- that helped turn Northwest around. The Court denied the applications from Cadwalader and Otterbourg. The other firms' applications will be heard at a later date.
In so ruling, the Court noted the importance that the process be perceived as a fair one, clearly concerned that these outrageous fees would have diminished the fairness of the entire process.