NWA, DAL Face Steep Legal Fees
 

Northwest, Delta Face Steep Legal Fees

Delta and Nortwest Airlines facing steep bankruptcy legal fees
By Armando Duke

(AXcess News) Houston, TX - Attorneys representing Delta Air Lines (OTC: DALRQ) and Northwest (OTC: NWACQ) have asked the bankruptcy court for $59 million in fees and expenses for between 3 to 4 1/2 months of legal work.

Airline employees are criticizing the amount the lawyers for the two airlines are asking the bankruptcy judge to approve after taking steep wage and benefit concessions. But lawyers typically make big fees in large bankruptcy cases and they could reap as much as $225 million between the two airlines before they exit bankruptcy.

Meanwhile, Delta is asking for an arbitration panel to cancel its pilot contract in order to impose $325 million in long-term wage concessions across its 6,000 pilots. Delta's pilot union said that it will call a strike if the arbitration panel approves Delta's request. A decision on the contract is expected April 15th. But Delta's pilots aren't alone, other employees of the airline have also taken steep pay cuts over the last two years.

Delta's lawyers have defended their fees saying that restructurings of this size are complex and difficult to manage, requiring teams of lawyers for lengthy periods of time to complete.

Estimates are that the two airlines legal costs could be $275 million, while United Airlines parent, UAL Corp., spent over $335 million over a 38 month period.

Northwest is targeting the end of this year to exit from bankruptcy while Delta expects it will take until sometime in 2007.

But in any bankruptcy case, the court decides how much lawyers can get and in most cases that is only 80 percent of the fees and expenses they submit. At times the court has even told attorneys they will have to wait and accept their fees later.

In Delta's bankruptcy case, 20 law firms have billed the court a total of $43.6 million for 4 1/2 months work. A hearing is set for April 3rd to weigh the attorneys fees for legal, financial and consulting services pertaining to Delta's bankruptcy case.

In Northwest's bankruptcy case, 18 law firms have bill the court for $15.9 million in fees and expenses for the first 3 1/2 months of work. Eighty percent of the initial fees and 100 percent of all the expenses have been approved so far.