Northwest Airlines is poised to leave bankruptcy court protection in June, although its plans for executive compensation have raised strenuous last-minute labour objections.

The carrier, which sought Chapter 11 protection in 2004 within an hour of Delta's bankruptcy filing, has, like Delta, cut costs by some $1.4 billion a year, slashed payrolls, trimmed routes, re-adjusted capacity and re-arranged its regional flying. Unlike Delta, however, Northwest is emerging in an atmosphere of labour discontent that stands in stark contrast to Delta's apparent upbeat mood.

Northwest employees were angered at plans to award chief executive Doug Steenland more than $26 million in stock awards and options, and at an agreement to give board chairman Gary Wilson some $2 million when he leaves the carrier's board of directors.

The Association of Flight Attendants says the payment to Wilson, an investor, "illustrates the breathtaking insensitivity and bad faith" that Northwest has shown its unions. The Air Line Pilots Association warns that Northwest "will not have a successful future if its employees are angry and demoralised".

The airline defended Steenland's awards, noting his leadership in the reorganisation. Steenland earned about $1.8 million in total compensation last year.

Union attempts to slow Northwest's emergence from court protection are expected to fail, but the discontent cannot be a good omen. Still, Northwest's post-bankruptcy strategy has not met with the scepticism that has greeted Delta's plans. Creditors in early May overwhelmingly approved Nortwest's reorganisation plan.

Northwest posted a $301 million net profit in 2006. Although its first-quarter 2007 net loss of $292 million was expected, the airline has already made some $395 million in profit-sharing payments this year and plans $1.6 billion in such payments through 2010.

Source: Airline Business