Northwest Airlines Corp. has reached a settlement with the union that represents its baggage handlers over a $10 million claim related to worker grievances filed in the company's bankruptcy case.
Under the agreement, the International Association of Machinists and Aerospace Workers will get a $3 million unsecured claim against Eagan, Minn.-based Northwest and a $1 million administrative claim under its reorganization plan.
"It will allow Northwest to resolve with finality the grievances in a manner acceptable to the IAM and beneficial to Northwest's estate," the airline said in papers filed this past week in U.S. Bankruptcy Court in New York.
The deal resolves all the grievances filed by the union's workers before the airline filed for bankruptcy. The union represents about 11,000 Northwest employees. Union spokesman Joseph Tiberi didn't return a phone call seeking comment.
Northwest emerged from bankruptcy in May 2007 swapping new stock for debt. The company will make a "catch-up distribution" to the union if the settlement is approved.
The company is asked for a hearing March 20 before U.S. Bankruptcy Judge Allan Gropper in New York to seek approval of the settlement.