Delta and Northwest are in the red but not their lawyers
As Delta and Northwest press employees to take deep pay and benefit cuts, their lawyers and consultants are asking bankruptcy court judges to approve $59 million in fees and expenses for 3 1/2 to 4 1/2 months of work.
Total fees could reach $300 million by the time the two airlines exit Chapter 11 bankruptcy, which is not uncommon for big complex bankruptcy cases. This would still be lower than what United Airlines spent on its 38 months bankruptcy case, $335 million.
Northwest is targeting to have finished its reorganization plan by the end of this year. Delta is projecting to emerge from bankruptcy summer of 2007.
While the fees are high, if the airlines come out of bankruptcy leaner and stronger, headed towards profitability, then it is all worth it. In one deal a lawyers arranged with renegotiation of lease terms on 88 aircraft, it saved $200 million a year for the next five years for the airline.
The Associated Press published some samples of the high legal and consulting fees:
One law firm billed Northwest $130 for long-distance faxes, at $1.25 per page. It charged 10 cents for each photocopy, adding up to $17,309. It billed more than $183,000 for online research.
Billing records show 59 lawyers from Bruce Zirinsky’s law firm alone working on the Northwest case. Zirinsky himself so far has logged 706.8 hours at $800 an hour. That added up to $565,440 in 3 1/2 months. Zirinsky did not return a phone call seeking comment on the fees.
David
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