The Spark

“The emancipation of the working class will only be achieved by the working class itself.” — Karl Marx

Vulture capitalism

Sep 26, 2005

While Northwest Airlines just declared bankruptcy and is demanding huge concessions and job cuts from its workers, its top officials have made out quite nicely.

Al Checchi and Gary Wilson, together with a group of investors, carried out a leveraged buyout of Northwest in 1989. With a mere 40 million-dollar investment, the pair used assets of the company they intended to buy to borrow more money to purchase the company for 3.65 BILLION dollars.

In 1994, to pay back part of their loans, they took their company "public," that is they sold Northwest stock. Of course, Checchi and Wilson took their share right off the top. They each made an estimated 150 million dollars from the initial public offering of Northwest stock.

That was only the beginning. Year after year, Northwest paid its top five executives big bucks. Since 2002, the airline gave its top five executives more than 32 million dollars, 15 million of it the year before it declared bankruptcy! And that doesn't even include other benefits like lifetime health care benefits or a million dollars a year pension for CEO Doug Steenland.

Since January, Checchi and Wilson have each sold about 80% of stock options they owned. Checchi made 26.4 million dollars on the sales and Wilson made 19.5 million dollars. After dumping most of their stock – they declared bankruptcy.

If Northwest is anywhere near death, it's only because these vultures have feasted on it for so long.