Judge voids Mesaba's power to force cuts

Malko

Malko

ughhh
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Stripped of its legal hammer, the regional airline has two options in its confrontation with its unions: negotiate or liquidate.

Liz Fedor, Star Tribune
Last update: September 13, 2006 – 10:49 PM
Mesaba Airlines' power to impose concessions on its unionized workers was taken away Wednesday by U.S. District Judge Michael Davis.

Davis determined that U.S. Bankruptcy Judge Gregory Kishel erred in mid-July when he granted the airline the authority to nullify existing labor contracts with its pilots, flight attendants and mechanics. Ruling on an appeal by the carrier's unions, Davis decided that Mesaba didn't negotiate in good faith and failed a legal test requiring it to be "fair and equitable" in spreading the pain of its bankruptcy restructuring.

Without the authority to force pay cuts on union workers, Mesaba management now is left with two immediate options: liquidate a key provider of regional air service or negotiate deals that union workers will ratify.

Mesaba President John Spanjers warned Mesaba's 3,300 employees last week that they must quickly reach deals with the company or the carrier would impose labor cuts or "cease flight operations."We need to move from the court back to the bargaining table for real this time," said Nick Granath, an attorney for the Aircraft Mechanics Fraternal Association (AMFA). "This is not working for them to keep litigating this."

Mesaba, based in Eagan, filed for bankruptcy protection in Minneapolis in October. Nine months ago, it asked its unions to accept 19.4 percent labor cuts in contracts that span six years. Mesaba has been unable to secure deals meeting that target, and management cannot get its hands on $24 million in debt financing unless it reaches its labor savings goal.

"While we are disappointed with Judge Davis' decision and will review all of our legal options to address his concerns, we are committed to successfully restructuring this company," Spanjers said in a statement Wednesday. "What remains unchanged is the company's need to find a solution quickly to ensure the survival of the airline." He emphasized a desire to "reach consensual agreements with each work group."

Mesaba said it has scheduled meetings with the three unions "to share detailed information about the company's cash position, which is quickly deteriorating."

The pilots union offered 14 percent labor savings over three years, and pilot negotiators said in early August that they did not want to return to the table until Mesaba demonstrated substantial movement.

"If the company cannot pay competitive rates to the employees who work here, we'll simply have to work someplace else," said Tom Wychor, chairman of the Mesaba pilots union.

Carla Rogat, vice president of the Mesaba flight attendants union, said all of the unions want to join management in saving the company. But she stressed that for the airline to be worth saving, it must offer a viable future for employees.

She said Davis' ruling creates an opportunity for Mesaba to compromise with labor. "They can't simply use the courts to force their view of the world," she said.

In mid-July, Kishel approved Mesaba's request to void its current contracts. But he required the carrier to give the unions 10 days' notice. Mesaba has never given notice.

While Davis ruled that Mesaba met a majority of the legal standards for a contract to be abrogated, he wrote that he reversed Kishel because of "Mesaba's refusal to negotiate snap-back provisions" that would provide some ability for employees to get better compensation if the airline's financial condition improves.

Davis also said Mesaba failed "to demonstrate that its proposals fairly and equitably spread the burden of reorganization among all relevant affected parties particularly MAIR."

MAIR Holdings is Mesaba's Minneapolis-based parent company.

The unions have repeatedly criticized MAIR for taking money from Mesaba in recent years but distancing itself from its subsidiary when Northwest Airlines reduced Mesaba's fleet and missed payments.

Liz Fedor • 612-673-7709 • lfedor@startribune.com
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One thing I *just don't understand* is how a fee for departure company can LOSE money. If mesaba is actually losing money, then that's managements' fault for running the company inefficiently, not labors. They need to sue Northwest, NOT their own employees.
 
wheelsup said:
One thing I *just don't understand* is how a fee for departure company can LOSE money. If mesaba is actually losing money, then that's managements' fault for running the company inefficiently, not labors. They need to sue Northwest, NOT their own employees.
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Can't sue Northwest -- it's in bankrupcy.
 
Minnesota_Flyer said:
Can't sue Northwest -- it's in bankrupcy.
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source?

When I was in highschool I paid cash for a bunch of stereo equipment, the company then went under (ch. 7 actually) and I filed suit to get my $$ back. I got a check a few months later.

Mesaba Airlines, parent file claims of $281M against NWA

http://www.bizjournals.com/memphis/stories/2006/08/14/daily36.html
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Mesaba's ground contracts are slowly getting rebid. I know AWAC has taken over some of their stations already.
 
Every time I go into a Mesaba hub, I cringe. From what I hear, the service has been pretty bad for a while. Pinnacle was wanting to try to get someone else to do our groundservice, but NWA (read "god as far as we're concerned") said we were stuck with them. Whenever I fly into DTW or MSP, I'm either waiting on marshellers, gate agents or both. We were delayed 20 minutes b/c we didn't have a push crew, and the next morning we were yelled at by the gate agent for being 20 minutes early.

Rumot is that PCL is gearing up to replace Mesaba at MSP and DTW "just in case." AWAC is replacing a lot of the NWA mainline ground workers, but I don't know about the Mesaba stations. I know a lot of those contracts went out for bid a week or two ago.
 
wheelsup said:
source?
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U.S. bankruptcy code.

I overstated a little. You can sue a bankrupt enterprise, but there are special procedures to follow and you usually have to get in line with the other creditors. Recovery is usually pennies or dimes on the dollar (depending on a variety of things).

Mesaba went into bankruptcy only after NWA went into bankruptcy and stopped paying Mesaba. Mesaba can sue for that money, but is limited to whatever percentage of debts NWA is paying out in the bankruptcy plan.
 
In truth, MAIR Holdings is sueing. If they get any cash (and history is any indicator) I doubt a dime of that will go to Mesaba......
 
From my understanding (one of the guys in the crashpad is Mesaba), MAIR holdings is holding all $120 Mil in profits that Mesaba earned over the last few years. Now, they are pissing money away (MSP and MEM Avro guys/gals are all on reserve, the roommate is "just flying around, doing safety checks"...he's a former Avro Cehck Airman), and MAIR will not give them any of their money, as they want to look like they are bankrupt. It's just an all-around crappy situation for all except management.

I feel for all those guys/gals. Give 'em hell!!!!!
 
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