Mesaba Has $10 Million 'Available Cash'

Bankrupt Mesaba Airlines has only $10 million left in "available cash," according to the judge presiding over the carrier's restructuring.

U.S. Bankruptcy Judge Gregory Kishel disclosed that figure Friday when he formally withdrew his permission for Mesaba to void its contracts with three labor unions.

Kishel's decision granting that right was overturned last week by U.S. District Judge Michael Davis. Mesaba management notified the unions this week that it intends to return to Kishel's courtroom - seeking authority to toss out the contracts - if the unions don't reach concessionary agreements by Thursday.

In his Friday order, Kishel said Mesaba reported Sept. 12 that it had $10 million in available cash left and was losing $1 million per week. The losses were attributed to revenue declines caused by the continual shrinkage of Mesaba's fleet by Northwest Airlines, Mesaba's main business partner.

In his ruling, Davis emphasized that Mesaba was asking for substantial cuts from its unions but did not expect its corporate parent, MAIR Holdings, to share the pain.

Kishel addressed that point Friday and posed possible solutions, such as "to prohibit the payment of shareholder dividends to MAIR for the duration of the concessionary labor cost structure."

Kishel said Mesaba could alter the size of the management fees paid to MAIR CEO Paul Foley and other MAIR executives for their expertise.

In interpreting the Davis ruling, Kishel noted, "Northwest Airlines, as a shareholder in the publicly held MAIR, stood to gain directly from any generation of post-reorganization profits by [Mesaba] that might be paid over to MAIR, as substantial `management fees' or as dividend payments."

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