Same issues, different airline.
Unable to reach negotiated deals with key unions to slash labor costs, Eagan-based Mesaba Airlines today begins trying to convince U.S. Bankruptcy Judge Gregory Kishel to reject their contracts. Union leaders, meanwhile, are talking strike.
As was the case with a like effort by Northwest Airlines to undo union contracts, the trial could take a few weeks. Kishel would apparently have to rule within 30 days from today on Mesaba's request to reject the contracts.
Mesaba insists it's merely seeking to cut labor costs to the point where it can compete with other regional airlines to do flying for mainline carriers. The Northwest Airlines regional carrier wants to slash labor costs for each work group by 19.4 percent.
Mesaba said it still hopes to reach negotiated deals with the unions for its pilots, flight attendants and mechanics. But it said it must get its labor costs down fast.
"We're on a tight timeline," said Mesaba spokeswoman Elizabeth Costello. "We need to know what our costs will be if we're to bid on flying for Northwest or any other carrier."
Eagan-based Northwest accounts for almost all of Mesaba's revenue. In 2005, Mesaba flew 5.7 million passengers for Northwest, for the most part ferrying them between smaller markets and Northwest hubs like the Twin Cities and Detroit.
In September, Northwest filed for bankruptcy. Mesaba followed in October after Northwest failed to make about $30 million in payments to Mesaba.
Northwest also is on track to take back about half of the some 100 planes it had been leasing to Mesaba, slashing the regional carrier's revenue.
With its fleet cut in half by the end of this year, Mesaba figures it would have about 1,800 employees, having let go of some 1,600.
Mesaba's unions contend the carrier is squeezing workers for concessions that are far beyond what the airline needs. If the company has its way, pilots would be paid 10 percent under the lowest pay scale now in place at any regional carrier, said union leader Tom Wychor.
"If our contract is rejected and Mesaba imposes its terms, we will strike,'' he said. "Those terms would be a death sentence for this carrier."
Under the company proposal, some pilots would see effective wage cuts of 15 percent to nearly 60 percent, as pay rates are cut and pilots shift to flying smaller planes, said Wychor.
The airline also wants employees to pay half of their health insurance costs, he added. And employees would get just three-quarters pay for sick days, he said.
Newly hired pilots wouldn't make much more than $10,000 a year after paying for medical insurance, he said.
Meanwhile, Wychor said he expects half of Mesaba's 850 pilots will be laid off by year's end if Northwest sticks with its plan to take back planes from the airline.
Mesaba's some 250 mechanics also are prepared to strike, said Kevin Wildermuth, their union's negotiating committee chairman.
"The proposed cuts by Mesaba are just absolutely draconian,'' he said. "Consensual agreements are the only way to save Mesaba Airlines. Without them, it is either: 'Quit or strike.' ''
Throughout the industry, struggling mainline carriers, which have been losing billions of dollars, are pressuring their regional airline partners to lower their costs, often playing them against one another.
Regional airline employees are at the bottom of the industry food chain, said Doug Abbey, a principal with the Velocity Group, an aviation consulting firm.
"The problems of the mainline carriers trickle down to the regional partners and then to the employees,'' he said.
To emerge from bankruptcy and compete for flying contracts, Mesaba said it must cut expenses by $65 million, with $17 million coming from employees and management.
With the cuts Mesaba is seeking, the average captain flying a 34-seat Saab plane would have a base pay of about $57,300; a first officer, $35,000, said Costello, the airline spokeswoman.
Mesaba would then be an "attractive option" for regional pilots, she said. And pilots could earn more if Mesaba wins contracts to fly bigger planes.
Mesaba is working to hold onto its existing contract to fly 49 Saab aircraft for Northwest. It also has submitted a bid to Continental Airlines to fly 69 regional jets for that carrier.
And Mesaba also is bidding to fly up to 126 regional jets for Northwest. That's basically a contract now held by Pinnacle Airlines, another Northwest regional partner facing a big squeeze by Northwest.
"But even with the 19.4 percent reduction, we know we are not the lowest bidder for the Northwest business," Costello said. "In the bid we put in for Northwest, we were in the middle of the pack."
If Mesaba is left with just the 49 Saabs, it will have to go out of business, said Wychor.
"That's not a viable business plan (with 49 planes),'' he said. "But no one believes that we will have a fleet of just 49 Saabs."
The airline needs to find new business and modernize its fleet, Wychor said. And MAIR Holdings, Mesaba's parent company, has more than $100 million that could be put to that end, he said.
"There's money at MAIR, and we gave it to them,'' Wychor said. "It should be used to reinvest in this company."
Martin J. Moylan can be reached at [email protected] or 651-228-5479.
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