Tempers, Time Short for Mesaba

Oct. 12, 2006
As the carrier moved toward its Sunday deadline for cutting labor costs, more bad blood emerged in bankruptcy court.

Mesaba Airlines and its large unions were back in bankruptcy court Tuesday, where the two sides clashed repeatedly during a daylong hearing.

Thomas Schmidt, Mesaba's vice president of finance, testified that the carrier must act now to slash its labor costs to avoid a liquidation.

Mesaba asked U.S. Bankruptcy Judge Gregory Kishel to grant its motion to allow Mesaba to void its labor contracts. Management wants to impose lower pay rates on its workers on Sunday if deals are not negotiated by then.

Jane Schraft, an attorney for the Air Line Pilots Association (ALPA), testified that Mesaba violated a confidential agreement by introducing labor proposals in court Tuesday that were "off the record." Schraft said she had never seen such a breach of confidentiality in 21 years of bargaining.

"These people cannot be trusted," said Tom Wychor, chairman of the Mesaba branch of ALPA.

The release of the confidential documents "underscores the total lack of faith and trust that we have in this management team," Wychor said.

The issues that unleashed this latest round of discord are whether Mesaba has been bargaining in good faith with the Mesaba unions and whether it was willing to negotiate over "snapbacks" or the restoration of wages and benefits included in concessionary contracts.

In September, U.S. District Judge Michael Davis reversed Kishel's July ruling that gave Mesaba the power to nullify its labor contracts. Davis pointed to two key issues in his decision - a failure to negotiate over snapbacks and a failure to require that other stakeholders, including parent MAIR Holdings Inc., share in the financial sacrifices along with the unions.

"It's incredibly unfortunate that we've had to discuss these matters in public," Mesaba spokeswoman Elizabeth Costello said. "They expected us to sit here and be silent and let this company go down the tubes this weekend."

Mesaba's actions in restoring wages for employees is a key issue that Kishel will examine before deciding whether to grant Mesaba permission to void its contracts. Costello said union attorneys misrepresented the company's posture by telling Davis, in their appeal arguments, that the airline refused to bargain over snapbacks.

The flight attendants and mechanics attorneys also expressed opposition to the introduction of the confidential proposals.

"I don't think you can underestimate the damage that has been done," said Nick Granath, an attorney for the Aircraft Mechanics Fraternal Association. The mechanics did not bargain on Tuesday afternoon and instead brought negotiators to the courtroom.

Mesaba's Schmidt testified in court that Northwest Airlines still has not indicated whether it will retain Mesaba to fly 49 Saab turboprops. And Schmidt said Northwest asked Mesaba for a financial proposal to fly 30 regional jets, but has not said if Mesaba will be chosen over several competitors.

Testimony on Tuesday also focused on the terms that Mesaba would impose if Kishel permits the company to void its contracts. Schraft said Mesaba notified the unions that it would slash labor costs by 19.4 percent, even though it recently said it could live with 17.5 percent.

The company intends to impose cuts that would last for 5 1/2 years.

The hearing continues today, and Kishel is expected to issue a decision before the end of the week.

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