Mesaba ruling set for today

U.S. Bankruptcy Judge Gregory Kishel's decision is expected to move the airline's labor dispute to a conclusion.
Liz Fedor, Star Tribune
October 12, 2006

U.S. Bankruptcy Judge Gregory Kishel will issue a pivotal ruling today in the Mesaba Airlines bankruptcy case that is likely to help break the logjam between Mesaba and its labor unions over concessionary contracts.

Regardless of what Kishel decides, his action is expected to set in motion events that will bring the 10-month-old labor-management struggle to a conclusion.

Mesaba attorney Michael Meyer implored Kishel on Wednesday to grant the company's motion for permission to void its current labor contracts. Meyer said the airline's cash position is so dire that Mesaba must have the ability to impose pay cuts "to stay alive" if it can't reach negotiated deals during the next few days.

By lowering its labor costs -- through negotiated deals or imposed terms -- Mesaba can tap into $24 million in debt financing.

Rob Clayman, an attorney for the Association of Flight Attendants (AFA), argued that Mesaba failed to meet its legal burden to secure approval to nullify its contracts. Lawyers for the pilots and mechanics unions made similar arguments.

Clayman urged Kishel to give Mesaba and the three unions another 10 days to two weeks to negotiate.

"My mind is not made up at this point," Kishel said Wednesday afternoon at the close of a two-day hearing.

In mid-July, Kishel granted permission to nullify the existing labor agreements, but Mesaba did not impose work terms and U.S. District Judge Michael Davis reversed Kishel's decision in September.

Kishel is in Minneapolis, but he is dealing with the same bankruptcy law that U.S. Bankruptcy Judge Allan Gropper has applied multiple times in the Northwest Airlines case in New York.

Gropper's name cropped up several times this week in Kishel's courtroom.

Throughout the Northwest case, Gropper has used his judicial power to create a climate that would foster deals between Northwest and its unions.

Instead of ruling on Northwest's request to void the pilots' contract, Gropper allowed the parties to bargain beyond a deadline and they reached a deal. When Northwest flight attendants were battling over which union should represent them, Gropper granted Northwest permission to void the contract. But he required Northwest to wait a few weeks, which bought the attendants time to conclude their representational election and the new union negotiated a tentative agreement.

Meyer said that if Kishel approves Mesaba's motion, the company would impose cuts that would reduce its labor costs by 17.5 percent -- less than the original 19.4 percent target.

Liz Fedor • 612-673-7709 • lfedor@startribune.com