Mesaba and unions take talks to deadline
If labor agreements aren't reached today, a bankruptcy judge may allow the airline to void labor contracts, which could prompt a strike.

Liz Fedor, Star Tribune
October 16, 2006

Despite the threats of a labor strike or company liquidation hanging over their heads, Mesaba Airlines and its three large labor unions had failed to reach concessionary deals by Sunday evening.

However, the two sides were still bargaining late Sunday in an attempt to negotiate agreements by early this afternoon -- a deadline set by U.S. Bankruptcy Judge Gregory Kishel.

Leaders of the flight attendants and mechanics unions expressed frustration Sunday afternoon with the lack of major progress.

"They've taken the posture that it will be our way or the highway, instead of working on a consensual agreement," said Tim Evenson, president of the Mesaba branch of the Association of Flight Attendants.

Nick Granath, an attorney for the Aircraft Mechanics Fraternal Association, said the union made a new proposal Saturday night.

But mechanics had not received a response from Mesaba as of 9:30 p.m. Sunday, a union negotiator said.

"It appears to me that the company is not interested in doing a deal. That is going to be the death of this company," Granath said.

If there are no deals by this afternoon, Kishel is poised to rule on Mesaba's request to toss out its existing labor contracts. If the judge sides with the airline, management intends to move swiftly to impose lower pay rates on its workforce.

Management wants to reduce its labor costs as quickly as possible, because the airline is running low on cash. It can't get access to $24 million in debt financing from a lender until it achieves labor savings.

Mesaba has been attempting to negotiate deals with its pilots, flight attendants and mechanics since December.

On Thursday, Mesaba attorney Michael Meyer asked the judge to rule on Mesaba's motion to void its contracts, so it could proceed with plans to impose labor cost cuts of 17.5 percent on its employees.

Kishel chose to accede to a request by the unions and directed the parties to go back to the table and try to get deals.

"Everyone understands that if an imposition [of work terms] occurs, this airline is done for -- the airline faces liquidation," said Kris Pierson, secretary-treasurer of the Mesaba branch of the Air Line Pilots Association (ALPA). If the three unions are forced to work under concessionary terms they did not negotiate, Pierson said the unions are prepared to strike.

Mesaba has filed a motion seeking an injunction to block a strike. If that injunction is granted after a hearing Tuesday, labor leaders have said Mesaba could expect to see mass resignations from its employees.

Mesaba management was saying little Sunday about the talks and Mesaba's future.

"We're not negotiating in the media. We're trying to do this at the table," Mesaba spokeswoman Elizabeth Costello said Sunday.

Costello, on Friday, had said, "We are hopeful that the talks will be productive." But she declined on Sunday to characterize the status of the talks.

Pierson said the pilots union made a substantial economic proposal Friday night, but it took the airline until Sunday afternoon to respond.

"Judge Kishel gave us a mandate to use our time wisely over the weekend here," Pierson said late Sunday afternoon. "That has not occurred so far. We are still dedicated to this process in getting a deal done. But we need to see meaningful and timely returns on our proposals in order to gain consensus."

At 9:45 p.m. Sunday, Pierson said pilot leaders had met to evaluate a counterproposal. "It was a significant enough move from the company to warrant a response," Pierson said. "We expect to be burning the midnight oil, and doing this all night long."

Northwest Airlines pays Mesaba to fly regional flights, and Mesaba filed for bankruptcy in 2005 after Northwest skipped some payments.

Northwest has been shrinking Mesaba's fleet. While it was operating 100 planes for Northwest a year ago, Costello said Mesaba is now flying only 59.

Mesaba is pressing hard for labor cuts, because management argues it must reduce its costs to retain Saab turboprop flying for Northwest. It also said it needs lower labor costs to win a Northwest contract to fly 30 Canadair Regional Jets.

U.S. Rep. James Oberstar, D-Minn., told the Star Tribune on Saturday that he spoke with a Northwest executive Friday about the Mesaba labor-management conflict.

"My encouragement was to keep Mesaba talking, don't walk away from it," said Oberstar, who emphasized he hopes the company and Mesaba's 3,170 jobs can be saved. "As long as you are talking, there is a way of reaching resolution," Oberstar said. He also spoke recently with Mesaba labor officials.

Oberstar, who is a leader on transportation issues, said he stepped forward in this Mesaba conflict as "an honest, objective, outside broker."

Northwest spokesman Kurt Ebenhoch declined Sunday to comment on Oberstar's conversation with a Northwest executive.

Mesaba's creditors, who want to get paid in this bankruptcy, also are watching the negotiations.

"Labor peace is a necessary piece" for Mesaba to successfully restructure in bankruptcy, said Tim Robinson, an attorney for the creditors committee.

But Robinson said Sunday that the labor conflict must be concluded. "Our constituents have been extremely patient over the past year, and that patience has grown razor thin at this point," he said.

If the creditors deem that Mesaba cannot survive as a viable business, they could petition the court to convert the bankruptcy from a Chapter 11 reorganization to a Chapter 7 liquidation.

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