Mesaba gets OK to impose cost cuts
A judge rules that Mesaba can dictate new labor terms; doing so would be a likely step toward liquidation, its unions say.
Liz Fedor, Star Tribune
October 17, 2006

U.S. Bankruptcy Judge Gregory Kishel gave Mesaba Airlines the green light Monday to abrogate its labor contracts on Wednesday and impose cost cuts of 17.5 percent on its three large unions.

Although Mesaba wants to move swiftly to slash wages, it first wants Kishel to grant an injunction forbidding employees from walking off their jobs.

The labor-management breakdown at Eagan-based Mesaba will thrust Kishel into the national spotlight today because he is expected to be asked to approve Mesaba's request to prohibit its pilots, flight attendants and mechanics from striking.

If Mesaba prevails, the regional carrier would make history. No bankrupt airline has forced three employee unions to work under imposed pay rates in the 20-plus years since the bankruptcy law was altered.

Today's legal battle temporarily leaves Mesaba's passengers, who fly on Northwest Airlines' Airlink flights, up in the air. Passengers could learn today or Wednesday whether they will be coping with a strike or flying with disgruntled Mesaba employees.

"A judge's ruling preventing a strike does not magically resolve the underlying conflict, and, in fact, worsens it by increasing workers' sense of powerlessness and injustice," John Budd, a human resources professor at the University of Minnesota, said Monday.

"If Judge Kishel allows Mesaba employees to strike, then a strike is very likely. Either way Mesaba is in trouble," Budd said.

In September, U.S. District Judge Victor Marrero in New York granted Northwest an injunction to block its flight attendants from striking. Today, Mesaba's legal counsel is expected to make similar arguments.

Across the United States, airline industry insiders have been shaking their heads at the poor state of labor-management relations at Mesaba.

"Mesaba will not survive if there are imposed contracts," said Duane Woerth, president of the Air Line Pilots Association (ALPA) International. He predicts that forcing employees to work under terms they did not accept at the bargaining table would spawn a strike or huge numbers of resignations.

Woerth, who emphasized that his pilots union has negotiated deals in recent years at 20 bankrupt carriers, calls Mesaba an anomaly.

Jerry Glass, a consultant and former US Airways executive, also has been watching the Mesaba case unfold. "Normally these things do get resolved," Glass said. "The alternative to not getting a deal is so bad."

But Mesaba and its three big unions have battled each other since December. Kishel said Monday that he was "very unhappy" to be placed in a position where he had to rule on a motion to allow Mesaba to throw out its labor contracts. On Thursday, the judge had directed the parties to make one more run at negotiating deals over the weekend. But they returned to court empty-handed.

Mesaba, which provides regional flying for its large business partner, Northwest Airlines, has spent more time in courtrooms arguing with its labor unions than has Northwest.

Both Northwest and Mesaba filed motions in their bankruptcy cases to gain the power to void their contracts and set pay rates and work rules. The threat of a judge allowing an airline to impose terms usually is enough incentive to get management and labor to reach deals at the bargaining table.

Northwest negotiated five concessionary deals with its three largest unions. The pilots ratified the first agreement, ground workers accepted the second deal and flight attendants have rejected two agreements and are back negotiating this week.

Mesaba management is 0-for-3 on reaching deals with its big unions.

"We know that consensual agreements are in the best interests of the airline, our employees and our customers," said Elizabeth Costello, a Mesaba spokeswoman.

After stating that Kishel made the "appropriate decision" on Monday, Costello said Mesaba negotiators are still focused on reaching deals with the unions.

"We have heard ad nauseam that the company wants a consensual deal," said Nick Granath, an attorney for the Aircraft Mechanics Fraternal Association. But he said Mesaba management has not accepted union-proposed cutbacks of more than 15 percent over four years.

Northwest spokesman Roman Blahoski said Monday, "If Mesaba schedule interruptions do occur, Northwest has a contingency plan to accommodate its customers."

Last week, Northwest CEO Doug Steenland told reporters that Northwest would "rebook and reaccommodate" passengers using other regional carriers where possible and to find "the most convenient transportation" to get customers to their destinations.

Northwest pilot leaders decided last week that their pilots will refuse to do "struck work." So Northwest will be prohibited from shifting Mesaba flights to Northwest planes and pilots.

Tom Wychor, chairman of the Mesaba pilots union, said Monday that Pinnacle Airlines pilots also will support Mesaba pilots and will not accept additional flying from Mesaba.

Mesaba has been attempting to reorganize the company under a Chapter 11 bankruptcy, but the creditors committee could file a motion to seek a Chapter 7 liquidation.

Wychor warned Monday that the company needs to take bargaining seriously.
"If they just sit back on their haunches, flush with their victory [Monday] in court, this company will be moving quickly into Chapter 7," Wychor said.

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