Mesaba sets deadline for contracts

The airline told its unions that if labor deals can't be reached by June 12, it will return to court in an effort to void its current contracts.

Liz Fedor, Star Tribune
June 02, 2006

Mesaba Airlines notified union leaders Thursday that it must reach concessionary labor agreements by June 12 or the carrier will return to bankruptcy court and renew its motion to nullify existing labor contracts.

Since December, Mesaba has been attempting to reduce its labor costs by 19.4 percent. The carrier set that goal after Northwest Airlines, which pays Mesaba for regional flying, skipped some payments to Mesaba and told the smaller carrier that it will cut its fleet in half.

Both airlines are reorganizing in bankruptcy. Mesaba, which has bid for new regional jets from Northwest, is trying to reduce its labor and nonlabor costs as part of that process.

Mesaba has been operating four-engine Avro jets and Saab turboprops for Northwest. The Avros are being phased out of Mesaba's fleet and management has said it needs the cuts in its labor costs to secure its core business of flying 49 Saabs and to attract new business from Northwest and other carriers.

"It is unavoidable to note that Northwest Airlines is moving forward in its reorganization process, and unless Mesaba solves its cost problems, its future with Northwest is at risk," Mesaba President John Spanjers said in a letter to the airline's unions.

On May 18, U.S. Bankruptcy Judge Gregory Kishel denied Mesaba's motion to void its contracts, but said the company could file a new request if it failed to reach deals at the bargaining table.
The uncertainty of Mesaba's cost structure is "the single greatest threat to its ability to secure its business," Spanjers said.

Mesaba management on Thursday told the unions for its pilots and flight attendants about the June 12 deadline. The Aircraft Mechanics Fraternal Association (AMFA) was notified Wednesday.

In an update to mechanics, negotiator Nathan Winch said Spanjers "expressed his desire to reach a consensual deal with AMFA." The union also was given a "comprehensive contract proposal," Winch said.

If Mesaba returns to court and Kishel grants its motion to void its current contracts, the airline could impose new pay rates.

Liz Fedor • 612-673-7709