Judge rules Mesaba can throw out labor contracts
Eagan-based Mesaba Airlines has won the right to impose a cost-cutting contract on its 1,300 union workers. Mesaba's bankruptcy judge ruled the wage and benefit cuts the company wants are necessary in light of its uncertain future as a feeder carrier for Northwest. At least one union is appealing the decision. Despite its court victory, some observers say Mesaba's survival seems as precarious as ever.
St. Paul, Minn. — U.S. Bankruptcy Court Judge Gregory Kishel, the son of a union steelworker, told his packed courtroom he delivered his ruling "with a heavy heart."
Kishel ruled Mesaba can impose cost cuts of 19.4 percent on its pilots, flight attendants, and mechanics. The company can also wait six years after exiting bankruptcy before allowing unions to renegotiate those terms.
Kishel's decision reverses his ruling on the same question back in May, when he said Mesaba failed to give proper documentation to union lawyers.
In an extremely complex case, the judge said one factor in particular drove his decision this time: Northwest Airlines. Without the labor cuts Mesaba has proposed, Kishel said the feeder airline would have no chance of winning bids to fly Northwest routes -- and thus no future.
Mesaba spokeswoman Elizabeth Costello says the company is trying right now to close a deal with Northwest.
"We've made cuts across the board, and now we're in the ballpark, but we still don't have a deal," said Costello. "That's where we're focused right now -- reaching a deal with our unions, and reaching a deal with Northwest to move forward and grow this airline."
The judge's ruling says Mesaba must give unions 10 days' notice before imposing a new contract. Costello says for now, the company wants to continue talks without starting that countdown.
Pilots union chairman Tom Wychor says his negotiators will show up at the table. But he does not expect progress.
"Frankly, we have had no real negotiations anywhere through this process. The company's line in negotiations is, 'Here's 19.4 percent for six years, take it or leave it.' That's not negotiating," said Wychor.
The pilots union is filing a swift appeal of the ruling, which Wychor expects the flight attendants and mechanics will join.
Wychor says the union could never agree to terms that cut the income of some experienced pilots up to 40 percent, and could leave some younger pilots taking home as little as $11,000 a year.
"That is no future for this carrier. When you're flying your flight to Brainerd, or Bemidji, or Grand Forks on Mesaba, do you want a pilot who's sitting up front worrying about having to drop his health care to pay his rent?" said Wychor.
In front of the courthouse, flight attendants chanted the word "CHAOS" -- the name for a type of unpredictable, partial strike their union threatens to employ if Mesaba imposes a new contract. Pilots and mechanics also say they'll walk out in that event.
Mesaba is sure to challange the legality of such a strike in court. Some union leaders say if they lose the right to strike, they will simply quit en masse.
Mesaba's labor troubles play out against an overall business situation that looks increasingly grim.
Mesaba's Elizabeth Costello points out the bankrupt Northwest has withheld $30 million it owes Mesaba, and is reducing Mesaba's fleet more than 50 percent -- leaving only small, loud turboprop aircraft with a limited range.
"We were forced into this situation by what's happening at Northwest, by what's happening in the industry as a whole," said Costello. "We know this is difficult for our employees, but we have to look at, 'How can we make this airline survive?'"
While Northwest is widely expected to emerge from bankruptcy in the next year, University of Minnesota industrial relations professor John Budd says between the labor impasse and swiftly falling revenue, there may be no saving Mesaba.
"With the precariousness of Mesaba, and how it's so dependent on Northwest, and can be potentially jettisoned by Northwest at any time, we may very well be watching the final hours of Mesaba here," said Budd.
That would mean the end of a 62-year-old Minnesota company, with 3,400 employees.
As Judge Kishel handed Mesaba the right to impose new terms on its workers, he left both sides with a plea: "Make peace," he said, and "please, work to save this airline."
- All Things Considered, 07/14/2006, 5:18 p.m.