Judge Delays Ruling on Mesaba Unions
Tuesday October 17, 10:58 pm ET
By Joshua Freed, AP Business Writer Bankruptcy Judge Delays Ruling on Whether Mesaba Unions Have Right to Strike
MINNEAPOLIS (AP) -- Mesaba Aviation Inc. and its unions were poised for a fight Tuesday night until a judge intervened, yanking back his permission for the feeder for Northwest Airlines to impose pay cuts on its workers, and delaying a decision on whether they could strike in response.
Bankruptcy Judge Gregory Kishel had given Mesaba permission to impose pay cuts at midnight Tuesday. But after seven hours of testimony over whether he should block a strike, Kishel said he needed more time to think about it.
"It has an effect of cruelty. It's not intended to be cruel," he said.
He said he would decide later this week or early next week on whether to block strikes. He barred the airline from imposing new terms before he issues his ruling. He also barred creditors from seeking to liquidate the airline for now -- something they had threatened to do if Mesaba didn't get labor deals it says it needs to keep flying for Northwest Airlines Corp., its only customer.
Mesaba President John Spanjers testified that the airline would be devastated by a strike, and that he expects that creditors would then step in to sell off its assets.
"Our flight operations would cease, and we would likely see the creditors committee step in and seize our assets," he said.
Attorneys for Mesaba's pilots, flight attendants, and mechanics argued that the law bars judges from blocking strikes even when the consequences would be dire. The bankruptcy judge in Northwest Airlines' case found the same thing earlier this year when its flight attendants tried to strike. However, a different judge blocked the strike, and the matter remains on appeal.
The unions also said it would be unfair to allow the company to impose the terms it wants while also taking away their right to strike. The company said it would keep negotiating even if it imposes new terms, but union lawyers said the company would have no incentive to make a better deal. Mesaba has said it would impose cuts that would cut 17.5 percent off its labor expenses.
"All hope of any real leverage, any real negotiations to reach a consensual agreement, will evaporate," said Nicholas Granath, an attorney for the Aircraft Mechanics Fraternal Association. "It will evaporate with the stroke of a pen, and that will be your honor's pen," he said.
Spanjers said employees who don't like the new terms can leave.
Mesaba, a unit of MAIR Holdings Inc., gets all of its planes, passengers and revenue from Northwest, which filed for bankruptcy protection in September 2005. Mesaba followed a month later.
Mesaba has warned that its financial situation is deteriorating and it can't tap into $24 million in debt financing unless it reaches a deal with its unions.
Mesaba, which does business as Mesaba Airlines and flies under the Northwest Airlink name, funneling passengers to Northwest's hubs in Minneapolis, Detroit and Memphis, Tenn. It flies to 86 cities in the U.S. and Canada. It's the only air carrier serving some of those cities.
Northwest has said it has a contingency plan for a strike, but has declined to provide details. Northwest pilots have said they won't fill in for striking Mesaba pilots. And on Tuesday Spanjers said he has had no contact with Northwest about plans to transport passengers if there's a strike.
In cities where Mesaba offers the only air service, the situation is being watched closely. They include Fort Dodge, Iowa, where Mesaba's three arrivals and three departures daily save people a four-hour drive to Minneapolis. "We love our service," said Rhonda Chambers, manager of Fort Dodge Regional Airport. "We want to make sure it stays. It's very important to our community."
Tuesday October 17, 10:58 pm ET
By Joshua Freed, AP Business Writer Bankruptcy Judge Delays Ruling on Whether Mesaba Unions Have Right to Strike
MINNEAPOLIS (AP) -- Mesaba Aviation Inc. and its unions were poised for a fight Tuesday night until a judge intervened, yanking back his permission for the feeder for Northwest Airlines to impose pay cuts on its workers, and delaying a decision on whether they could strike in response.
Bankruptcy Judge Gregory Kishel had given Mesaba permission to impose pay cuts at midnight Tuesday. But after seven hours of testimony over whether he should block a strike, Kishel said he needed more time to think about it.
"It has an effect of cruelty. It's not intended to be cruel," he said.
He said he would decide later this week or early next week on whether to block strikes. He barred the airline from imposing new terms before he issues his ruling. He also barred creditors from seeking to liquidate the airline for now -- something they had threatened to do if Mesaba didn't get labor deals it says it needs to keep flying for Northwest Airlines Corp., its only customer.
Mesaba President John Spanjers testified that the airline would be devastated by a strike, and that he expects that creditors would then step in to sell off its assets.
"Our flight operations would cease, and we would likely see the creditors committee step in and seize our assets," he said.
Attorneys for Mesaba's pilots, flight attendants, and mechanics argued that the law bars judges from blocking strikes even when the consequences would be dire. The bankruptcy judge in Northwest Airlines' case found the same thing earlier this year when its flight attendants tried to strike. However, a different judge blocked the strike, and the matter remains on appeal.
The unions also said it would be unfair to allow the company to impose the terms it wants while also taking away their right to strike. The company said it would keep negotiating even if it imposes new terms, but union lawyers said the company would have no incentive to make a better deal. Mesaba has said it would impose cuts that would cut 17.5 percent off its labor expenses.
"All hope of any real leverage, any real negotiations to reach a consensual agreement, will evaporate," said Nicholas Granath, an attorney for the Aircraft Mechanics Fraternal Association. "It will evaporate with the stroke of a pen, and that will be your honor's pen," he said.
Spanjers said employees who don't like the new terms can leave.
Mesaba, a unit of MAIR Holdings Inc., gets all of its planes, passengers and revenue from Northwest, which filed for bankruptcy protection in September 2005. Mesaba followed a month later.
Mesaba has warned that its financial situation is deteriorating and it can't tap into $24 million in debt financing unless it reaches a deal with its unions.
Mesaba, which does business as Mesaba Airlines and flies under the Northwest Airlink name, funneling passengers to Northwest's hubs in Minneapolis, Detroit and Memphis, Tenn. It flies to 86 cities in the U.S. and Canada. It's the only air carrier serving some of those cities.
Northwest has said it has a contingency plan for a strike, but has declined to provide details. Northwest pilots have said they won't fill in for striking Mesaba pilots. And on Tuesday Spanjers said he has had no contact with Northwest about plans to transport passengers if there's a strike.
In cities where Mesaba offers the only air service, the situation is being watched closely. They include Fort Dodge, Iowa, where Mesaba's three arrivals and three departures daily save people a four-hour drive to Minneapolis. "We love our service," said Rhonda Chambers, manager of Fort Dodge Regional Airport. "We want to make sure it stays. It's very important to our community."
