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Mesaba article with a little help from ALPA

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Active member
Nov 2, 2003
It's good to see the ALPA is showing the world what our management is really doing (or not doing).

Mesaba filing casts doubt on MAIR ties

Liz Fedor, Star Tribune
Last update: October 21, 2005 at 9:20 PM

When Mesaba Airlines filed for bankruptcy on Oct. 13, its president, John Spanjers, took the hot seat to answer dozens of questions from reporters about how the airline would use Chapter 11 to slash costs and survive the bankruptcy of its only customer, Northwest Airlines.
Notably absent from that session was Paul Foley, the 53-year-old president and CEO of MAIR Holdings, which owns Mesaba and has relied on the airline for most of its revenue and all of the profits that MAIR reports to shareholders.
Foley's silence wasn't lost on some Mesaba employees, who long have criticized what they say is an expensive corporate structure that provides little benefit to the airline or MAIR shareholders.
"I don't know of anybody who can tell me what Paul Foley does on a day-to-day basis at MAIR Holdings," said Tom Wychor, a 16-year Mesaba pilot and chairman of the airline's pilots union.
Through a spokesman, Foley declined numerous Star Tribune interview requests for this story. Though he speaks with Wall Street analysts on a regular basis, Foley rarely meets with reporters.
Pierson (Sandy) Grieve, a MAIR Holdings board member, described Foley as "a very effective operating executive and a good communicator."
Grieve, former CEO of Ecolab Inc., said Foley's leadership is an important reason why "Mesaba has been recognized as a leading airline in terms of safety and efficiency."
Foley was a vice president of operations for a cargo carrier, Atlas Air, when he joined Mesaba in 1999 as its chief executive. At the time, Mesaba Holdings, as it was known then, had one main operating segment -- Mesaba Airlines. But in late 2002, Foley hailed the $3.2 million acquisition of Big Sky Airlines, a small carrier based in Billings, Mont.
"Big Sky is a good example of the type of opportunity we are seeking," Foley said in a news release. "It is an efficiently run company with an excellent safety record and a cost structure that positions it well in the highly competitive regional airline marketplace."
Piling up losses
But Big Sky failed to become the growth vehicle that Foley envisioned. Mesaba accounts for about 97 percent of MAIR's revenue, and Big Sky has piled up almost $11 million in pretax operating losses in three years.
Some Mesaba employees, facing the double-whammy of pay cuts and job losses, said they're tired of paying for a failed airline and redundant corporate overhead. MAIR has agreed to provide Mesaba up to $35 million in bankruptcy financing, but Mesaba employees noted that the only reason MAIR can afford to do so is because of the existence of Mesaba.
"The pilots very clearly see MAIR Holdings and Paul Foley as an expense that we can't afford at this time," Wychor said. Mesaba must "restructure ourselves out of being the only airline supporting two management teams [MAIR and Mesaba] and another carrier's losses."
MAIR's corporate offices are in downtown Minneapolis, far from Mesaba's headquarters in Eagan. Minnesota Twins owner Carl Pohlad is MAIR's chairman and is paid $300,000 a year.
Foley, named CEO in late 2002, has a close relationship with Pohlad and sometimes can be seen in Pohlad's suite at Twins baseball games.
Northwest, which owns 29 percent of MAIR's stock, typically occupies three slots on the board of MAIR Holdings. Grieve, a former chairman of the Metropolitan Airports Commission, holds one of the Northwest seats. The other two recently were vacated by Northwest CEO Doug Steenland and Mickey Foret, former president of Atlas Air and former Northwest chief financial officer.
The remaining board seats are held by Foley; Bob Pohlad, CEO of PepsiAmericas and Carl Pohlad's son; and Donald Benson and Raymond Zehr, executives for Pohlad companies. MAIR's directors are each paid $40,000 a year.
Foley was given a four-year employment contract with MAIR in fall 2004. It included a $500,000 signing bonus.
In fiscal 2005, which ended in March, Foley was paid a $350,000 salary and a $350,000 bonus. His total cash compensation exceeded that of Northwest's Steenland in 2004, who was paid $473,000 during his tenure as president and later chief executive of a company more than 20 times the size of MAIR.
When Foley's compensation package was reported last year, Wade Slagle, a leader within the Aircraft Mechanics Fraternal Association (AMFA) said, "They are more interested in keeping Paul than their mechanics. All we hear in negotiations is how bad things are."
During the six years Foley served as the top executive at Mesaba Airlines and later as the CEO of MAIR Holdings, he has maintained his permanent residence on the East Coast.
A regulatory filing shows that Foley received about $75,000 each of the past three years for living and travel expenses. The company said Foley would continue to get that $75,000 annual cash benefit as long as he kept his legal residence in Westin, Conn., or another city far from Minnesota.
"His living and travel expenses exceed most of our captains' annual pay," said ALPA's Wychor.
Grieve said Foley recently sold his home on the East Coast. "He just moved here," Grieve said. "He's moved into a home in the last couple of weeks. That will change his ability and time to be involved in [community] affairs beyond purely Mesaba."
Foley probably will have regular contact with Mesaba on MAIR's debtor-in-possession financing. A hearing will be conducted on that financing package on Nov. 29.
As of Sept. 30, MAIR had cash and investments worth about $118 million, according to a regulatory filing. MAIR is willing to make $35 million in financing available in two parts, and $20 million of the funding requires Mesaba to produce an "acceptable five-year business plan" by Jan. 31.
The pilots' Wychor sees an artificial separation between the MAIR and Mesaba businesses.
"MAIR fundamentally acts as a vacuum cleaner taking cash from the right pocket of Mesaba," Wychor said, and uses some of that money to "fund a separate suite of executives."

Liz Fedor * 612-673-7709
Four thumbs up!
Anyone have a time line for when NWA is going to finish hacking up their leases on AC? When will this show be over? I know spanj said 12-24 months does that mean we will all be on edge for that long?
xcr600 said:
Anyone have a time line for when NWA is going to finish hacking up their leases on AC? When will this show be over? I know spanj said 12-24 months does that mean we will all be on edge for that long?

Spangebob Jinglepants wants you on edge 24/7 ad infinitum, not a measley 24 months! You at least need to account for the MCF (Mesaba Correction Factor) by multiplying any time by four and dividing any positive outcome by seventeen-and-a-half. Eg:

"Hey, I heard there's gonna be some big announcement in a week!" *MCF=

One month later: "Hey, did ya hear we're getting a fleet of two CRJs? Oof da."
Yup. Two CRJ's. And based on the intellect of our senior leadership team, they're probably pretty content with that. Seems economically feasible to me. That article needs to really be spread around...


ImbracableCrunk said:
Spangebob Jinglepants

LOL! I haven't heard that one yet.:D

I also found their reasoning interesting during the conference call. So, the reason we're in bankruptcy is NOT because NWA didn't pay us like they promised but because we're too expensive to operate. What Morons. We could work for free but if NWA doesn't pay us, we'd go under.
:uzi: :pimp:


I usually dont post anything on this subject but now I have to. I am a former Big Sky Pilot and now work for another company so I could care less about the whole subject.

I agree that MAIR has done some strange things. But when it comes to how they do business, there is nothing you or I can do about it. They hired you to fly airplanes, not make business decisions. You agreed to a contract, you got that. You got your scope out of Big Sky, and rightfully so. The reason Big Sky is loosing money is because they are limited in what they can do now. Do I think Big Sky was used as a pawn in your contract...yes. Has ALPA ever helped anyone flying at the regional level???????? Well Im not in the left seat of a 777 so I dont think I will ever be helped by Alpa. I know for a fact that when Big Sky TRIED to join ALPA, ALPA shot Big Sky down.

The world was coming to an end for Mesaba when we the BSA pilots voted for the buy out. Did you really think the BSA pilots gave a crap when BSA got scoped? Haaa Haaaa The last laugh is on us. Pilots go to BSA for two (2) reasons. To get time to move on (not RJ's) or to make a comfortable living in Montana. By the way, you probably havent seen to many BSA pilots beating down your door when you got those "shiny RJ's". The iorny is that BSA is hiring, and starting to grow. They are the highest paid pilots for 19 seat a/c. www.airlinepilotpay.com Your next argument will be that "it is our money that is funding Big Sky, we made that". NO, you got hired to do a job to make money for the shareholders. What if I flew a corporate plane and went to my boss and said, "hey man why are you spending my money like this. I flew you to all these places"? Yeah Right.

Its time to open your eyes and realize that this is not something that is just happening to Mesaba. I agree man, I feel all of Mesaba's pain. There is a crisis going on in the airlines and it is not the bird flu. You will never change the way board members and management get paid. They control the money. If I were you, then I would find a company that does not have all of its eggs in one basket (aka NWA).

This will draw some heat, but im trying to make the point that the entire industry is going through major problems. If ALPA really wants to do a good job, then they need to tear down the walls between regional and major. Have you noticed that all of the airline managements have been changing with changing times? Why cant ALPA do the same? The management of all the airlines is about 8 years ahead of ALPA. When RJ's came on the scene, management knew that pilots would fly them cheaply. So they saturated the market. Now you have over capacity. When you have overcapacity, somebody is gonna get the short end of the stick....sorry, i truly am. But when we said we were gonna lose our jobs at BSA, i remember someone on this board from Mesaba said "ohh well, thats to bad". Well I guess so.

I truly am sorry for your problems at Mesaba. But you CAN do something about it. The problem is that it is not going to be through ALPA, they are having enough trouble keeping the highest paying members of the union happy.
Ok first off much of what you say is true. But the simple fact of the matter is Big Sky would have liquadated if it wasn't for MAIR holdings. And where did Mair Holdings get its money from, Mesaba.

You say you could care less about RJs but from your rant I can see bitterness as to being scoped out of future growth. I completely understand this I feel the same when it comes to NWA. I think you are right ALPA needs to stop all this whip sawing the only thing is that to stop it the high priced senior pilots need to give up the high end pay scales. Any how now that they are bankrupt the whip sawing will continue and they lose the high pay scales anyway.

I think mesaba's union biggest mistake was not to combine the seniority lists to tell management anytime you do this we will just combine the seniority lists onto the better contract. But we weren;t willing to give up the negotiating capital to do this so what happens - we get whip saw again now that we are in bankruptcy and are facing losing our scope.

As far as some jack a$$ saying thats too bad you lose your job the vast majority of us over here don't feel that way. I think you should be on our seniority list. I don't blame you for signing that contract when faced with the decision you had to make.

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