"Mesaba will soon face a 'cash crisis,' Spanjers says"

[gnx99]

Another fun one from the Star Tribune, for those that haven't read it.

http://www.startribune.com/535/story/470746.html

Mesaba will soon face a 'cash crisis,' Spanjers says
The airline's president said an infusion of outside money is needed - and quickly - for the carrier to restructure.

Liz Fedor, Star Tribune
Last update: June 02, 2006 – 8:21 PM

Without an infusion of outside money, Mesaba Airlines will face a "cash crisis" by the end of August, company President John Spanjers said Friday.
That reality is prompting Spanjers to move swiftly to try to secure debtor-in-possession financing and to focus on slashing labor costs.

"The company's future is at stake," Spanjers said in an interview at the airline's Eagan headquarters. "My overall responsibility is to make sure this company survives this bankruptcy."

In December, Mesaba management told its employees the company needed to cut operating expenses by $66.4 million a year, with labor costs accounting for $17.1 million of that. Those targets were set after Mesaba filed for bankruptcy in October. The regional carrier was thrown into financial turmoil after Northwest Airlines filed for Chapter 11 bankruptcy in September, skipped some payments Mesaba was due for operating regional flights and decided to cut the carrier's fleet in half.

Spanjers wanted lower labor rates in place by April 1, but management and negotiators for pilots, flight attendants and mechanics have been unable to reach deals. Consequently, Spanjers said, monthly labor costs have been higher than budgeted.

And, he said, its cash position has been "degraded significantly," but declined to disclose the airline's cash balance.

He said Mesaba hopes to finalize debtor-in-possession financing by the end of June, and that executives have met with multiple lenders. When the regional carrier filed for bankruptcy, its parent, MAIR Holdings Inc., provided a letter saying it was willing to provide financing, but did not renew the offer this spring.

Mesaba management and its labor unions have been at odds for six months concerning potential cutbacks. In particular, the unions have battled airline negotiators about their insistence that they accept six-year contracts that reduce labor costs by 19.4 percent.

Spanjers has said repeatedly that he wants to reach deals at the bargaining table, but that the company can't back off of its labor-cost targets. He stressed that company negotiators are flexible about how to reach the 19.4 percent concessionary target, but said they can't reduce the goal. The company needs to retain an 8 percent profit margin in its business plan to attract investors, he added.

Mesaba already has been "aggressive," he said, in its financial assumptions for restructuring leases and other airline operating costs.

"I don't want to impose" pay rates and work rules, Spanjers said, but added that Mesaba will head down that path if necessary to save the company. This week, Mesaba told its labor unions that it must reach deals by June 12 or the airline will renew its request with the bankruptcy court to nullify its labor contracts.

However, before U.S. Bankruptcy Judge Gregory Kishel would rule on the motion, Spanjers said, the parties would take part in a hearing scheduled to begin June 26 in Minneapolis. That timetable would buy two weeks for negotiating.

Spanjers has been at bargaining talks with the pilots since late April, and mediators also have joined the process, but the "gap is still large" between the two sides, he said.

Tom Wychor, chairman of the Mesaba pilots union, said Friday that "there's a wide gulf" in how the two sides perceive a future contract.

"We understand that there are problems with Mesaba, and we have real money on the table to solve those problems," Wychor said. "We remain committed to stay at the table to find a consensual agreement. That will be the only way this company will survive."

The airline employs 3,539 people, about 1,400 of them in the Twin Cities.

Liz Fedor • 612-673-7709

 

[arthompson]

How can the parent company not provide DIP financing?

 

[belchfire]

Um...cause they're so busy trying to take away retirements and other benies from their own employees???

Just a guess. Maybe because they are Debtor in Possesion themselves?

It is just the same old shell game, the regionals are now copying the majors.

 

[redflyer65]

Cash crisis? I'm still laughing my arse off! What an idiot.

Just call up MAIR and ask for a few million. What a complete scam.

 

[mesaba2425]

The writing is on the wall. It's up to the union to read it.

 

[scootertrash]

No I think it is up to managment to read what is on the wall!!! For all of a sudden to need 66 million in savings to run the company, somebody has not done their job, aka MANAGMENT!!! They have failed in their fidicuary duty to run the company in a profitable and efficient way!

Yes most of us here understand that some adjustments might need to be made but not to the extent that managment is asking and certainly not for six years!

 

[YourPilotFriend]

The regional airlines are specifically setup for this kind of scenario we see at Mesaba. Management has designed them that way; that's why they seek further scope relief.

 

[WMUSIGPI]

Sorry no sympathy here... I've already been in a cash crunch since January thanks to those knuckleheads. Sorry John, guess it's time to dust off that dispatcher certificate.

 

[arthompson]

I just don't see how MAIR can not provide financing to it's principal operating subsidiary

 

[xjlifer]

Because if Mair did provide DIP there would be no cash problem...then they could not go to the Judge and say liquidation is imminent.

If it was not so freakin sick it might actually be funny.

 

[xjgearbtch]

The best part if we do liquidate and MAIR starts a new airline. Guess who's senority list they have to use.... That letter was worth it's weight in gold. If we had that 15 years ago, we'd all be on Air Tran's senority list. Damn if only.

 

[xjhawk]

because i beleive that MAIR is providing Debtor financing for NWA, along with Pinnacle and some investment group. I cannot remember where i put that link to the article, but it was in the paper awhile back. Well, what happens when Air willy gives financing to US Air? mmm can you say MAIr is to get some of NWA, i am not saying Mesaba will, because the courts have already said we are not a part of that cash hording.....nevermind, do not get me started.

 

[redflyer65]

This Mesaba management team should be charged with fraud, because that's what this whole bankruptcy filing is. They should be put in jail, literally.

They have done nothing but taken a well run company with realitive happy employees and run it right into the ground. Its unbelievable sad.

Good luck you guys, you don't deserve this garbage from Jinglepants.

 

[SEVEN]

Can't we get this over with already? It's sad, but when I see an ugly pink saab fly over my house on the Polar1 I actually miss flying that thing.

Thanks Doug and John.:smash:

 

[Northern Lights]

Can't we get this over with already? It's sad, but when I see an ugly pink saab fly over my house on the Polar1 I actually miss flying that thing.

Thanks Doug and John.:smash:

Sigh...

I had the same feeling this morning when I walked out of church, and two Saabs flew over on final to 12L.

 

[flyboyike]

because i beleive that MAIR is providing Debtor financing for NWA, along with Pinnacle and some investment group. I cannot remember where i put that link to the article, but it was in the paper awhile back. Well, what happens when Air willy gives financing to US Air? mmm can you say MAIr is to get some of NWA, i am not saying Mesaba will, because the courts have already said we are not a part of that cash hording.....nevermind, do not get me started.

Here's a question: who do you suppose owns MAIR?

 

[Workin'Stiff]

"Who do you think owns MAIR"

Stockholders...

I couldn't hold the formatting, but you get the gist...

BREAKDOWN
% of Shares Held by All Insider and 5% Owners: 15%
% of Shares Held by Institutional & Mutual Fund Owners: 57%
% of Float Held by Institutional & Mutual Fund Owners: 67%
Number of Institutions Holding Shares: 40

MAJOR DIRECT HOLDERS
HolderSharesReported


POHLAD, CARL R.1,913,715 4-Nov-04
FOLEY, PAUL F.9,500 3-Dec-04
POHLAD, ROBERT C.9,000 4-Nov-04
BENSON, DONALD E.9,000 10-Sep-04
WEHRENBERG, JEFFREY W.1,000 7-Jun-05


TOP INSTITUTIONAL HOLDERSHolderShares% OutValue*ReportedFMR CORPORATION (FIDELITY MANAGEMENT & RESEARCH CORP)2,000,0269.71$9,360,12131-Mar-06DIMENSIONAL FUND ADVISORS INC1,560,6787.58$7,303,97331-Mar-06AEGIS FINANCIAL CORPORATION1,424,0536.92$6,664,56831-Mar-06PAR CAPITAL MANAGEMENT, INC.1,200,0005.83$5,616,00031-Mar-06SC FUNDAMENTAL INC.415,1682.02$1,942,98631-Mar-06SMITH (DONALD) & COMPANY INC.2,059,06010.00$9,636,40031-Mar-06LEGG MASON INC.394,2651.91$1,845,16031-Mar-06PALMYRA CAPITAL ADVISORS, LLC369,6001.79$1,729,72831-Mar-06SC-BVI PARTNERS300,6391.46$1,406,99031-Mar-06PA COMMONWEALTH OF PUBLIC SCHOOL EMPLOYEES RETIREMENT SY281,0001.36$1,315,08031-Mar-06
TOP MUTUAL FUND HOLDERSHolderShares% OutValue*ReportedFIDELITY LOW-PRICED STOCK FUND2,000,0269.71$11,980,15531-Jan-06AEGIS VALUE, INC.1,210,9225.88$6,187,81128-Feb-06DFA U.S. SMALL CAP VALUE SERIES614,1082.98$3,138,09128-Feb-06HEARTLAND VALUE FUND383,0001.86$1,803,93031-Dec-05DFA TAX-MANAGED U.S. SMALL CAP VALUE SERIES201,234.98$1,028,30528-Feb-06DFA U.S. MICRO CAP PORTFOLIO151,940.74$776,41328-Feb-06VANGUARD EXTENDED MARKET INDEX FUND89,813.44$423,01931-Dec-05FIFTH THIRD MICRO CAP VALUE FUND77,000.37$461,23031-Jan-06COLUMBIA FDS TR VI-COLUMBIA SMALL CAP VALUE FD71,812.35$338,23431-Dec-05ISHARES RUSSELL 2000 INDEX FD71,730.35$337,84831-Dec-05

 

[Mesabi Miner]

TAH man, you should get into aviation consulting rather than this flying gig! Ask you, and you receive! Impressive...

MM

 

[Workin'Stiff]

Haha... All in a days work!

 

[WMUSIGPI]

Did I read that right... 10000 shares and I'd be the number 2 shareholder of MAIR? That's what, $40000? Maybe I should by myself a seat on the board of directors.:beer:

 

[fieldinsight]

Well, I can think of the first place SLT can start.... Management paycuts haven't occured because they haven't gotten labor on board. If the company is facing a cash crunch (I call BS), then put the paycuts into effect. Drink your own damn medicine first! Lead by example!

Apparently the MAIR board must see providing any further DIP financing as pointless as well. Saving up that cash to buy flying from NWA, huh?

I don't even look up anymore when I hear the Saab fly over on approach to TOL. I hear her, but don't miss it anymore....

 

[Jumbolina]

I feel the same way when one of the "Mighty Avros" fly over in and out of MSP. Used to give me warm fuzzys, now it just torques me off

 

[D'Angelo]

The ball is in the unions court now. Its either stop chanting and start working on a deal or lead the employees like sheep to the slaughter. I think ALPA likes chanting too much though. Theyd rather make pretty signs and chant rather than recognize rome is burning. Kind of sounds like a cult doesnt it? When you think about it you chant, make signs, refuse to listen to reason, let your leader led you to demise, etc. Maybe DW is really Marshall Applewhite.

 

[WMUSIGPI]

In a way I do have to agree there. What's the point of setting a new deadline a week out then not bother to set up any negotiations between now and then. Might as well have just refiled the 1113c this morning. Though at this point I'd rather see the doors closed for good than 20%+ cuts and then magically new 70 seaters show up. But that is from my perspective of making as much on unemployment, free to do as I wish, as I was on reserve in a crashpad never getting to see my family.

 

[xjhawk]

take a look at skywest and their pay rates....non union and they make more, at least on the FO side, i am sure the CRJ rates are abouteven.....sure wish i did not turn down a interview there...

Oh, by the way, i still have this thought twisting in the back of my head...here it goes.

NWA cannot get Compass up and running fast, no matter what people say, they have neither the pilots or the structure to make a viable 36 plane airline run in the next two years.

In a couple years time, there will be growth at NWA and enough recalls so that not enough numbers of NWA pilots will want to staff Compass

That, like bigsky, Compass was a 2 million dollar investment, to get better labor rates, and scare labor. Oh, its also going to make money when they sell it off, or IPO.

If they sell it off, it will be with a long term contract,


Who will buy it...look at who NWA owns, what company does its board memebers partly own and control?

MAIR holdings. Was this bankruptcy at mesaba just to get our labor prices to rock bottom, so make record profits from 90+ planes......

Could MAIR buy compass? think about that.....any thoughts from the enlightened...not the stupid!

 

[flyboyike]

NWA cannot get Compass up and running fast, no matter what people say, they have neither the pilots or the structure to make a viable 36 plane airline run in the next two years.

I tend to agree, considering how poorly Northwest runs what is already in place, it seems unlikely that they can start a whole new operation and make it work. However, I don't necessarily think they have MAIR in mind, I think it was more like a move to appease the pilots at the time and when enough are recalled, NWA will just scrap the whole idea.

 

[PCL_128]

take a look at skywest and their pay rates....non union and they make more, at least on the FO side, i am sure the CRJ rates are abouteven.....sure wish i did not turn down a interview there...

Skywest pilots only have payrates and workrules competitive with ALPA carriers because Skywest management is trying to do anything they can to keep a union off the property. The pilots of non-union carriers have ALPA, APA, NPA, etc... to thank for their good fortunes. If not for the unions, then the pilots at these non-union carriers wouldn't receive near the good treatment they do now.

 

[hoover]

If I walked into a Burger King and offered to pay $1 for a Whopper, I would be shown the door in about 5 seconds. But for some reason, the attitude has developed that the flying public deserves air transportation that is affordable. I say bull$hit. In this day and age, you can fly coast to coast in 5 hours. That is a service that is worth a premium price. If you can't afford to pay it, then there is always Greyhound.

It is absolutely ludicrous that pilots with college degrees, expensive flight educations, and thousands of hours of experience should be expected to work for poverty wages so that Joe Public can get his $99 airfare to Orlando.

I wish you all the best, but if it comes to it, I say BURN THE FUKCER DOWN!
What have you got to lose?

 

[D'Angelo]

If I walked into a Burger King and offered to pay $1 for a Whopper, I would be shown the door in about 5 seconds. But for some reason, the attitude has developed that the flying public deserves air transportation that is affordable. I say bull$hit. In this day and age, you can fly coast to coast in 5 hours. That is a service that is worth a premium price. If you can't afford to pay it, then there is always Greyhound.

It is absolutely ludicrous that pilots with college degrees, expensive flight educations, and thousands of hours of experience should be expected to work for poverty wages so that Joe Public can get his $99 airfare to Orlando.

I wish you all the best, but if it comes to it, I say BURN THE FUKCER DOWN!
What have you got to lose?

Whine whine whine. Nobody cares that you spent a lot of money on your training. Just because you know how to go into heavy debt doesnt mean your entitled to outlandish salaries.

 

[SEVEN]

Just because you know how to go into heavy debt doesnt mean your entitled to outlandish salaries.

Yes it does.