Mesaba's MESS

[jetbluedog]

Jan 9th strike deadline approaching.....401K lawsuit filed...what the heck is going on at Mesaba??? Sounds pretty ugly, or is this just typical regional airline treatment??


Wednesday December 31, 2:51 pm ET

MINNEAPOLIS & ST. PAUL, Minn.--(BUSINESS WIRE)--Dec. 31, 2003--Mesaba Aviation, Inc., a subsidiary company of MAIR Holdings, Inc. (Nasdaq:MAIR - News) issued the following statement from its president and chief operating officer John Spanjers today, concerning the lawsuit filed by the Air Line Pilots Association:
"Mesaba Airlines regrets the errors that occurred in certain employees' 401(k) accounts, and we have disclosed these errors to the IRS and the Department of Labor. We also have communicated to all employees the nature of the errors and our plan for both correcting them and preventing their recurrence. We believe this lawsuit is unnecessary given our commitment to correcting the errors.

"We are disappointed that ALPA deemed a lawsuit necessary at this time, because since we self-disclosed these errors, we have worked closely with ALPA to address the concerns of the Mesaba pilots -- and all Mesaba employees -- and to rectify the errors.

"In addition, the timing of this lawsuit adds another layer of distraction as Mesaba approaches the Jan. 9 deadline in its pilot negotiations."

 

[jetbluedog]

More Info

More info from the Star Tribune...

Pilots sue Mesaba over 401(k)s
Liz Fedor, Star Tribune

Published January 1, 2004 MESA01


Nine days before a strike deadline, the pilots union at Mesaba Airlines sued the company Wednesday in U.S. District Court in Minneapolis for failing to deposit pilot contributions in 401(k) retirement plans.

Mesaba President John Spanjers acknowledged Wednesday that management made errors in handling the retirement funds. However, he charged, "The timing of this lawsuit adds another layer of distraction as Mesaba approaches the Jan. 9 deadline in its pilot negotiations."

In a letter to employees, Eagan-based Mesaba said "errors in the administration of the plan have caused some participants' accounts to be misfunded." The company said that it disclosed the errors to the Internal Revenue Service and the U.S. Department of Labor, and that it has developed an action plan for resolving the problem.

Spanjers said Wednesday that he regretted the errors and pledged to correct them. "We believe this lawsuit is unnecessary given our commitment to correcting the errors," he said.

How much money did Mesaba mishandle?

"We know it's hundreds of thousands of dollars," said Kris Pierson, a Mesaba pilot and spokesman for the Air Line Pilots Association (ALPA). But he said the company hasn't given detailed information to the union.

"I don't have specific data on the amount of money or the number of participants affected," Mesaba spokesman Dave Jackson said Wednesday. "We are still collecting that data."

In addition to alleging that Mesaba failed to transfer some employee contributions to the retirement plan, the lawsuit contends that Mesaba did not make the required matching contributions.

The union contends that some contributions were made outside of legal time limits and that Mesaba did not correct errors that date back to at least 1996.

Five Mesaba pilots, including Michael Fischer of Woodbury and Brad Schirmers of Maple Grove, are plaintiffs in this civil case. The pilots are being represented by ALPA's legal department in Herndon, Va., and the Lindquist & Vennum law firm in Minneapolis.

The complaint states that on at least 738 occasions between 1996 and 2003 that Mesaba failed to deposit retirement contributions into the 401(k) plan. The suit contends that Mesaba retained those employee salary contributions as part of its "general assets" and used the money for its own purposes.

"These errors affected employees across the company in all job classifications and were, in most cases, relatively small and infrequent," Spanjers said in the letter to employees. More than 44 percent of Mesaba's 3,326 employees are participants in the retirement savings plan, he said.

ALPA's Pierson said the union decided to sue after reading Spanjers' letter to employees on the company's Web site. He characterized the letter as "filled with the same empty answers to the important questions that we have had about the 401(k) problem since Day 1."

The pilots learned of the funding shortfall in late September. Pierson said they chose to pursue the lawsuit because they couldn't get adequate information from the company after making repeated requests.

The union and management are expected to return to the bargaining table on Monday for five final days of talks. If they don't reach an agreement by Friday night, the 844 pilots could shut down the airline by striking.

"Mesaba pilots have been focused on getting a new contract that we have earned and deserve for over two and a half years," Pierson said. "We will not be distracted from our goals next week or ever."