Mesaba Moves To Void Contracts

 - December 6, 2007, 7:01 AM

Bankrupt Mesaba Airlines has asked a bankruptcy court judge to void contracts with its three labor unions after employees refused to agree to a 19.4-percent cut in payroll costs. In response, the airline’s pilots, flight attendants and mechanics staged protests at Minneapolis-St. Paul International Airport on February 8 and Memphis Shelby County International Airport on February 9, and jointly petitioned the judge in the case to consider the $120 million held by parent company MAIR Holdings during the hearing, scheduled to start February 24.

The employee groups argue that MAIR Holdings started siphoning the airline of its liquidity in 2002, when it acquired Big Sky Airlines, and that “despite the failed growth strategy, MAIR Holdings executives have rewarded themselves with salaries, bonuses and stock options at levels that exceed their peers’ at both regional and mainline carriers.” The judge rejected the employees’ argument, ruling that a one-time infusion of funds into the insolvent airline would do little to change its future prospects.