Bait and Switch
It's a good thing airline employees get to fly for next to nothing. If MAIR Holdings, Inc. gets its way, Mesaba pilots will have to fly to Houston to defend themselves from a lawsuit that seeks to extricate the company from its agreement with its unions.
In recent years, Minnesotans have watched local airlines use the court system to undo their promises to workers and eliminate tens of thousands of well-paying jobs. Taxpayers have bailed out Northwest in exchange for promises that the company's good jobs would remain here, stimulating our economy.
Mesaba is, in essence, a Northwest spin-off. At the moment, it's owned by a publicly traded holding company, MAIR, whose backers have deep ties to Minnesota. Northwest is MAIR's largest shareholder; Twins owner Carl Pohlad holds 10 percent and his son, Robert Pohlad, is chairman of its board.
Northwest has also been MAIR's largest customer. Like other regional airlines, Mesaba flies Northwest's planes on Northwest's routes on a schedule and a fare structure dictated by Northwest. Mesaba's profits—$100 million in the months before the bankruptcy—go directly to MAIR. Mesaba has 3,200 employees; MAIR has five.
As a part of the resolution of both airlines' bankruptcies, Northwest will officially acquire Mesaba. But MAIR is staying in business—in April, the company's other subsidiary, Big Sky, will begin flying for Delta.
Pilots worry that MAIR will use Big Sky to underbid them for business—a practice so common in the airline industry that it has its own name: "whipsawing." Flight attendants and mechanics have relatively little bargaining power, but pilots have a singular advantage: There are no scabs, so when they strike, airlines can't fly.
At the same time, pilots for regional carriers make far less than their major-airline counterparts. Mesaba's pilots make an average salary of just $46,000 a year.
In recent years, tensions have come to a head twice. In January 2004, Mesaba's pilots were on the verge of a strike. The job action was averted at the last minute by a deal. Under the terms of the agreement, Mesaba's corporate parent, MAIR, promised that its pilots wouldn't be hurt by its purchase of Big Sky. MAIR agreed that Big Sky wouldn't fly planes larger than 19 seats unless the cockpits were occupied by Mesaba pilots.
But last March, as part of Mesaba's bankruptcy, the U.S. Bankruptcy Court threw out the airline's agreements with its unions. On December 28, MAIR notified the pilots' union that it considered the deal terminated. The same day, the company filed suit against the union in the U.S. District Court for the Southern District of Texas, claiming the 2004 agreement unreasonably restricts its ability to compete for business.
There's no great mystery why MAIR chose to file suit in Texas, says company spokesman Jon Austin. "One of the defendants is located down there, our law firm is located down there—that one is as convenient as any for many of us."
The law firm handling the suit for MAIR, Haynes & Boone, is based in Houston and has a long track record of helping bankrupt airlines win concessions from courts. Most famously, it represented corporate raider/airline executive Frank Lorenzo, who created the present day incarnation of Continental.
The pilots accuse MAIR of forum shopping—looking for a judge more likely to side with the airline. The union's attorney isn't even prepared to concede that the matter belongs in court, much less one in Texas.
"We believe this is subject to arbitration," says James Linsey. "MAIR agreed to the process."
The union is examining all of its options, including getting the case transferred closer to home, Linsey says. The first hearing on the matter will take place—in Houston—next month.
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