Judge rules Mesaba can reject contracts, impose terms Wednesday

Monday, October 16th 2006, 3:55 pm

By: News On 6

MINNEAPOLIS (AP) _ A bankruptcy judge ruled on Monday that Mesaba Aviation Inc. can reject its union contracts with workers, a legal step toward a showdown that could result in a strike this week at the Northwest Airlines Corp. feeder.

Judge Gregory Kishel's ruling said Mesaba can impose terms at 12:01 a.m. on Wednesday, the day after he's scheduled to hear the airline's request for an injunction against a strike.

Mesaba has said it will impose terms on its 1,140 pilots, mechanics and flight attendants if given the legal right to do so. Unions have said they will strike rather than accept the proposed work rule changes and pay cuts.

Mesaba funnels passengers to Northwest's hubs in Minneapolis, Detroit and Memphis, Tenn. from nearly 100 cities in America and Canada. It's the only air carrier serving some of those cities.

The airline has said it wants to cut labor costs by 17.5 percent.

This is the second time Kishel has given Mesaba permission to throw out its union contracts. Much of his first decision was upheld on a union appeal, and Kishel's ruling on Monday dealt with the parts that weren't.

The judge ruled the airline had bargained in good faith on snapbacks, or automatic restorations of cuts in the future. He also rejected a union argument that Mesaba parent MAIR Holdings Inc. would get an economic windfall through bankruptcy.

Mesaba has warned that its financial situation is deteriorating and it can't tap into $24 million in debt financing unless it reaches a deal with its unions. At the same time, the airline's creditors are getting impatient and could push for liquidation in an attempt to recover some of their money.

Mesaba gets all of its planes, passengers and revenue from Northwest, and when Northwest filed for bankruptcy protection in September 2005, Mesaba followed about a month later.

Northwest has been pressuring Mesaba and its other regional feeder, Pinnacle Airlines, to cut costs. The feeder airlines fly under the Northwest Airlink name.

Northwest Chief Executive Doug Steenland said last week that the airline has made preparations for getting Mesaba passengers to their destination if the airline workers strike.

He won't be able to count on pilots from his airline. Their union said in a hot line message last week that Northwest pilots will not perform ``struck work,'' flying normally done by Mesaba pilots.