Pinnacle Airlines Corp. is continuing to try to negotiate a 5% pay cut for all of its union employees and might need an answer this month to avoid filing for bankruptcy protection.
The proposed pay cut is part of a broader cost-cutting effort by the holding company for U.S. regional carriers Pinnacle Airlines,and Mesaba Aviation, which lost $8.8 million in the first nine months of 2011 and said in November that it would try to modify its agreements with mainline airline partners, lessors, debt holders, vendors and labor to improve its liquidity and profitability.
In an update provided to union members Jan. 6, the United Steel Workers (USW), which has three local unions at Pinnacle Airlines and Colgan, said Pinnacle wanted the pay cuts ratified by its union members by Jan. 16.
But in a Jan. 8 posting the USW said that negotiations were put on hold for the weekend “pending results of discussions with certain other parties.” Reached on Jan. 12, Dave Trostle, USW’s international staff representative for flight attendants at Pinnacle and Colgan, said only that management and the union “are still working diligently to get all of this resolved.”
“Certainly, we’re working with a compressed timeline,” he added.
In its Jan. 6 message to USW members at Pinnacle and Colgan, the union told them that “management is negotiating with other parties, in addition to the USW and the other unions, concerning its restructuring. If these negotiations fail, it is possible that the company could file for bankruptcy protection and ask a bankruptcy court to allow it to restructure its agreements with the unions and others.”
Pinnacle said Jan. 11 that “discussions with multiple groups are in progress.”
The USW messages come on the heels of a mid-December message that Pinnacle CEO Sean Menke sent to pilots, which one of them posted on an airline pilot forum on the Web. In that message, Menke said pay will be cut by 5% only if all of the unions agree to it, and added that it then would be applied to all non-union employees as well.
Menke also told pilots the airline wants to negotiate a “more manageable implementation agreement for the pilot integrated seniority list.”
In that message, Menke also revealed that he asked the company’s officers to “take a hard look at each of their departments to see where further changes can be made—from director level all the way down to front-line.” Menke said the “overriding question” the officers are being asked is, “What positions are required to support our operations in light of the current business environment.”
Menke told pilots he “committed to having these organizational restructuring decisions made by Jan. 31.”