Pinnacle Starts Process To Force New Union Pacts

By Bill Dries

Memphis-based Pinnacle Airlines Corp. has asked a federal bankruptcy court judge in New York to throw out its contracts with unions representing pilots and flight attendants as the regional air carrier continues to negotiate for wage concessions and other similar measures.

In a letter to employees Friday, Sept. 14, Pinnacle CEO John Spanjers said negotiations with the Air Line Pilots Association and the Association of Flight Attendants “have been constructive to date, however, Pinnacle must take all steps to position the company to restructure successfully.”

Attorneys for Pinnacle have specifically filed a motion under section 1133 of the U.S. Bankruptcy Code that sets in motion a process in which the company is asking the court to throw out the existing contracts with both union and put in place a new court-ordered labor agreement.

Pinnacle filed for bankruptcy reorganization in April. That reorganization plan was scrambled when Delta Air Lines, which Pinnacle flies for under contract, reached a new contract agreement with the Air Line Pilots Association. The Delta contract allowed the global air carrier to drop its connecting flights on 50-seat jets faster than it had previously been able to.

Pinnacle has to come up with a new reorganization plan to come up with $76 million in annual cost savings as a result of the Delta changes.

Pinnacle’s move in bankruptcy court comes the same week the company announced dispatchers represented by the Transport Workers Union ratified a new contract with concessions.

If there are not negotiated contract changes with the two other unions, Spanjers said the company is prepared to follow this week’s court filing in October by seeking a court order rejecting the existing contracts.

“To be clear, our goal remains to meet cost savings targets through consensual agreements prior to the start of the hearing,” Spanjers wrote. “But we must make meaningful progress very quickly. There is little time to spare.”