In Re Pinnacle Airlines Corp.
United States Bankruptcy Court for the Southern District of New York
483 B.R. 381 (2012)
- Written by Philip Glass, JD
Facts
Pinnacle Airlines (Pinnacle) (debtor) faced severe liquidity and labor-cost crises, placing reorganization at risk. Pinnacle, which had a collective-bargaining agreement with pilot employees, proposed modifications to the agreement, which the union representative refused––a refusal likely to lead to liquidation. During negotiations, Pinnacle refused to cede ground on its aggregate demand. Pinnacle claimed its modifications were necessitated by significantly over-market labor costs that hindered competitiveness. The pilots, who had above-market wages in their industry, would have to take larger pay cuts in light of their greater ability to do so than other employees. Senior management would also experience pay cuts. Pinnacle proposed nominal profit-sharing with the pilots, which would not sufficiently reward them if a windfall occurred. Pinnacle’s proposed labor-cost reductions would unjustifiably lessen standards. Thereafter, Pinnacle filed an 11 U.S.C. § 1113 motion to reject the collective-bargaining agreement.
Rule of Law
Issue
Holding and Reasoning (Gerber, J.)
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