Midwest Air to reduce pay of most employees

The Midwest Air Group Inc. will be cutting the pay of most of its employees, including the chief executive, who made the announcement this past week that he would personally take a 40 per cent cut in pay.

The airline is being forced to make these drastic changes as it struggles to stay in business by offsetting rising operational costs – such as the cost of jet fuel - chief executive Tim Hoeksema told employees in a recent memo. He noted that the airline needs to reduce expenses because its operating costs are so much higher than those of other carriers of similar size.

“Our best choice is to fix this disparity so our costs better match our revenues, (or) file for Chapter 11 and try to fix it there, or ignore it and fail as a business,” he added.

Hoeksema announced that he would take a 40 per cent cut to his pay package, which includes salary plus bonuses. The Milwaukee-based carrier did not disclose the amount of his current compensation. Since the airline was taken over by TPG Capital, it has been privately owned, and is not required to publicly disclosed salaries paid to its executives.

The Midwest Airline news was released as rival AirTran Airways made the announcement of its plan to cut the pay of its employees by around 10 per cent, also to offset rising operational costs. The company noted that the plan was to reduce pay for a six-month period and to review the situation again at that time.

The company did not stipulate the exact amount of cuts it was seeking from the pilots and flights attendants, and their unions will need to vote on any proposal. It did say that it wanted unions to approve cuts that would bring salaries in line with similar airlines.

www.midwestairlines.com