Mesaba Negotiations update:  July 10, 2006

Today, the Mesaba Labor Coalition made a joint proposal to management. The Coalition unions have focused on 5 key areas of joint concern. In each of these 5
areas, the unions have presented identical proposals to management. With respect to the overall cost savings, each union’s proposal varies with respect to how the
cost savings are achieved, but each union has proposed same total cost savings.

1. Overall cost savings

Each of the three unions has agreed to target of 15% cost savings. AMFA has achieved this savings by proposing an 8% wage and premium cut, excluding holiday
pay from the calculation of overtime and paying holiday pay of a rate of 1 times the applicable rate, eliminating the four hour call in, paying sick time used at 75%,
reduction of the uniform allowance of $100 and eliminating the Performance incentive plan also known as the quarterly incentive plan. AMFA has also proposed
changes the LTD and STD disability plans and has proposed to contribute 33% of the health care premium for plan one versus the 30% that we currently
contribute. There are also provisions in the AMFA proposal to recapture some of the wage cut after December of 2007 by increasing wages at a rate of .12% per
aircraft over the 49 Saab base and each three months thereafter.

In accordance with management’s “Mercer Model” – the financial model used by management in the first Bankruptcy hearing, a 15% cut in labor cost
savings will yield a 6% profit margin. A 17.5% cut in labor costs, which is management’s new target, will produce a 7.1% margin. Stated another way, we are now
1% apart on the margin, and 2.5% apart on the level of labor cuts.

2. Duration

We have increased our proposal on duration to 3.5 years. In order to balance this move, we also proposed an additional 3% kicker that will follow the two 1%
annual kickers. We believe that the additional raise will ensure that we are not far below industry rates at the end of the term, while the extended duration also
provides Mesaba with the additional stability they have said they need. We have also proposed that we receive a 1% raise on the amendable date and every six
months thereafter while in negotiations for the new CBA.

3. Health insurance

We have agreed to modifications in the level of employee premium contribution (30 – 33%) and to modifications in the prescription drug coverage, both of which
will yield substantial savings. The Coalition is united in its belief that with these changes, management must commit to limitations on its ability to raise the office
co-payment, deductibles, and out-of-pocket limits. Otherwise, management could – as they have previously proposed – double the deductibles and obtain
hundreds of thousands more in savings, without providing us with any credit for the increased savings, and more importantly, making our health insurance
unaffordable. Our proposal is that management can not raise any of the three items listed unless: 1) actual per capita costs have risen over the previous year AND
2) the industry average exceeds the level in place at Mesaba. This is a proposal that addresses the needs of both sides and should resolve this issue.

4. Equity claim

5. Profit sharing.

The equity claim and profit sharing are two important aspects of our investment strategy (along with our proposal for a note and wage recovery) and will ultimately
determine whether any deal is worth ratifying. We are not giving concessions without receiving a return. In other words, there is no something for nothing. If
management wants cost savings, it will have to address our issues, and our issues involve the level of return we will receive on our investment in Mesaba

It is now up to Mesaba management to counter our proposal. They indicated that they would contact us in the near future and we have tentatively
scheduled negotiations for the week of October 9.

In response to the district court’s decision to uphold our appeal, ALPA, AFA and AMFA have served additional discovery requests on both Mesaba and
MAIR. Mesaba has objected to our requests, and a hearing to resolve this dispute has been scheduled for Thursday, October 5, in Bankruptcy Court. The requests
for information relate to the defects identified by the district court: management’s unwillingness to bargain over snapback provisions, and management’s failure to
demonstrate that the unions will be treated in a fair and equitable manner vis-à-vis MAIR Holdings.

On October 10, the Bankruptcy Court has scheduled the hearing to reopen the evidentiary record on the renewed motion for relief under section 1113(c) of the
Bankruptcy Code. Management has requested that the Bankruptcy Court issue its decision by Friday, October 13. If management is granted the ability to reject the
union contracts, it has announced that it will impose new terms and conditions on Sunday, October 15, absent tentative agreements.

Yesterday management filed a motion requesting the Bankruptcy court to enjoin the unions from striking if they are authorized to impose new terms. Management
has requested the court issue its decision on the same day that it has asked for the 1113(c) decision - Friday, October 13. There will be less than 48 hours between
our knowledge of the court’s decisions and management’s potential imposition of new terms. We are tentatively planning a Mesaba Labor Coalition phone
conference for the evening of October 13. More details will be forthcoming.


While our legal team will exert every effort to defend our collective bargaining agreement, our primary focus continues to be to negitiate a consensual agreement.
It’s time for management to move and turn its focus and attention to the same goal.



Nate