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FairPoint, Unions Agree To Talk As Dispute Affects Earnings

FairPoint Communications and striking union workers will return to the bargaining table in two weeks. 

The news come as the company reports that third quarter earnings were offset by increased costs due to the labor dispute.

In its earnings announcement on Wednesday, FairPoint said revenues increased but they were  "more than offset" by higher expenses. 

The company reported $17 million in expenses related to the labor negotiations and preparing for a union strike, which took place on Oct. 17.

In a conference call announcing the third quarter figures, FairPoint CEO Paul Sunu said the costs included hiring and training replacement workers in order to maintain customer service.

“Our plan here on the contingency planning has not been about just keeping the lights on,” Sunu said. “It has really been about being able to service our customers in the long run. That’s part of the reason we spent so much time with our contingency contractors and workforce, training them.”

Our plan here on the contingency planning has not been about just keeping the lights on. It has really been about being able to service our customers in the long run." - FairPoint CEO Paul Sunu

  Despite those efforts the Vermont Public Service Department says complaints about FairPoint service increased after the strike from levels that the state says were already unacceptable.

Sunu says expenses also increased due to a spike in employee medical expenses as the union contracts expired last summer. 

Sunu said as the strike continues, the company expects to see savings from not paying salaries and benefits of union workers, although he says FairPoint will continue to incur added expenses due to the strike. 

Last week, FairPoint terminated health benefits for striking workers. 

However, company and union officials have announced that they will meet with a federal mediator in Boston on Nov. 18. It will be the first time the sides have met in more than two months.

Mike Spillane of the Vermont International Brotherhood of Electric Workers, which is one of the striking unions, says renewing the talks is important. But he says there’s no indication that the parties will be any closer together in their demands. 

Spillane believes the company has agreed to more talks because it’s feeling pressure financially and from customers over service delays.

“I know they’ve put a significant amount of money into not negotiating with us,” says Spillane. “I think if you look at all the money they’ve put out, they could have solved this contract with that money instead of using it to not bargain with the union.”

In a statement, FairPoint said the agreement to sit down with a federal mediator is simply exploratory.

The company disputes union claims that is doing so because of service problems. FairPoint says the terms of the expired union contract can't be sustained in the current business climate and are out of line with similar union agreements. 

The unions say they have offered plans that would save the company more than $200 million.  FairPoint declines to specify how much savings it wants to realize from a new contract, but says the union offer is far less than the concessions necessary.

Overall in the third quarter, FairPoint reported a net loss of $37.8 million.  It has losses of $92.7 million for the year-to-date.

Sunu says revenue from ethernet services continues to grow as FairPoint works to re-brand itself as an advanced telecommunications company.

An earlier version of this story stated that FairPoint is asking for $700 million in contract concessions.  The company says it has never quoted a specific figure.

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