Maine’s largest telephone company says cost-cutting measures in a new labor agreement that slashed employee benefits after a four-month strike helped it achieve its most profitable quarter since it emerged from bankruptcy in 2011.

FairPoint Communications Inc. surprised industry analysts Wednesday by reporting a $40.3 million profit for the second quarter of this year. Excluding the first quarter of 2011, when FairPoint wrote off more than $1 billion in debt after emerging from bankruptcy, it was just the second profitable quarter in five years.

The Charlotte, North Carolina-based telecommunications company reported net income of $1.49 per share for the second quarter. The consensus among analysts had been that the company would report a $1.20 per share loss, according to

A representative for the labor union that initiated the four-month strike that ended in February said he looks “skeptically” at the profit figure, which the company said was driven by a 34 percent reduction in operating expenses.

“I think my initial response is you really have to dig into the weeds before you give too much credit there,” said Peter McLaughlin, business manager for the International Brotherhood of Electrical Workers’ Local 2327 in Augusta. He said the union hasn’t had enough time to dig into the numbers, but he has his doubts.

“A lot of this is accounting gimmicks, and these guys will gimmick it to make it look good,” McLaughlin said Wednesday evening. “You really have to be a finance guy and we haven’t drilled down on that yet, and so I don’t want to say anything out of school here before we have the facts together.”


As part of its continuing efforts to control costs, FairPoint has begun laying off 111 employees in northern New England.

According to the Local 2327 website, 75 IBEW members and 36 Communications Workers of America members in the region are being furloughed after an unsuccessful effort to encourage workers to leave voluntarily.

FairPoint officials cited cost-cutting measures related to downsizing and new union contracts as the primary reasons for the financial turnaround. In the second quarter of 2014, FairPoint posted a net loss of $22.7 million.

“We had a solid quarter,” Chief Financial Officer Ajay Sabherwal said during a conference call Wednesday to discuss the earnings. “This is particularly noteworthy since it is the first complete quarter after the strike, operating under the new collective bargaining agreements.”

FairPoint achieved profitability despite lower sales than a year earlier. It reported total revenue of $214.1 million in the second quarter, down 5.1 percent from $225.6 million in the second quarter of 2014.

What made the difference was the 34 percent reduction in operating expenses. The company reported operating expenses of $154.8 million in the second quarter, compared with $235.2 million in the same period a year earlier.

FairPoint CEO Paul Sunu said during Wednesday’s call that in addition to cost reductions from the new union contracts, the experience of going through a strike left the company in a better position.

“We came out of the strike a stronger team with greater insight and knowledge of our operations and our network,” he said.


More than 1,700 union employees of FairPoint returned to their jobs in late February after the four-month strike over issues that included proposed cuts to health care and retirement benefits, a two-tiered system that would pay new hires less money, and the company’s desire to increase its use of independent subcontractors.

The striking workers from the two unions ratified tentative collective bargaining agreements with FairPoint after three days of voting in Maine, New Hampshire and Vermont. The new contracts reduce a number of worker and retiree benefits, but only give FairPoint the right to hire subcontractors in certain circumstances such as weather-related emergencies, according to the unions.

Union leaders have described the new contracts as fair, but they have yet to release full versions of the documents to their members or the public.

The unions also said they will fight to reverse the layoffs of the 111 workers in northern New England.

“We are carefully reviewing the entire process and will be challenging this event by all means possible,” the IBEW website states. “We wish our brothers and sisters – many who’ve worked shoulder-to-shoulder with us for decades and who walked the picket lines with us for four long months to fight for a fair deal – the very best in their future endeavors. We thank them for their sacrifices as union brothers and sisters, and in their honor we will continue to fight the corporate greed that FairPoint embodies.”

Staff Writer Whit Richardson contributed to this report.

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