Southwest Airlines loses bid for Frontier

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Southwest Airlines loses bid for Frontier

Postby Sentinel Chicken on Thu Aug 13, 2009 7:23 pm

Southwest Airlines loses bid for Frontier

06:57 PM CDT on Thursday, August 13, 2009

By ERIC TORBENSON / The Dallas Morning News

Southwest Airlines said Thursday evening that its $170 million bid to acquire Denver's Frontier Airlines Inc. was not selected, giving the carrier to Republic Airways Group Inc.

Southwest said its failure to reach a deal with Frontier Airlines' pilots union was the key factor in its bid not being selected.

The union demanded that an integration plan with Frontier’s 600 pilots be part of the formal $170 million bid for Frontier. Without the protections in place before the bidding started, Southwest pilots would lose negotiating leverage and potentially be harmed in the talks with Frontier if they went to some sort of binding arbitration, Kuwitzky said in an interview today.

Frontier’s pilots union had previously rejected an offer from SWAPA that included job protections for all Frontier pilots, pay increases of up to 40 percent when Frontier pilots transitioned over to Southwest’s seniority list and other considerations.

“We think it’s a fair agreement,” Kuwitzky said.

Frontier’s pilots want their years of experience to play a bigger role in how they would be integrated into Southwest. Attempts to reach the union weren’t successful Thursday.

The stalemate with the pilots threatens to blow apart the complex talks happening in New York between Southwest, Frontier’s management, Frontier’s creditors committee and the other bidder for Frontier, Republic Airways Group Inc.

Pilot labor expert and airline consultant Robert W. Mann said Southwest’s executives can’t be blamed for thinking that Frontier pilots would see the prospect of higher pay and potentially greater job security in the Southwest bid as attractive.

“Frontier pilots need to look at the facts,” he said. Republic has said it would operate Frontier separately from its other regional jet operations, but Republic replaced all the pilots and planes at Midwest Airlines when it bought Midwest this year and could do the same to Frontier’s operations down the road, Mann said.

“It’s all about expectations, but you have to wonder about the long-term viability of Frontier if Southwest decides it really wants Denver.”

Tough pilot negotiations aren’t anything new in the airline industry, but deals between pilot unions do get done quickly in some mergers, Mann said. The merger of Northwest Airlines and Delta Air Lines was smoothed by the pilot unions agreeing early to binding arbitration. But pilots of America West and US Airways are still fighting after coming together in 2005 over seniority issues, Mann said.

None of the other unions at Southwest have been asked to create an integration agreement with Frontier.
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