Media: What was your reaction to the ALPA MEC's decision not to send the agreement out to a vote by members?
Kelly: "Well, first of all, I'm appreciative of all the hard work that has gone into a seniority list integration agreement between the Southwest pilots and the AirTran pilots. In fact, it is unprecedented that we actually were able to come to an agreement in principle among the company and the two pilot unions.
"The Southwest pilot union had unanimously approved the deal to send it out for a vote. I was disappointed last week that the ALPA MEC chose not to send it out, in effect rejected that deal.
"So at this point we'll move forward. There is a process agreement in place that allows for mediated sessions and then ultimately binding arbitration if we merge the two airlines. We're going to take a step back and evaluate all of our operations.
"We had a very generous offer economically on the table. So we have pulled that offer. Now, it's just a different environment with the economy and also with very high fuel prices. We'll just consider all options and ultimately we'll do what's best for the Southwest Airlines' culture as well as the Southwest Airlines business."
Media: So the financial sweeteners are no longer on the table? You won't initially participate in mediation?
Kelly: "Correct. Obviously if asked, we'll join the mediated sessions. We can't improve upon what was offered. In fact, at this point I don't feel comfortable, since we don't have a deal, I don't see any reason ... well, we pulled the offer."
Media: What was the annualized cost of what Southwest offered to get the deal?
Kelly: "Well, it was certainly tens of millions of dollars in 2012, and annualized it would obviously be more than that. That's my best estimate off the top of my head."
Media: Does this push back the timetable for getting a single operating certificate that covers both Southwest and AirTran?
Kelly: "No. They're separate issues. All of that will have to be coordinated with the FAA. But in other words, as you well know, this is a multi-month if not multi-year conversion process.
"The target date for the single operating certificate is March 1. Well, we were not going to have one airline at that point, as you guys know. It really has no bearing. What this does is it will slow down the integration process and perhaps change the integration process.
"We were willing to put some money on the table to get an expedited seniority list, and since we have not been able to do that, well, it just gives us an opportunity to reconsider how we want to move forward."
