McCaskill-Bond Seniority Integration Legislation

[FDJ2]

Here's some info on the McCaskill-Bond legislation which might be of interest to the Frontier and SWA pilots. These excerpts come from a communication which was originally put out by the UAL MEC, but I think there's some good information in there which might play out in the next few months at Frontier/SWA.

Important Facts Regarding the McCaskill-Bond Seniority Integration Legislation​

· Ensures the Association’s Merger/Fragmentation Policy will guide the seniority integration process if two ALPA-represented carriers merge.

· Ensures that a pilot group’s collectively bargained merger integration protections will continue to govern as before. In the case of the United pilots, seniority integration protections afforded by Section 1 of the CBA (as shown below) will remain in force.

1-D-3 – Air Carrier Successors
In the event of a Successorship Transaction in which the
Successor is an air carrier or Entity that Controls or is under
the Control of an air carrier, the Successor shall provide the
Company's pilots with the seniority integration rights provided in Sections 2, 3, and 13 of the Labor Protective Provisions specified by the Civil Aeronautics Merger Board in the Allegheny-Mohawk merger (''Allegheny-Mohawk LPPs''), except that the integration of the seniority lists of the respective pilot groups shall be governed by Association Merger Policy if both pre-transaction pilot groups are represented by the Association.

1-E-2 – Seniority Integration
The Company shall require the Transferee to provide the
Transferring Pilots with the seniority integration rights provided in Sections 2, 3, and 13 of the Allegheny-Mohawk LPPs except that the integration of the Transferring Pilots into the Transferee's seniority list shall be governed by Association Merger Policy if both pre-transaction pilot groups are represented by the Association. The Company shall require each Transferee to provide the seniority integration rights specified in the preceding sentence in connection with a Substantial Asset Sale in a written document enforceable against the Transferee by the Association and/or the Transferring Pilots.

· Provides a seniority integration process for pilot groups lacking contractual seniority integration protections defined in sections 3 and 13 of the Allegheny-Mohawk Labor Protective Provisions (LPPs).

Sections 3 and 13 from Allegheny-Mohawk

Section 3

Insofar as the merger affects the seniority rights of the carriers employees, provisions shall be made for the integration of seniority lists in a fair and equitable manner, including, where applicable, agreement through collective bargaining between the carriers and the representatives of the employees affected. In the event of failure to agree, the dispute may be submitted by either party for adjustment in accordance with section 13.

Section 13


(a) In the event that any dispute or controversy (except as to matters arising under section 9) arises with respect to the protections provided herein which cannot be settle by the parties within 20 days after the controversy arises, it may be referred by any party to an arbitrator selected from a panel of seven names furnished by the National Mediation Board for consideration and determination. The parties shall select the arbitrator from such panel by alternatively striking names until only one remains, and he shall serve as arbitrator. Expedited hearings and decisions will be expected, and a decision shall be rendered within 90 days after the controversy arises, unless an extension of time it is mutually agreeable to all parties. The salary and expenses of the arbitrator shall be borne equally by the carrier and (i) the organization or organizations representing employee or employees or (ii) if unrepresented, the employee or employees or group or groups of employees. The decision of the arbitrator shall be final and binding on the parties.

(b.) The above condition shall not apply if the parties by mutual agreement determine that an alternative method for dispute settlement or an alternative procedure for selection of an arbitrator is appropriate in their particular dispute. No party shall be excused from complying with the above condition by reason of having suggested an alternative method or procedure unless and until that alternative method or procedure shall have been agreed to by all parties.

 

[Raoul Duke]

WN will make SLI on their terms part of the deal - i.e. the bankruptcy court would impose the bostich SLI protocol

 

[Cometman]

Here's some info on the McCaskill-Bond legislation which might be of interest to the Frontier and SWA pilots. These excerpts come from a communication which was originally put out by the UAL MEC, but I think there's some good information in there which might play out in the next few months at Frontier/SWA.

Important Facts Regarding the McCaskill-Bond Seniority Integration Legislation​

· Ensures the Association’s Merger/Fragmentation Policy will guide the seniority integration process if two ALPA-represented carriers merge.

· Ensures that a pilot group’s collectively bargained merger integration protections will continue to govern as before. In the case of the United pilots, seniority integration protections afforded by Section 1 of the CBA (as shown below) will remain in force.

1-D-3 – Air Carrier Successors
In the event of a Successorship Transaction in which the
Successor is an air carrier or Entity that Controls or is under
the Control of an air carrier, the Successor shall provide the
Company's pilots with the seniority integration rights provided in Sections 2, 3, and 13 of the Labor Protective Provisions specified by the Civil Aeronautics Merger Board in the Allegheny-Mohawk merger (''Allegheny-Mohawk LPPs''), except that the integration of the seniority lists of the respective pilot groups shall be governed by Association Merger Policy if both pre-transaction pilot groups are represented by the Association.

1-E-2 – Seniority Integration
The Company shall require the Transferee to provide the
Transferring Pilots with the seniority integration rights provided in Sections 2, 3, and 13 of the Allegheny-Mohawk LPPs except that the integration of the Transferring Pilots into the Transferee's seniority list shall be governed by Association Merger Policy if both pre-transaction pilot groups are represented by the Association. The Company shall require each Transferee to provide the seniority integration rights specified in the preceding sentence in connection with a Substantial Asset Sale in a written document enforceable against the Transferee by the Association and/or the Transferring Pilots.

· Provides a seniority integration process for pilot groups lacking contractual seniority integration protections defined in sections 3 and 13 of the Allegheny-Mohawk Labor Protective Provisions (LPPs).

Sections 3 and 13 from Allegheny-Mohawk

Section 3

Insofar as the merger affects the seniority rights of the carriers employees, provisions shall be made for the integration of seniority lists in a fair and equitable manner, including, where applicable, agreement through collective bargaining between the carriers and the representatives of the employees affected. In the event of failure to agree, the dispute may be submitted by either party for adjustment in accordance with section 13.

Section 13


(a) In the event that any dispute or controversy (except as to matters arising under section 9) arises with respect to the protections provided herein which cannot be settle by the parties within 20 days after the controversy arises, it may be referred by any party to an arbitrator selected from a panel of seven names furnished by the National Mediation Board for consideration and determination. The parties shall select the arbitrator from such panel by alternatively striking names until only one remains, and he shall serve as arbitrator. Expedited hearings and decisions will be expected, and a decision shall be rendered within 90 days after the controversy arises, unless an extension of time it is mutually agreeable to all parties. The salary and expenses of the arbitrator shall be borne equally by the carrier and (i) the organization or organizations representing employee or employees or (ii) if unrepresented, the employee or employees or group or groups of employees. The decision of the arbitrator shall be final and binding on the parties.

(b.) The above condition shall not apply if the parties by mutual agreement determine that an alternative method for dispute settlement or an alternative procedure for selection of an arbitrator is appropriate in their particular dispute. No party shall be excused from complying with the above condition by reason of having suggested an alternative method or procedure unless and until that alternative method or procedure shall have been agreed to by all parties.

Great information. However, since it is not a merger it has no effect on SWA. If SWA offers F9 a staple with pay protection they will take it. They can also put a freeze on the Denver Base until all the Air buses are gone. What a deal for them. One minute they are in Chapter 11 with an auction and the next they are with SWA.

 

[FlyinGuy]

Just remember that SWA can run this deal like ATA if there is no "agreement".

 

[airlinepilot]

This has nothing to do with ATA and is totally different. SWA did not bid to acquire ATA. Yes I know they purchased the company to get the gates at LGA but that was only after ATA was 100% OUT OF BUSINESS! SWA never tried to acquire aircraft or employee groups at ATA.

 

[TWA Dude]

However, since it is not a merger it has no effect on SWA.

Your assumption is premature.

What a deal for them. One minute they are in Chapter 11 with an auction and the next they are with SWA.

That's how it works. Heck, sometimes the newly acquired pilots even get furloughed. Such a deal the AA buyout was for me.

 

[PCL_128]

Great information. However, since it is not a merger it has no effect on SWA.

If more than 50% of Frontier's assets are purchased, then it's considered a merger under this legislation.

 

[gt1900]

SWA will operate F9 as a totally seperate company and slowly kill them off. Thats why the statement said "Frontier employees will be hired into Southwest as needed". I hate to say it but SWA has never wanted another airlines employee's. SWA has a very good culture that they want to protect, and they do that with their "people" department. F9 pilots will be "hired" as necessary. Its sad because F9 has a bunch of great people. I think there will be a bunch of F9 guys on the street. Hopefully I'm wrong, but history doesn't show it.

 

[Cometman]

If more than 50% of Frontier's assets are purchased, then it's considered a merger under this legislation.

It is a purchase. Of course it will be over 50%. How else would SWA own it if it were less. It would be a merger if they combined the airlines into one operation. That is not what it is at this time. Delta and NW was a merger. This is a purchase.

 

[FDJ2]

Great information. However, since it is not a merger it has no effect on SWA.

Are you sure about that?

"In the event of a Successorship Transaction in which the Successor is an air carrier or Entity that Controls or is under the Control of an air carrier, the Successor shall provide the Company's pilots with the seniority integration rights provided in Sections 2, 3, and 13 of the Labor Protective Provisions"

 

[FDJ2]

Just remember that SWA can run this deal like ATA if there is no "agreement".

Frontier is not ATA and Frontiers stand alone performance has been fine. They also have a new PWA which was signed by the bankruptcy judge as part of their plan of reorganization and firm commitments for financing. If SWA wants Frontier, SWA will have to make a competitive offer. This isn't a Chapter 7 fire sale.

Jan 28, 2009
Frontier Ends 2008 With Strong Financial Performance

Feb 26, 2009
Frontier Airlines Shows Operating Profit for January 2009

Mar 5, 2009
Frontier Airlines Receives Commitment for Debtor in Possession Financing

Mar 24, 2009
Frontier Airlines Reports Fourth Straight Monthly Operating Profit

Apr 28, 2009
Frontier Airlines Reports Fifth Consecutive Monthly Operating Profit

May 28, 2009
Frontier Airlines Begins New Fiscal Year With $2.4 Million Net Profit in April

Jun 25, 2009
Frontier Airlines Reports May Net Profit of $1.1 Million

 

[PCL_128]

It is a purchase. Of course it will be over 50%. How else would SWA own it if it were less. It would be a merger if they combined the airlines into one operation. That is not what it is at this time. Delta and NW was a merger. This is a purchase.

FAPA scope language requires an integration if any sort of "pooling of assets" is utilized, meaning SWA could not use any of the F9's gates, slots, planes, employees, etc... without carrying through with a merger.

 

[Cometman]

If more than 50% of Frontier's assets are purchased, then it's considered a merger under this legislation.

Here is how they describe the transaction under the law4) COVERED TRANSACTION- The term `covered transaction' means--

• (A) a transaction for the combination of multiple air carriers into a single air carrier; and which
  (B) involves the transfer of ownership or control of--
  • (i) 50 percent or more of the equity securities (as defined in section 101 of title 11, United States Code) of an air carrier; or
    (ii) 50 percent or more (by value) of the assets of the air carrier.

If you read (A) it says AND. That means if the transaction is a combination of MUTIPLE air carriers into a single air carrier AND 50% or more of the assets.

SWA might buy more than 50% but they are not combining multiple air carriers. Now, Delta and Northwest did. SWA will operate F9 as a seperate airline until they take everything they want and there is nothing left. Remember, they are buying F9 for what ever reason. They can do what they want.

SWA is willing to give F9 a list of things to get them to agree because SWA doesn't want to continue with the bidding if there could be a fight.

Staple, pay freeze, freeze on Denver Base. Maybe a little more incentive.

This could be the most serious decision F9 pilots make in their career. They might only get one chance.

 

[FDJ2]

It is a purchase. Of course it will be over 50%. How else would SWA own it if it were less. It would be a merger if they combined the airlines into one operation. That is not what it is at this time. Delta and NW was a merger. This is a purchase.

Technically DAL acquired NWA and NWA is currently a wholly owned subsidiary of Delta Air Lines, but that doesn't matter, because the nature of the corporate transaction is not relevant and likewise it doesn't matter if SWA purchases Frontier or mergers with Frontier, what matters is if SWA gains control of Frontier. At that point the McCaskill-Bond Legislation will likely kick in.

 

[PCL_128]

Here is how they describe the transaction under the law4) COVERED TRANSACTION- The term `covered transaction' means--

• (A) a transaction for the combination of multiple air carriers into a single air carrier; and which
  (B) involves the transfer of ownership or control of--
  • (i) 50 percent or more of the equity securities (as defined in section 101 of title 11, United States Code) of an air carrier; or
    (ii) 50 percent or more (by value) of the assets of the air carrier.

If you read (A) it says AND. That means if the transaction is a combination of MUTIPLE air carriers into a single air carrier AND 50% or more of the assets.

SWA might buy more than 50% but they are not combining multiple air carriers. Now, Delta and Northwest did. SWA will operate F9 as a seperate airline until they take everything they want and there is nothing left. Remember, they are buying F9 for what ever reason. They can do what they want.

SWA is willing to give F9 a list of things to get them to agree because SWA doesn't want to continue with the bidding if there could be a fight.

Staple, pay freeze, freeze on Denver Base. Maybe a little more incentive.

This could be the most serious decision F9 pilots make in their career. They might only get one chance.

You're not paying attention to the FAPA scope language. It's a factor in this transaction. You can't transfer any of the F9's assets to SWA without triggering the scope provisions of Section 1 of their contract. That trigger will require an integration, and that triggers Bond-McKaskill

 

[gt1900]

Are Skywest and ASA under 1 seniority list?

 

[Cometman]

Technically DAL acquired NWA and NWA is currently a wholly owned subsidiary of Delta Air Lines, but that doesn't matter, because the nature of the corporate transaction is not relevant and likewise it doesn't matter if SWA purchases Frontier or mergers with Frontier, what matters is if SWA gains control of Frontier. At that point the McCaskill-Bond Legislation will likely kick in.

What would happen if they kept F9 as a seperate airline. Assuming it did not violate SWAPA. Would they have to combine the list? I do not believe they have one list with Lynx. And that brings up another question. According to your theory Lynx would also have to be included.

 

[FDJ2]

SWA might buy more than 50% but they are not combining multiple air carriers. Now, Delta and Northwest did. SWA will operate F9 as a seperate airline until they take everything they want and there is nothing left. Remember, they are buying F9 for what ever reason. They can do what they want.

SWA might think they can do whatever they want, but the fact is that they can't. Frontier has had solid financial performance this year, they have firm commitments for financing, the bankruptcy judge recently approved a new PWA which has successorship protections requiring seniority integration in the event of an acquisition similar to what SWA is proposing. I know the SWA pilots hope they can strong arm the Frontier pilots like the APA did to the TWA pilots, but this is a whole different ball game and the new legislation was written specifically to prevent that from occurring.

 

[Cometman]

SWA might think they can do whatever they want, but the fact is that they can't. Frontier has had solid financial performance this year, they have firm commitments for financing, the bankruptcy judge recently approved a new PWA which has successorship protections requiring seniority integration in the event of an acquisition similar to what SWA is proposing. I know the SWA pilots hope they can strong arm the Frontier pilots like the APA did to the TWA pilots, but this is a whole different ball game and the new legislation was written specifically to prevent that from occurring.

Wishful thinking but you did not answer the questions I wrote.

 

[FDJ2]

What would happen if they kept F9 as a seperate airline. Assuming it did not violate SWAPA. Would they have to combine the list? I do not believe they have one list with Lynx. And that brings up another question. According to your theory Lynx would also have to be included.

It would depend on the PWA's of the pilot groups involved. FAPA has a PWA, it's been recently approved by the judge and is a part of Frontiers plan of reorganization. It has successorship protections.

I think folks need to remember that Frontier is not in Chapter 7. They seem to be doing well in reorganization and they've been posting good financial results. This isn't a fire sale like ATA and this legislation was written specifically to preclude another AA/TWA integration where an employee group is denied their right to a fair integration if their airline is acquired.

All of this may mean that SWA may back out of this deal, but I think if they are serious about it and they truly want Frontiers assets, they'll have to play nice in the sand box.

 

[Crandal]

SWA will do Prenup agreement with Frontier Pilots that will help SWA get around Frontier Scope and also, the same Prenup will help circumnavigate McCasskil Legislation.

 

[FDJ2]

Wishful thinking but you did not answer the questions I wrote.

Maybe because you didn't ask one.

 

[Cometman]

It would depend on the PWA's of the pilot groups involved. FAPA has a PWA, it's been recently approved by the judge and is a part of Frontiers plan of reorganization. It has successorship protections.

I think folks need to remember that Frontier is not in Chapter 7. They seem to be doing well in reorganization and they've been posting good financial results. This isn't a fire sale like ATA and this legislation was written specifically to preclude another AA/TWA integration where an employee group is denied their right to a fair integration if their airline is acquired.

All of this may mean that SWA may back out of this deal, but I think if they are serious about it and they truly want Frontiers assets, they'll have to play nice in the sand box.

I guess if they are not happy with what SWA offers they can say no. If SWA backs out then F9 can go with republic. I think they will accept a staple, pay and Base lock. Plus seniority for vacation etc. That is it for now. I said enough since I am not in either corner. Later

 

[FDJ2]

SWA will do Prenup agreement with Frontier Pilots that will help SWA get around Frontier Scope and also, the same Prenup will help circumnavigate McCasskil Legislation.

If they do a prenup with the Frontier pilots then that implies a negotiated list. That would be great, I hope it works out and you get a mutually beneficial seniority list.

 

[FDJ2]

I guess if they are not happy with what SWA offers they can say no. If SWA backs out then F9 can go with republic. I think they will accept a staple, pay and Base lock. Plus seniority for vacation etc. That is it for now. I said enough since I am not in either corner. Later

That's right, choices have to be made by all sides.

I'm not personally involved in this potential transaction, but I do have a problem with the strong arming some seem to think is appropriate.

 

[airlinepilot]

Any aircraft that SWA owns or buys must be operated by SWAPA pilots. This is very simple. If the two unions cannot settle all issues upfront then Gary will not do it.

 

[PCL_128]

Are Skywest and ASA under 1 seniority list?

Skywest has no contract, and ASA didn't have any contract language that required an integration (same reason that Delta could purchase them and not integrate).

What would happen if they kept F9 as a seperate airline. Assuming it did not violate SWAPA. Would they have to combine the list? I do not believe they have one list with Lynx. And that brings up another question. According to your theory Lynx would also have to be included.

Lynx is included under special exceptions within the FAPA scope language. An acquisition by SWA would not be. SWA could certainly purchase F9 and operate them as a completely separate operation, but the second they try to "pool" assets, such as using F9 gates for SWA operations, the FAPA scope clause kicks in and requires an integration.

SWA will do Prenup agreement with Frontier Pilots that will help SWA get around Frontier Scope and also, the same Prenup will help circumnavigate McCasskil Legislation.

FAPA would not be wise to accept such a thing. Hopefully they will look at what the APA did to the TWA pilots when they signed away their scope protections.

 

[gt1900]

Simple, SWA will use their own A/C and swap all the gates. Its going to be so easy for them to kick F9 to the curb. I hate to say it, but SWA ain't stupid! They will not pool any assets. They are buying F9 to eliminate competition, simple as that. F9 will be gone in 3 years, and all the pilots will be on the street. And I'm not saying I like it, but thats the way its going to be. If you think SWA can't move around FAPA you are out of your mind........ Funny thing is PCL, you keep saying how the government won't let it happen, and then I point out that Skywest bought ASA and they are operated seperately as different airlines with different seniority lists. SWA will do the same thing. And get rid of F9, and its employees. For god sakes, MEH subbed all thier flying out to Republic and ALPA was helpless to stop it. Yet you think FAPA can? You simply don't get it do you!

 

[PCL_128]

Simple, SWA will use their own A/C and swap all the gates.

Swapping the gates would trigger the Section 1 language. Unless all assets are kept completely separate, the scope language comes into play. I'm not a big fan of independent unions, as you well know, but I have to admit that FAPA seems to have done a pretty decent job of writing their scope clause.

I hate to say it, but SWA ain't stupid!

Agreed. That's why they're demanding that FAPA come down to Dallas to talk with them about signing away their scope language. SWA management knows that that language will inhibit what they're trying to do, so they're going to try to convince FAPA to give it up. The same thing happened with TWA/AMR, but the TWA pilots were in much worse shape, because they were likely to liquidate without the deal. F9 has more leverage, because they have an alternate deal on the table with Republic. If they refuse to accept SWA's terms, then SWA can take their ball and go home, and the FAPA pilots still have jobs under Republic.

Funny thing is PCL, you keep saying how the government won't let it happen

The government? I'm talking contract language, not government legislation. Bond-McCaskill is a completely separate issue.

and then I point out that Skywest bought ASA and they are operated seperately as different airlines with different seniority lists.

Different scope language. The whole RJDC battle was linked back to the fact that neither the DAL nor the CMR/ASA scope language required an integration. The FAPA language appears to have enough protections.

For god sakes, MEH subbed all thier flying out to Republic and ALPA was helpless to stop it. Yet you think FAPA can?

Again, different contract language.

You simply don't get it do you!

Have you read the FAPA contract? Here's the applicable section:

G. MERGER PROTECTION

1. In the event of a merger between the Company and another air carrier (i.e. the combination of all or substantially all
the assets of the 2 carriers) where the pre-merger operations are integrated, the integration shall be in accordance
with Sections 2, 3, and 13 of the Labor Protective Provisions specified by the Civil Aeronautics Board in the Allegheny-
Mohawk merger (“Allegheny-Mohawk LPP’s”). The term merger as used herein means joint action by the 2 carriers
whereby they unify, consolidate, merge, or pool in whole or in part their separate airline facilities or any of the
operations or services previously performed by them through such separate facilities.
2. In the event the Company acquires all or substantially all of the assets or equity of another air carrier, or another air
carrier acquires all or substantially all of the assets or equity of the Company, the Company shall meet promptly with
the Association to negotiate a possible Fence Agreement to be in effect during the period, if any, the 2 carriers are
operated separately without integration of the Pilot work force. These discussions shall not be pursuant to Section 6
of the Railway Labor Act, as amended, and reaching an agreement with the Association shall not be a prerequisite for
closing, or any other aspect of the transaction or operations pursuant to the transaction.

H. SUCCESSORSHIP

1. This Agreement shall be binding upon any successor or assign of the Company unless and until changed in
accordance with the provisions of the Railway Labor Act, as amended. For the purposes of this Paragraph H, a
successor or assign shall be defined as an Entity, which acquires all or substantially all of the assets or equity of the
Company through a single transaction or multi-step, related transactions.
2. No contract or other legally binding commitment involving a successor or assign shall be signed or otherwise entered
into unless it is agreed as a material and irrevocable condition of entering into, concluding and implementing such
transaction that the successor shall be bound by this Agreement, shall recognize the Association as the
representative of the Pilots, and shall assume the employment of the Pilots.

 

[ASADFW7]

So who is a lawyer here? Let this play out between the two parties involved. The big play is who SWA goes after next.