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Southwest Considers Stand-Alone AirTran If Pilot Vote Fails
By Mary Schlangenstein and Mary Jane Credeur
October 11, 2011 5:36 PM EDT
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Southwest Airlines Co. (LUV) told pilots it would keep operating newly acquired AirTran Holdings Inc. (AAI) as a stand-alone carrier if union members don’t agree to combine seniority lists.
Southwest briefed pilots on a “Plan B” for “separate and unintegrated” operations after that union declined to hold a membership election on a seniority proposal, according to an AirTran union summary obtained by Bloomberg News. Pilots at both airlines are now voting until Nov. 7 on a new agreement.
Keeping AirTran flying on its own would run counter to the goal of folding the discount carrier into Southwest, the biggest low-fare airline. Dallas-based Southwest paid $1 billion in cash and stock in May to buy AirTran, winning access to fly into Atlanta, home of the world’s busiest airport.
“I’m sure that’s not what management planned when they acquired AirTran,” said Hunter Keay, a Wolfe Trahan & Co. analyst in New York who recommends holding Southwest. “It probably is to some degree a negotiating tactic.”
Pilots’ approval of one seniority list would give Southwest a timeline to blend workforces and fleets, and set union members’ rankings for pay, schedules and the types of jets they fly. For AirTran pilots, ratification will mean “certainty of integration,” Southwest said in a Sept. 22 letter to union members.
Staying Flexible
Southwest has met with pilots to explain “what that vote is and what it does,” Beth Harbin, an airline spokeswoman, said in an interview today. “Absent approval, we have to think about, ‘Where is the flexibility?’”
Harbin declined to discuss the AirTran union summary or what options Southwest would consider if pilots don’t accept the new seniority agreement.
“I’m certainly not going to go into any detail about what that flexibility is,” Harbin said. “Our focus is going to be on getting the deal with the pilots done quickly because that really does set a good momentum for the rest of the integration.”
Jim Morris, a spokesman for the Air Line Pilots Association at AirTran, declined to comment, as did Jacob North, a spokesman for the Southwest Airlines Pilots’ Association. AirTran has about 1,700 pilots, while Southwest has more than 6,000.
Southwest rose 2.3 percent to $8.15 today in New York trading. The stock has fallen 37 percent this year for the third-worst decline among 10 carriers in the Bloomberg U.S. Airlines Index.
Pilot Balloting
The seniority agreement now being voted on by pilots was crafted after AirTran’s union decided against sending the original version to rank-and-file members. Under the new plan, current Southwest pilots’ seniority rights would be protected, and AirTran pilots would get pay raises.
“The company believes this proposal strongly merits your support,” Southwest said in the Sept. 22 letter.
If the ratification vote falls short, Southwest executives have developed “Plan B” as a contingency, according to the AirTran union summary. Details of that strategy were completed on Sept. 20, the summary said.
“Plan B calls for AAI and SWA to remain separate and unintegrated,” according to the summary, using abbreviations for AirTran and Southwest.
Savings, Revenue
A stand-alone AirTran would provide the same savings and revenue benefits because it would keep collecting $200 million a year in fees for checked bags, and AirTran’s Boeing Co. (BA) 717s wouldn’t be blended into Southwest’s fleet, the summary said. Southwest flies only Boeing 737s.
“It’s certainly a valid strategy,” Keay, the Wolfe Trahan analyst, said in an interview.
Southwest has said it expects that full integration of the airlines would take about two years after receiving regulatory approval to operate as a single carrier in 2012’s first quarter. Pilots’ failure to agree on an integration plan can scuttle mergers or keep airlines from operating as a single carrier after a tie-up.
Southwest’s 2009 bid for Frontier Airlines Holdings Inc. faltered when the carriers’ pilots couldn’t agree on seniority. US Airways Group Inc. (LCC) pilots are still feuding over seniority after the carrier’s creation in the 2005 merger of its namesake predecessor and America West Holdings Corp., forcing management to follow separate work agreements with two unions.
To contact the reporters on this story: Mary Schlangenstein in Dallas at [email protected]; Mary Jane Credeur in Atlanta at [email protected]

Don't see any quotes from Gary Kelly stating that he would not follow the Process Agreement. Don't see any quotes stating that they would not integrate. All I see is speculation from journalists.
 
So if you think this group will say "Hey we will take a pay raise to keep all AT guy's on a B scale". If so, you have the SWA group all wrong.
QUOTE]

I hope you're right, however, after seeing the LUV version of the Golden Rule in action, some are not holding thier breath.

BTW, we're not coming from a failing carrier either.

The golden Rule- Treat each other or others the way you want to be treated. It may be hard to see but it truly is a something that is done every day at SWA.

Your saying right now "I'm not even at SWA". Which is true, but you have a chance to be. If anything GK was trying to protect his current group and provide job security for you. M and B never guaranties any body a job.

The SLI was all business, would you expect SWA to do the same with it's competitors (Golden Rule?, research F9 and SWA hashing it out for Mexico flying, it's all business). Keeping ops separate because of arbitration would cost the company millions, and for what? For your future employer to bleed out and die.

Coming from a failing carrier? AT was strong, but long term both companies needed each other. What I meant, was most pilots at SWA know what it feels like to be at a failing carrier.

I don't know where you are at on the list but I am at the bottom of the snap shot date. I am trying to give it a chance. I have meet some of your Pilots and most are awesome. They have all great attitudes, but have a little pain to share which is understandable. Some wont even look you in the eye (not cool). Do I do that? NO. You want to know why brother? Because I live by the GOLDEN RULE.

Give it a chance. Not saying just to you, but to all.
 
Drop it, people. Like it or not, it's over. AirTran gets routes to Mexico, ect. SWA IT renumbers aircraft.
 

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