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Soaring fuel prices complicate AirTran's labor negotiations with pilots union

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Eagle757shark

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Soaring fuel prices complicate AirTran's labor negotiations with pilots union

Jason Garcia
Sentinel Staff Writer
March 4, 2008

Record fuel prices are threatening to make long-running labor negotiations between AirTran Airways and its more than 1,500 pilots even more difficult.

With the price of oil rising beyond $100 a barrel, AirTran President and Chief Executive Officer Bob Fornaro said Monday that his company is unlikely to exceed -- or even match -- the deal that the National Pilots Association rejected last fall.

"I would say right now I'm not sure we would put that agreement back on the table. That was a $65-a-barrel agreement, and that's not where we are," Fornaro told analysts at the Raymond James Annual Institutional Investor Conference in Orlando. "We're taking a fresh eye as to what we're going to put on the table."

Capt. Mike Best, the pilots association's president, would not comment on Fornaro's remarks, citing a "media blackout" imposed by the National Mediation Board, which has been overseeing the talks since September 2005.

AirTran, a unit of Orlando-based AirTran Holdings Inc., has been haggling with its pilots over a new contract for nearly three years. Company executives and previous union leaders reached a tentative deal last August on a pact that called for $54 million worth of raises and benefit increases over a little more than four years.

But the deal unraveled when 60 percent of union members voted against it. The union also voted to oust the leadership team that negotiated the pact.

AirTran executives have vowed to keep a lid on labor costs. Fornaro noted on Monday that AirTran stands to benefit if bigger rivals Delta Air Lines and Northwest Airlines, which are trying to negotiate a merger that would create the world's largest airline, have to "buy off" labor groups with concessions to ensure they don't object to a deal.

"That means our cost advantage will widen," Fornaro said. "It will be harder and harder for them [the legacy carriers] to match our prices."

In another nod to stratospheric fuel costs, AirTran also announced further cuts in its growth plans Monday: Fornaro said the airline has struck deals to sell to an undisclosed buyer a pair of Boeing 737s it currently has on order.

AirTran also revealed in regulatory filings that it has cut its expected growth in seat capacity nearly in half -- to 5 percent in each of 2009 and 2010. AirTran had previously projected capacity growth of 8 percent in 2009 and 10 percent in 2010.




Jason Garcia can be reached at [email protected] or 407-420-5414.


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