Southwest submits proposal to acquire Frontier Airlines

[krewmeel]

I think the Bond MacCaskill law applies here, but the law says we come to an agreement, or on to arbitration. All SWA has said is that without an agreement with the unions, then no deal. We won't go to arbitration. I think if we purchase Frontier, the pilots come too, at least that's what I have heard from some of our union guys in the "know". The question is, will the unions come to an agreement. I would think even a pay protected staple, with the ability to make 140 grand within a few years, as an FO, with a solid company, would be better than taking a chance on Republic.

Personally, I'm all for this, I think it's a win/win for everyone involved. But we have a lot of worry right now amongst our junior pilots. A hard-line stance from Frontier guys would scuttle this thing quicker than anything, IMHO. Fortunately, I haven't seen this, as most I've talked to are excited about the prospects of coming over, and I think the vast majority of us would love to have them.

BTW, the law does not say you can't staple. It says "fair and equitable". And that is for the two unions to hash out. Once again, if they or us decide it's not fair or equitable, then fine. We'll pass. The last thing we need is a big ugly integration.

The law does not say that you cannot staple, that's true, but that is hardly "fair and equitable" is it? The law was written because an entire pilot (and FA) list WAS stapled. The law says specifically that the Allegheny/Mohawk integration shall be used as a reference. This integration basically was an integration by percentile, ie, Joe Smith is 50% at WN and Tom Jones is 50% at F9 so they should be next to each other on the SLI.

Your pilots, especially the junior ones, are unlikely to go for this.....

 

[tzskipper]

You are correct that if this deal with WN goes through frontier will cease to exist before long, however, I think you are wrong about the F9 pilots ALL going to the street. You need to review the McCaskill Bond. This is a buyout, not a finance deal like ATA. SWA never owned ATA, they just gave them money and had a codeshare. There is a big difference. Plus the BK judge will have the employees of Frontier's interests in mind. He will not let this deal go through if it will mean all the employees will go to the street. If that is SWA's intent then RAH will more than likely win the decision. Do yourself a favor and review the bond, you might think differently.

Fwiw, LUV did "buy" ATA last March in order to acquire the LGA slots. It was made evident that any attempt to enforce any CBA provision would be dealt with through an 1113 motion. The BK Judge will not give a rats-ass about the Frontier employees. His interest will be in the estate/creditors only.

S

 

[HalinTexas]

In 2004 SWA acquired an 25% interest in ATA for about $105M in cash and loan guarantees. They, SWA, promptly had one of their own appointed CEO John Denison, http://en.wikipedia.org/wiki/John_G._Denison. ATA could NOT fly any city-pairs that directly competed with SWA. GK talked the union down when they were told that SWA would divest themselves of ATA stock. Late in 2005, Mattlin-Patterson, http://en.wikipedia.org/wiki/MatlinPatterson_Global_Advisors, bought out SWA's shares, but kept JD onboard until he was replaced by his hand-picked successor, Sabodh Karnik, http://en.wikipedia.org/wiki/Subodh_Karnik.

Various announcements by both SK and JD led us to believe that a continued partnership between ATA and SWA would continue for 5 - 10 years.

SWA bought ATA's cert. in liquidation last year, but took no people or equipment, just slots and gates. Hope they have fun in LGA.

 

[Sumo14]

So what happens to all us SWA poolies? Are we getting flushed?

I'm wondering that as well. I hope we hear something from the PD soon as to what our fate may be IF this actually transpires.

 

[Bigoober]

Sumo, did you get the email today. Not much was said but just wanted to make sure you are still getting the "updates".

 

[sshrae]

Fwiw, LUV did "buy" ATA last March in order to acquire the LGA slots. It was made evident that any attempt to enforce any CBA provision would be dealt with through an 1113 motion. The BK Judge will not give a rats-ass about the Frontier employees. His interest will be in the estate/creditors only.

S

I have to respectfully disagree with you here. I think the judge definitely gives a damn about all those employees being put to the street. If that was to happen he would surely approve the rah deal instead that would keep hundreds of DEN people employed. If that is SWA's intent ( I think it is not) the judge does not want to see that. SWA did not buy ATA, at least not while they were still operating. There is a big difference.

 

[krewmeel]

I have to respectfully disagree with you here. I think the judge definitely gives a damn about all those employees being put to the street. If that was to happen he would surely approve the rah deal instead that would keep hundreds of DEN people employed. If that is SWA's intent ( I think it is not) the judge does not want to see that. SWA did not buy ATA, at least not while they were still operating. There is a big difference.

I agree, I think that the judge will give WN a "smell test" to gauge their intentions. If he thinks that LUV is going to go all ATA on our A$$ then he will approve the RAH deal over the SWA one. He is remarkably pro labor in his comments and actions. He is not giving F9 mgt. a lot of breaks.

 

[tzskipper]

I agree, I think that the judge will give WN a "smell test" to gauge their intentions. If he thinks that LUV is going to go all ATA on our A$$ then he will approve the RAH deal over the SWA one. He is remarkably pro labor in his comments and actions. He is not giving F9 mgt. a lot of breaks.

I truly hope so, but looking at past WN transaction and their outcomes, history is not on the F9 side.

S

 

[Sumo14]

Sumo, did you get the email today. Not much was said but just wanted to make sure you are still getting the "updates".

Bigoober, thanks for the heads up and good luck.

 

[Zinger]

Fair and equitable will be for the unions to decide because it will never make it to arbitration. Would the F9 folks rather have;

1- Pay protection at the bottom of the SWA list (a 30% automatic raise or so with a stable airline)

or

2- A future with a slippery CEO at Republic...the Republic that allegedly wishes to get unlimited scope relief.

Option 2 sounds dicey at best. The choice sounds simple.

I think that SWA pilots would see a relative seniority or a ratioed integration as deal breakers. Why piss off 6000 SWA guys to please 600? Why slow their growth and allow others to patch the hole they've already paid for? Why let SWA haters and bad apples onto the list unquestioned with SWA trying to protect their culture? If I was at F9, I would be happy with being at the bottom of the SWA list with pay protection. How can the Republic alternative for them be any better?

 

[The Prussian]

" ATA...struggling to gain a foothold in scheduled service. "

Well, I wouldn't call being the largest carrier in MDW (surpassing SWA for many years ), the largest carrier in IND, and operating a scheduled service Route System that encompassed 42 cities exactly "struggling".

Would you?




YKMKR

Well, yes...they did struggle. They ramped up too quickly on the scheduled service side of their business. But they did know the charter end of the business, and performed that side very well.

 

[Popeye0537]

I believe the press release stated that WN was going to keep the companies seperate, right? Why do you think that is? So that they don't have to integrate the lists. What the motivation to bring F9 onboard? None, end of F9 end of story. I hope for F9 this doesn't happen.

 

[aircowboy]

Southwest will jump into the Anchorage market .....look out Alaska the gravy train might be derailing

 

[Mach 80]

>>>Southwest will jump into the Anchorage market <<<<

Not necessarily. Note the "Anchorage" portion of the following:


http://www.examiner.com/x-3584-Airl...sts-bid-for-Frontier-picked-apart-and-studied

 

[sandyPAN]

I have a friend at f9 with a family, and I would much rather see him get a raise and work for a stable company. The alternative is possibly becoming a commuter pilot for a shady outfit. Ask any of our Morris folks how their lives turned out. If f9 folks get the chance to be at the bottom of SWA with pay protection you should jump on it. This is a great place for your kid's future. Tell your REPs that. I don't think SWAPA will be able to agree on anything else.
Good luck!

 

[sshrae]

I believe the press release stated that WN was going to keep the companies seperate, right? Why do you think that is? So that they don't have to integrate the lists. What the motivation to bring F9 onboard? None, end of F9 end of story. I hope for F9 this doesn't happen.

Of course they are going to keep the companies separate, they are not just going to shut it down and scrap the planes overnight. Like I said, if they have their way eventually it will mean the end of F9, where I think you are wrong is that it will mean the end for the Frontier pilots. Nobody, including the bk judge wants to see all those employees on the street. I think you have a personal issue against frontier for some reason. Probably because you know that this would really hurt your commuter airline, and it would. BB gets his 40 some odd million in dip financing back and is left with an underperforming airline. Not even close to the end of story as you say. I think we all have to wait and see how this plays out but your pessimistic attitude isn't fooling anyone.

 

[contrail67]

UAL might as well close DEN hub today....if this goes through they have no chance making it in DEN with their cost structure. It will be BWI all over again...

That actually made me laugh....think.

 

[HalinTexas]

From wikipedia "ATA Airlines." I know your high school teachers don't' like you using this as a source, but.....it's accurate here.

First bankruptcy
On October 26, 2004, ATA Holdings and its subsidiaries filed for Chapter 11 bankruptcy protection. Eventually, shareholders of ATA Holdings stock lost all their money and received no shares.[7] The stock, previously traded on the Nasdaq stock exchange as "ATAH", was delisted.
In 2004, AirTran Airways agreed to pay $90 million for ATA's 14 gates at Chicago-Midway. Southwest made a higher bid and AirTran's deal fell apart.
In December 2004, ATA entered into an agreement with Southwest Airlines to transfer six gates at Chicago Midway International Airport and 27% of non-voting stock in exchange for a cash influx and codeshare agreement.
In the beginning of 2005, the airline drastically reduced flights at its Indianapolis hub to only three destinations and centered scheduled flights at Chicago Midway International Airport in order to complement Southwest Airlines codeshare flights. ATA also focused on serving markets that are business oriented and do not have Southwest service, such as San Francisco, Dallas/Fort Worth, and New York-LaGuardia. Additionally, ATA began offering point-to-point service not connecting to its Midway Hub, as to benefit other Southwest Airlines focus cities, such as Las Vegas, Orlando, and Phoenix, with connections to non-Southwest destinations such as Denver and Hawaii. Southwest CEO, Gary Kelly, said that revenues were up nearly 20% due to the new codesharing agreement.
On March 28, 2005, ATA shut down its commuter airline service, Chicago Express/ATA Connection, and later sold the assets to a private buyer. In attempt to reduce operating costs, the airline also downsized its fleet by returning twenty Boeing 737-800 and eight Boeing 757-300 aircraft, along with numerous Boeing 757-200 aircraft. The eight 757-300 airframes were subsequently refurbished by Boeing, the lessor, and then leased to Continental Airlines.


ATA Airlines Boeing 757-300 (N550TZ) at MCO
In mid-2005, ATA entered an agreement to lease three ex-United Airlines Boeing 737-300 aircraft. Three 737-300s entered service with ATA in late November 2005. Due to high lease rates, the three 737-300s were taken out of service in November 2007, and returned to their owners.
In September 2005, ATA outsourced all its Heavy Maintenance Checks to overseas and domestic contractors. Also planned was an agreement with Continental Airlines to trade ATA's remaining four 757-300 aircraft for four 737-700 aircraft. In early October 2005, ATA terminated these negotiations due to the Boeing machinists strike, which would delay the delivery of the aircraft.
On October 13, 2005, ATA announced major service reductions, ending flights to Boston, Minneapolis/St. Paul, and Newark. In addition, the planned addition of flights to Miami and Sarasota, Florida was cancelled. This ended Southwest codeshare service to Minneapolis and Newark. Later that year, on November 1, 2005, a second round of flight cuts were announced, including the suspension of scheduled service to Denver, San Juan, and their headquarters and former hub Indianapolis.
On November 17, 2005, ATA Airlines received court approval to sell its Ambassadair Travel Club division to Grueninger Cruises and Tours.
In a third round of cuts announced on December 6, 2005, ATA announced that it would discontinue service to three additional cities. ATA would suspend flights from Chicago Midway International Airport to San Francisco, Orlando, and Fort Myers in late April 2006. Following these cancellations, ATA would have only 18 daily scheduled departures from its former Chicago hub and 52 scheduled departures company-wide. Moreover, the company would be left with only 1 gate at Midway, down from its previous total of 14, surrendering the balance to Southwest or the city.
On December 15, 2005, ATA announced an expansion of its code-share agreement with Southwest Airlines. ATA Airlines would expand codesharing with Southwest Airlines between Dallas-Fort Worth International Airport and cities in the Southwest system that connect via Chicago Midway International Airport. This is where SWA sold their shares.
In January 2006, MatlinPatterson and certain pre-bankruptcy creditors invested over $100 million in ATA and took the company private, also taking over ATA Holdings, Inc. Following the transaction, on February 28, 2006, ATA Airlines emerged from Chapter 11 bankruptcy protection. However, the airline was still shrinking. ATA continued to return more aircraft, including the 1,500th Boeing 737 Next Generation produced, N333TZ, which was delivered new to ATA on May 14, 2004.

SWA made their $100M investment back in one year, and then some. They've gained every month since. Very shrewd. Keep an eye out on Matlin-Patterson.

 

[krewmeel]

Fair and equitable will be for the unions to decide because it will never make it to arbitration. Would the F9 folks rather have;

1- Pay protection at the bottom of the SWA list (a 30% automatic raise or so with a stable airline)

or

2- A future with a slippery CEO at Republic...the Republic that allegedly wishes to get unlimited scope relief.

Option 2 sounds dicey at best. The choice sounds simple.

I think that SWA pilots would see a relative seniority or a ratioed integration as deal breakers. Why piss off 6000 SWA guys to please 600? Why slow their growth and allow others to patch the hole they've already paid for? Why let SWA haters and bad apples onto the list unquestioned with SWA trying to protect their culture? If I was at F9, I would be happy with being at the bottom of the SWA list with pay protection. How can the Republic alternative for them be any better?

All that you say is true, however, F9ers should should think about this if we are stapled:


1. WN is overstaffed by about 400 pilots right now; who do you think the furloughees will be?

2. F9 has fewer commuters than most airlines due to the relatively good QOL in DEN. When the WN DEN base opens after the purchase, who do you think is going to end up commuting to OAK?

3. WN has some of the highest paid work groups in the airline business, therefore, their cost structure is getting to be relatively high. UAL was the "place to be" 15 years ago. Point is: even the seemingly invincible can fall fast and hard, do you want to be at the very bottom if that happens?

Just being Devils advocate here guys....this may work out ok for we F9ers but don't think you have won the lottery just yet....

 

[scoreboardII]

This is all very preliminary, but the law states very clearly that you can not acquire an airline, fire all of the employees, and the offer to re-hire them.

Correct.

Which is why before the deal is made, the agreement will be reached that Frontier guys get an offer to be hired at a later date.

The other option is republic, good luck to all!