Pilot union impasse scuttles Southwest's Frontier buy
Southwest Airlines said late yesterday that its $170 million bid to acquireFrontier Airlines was "deemed unacceptable" by a US Bankruptcy Court after the two carriers' pilot unions were unable to reach an agreement on joint work rules and seniority, paving the way for Republic Airways Holdings to purchase Denver-based Frontier.
SWA and Republic both issued bids for bankrupt Frontier that were considered in a court-monitored auction held yesterday (ATWOnline, Aug. 11). Even though SWA's offer was much higher than Republic's $108.8 million proposal, the LCC's bid included a clause requiring that the Southwest Airlines Pilots Assn., representing its nearly 6,000 pilots, and the Frontier Airlines Pilots Assn., representing 700 pilots, reach an accord. But the two groups suspended negotiations Wednesday night after FAPA balked at SWAPA's proposal to place the Frontier pilots at the bottom of their seniority list.
"Southwest was not willing to remove the need for the two pilot unions to reach agreement," SWA said in a statement, adding that its "culture and relationships with its employees are too important to compromise."
Chairman, President and CEO Gary Kelly explained, "We said all along that we would only move forward on this deal if it proved to be the right decision for our employees and financially prudent for our company. . .We chose not to amend our bid to remove the labor requirement, a key reason our bid was not selected." He added that SWA remains "committed" to the Denver market.
by Aaron Karp
