Saturday, August 01, 2009

A Frontier Air Pilot’s Take on Southwest Air’s Bid
By Michael Corkery

Southwest Airlines has said its potential purchase of Frontier Airlines Holdings out of bankruptcy-court proceedings would depend partly on whether it can obtain a labor agreement with Frontier’s pilots union.

What Southwest is looking for from Frontier’s 720 pilots is unclear. So Deal Journal spoke with John Stemmler (left), the Frontier Airline Pilots Association president, who is headed to Dallas on Monday to meet with Southwest management and its pilots’ union to start discussions. Stemmler spoke about his fears of the sale leading to job losses at Frontier and the phasing out of airline’s favorite animal logo.

And while Republic Airways Holdings, a holding company for regional airlines, has also bid on Frontier and said it wanted to extend the pilots’ contract by three years if it wins the auction for the company, Stemmler says.

Deal Journal: Would you be happy with Southwest Air buying Frontier?

John Stemmler: It’s too early to tell. We haven’t been formally approached by Southwest, but the company has said in internal communications that they are looking for some kind of labor agreement with the pilots. Absent that agreement, they might not go through with the deal.

DJ: Do you expect there will be any job losses from any acquisition.

Stemmler. There are roughly 2,500 back office people at Frontier in Denver that are what they call synergistic cost centers. (In other words, they are overlapping with Southwest operations and vulnerable to cuts). These aren’t the people whom I represent, but they are my friends. The Southwest deal would probably eliminate more of these jobs than a Republic deal because Republic doesn’t have the ticketing and back office operations that Frontier provides.

DJ: Do you expect that seniority of Frontier pilots in a combined work force with Southwest will be a major sticking point.

Stemmler. It’s the biggest issue. Seniority is life in aviation. There as many formulas for seniority as there have been mergers. The best-case scenario is that they phase out Frontier’s Airbuses and retrain Frontier pilots to fly 737s (the Boeing plane in the Southwest fleet), resulting in no net work-force reduction. The worst case is that Southwest ignores Frontier’s seniority and our pilots are put at the back of the list.

DJ: Will a sale kill Frontier’s corporate culture?

Stemmler. We are small airline. I’ve been at the company for nine years and we’ve all flown together. It’s much different at a bigger airline. Change is painful. We have done so well, recording a profit over the past eight months. It’s tough for employees to get their arms around the idea that we need a financial sponsor to get through bankruptcy.

The tails of Frontier Airlines planes decorated with wildlife portraits stand at the gates at Denver International Airport in 2003.

DJ: What about Frontier’s famous animal logos, will you miss that?

Stemmler. Kids go crazy about it (each of Frontier’s 51 planes has a different animal on the tail). Passengers will ask what animal is this plane. The experience of going through airports since 911 has been getting increasingly worse. But we are still trying to have fun.

DJ: Do you think your pilots will be able to integrate into Southwest’s own folksy culture?

Stemmler. It’s a very similar thing. They stress that this is not just about putting butts in seats and moving them. It’s about giving customers a pleasant experience. They seem to get it.

DJ: Some pilots would love to fly for Southwest because they pay so well.

Stemmler. There was a time when people when people wouldn’t dream about going to Southwest because you didn’t know if it would still be flying in a few years because it was such a small company. Now these are coveted jobs. It went from one of the lowest paying to one of the highest. Southwest has grown to point to where it’s really stable, which you can’t say about a lot of other airlines.

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