flyguy23

I don't expect anything. We'll see what happens

Eric Stratton

Well that's a cop out answer.

BigGuns

This is the most truth posted yet in this thread. The "McCaskill/Bond Law is a federal law. I applies to all unionized airlines working under the Railway Labor Act.... I see a (SWA and F9 have similar a/c). I see a relative seniority integration done by arbitration. Here is more info on the law....

Signed by the president into law in late December 2007, Missouri's senators, Democrat Claire McCaskill and Republican Kit Bond, unhappy with the way TWA workers fared in the buyout, offered a little-noticed amendment to the omnibus spending bill that brings back a regulation-era worker-protection policy. The law subjects mergers and buyouts to Sections 3 and 13 of the Civil Aeronautics Board's decision in the 1972 Allegheny-Mohawk merger. Prior to deregulation in 1978, the Civil Aeronautics Board (the primary airline regulator) required merged airlines to include some onerous "labor protection provisions" in the terms of the merger, many of which were negotiated into collective bargaining agreements after deregulation.

The McCaskill-Bond amendment requires just two of the labor protections: that "provisions shall be made for the integration of seniority lists in a fair and equitable manner" and that disputes over seniority be submitted to binding arbitration.

"Fair and equitable" is thought to mean that seniority lists would be merged, as McCaskill and Bond thought should have happened with TWA's workers. Binding arbitration speeds up the process, forestalling the endless negotiations over new lists currently bedeviling US Airways. Furthermore, past airline mergers--including FedEx's acquisition of the Flying Tigers--would probably not have happened without a merged seniority list for pilots. The Tigers merger fueled FedEx's international expansion, demonstrating the remarkable added value that a merger can offer.

With congressional guidance on integrating employee seniority lists, airlines face one less roadblock to their desired mergers.

MILPILOT17

This is not SWA's or SWAPA's first rodeo; I think they'll have it together before it's a "done deal". For the record, best of luck to all involved.



This is the first of what will likely be many communications from your M&A Committee. Our intent is to offer insight to historical SWAPA precedent with regard to mergers and acquisitions; to provide you with background of new legislative requirements regarding operational M&As; and finally, to provide you with a brief and very tentative road map to our process in the coming months. This brief will reference legislation and historical articles authored by our SWAPA staff and legal counsel. The full texts of these documents are available on the SWAPA website.

SWAPA Precedent
There are two transactions in Southwest's past that are relevant to the Frontier purchase. One was the Muse/TranStar alter-ego and the other was the Morris acquisition. These two transactions were very different with regard to corporate structure and their resulting effect on pilot seniority. Effectively, the Transtar alter-ego ended with no direct transfer of pilots to our list while Morris was what is referred to as "endtailing" or more commonly, a "staple."

In 1985, Southwest purchased Muse Airlines, changed the name to TranStar and operated them as an "alter-ego" carrier, owned and controlled by Southwest Airlines. This was possible because SWAPA waived scope provisions in return for a 4:1 ratio increase in SWA aircraft to Muse aircraft with the maximum number of Muse airplanes capped at 22. Because of this hard cap of 22 aircraft, operating TranStar as a separate company became increasingly expensive and the benefit of a potentially "cheaper" alter-ego quickly evaporated. In coordination with the Company, SWAPA explored integrating seniority lists on a varying ratio basis. SWAPA began negotiations with the newly-formed TranStar pilot association. The integrated list did not meet the TranStar pilots' desires and they turned down SWAPA in hopes for a better solution. With negotiations at an impasse between SWAPA and TranStar pilots, SWA decided to close the doors at TranStar. TranStar pilots were subsequently offered preferential interviews.

Morris Air, conversely, was more of a conventional acquisition and integration of operations. SWA purchased Morris in December of 1993 and the transition was complete by the first quarter of 1995. The Morris pilots were stapled to the SWA seniority list with pay protections. Since they were a non-union carrier, SWAPA set out to obtain recognition as the sole bargaining agent for the Morris pilots from Morris and Southwest management. SWAPA received 190 cards requesting representation from the 202 Morris pilots. The Morris pilots were given a seniority date of January 1, 1994. It is important to note that while the operations continued separately, SWA was still in a growth and hiring mode. As the Morris operation wound down, Morris pilots slotted in at SWA above new-hire pilots with hire dated subsequent to January 1, 1994. This continued until the transition was complete in March 1995.


McCaskill-Bond, Allegheny-Mohawk and Labor Protective Provisions (LPPs)
Prior to deregulation, approval from the Civil Aeronautics Board was required for all mergers. Airlines were required to account for how labor would be integrated based on LPPs prior to the approval of the merger. After deregulation, this was no longer a requirement. LPPs were left to individual pilot groups to negotiate into their contracts. The cornerstone for this methodology is the Allegheny-Mohawk merger in the early 1970s.

Simply put, the Allegheny-Mohawk provisions provide for a "fair and equitable" integration of pilot groups. If there is an impasse, either side may refer the dispute to an arbitrator; the arbitrator's decision is binding. The application of the Allegheny-Mohawk principles has not been mandatory, but many unions choose to use these principles as a guide.

As a result of the 2007 AA/TWA merger, Missouri Senators McCaskill and Bond gained passage for an amendment to legislation that would require the application of the Allegheny-Mohawk provisions in the event of a combination of more than 50 percent of air carrier assets or equity. Though this is paraphrasing, please note the lack of reference to the terms "merger" or "acquisition." The only reference that is applicable is the term "combination" as directly referenced from the legislation itself. (For the full verbiage of the McCaskill-Bond Amendment, please log on to the SWAPA website to read it in its entirety.)

Our in-house legal counsel, Teri Curro, with input from our retained law firm Baptiste & Wilder, published a much more in-depth look at Allegheny-Mohawk and McCaskill-Bond which is also available on the SWAPA website. Some pertinent excerpts are included:

The Bond-McCaskill law does not appear to establish any substantive right to employment. The Bond-McCaskill amendment does not require a carrier to hire the employees of another carrier, nor does it require a merger of the carriers in the event of a transaction.... Further, if SWA acquired another carrier and chose (with the Association's consent) to operate the carrier separately, it could do so without having to effect a merger. It could acquire a carrier, and its employees, in a stock transaction (maintaining the separate corporate entity and management) and operate as a separate carrier (again, with the Association's consent) also without triggering these obligations.

How the Company structures the Frontier transaction will become evident in the coming week. Today we do not know which path they will take. An integration (SLI) of the F9 pilots can include anything from a straight staple to a negotiated integration. The manner in which the Company structures the transaction will dictate how your M&A Committee proceeds.


The Road Ahead
Our road map is primarily driven by how the Company frames the purchase, but the good news is that the Company has included SWAPA in the process. We have the ear of our decision makers and are able to convey our perceptions of potential pitfalls. The importance of this cannot be understated. SWA has conveyed to the entire Company that without the support of labor and without labor agreements in place, the deal will not go through. SWAPA is committed to achieving contractual solutions with regard to our Section 6 and also is committed to obtaining a favorable conclusion to the acquisition of Frontier.

Job protection is the Number One goal of the M&A Committee. In turn, your Board of Directors has authorized up to $1 million from our Reserve Fund to aid the M&A Committee in its seniority protection efforts. The first step was to add the law firm of Bredhoff & Kaiser in addition to Baptiste & Wilder as our retained counsel. It is our opinion that these two law firms are the premier firms in the country with regard to M&A and have been involved in almost every major airline merger in the last ten years.

As more information is available and as our process evolves, the membership will be briefed. We appreciate your support and your input as we undertake this important work.

flyguy23

Its not a copout answer. I simply don't want to engage someone who is just here to pick a fight. Hes proven that slinging mud is all that is desired. Since ive been called out by you though, i'll answer. I don't care if im below every single F9 pilot in the combined list. Acquiring F9 would benefit everyone. I fully believe Bedford plans use the F9 cert. to add airbus which he currently isn't approved to do on any of the other certs. He also inherits infrastructure for that airplane that would cost a fortune otherwise. So F9 would add a lot of growth to republic and for the frontier guys/gals. Probably not the answer you expected, but thats my take.

InformationEcho

The idea that Bedford will continue to allow F9 to operate as a 'high cost' subsidiary of RAH is laughable.

Why would the first volley from Bedford be "Unlimited Scope Relief" if he planned to maintain the status quo with the 'bus?

Bedford is the new Jonny O,not some white hat riding in to save the day.

I see such concern about "All the F9 employees losing their jobs", believe that BB will have those same F9 employees making commuter wages in no time.

At that point you could make more stocking shelves at Home Depot on overnights.

Yabadaba

First off I agree Bedford is one of the dirtbags of aviation but can't anyone else think of another reason he wants scope relief? Menke mentions every state of the airline there will be a big change on the B concourse soon... if so what happens to RAH fee for departure from UA? If there is a credit issue with UA and they shrink will there be room for expansion in DEN by the only company making money there? Would it be better to wait for more buses to come or just paint some recently grounded 170's and taxi them over to the A concourse. In a perfect world we would just get more buses but he is trying to find a way to potentially keep his airplane flying. If scope isn't relieved now there is no way could get FAPA to agree down the road.

I know all about what BB has said previously about Airbus VS 190s but a 318 has much higher CASM than the 19 or 20... and last I checked the 18's were going away.

flyguy23

Easy guys. No scope relief will be required as Bedford has already made it known to both parties he wants a full seniority list integration. Just because he wants to fly 190s out there doesn't mean he won't grow the airbus side of thing as well.

Yabadaba

Possible... but I doubt we would see any airbus growth for a long time. He is just looking for a possible place to put airplanes if the fee for departure gravy train goes away.

F9er

Lets just pray that Southwest wins the bid so we don't have to worry about that