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SOUTHWEST AIRLINES’ BID TO ACQUIRE FRONTIER NOT SELECTED AT AUCTION

pberg
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SOUTHWEST AIRLINES’ BID TO ACQUIRE FRONTIER NOT SELECTED AT AUCTION

Carrier’s Refusal to Remove Labor Requirement Key in Decision


 
DALLAS, TX—Aug. 13, 2009—Southwest Airlines (NYSE: LUV) confirmed today that its bid to acquire Frontier Airlines was not selected.  Southwest submitted a bid of more than $170 million to Frontier Airlines on Monday, Aug. 10, 2009, in accordance with the procedures established in the U.S. Bankruptcy Court for the Southern District of New York. 


“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,” said Gary Kelly, Southwest’s Chairman of the Board, President, and CEO. “We have a mission to preserve and protect our Culture and the best interests of our Employees, Customers, and Shareholders.  This was a great opportunity that required us to act fast.  A lot of people worked very hard with every intention of making this work.  We were fortunate to be in a position to examine the acquisition to see if it was the right decision for Southwest Airlines. We chose not to amend our bid to remove the labor requirement, a key reason our bid was not selected.  Our congratulations to Republic Airways and Frontier Airlines.”


As stated in its initial statement of interest on July 30, 2009, Southwest said there would be several contingencies to be resolved for a deal to go through.  Key in its position, Southwest was not willing to remove the need for the two Pilot Unions to reach agreement. Southwest’s says its Culture and relationships with its Employees are too important to compromise.


 “Southwest remains committed to serving the Denver market with our low fares and excellent Customer Service,” Kelly said.  “We began serving Denver in 2006 with just 13 flights and have grown to offer 112 nonstop daily flights today.  We are very pleased with the response we have seen to our service and growth in Denver, and we will continue to compete vigorously in the market.”  

 

One of the contingencies in Southwest's proposal was that labor groups from the two airlines would need to reach an agreement on how the two Pilot Unions (SWAPA and FAPA) would work together.  Despite a good faith and diligent effort by all involved, including the top leadership of the Southwest Airlines Pilots Association (SWAPA) and the Frontier Airlines Pilots Association (FAPA), who labored long into the night, the two unions were not able to come to an agreement before the auction deadline.  As a result, Southwest’s bid was deemed unacceptable.

 

Frontier filed for bankruptcy court protection in April 2008.  Southwest submitted its initial indication of interest to acquire Frontier Airlines on July 30, 2009, which gave the carrier an opportunity to engage with Frontier in the due diligence required to determine the scope of a binding proposal.  Southwest submitted a bid of more than $170 million to acquire Frontier on Monday, Aug. 10, 2009.  
 

After 38 years of service, Southwest Airlines offers a reliable product with exemplary Customer Service. Southwest Airlines is the most productive airline in the sky and offers Customers a comfortable traveling experience with all premium leather seats and plenty of legroom.  Southwest recently updated its gate areas and improved its boarding procedure to make flying Southwest Airlines even more convenient and simple. Southwest Airlines currently serves 66 cities in 33 states, and announced service to Boston Logan, which begins Aug. 16, 2009, and to Milwaukee, which begins Nov. 1, 2009. Southwest currently operates more than 3,200 flights a day and has nearly 35,000 Employees systemwide.

 

www.southwest.com

21 Comments
Anonymous4040
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WOOOO HOOOOOO, thank God!!!!!! GO FRONTIER AND GO REPUBLIC, look forward to being able to still fly Fontier!!!!
Cat3
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I like Southwest, but I love Frontier Airlines!!!! I am so happy that you were not able to crush this fine airline. We all know GK that was your plan. You can try to paint this anyway you want to, your employees will surely believe anything you say. The business world, the airline world and guess what, even us customers know the real truth now: You are a bully, and finally the underdog took off his glasses and hit you back. In fact, Frontier has been hitting you back since you came to Denver. When Herb said years ago, Southwest will fly to Denver when pigs fly I don't think he meant that Southwest would be the pig. But there it is. Frontier will never have a pig on its tail, but you already do! I'm sure Frontier realizes that they are now in for the fight of their life, it's not the first time and God willing it won't be the last time. The real Luv, is with Frontier, in Denver anyway!
DENVER
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HAHAHAHHAHA LOOSERS!!!!!!! southwest my ass
Anonymous35
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Frontier is gone, republic cant save them
Anonymous3136
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cat - you can paint this anyway you want to, but you are clearly a moron.
Lynx_FA
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As a Lynx employee and a Texan that just happens to have lived in Denver for 4 years and is very familar with the SWA culture; I hope that the SWA culture that has been spoken of is not "Texas Arrogance" that I have heard so much about since I moved to Colorado 4 years ago. For SWA management to compliment Frontier and its employees and then turn around and basically state that your pilots don't deserve any consideration in seniority, "because our culture and employees are too important to compromise." This statement unfortunately gives credence to the people who stated that SWA was just interested in Terminal A, squashing a competitor (ie. Walmart), and getting routes, etc. and had no regard for its employees. Sure those heartless among you will state that this is business. But folks businesses are not run without people.and both airlines have excellent workers among their ranks. I was actually excited to hear that SWA was going to keep Lynx around and potentially grow our operation, but at what cost, the potential loss of thousands of our cousins jobs at Frontier. In this maket a lower paying job under Republic is better than no job at all. I wish my friends at SWA the best, I have nothing but praise for the SWA employees that I have encountered over the years. See you in the skies.
Robert_Miller1
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Does this have an effect on Southwest's plan to enter the Atlanta, GA market?
Anonymous2829
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GoodLuck to all employees of Frontier Airlines( soon to be Replubic ) . Sad that our two companies couldn't come together on terms to make this union possiable ! We both have Great Cultures with our companies and it's sad to see the neg side on bitter people comeout. You the employees of Frontier Airlines ( have banded together, through many financial situations, including being currently bankrupt ) and still remain true to your company ! Southwest Airlines people know how to get behind our great company and make it thrive, especially during hard times. HATE OF SOUTHWEST AIRLINES, ENVY, OR CALL IT WHAT YOU MAY, we will be around for a long time !!!!!!! for those Employees of Frontier Airlines who are about to lose thier Jobs, not because our failed attempt to join our two companies, but because Frontier had already deemed it necessary to shut down some of your cities and lay your people off, even before anybody takes you over. rememeber this, as you go forwards into the future, lets hope that you fears of losing your jobs don't occure! When two companies join forces, someone, in each company, will lose. If you are that Bad Apple, look inside and become the person you use to be !, if not consider you job on the cutting board. No company needs that type person right now or ever !!!!!!!!!!!! GOOD LUCK !!!!
Anonymous2829
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I wonder if this fine little airline will survive ! the fear of unknown has caused alot of people to doubt what may have really happened. we might not ever know. I agree, lets hopes Frontier makes it ! the truth of the matter is, you would have made it with Southwest Airlines. Just ask the people who have already been told that they are loosing JOBS with Frontier, Good Luck with that !!!!!!!!!!!!!!!
Anonymous2978
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If they dont, im screwed on my flight to denver
Anonymous2386
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I'm confident Southwest will move forward and find another way to grow. Say what you want, but the fact remains that Southwest's smart business practices have made the company a leader in the industry. Best of luck to the Republic/Frontier folks - especially those who will now lose their jobs.
reality1
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I hope I am wrong, however I believe the Frontier Pilots made the mistake of their lives. They will be Republic, not Frontier employees. Time will tell...Republic is no Frontier. I find it hard to believe these Frontier Pilots turned down the opportunity to be part of the LUV Family Jim
Adrian1
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Republic can't save Frontier? Actually Republic has A LOT more money than people think. They are well prepared to save Frontier, get through even worse economic times and add growth to the company. I predict that Southwest will start to have problems now. Yes, they can afford to bleed money for a long long time now that they have started to loose, but is that what they really want to do? Frontier will continue to "kick Southwest's butt" in Denver as they always have. Remember, the only reason Frontier had to file for chapter 11 was because First Data Corp. was going to hold back an unfair amount that would have made it impossible for Frontier to survive no matter how well they were doing in the midst of the high fuel costs.
Adrian1
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Suck it Suckwest! HAHAHAHA! You finally LOST!
Anonymous2210
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I am glad that SWA did not get the bid. And, another thing- kudos to SWA for not agreeing to the pilots of Frontier. SWA is NOT merging, therefore, why should Frontier bring their seniority with them? Just like with any company, if you (Frontier) are being rescued from a company that is financially stable and not even looking into bankruptcy, what makes you think you can waltz into a GREAT company and keep your seniority? SWA is a fine and wonderful airline and always will be!!! Just please don't hire any of these jokers when they go under in a couple of years.... they will wish they agreed!
Anonymous3832
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It sure would be interesting to be a fly on the wall in the exec boardroom at Southwest right about now, after they had all those grandiose plans that came to a screeching halt. One might wonder if they were truly ever serious about buying Frontier or if they temporarily forgot about the fact the labor unions would be required to come to an agreement before this could go forward. Did they really think 2 separate labor unions could come to an integration agreement in just a few days? I wonder how the board of directors feels about this aborted attempt.
Retired_SWA_F_A
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The big losers in this deal are Frontier's creditors. According to the Dallas Morning News report from 8/15/08 (Frontier says Southwest's bid was hurt by more than just the pilot troubles),the RAH bid will raise the return to creditors to 19 cents. That effectively means that the local Denver companies that sold office supplies, sold coffee and snacks, provided security, electricity, and water, provided janitorial services, fueled aircraft, washed aircraft, serviced aircraft, and everyone else that provided any product or service to Frontier Airlines HDQ and airport facilities will all get a whopping 19 cents for every dollar owed them. These are people who have bills to pay also. It's a shame that WN and UAL have to compete with a bunch of people who couldn't make an airline work in the first place and who get to continue to operate while not having to pay their bills in full. That's hardly a fair playing field. The article also states, "Frontier said its lower costs and brand loyalty will help it survive in Denver." If Frontier truly had the brand loyalty that is purported in this article they would have never ended up in bankruptcy court in the first place. It is a shame that Frontier is painted as a darling child by much of the media when, in fact, they more resemble a spoiled child unable to face the fact that they lost the game the first time around and now want to start over on a playing field that is far from level and which favors themselves. Its no wonder WN would not want to poison their own culture with this sick sense of entitlement by bringing on the whole Frontier flock. The current lower costs referred to in the article come on the backs of Frontier Airline's creditors. And Frontier employees are upset that they might end up on the street? Yet I see little concern for the aftermath of the mess that Frontier Airlines has caused for the local Denver business community and their families who might themselves end up on the street as a result of the 19 cent return on the money owed to them by Frontier Airlines. Those folks did business with Frontier in good faith and have now been screwed. Fly Southwest Airlines, folks, they pay their bills in Denver!(Now that's true hometown spirit!)
Anonymous2007
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Wow guys why would you even talk like that. F9 employees show some class. Better keep your fingers crossed. I found out last night that I may not be the first victim of this Republic buy out but I am definatley the next and if what I heard is correct I wont be the last.
Anonymous2197
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Come on folks, I love both Southwest and Frontier....and it wasn't about "the underdog hitting back." If SWA wanted Frontier bad enough, their CEO could have single handedly removed the labor agreement clause, put up way more cash than Republic, and it would have been a done deal. By choosing to leave the labor agreement clause in place, SWA gave Frontier the option of choosing SWA or Republic........which I think is awesome. Frontier's pilot union chose Republic, and for everyone involved, I hope it was the right choice. As far as furloughs go...........even with Republic, there will be furloughs and out-right job losses (according to a friend of mine who's at Frontier). I appreciate SWA being honest about their intent to slowly absorb Frontier into SWA. I think Republic intends to do the same, but didn't say it. If you don't believe me, look at all the Republic Regional Jets in Kansas City, that use to be Midwest 717's. They'll eventually replace Frontier with thier own Brand, so in the end how is it any different for the ex-Frontier employee?
Adrian1
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To the retired SW FA, " If Frontier truly had the brand loyalty that is purported in this article they would have never ended up in bankruptcy court in the first place" Maybe you need to do a little research on why Frontier had to claim bankruptcy. They were doing fine until their credit card processor First Data Corp. decided to hold back an unfair amount of cash that would have made it impossible for Frontier to survive. The city of Denver now hates SW for what they tried to do which will make it even harder for SW to survive in a city where they've never even made any money in the first place. Educate yourself and quit talking out of your dried up you-know-what
Anonymous3505
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Southwest IMO is the best airline around, I do like Frontier (or did) but this was a very limited scope airline and you can't even compare the two airlines. Southwest does an amazing job and has consistently performed in recent years, so how can you fault the excellent management that Southwest has? They have the most loyal customers (me included) and employees I've ever seen. In the long run, Frontier and it's employees (the ones that would have remained, as no matter what happened or who took over Frontier, jobs were going to be lost anyway) would have benefitted had Southwest been successful with their bid. I also fly Delta, Continental, Airtran, US Air, rarely United or American - no matter who else I fly, none of them compare to Southwest and I always regret that I had to fly another airline but sometimes you don't have a choice. Given the choice, I'd always fly Southwest - even if it cost a little more, it would be worth it to me. I go out of my way to fly them now but I've got to go to Nashville or Birmingham. If they were in Atlanta this would be great. We should all wish for Southwest to expand their access to gates and cities, everywhere they go they've been successful with their low fares and unsurpassed customer service. The only people that should be happy about this are the airlines that are afraid of Southwest because they know they can't compete with Southwest's business model. I was really hoping this would have happened because it would have given Southwest gates in Atlanta and more coverage in the Mountain states. And to those who hate Southwest, though I can't understand their position, I realize that this is more ignorance than anything, so keep on hiding under your rock.