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Southwest Airlines CEO Gary Kelly on Bid for Frontier

pberg
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A press release was issued today announcing that Southwest Airlines has submitted a proposal to acquire Frontier Airlines, which will be sold at auction in bankruptcy court this month.  The following memo was sent to all Southwest Airlines Employees from our CEO, Gary Kelly.

This morning Southwest Airlines submitted a bid of more than $170 million to acquire Frontier Airlines, which has been in bankruptcy since April 2008.  We understand an auction will commence later this week in New York.  Once the auction is concluded, the bankruptcy court must approve the selection of the winning bidder.  So really, we just don’t know when it will be that we’ll hear about these results, but I commit that we’ll keep you informed as we go.  

 

We believe Southwest’s bid represents the best possible longterm scenario for Frontier, its Employees, and the Denver traveling public.  Southwest brings to the table the most consistently profitable airline in commercial aviation history, the best Customer Service record in the industry (as repeatedly determined by the Department of Transportation), an Employee-centric Culture, and low fares.  If we are successful in our bid, Southwest will offer a financially stable, Customer friendly, low fare alternative to the dominant carrier in Denver into the future.    

 

I have seen and read speculation and reports as to why Southwest would be interested in acquiring Frontier.  Simply enough, Frontier is for sale, and purchasing them would allow us to increase our Customer base in a city where we want to grow.  Frontier also is a stellar airline with a great reputation known for quality Customer Service, passionate Employees, and low fares.  Sound familiar?  Those are the three main ingredients that Southwest Airlines was founded on more than 38 years ago, and those three values remain at the core of our DNA today.  While there are obviously some differences in our companies, we also see a lot of similarities.   

 

I have also seen some speculation as to why this move makes sense for Southwest Airlines.  Southwest is a growth company.  Who would have ever thought 38 years ago that we would grow from offering service between three Texas cities to carrying more passengers than any other carrier in the United States?  Pretty remarkable, and even more remarkable is the fact that we have grown while being profitable for 36 consecutive years – a feat unmatched and unheard of the airline industry!  

 

We began serving Denver in January 2006 with just 40 Employees and 13 daily nonstop flights.  Today, we have nearly 400 Denver Employees and operate 113 daily nonstop flights to 34 destinations from the Mile High city, making Denver the fastest growing city in our history, and already among our top 10 airports (out of 66 and growing) that we serve in terms of daily departures.  It’s clear Colorado Customers appreciate our low fares, great service, and convenient schedule to places they want to go.  

 

If our bid is successful, we will return to growth mode in the midst of a deep recession, expand our network in Denver to include many attractive destinations that we don’t currently serve today, and offer Denver travelers a stable, low fare airline with legendary Customer Service to compete against the dominant carrier at DIA.  

 

Through this acquisition, Southwest will continue to provide Denver a financially stable source of its historically low fares well into the future.  There should be no doubt; the bankruptcy process will require some change to Frontier in any scenario.  Given Southwest's history and track record of running a successful airline, we believe that our bid is the best option on the table for Frontier, Southwest, and the traveling public.  A successful acquisition of Frontier Airlines by Southwest will expand our network of legendary low fares to additional cities, add jobs into Southwest through growth, and strengthen low-fare competitive pressure in Denver and other cities.

To listen to a conference call held today to discuss Southwest’s bid proposal with Ron Ricks, Executive Vice President Corporate Services and Corporate Secretary, and Bob Jordan, Executive Vice President, Strategy and Planning, please click HERE.  To read a transcript from the call, please click HERE.

 

126 Comments
Dedicated_SWA_e
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Thank you, "Dedicated F9 Employee-IT" and "OPNLguy" for you compliments on my posting. It is very good to see that those core values, and beliefs we share, truly are within each of us. All of our customers depend and expect it of all of us. (as they should) Thank you, "L Moody" That was a very positive outlook on possibilities, as well as inspirational for all of those who are involved in this exciting possibility.
12_year_F9_EMP
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I have read the blogs and comments on all the F9/WN buyout and as a 12 year F9 employee I must say that the few that are bashing on both sides need to remain quite. There is not much in our control right now and the only thing we can do is sit and wait. If WN wins then we as F9 employees have a choice to make which is apply for a WN position or not. I personally do not want to start over but if that is what I have to do and that is what I decide to do then I give my 100% to my new employer. I know from talking to some of the F9 workforce it is not only that we may lose our jobs it is also the fear of starting all over again. We have built this airline from the ground up as front line employees and it is tough seeing something you care for so much possibly disappearing. It is not the best of times for us right now and the bashing just makes it worse. So to both side I say please remain positive and lets all see what happens. By no means is this final yet and until it is, everyone needs to remain calm. To my fellow F9 Employees please refrain from bashing. 2 wrongs don't make a right. Let the very very few WN employees bash all they want but we are better than that! (Please WN employees don't take that the wrong way it is to the ones that posted on this blog bashing F9 and having a "I am better than you attitude") Paula, I listened to the webcast but the only thing about F9 employee seniority that was mentioned was the pilots group. Could you please let the othe F9 employee groups know what if any seniority is going to be recognized. Thanks 12 Year F9 Emp.
Anonymous4379
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To the retired Southwest employee that stated they would have to break out a chisel and hammer to break F9's bad customer service habits, i'll have you know that F9 is highly regarded for its customer service in Den as well as other stations. So before you bash F9 get your facts straight. So stop sipping on the WN kool-aid.
Anonymous4377
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This is for Tina Lopez. I think it's great that you were able to retire from working at Southwest. At least for Southwest sake they were able to get rid of a mean spirited arrogant employee. Iam glad I never got the chance to work with you, or in a situation to where I had to depend on you taking care of me or my family. But I do feel sorry for the people that had to deal with you. Southwest must have felt sorry for you, and they just decided to gave you a job. Or you just lied about how much you love taking care of people. I will say for one thing is that I know you would never pass as a Frontier employee. Because they actually care about the people, hell even the traveling dog down below in the cargo hold. May be somebody needs to take a chisel and a hammer to you, and not stop untill you are changed from a mean spirited you know what, to a loving caring person. I feel sorry for the one who does this, because it will be a full time job. Hey you know what some vo-tech schools offer classes on how to be polite to others, apparently you were never taght any respect for others, or maybe your parents just gave up. Sorry for being rude but you asked for it.
Anonymous359
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I will just come out and say it. Can we all just stop with the bashing of the airlines, this is actually showing how immature both airlines are. We don't even know whats going to happen. I love F9, I worked for them for over three years. And if SWA wins then I hope that SWA will give me anterview, and decides to hire me. Because if they do here is what they will get. A employee that show up for work ontime, someone who will work so much overtime that I could retire in a year. Don't beleive me then just ask th people I work with, shoot even the post office wants to deliver the mail to the station I work at. I will allways luv F9 but I will give SWA the same dedication that I gave to Frontier and thats take care of our customers and each other. The F9 employees will be the new kid in high school, but we will adapt because thats our nature. Sure it will be awkward at first but in time it will be ok. Life is about change and no guarantee of any thing. SWA you are a good company like Frontier is I just I hope I get the chance to be part of your crew. Hang in their F9 employees, it allways works out in the long run.
RELAX_
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You guys have way to much time on your hands. It is all a bunch of hot air until ink is on paper and the deal is done. Should the WN bid not be accepted how much time have you wasted? Go grab your children and read them a book, go talk to your grandparents. go water your lawn!
longtime_f9_emp
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I am not going to lie and say I am comfortable with all of this, but whatever happens I just hope that everyone is taken into consideration where jobs are concerned! Many of us, like many WN employees also have mortgages and families to take care of and it's the uncertainty right now that is upsetting everyone! As for those fellow employees of mine who are "bashing" they are reaccting poorly in the uncertainty and it should be taken with a grain of salt!!! I am scared to death also but there are more proper ways to face it than that! So for those people I apologize! This will be a much smoother process if we all just get along! Whatever happens will happen and there is nothing any of us can do about it, F9 employees or WN employees! Let's just make it as smooth as possible! I LOVE F9-and would hate to see the brand go away! Thank you!
DALLAS_21YEAR_F
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SIMPLE ASK THE EXMORRIS AIR EMP., FROM WHAT I RECALL ALL WHOM WANTED TO WORK FOR SWA, ALL HAD INTERVIEWS AND FOLDED INTO THE WORK FORCE WITH VERY FEW CASES OF NOT ABLE TO BE HIRED.
Anonymous2310
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F9 employees, I know what it is like to have a uncertainty of having a job. But if the bid goes thru and SW wins then we would love to have the F9 team over into a great airline. All the negative remarks about Frontier, we are not sure of and certainly know that it gave it all to stay afloat. F9 employees don't let anyone steal your joy and pride of your airline and force you into a negative slump like I have been reading on this blog. I am a hard working employee of WN and also a station trainer and never heard of SW til I started to work for them and found out that this was the best job that I have worked so far. For the F9 ramp guy, continue to work hard and if the move takes place, we would definitely love to have you on with us. But people remember here at SW we work with positive and outrageous attitude employees, if you feel that you can not up and change and work for a airline that would continue a future for you and your family, then move to something suitable for you. A buyout is going to happen, but we want you to feel welcome to WN if this is your choice. and one more thing that I read about the Training, F9 employees it not that hard, but serious and any one of you can make it. Take care F9 employees and looking forward to working with those of you who will welcome a transition.
Anonymous590
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Hi Paula, I have a couple of questions concerning the Flight Operations side of this whole deal. I know the concern has been how an acquisition will affect Pilots, but there is a whole group of folks at HQ here in Denver who are wondering as well. I've listened to the conference call recording, and according to plan WN would phase out F9's Airbus fleet over a period of 2 years going strictly Boeing of course. That being said, the dispatchers over here have to be certified in a new aircraft type once the Boeings start arriving. 1. How will WN do this transition? Will they send trainers to DEN to get the dispatchers checked out on the new planes? 2. The recording said that if/when the deal is closed they will obviously need employees to run the operation in DEN. What will happen at the end of 2 years? Will WN use the F9 Flight Ops team to run it during this period, then at the end say "Thank you very much, we've got it from here..", and then transfer the operation to the dispatchers in Dallas? As you well know, the Flight Operations for airlines are at the HQ, so will everyone lose their job after 2 years, or will we be offered an opportunity with the caveat being moving to Dallas? Thanks.
Anonymous3536
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This transaction between the Southwest and Frontier is unlike the deal between ATA and Southwest. ATA remained an independent company with its own staff and debt obligations. They downsized as a result. Southwest picked up some of their staff. This is a complete buyout. Hence, Southwest assumes responsibility for the entire airline along with much of its fleet and the staff pending antitrust review. Staff Pay will fall under union guidelines in most instances. Nobody, not even management, knows for sure if they will have to furlough staff other than ADMINISTRATION but if that happens, you won't be fired by yourself. It is, however, very unlikely when there is attrition and an ability to transfer to another city. So relax, let them do business, support economic recovery, get ready for some new training and non-rev more efficiently to new cities
Anonymous3536
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And note that American had an intention to cut capacity when they bought TWA. Delta has to cut when Cincy and Detroit are down the street from each other. US Airways cut before they merged and lacked the ability to do much of it afterward. United would cut but nobody wants to merge with them. Southwest, Airtan and Jetblue, on the other hand, want to grow. Southwest may grow significantly and with the potential to dominate a key market that will keep jobs in Denver for a very long time. So chill it out, OK!
ALCALA_AYALA
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Bottom line is the employees of Frontier are BOTTOM OF THE LIST in terms of priority for Southwest management. No matter what they may say, the only thing they are motivated by is keeping their shareholders happy. What is the quickest way for a company to boost their stock price??? LAYOFFS!! I love both Frontier and Southwest --- although Frontier's customer service was much better --- but unfortunately that doesn't matter when greed gets in the way. So thanks F9 employees. Good luck to you when you begin to feel Southwest's "Luv" and they cut you free.
L_Moody
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"What is the quickest way for a company to boost their stock price??? LAYOFFS!! ...doesn't matter when greed gets in the way. "— Anonymous — Wed, 08/12/2009 - 14:50 In 38 years, Southwest has never had an involuntary layoff. I am glad you love Frontier and Southwest. Your comments about layoffs, greed and Frontier's People being at the "BOTTOM OF THE LIST" are misguided. The People of Frontier are deeply concerned and should not be worried unnecessarily during this difficult time. The more the everyone learns about the Leadership of Southwest Airlines, the more comfortable they will feel. Southwest Airlines and their Leadership are studied as examples of excellence in many, many college business departments because their reputation is centered around putting its People first. I know this is true because Southwest has been putting me and my family first for many years. I hope to meet my new friends from Frontier soon.
Anonymous2166
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Love to see Southwest AIrlines go into Alaska. Check out the Anchorage Daily News site to see all the support with the notion of SWA flying into Alaska - WOW!!! The SWA way fits the Alaska way, there is no real competition and ALaskans are just sick of AA controlling the market - opps, did I say Alaska Airlines, should be Seattle Airlines....
Anonymous4399
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(KERA) - Southwest Airlines CEO Gary Kelly says one issue could break the deal Southwest has proposed for bankrupt Frontier Airlines, of Denver. A winning bidder could be announced this week. KERA's Bill Zeeble has more: Assuming Southwest's hundred-70 million dollar takeover bid for Frontier beats competitor Republic, Kelly says he'll stop the deal cold if Southwest and Frontier employees are in conflict. Kelly: I won't go forward unless we have an agreement with their labor. And you see examples around the country where airlines have acquired other airlines and then left it up to unions over years to fight it out over a period of years. We're not going to do that. When Fort Worth's American Airlines bought TWA, union groups from both carriers remained in conflict for a long time. Kelly says Southwest employees and the corporate culture are too important to upend. He says he respects Frontier's workers but says if they end up working for Southwest, their pay would rise significantly.
Anonymous2539
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Based on the leaked SW pilots union email this morning, we now see that WN did intend to staple the F9 pilots to the bottom of the list. Doesn't this suggest exactly how WN intends to treat all F9 employees?
Anonymous907
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If Southwest wins, I would say it is pretty much a given that the maintenance areas will be desolved and there will not be many if any job offers to those areas. I would also figure as the Airbus's leave the fleet the mechanics would be let go. I have not heard rumor or truth that SWA is planning on keeping any of F9's maintenance personnel. It would also make sence that they would not need F9's reservations, planning or office personnel do to SWA having an established group that is already imbedded into their system. I truley believe that the number of F9 employees that will be retained, I am sorry to say, will be minimal.
epopik
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I am currently a SWA employee and luv my company very much. I also would like to say that I respect the F9 employees and applaud them on their effort to save the company. Many of us here at SWA would welcome F9 employees with open arms. As most of you know, SWA is heavly unionized and we will not give up our seniority without a battle. Most of us, as least those who I've spoken with, are OK with giving F9 employees the higher pay. It would be the right thing to give the F9 employees a pay base on their years of service with F9, we are ok with that. However, when I comes to bidding for schedules and days off, we would like the seniority status to be the date of hire with Southwest, not F9. Most of think this would be a good comprise, higher pay, but bottom of the line seniority for bidding purposes.
pberg
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Lots of rumors circulating today. While the bankruptcy auction process is confidential, I can confirm that SWA is still a participant in the auction process, which continues through Aug. 17, if needed.
Anonymous588
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Hi Paula, Were you able to look into the questions I posed on 8/12 at 12:47 PM? Thanks
pberg
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Dear “Anonymous — Wed, 08/12/2009 - 12:47” and "Thu, 08/13/2009 - 13:38" I’m sorry I didn’t respond sooner. It seems that every time I sit down to draft a response I get pulled in another direction. Thank you for your patience. As a non-pilot myself, I understand that there are many other workgroups that have questions about what a final agreement might look like. Folks from both companies are in NYC right now working through the process, so we just don’t know yet. And, we’ve been told that, if needed, that process could continue through Aug. 17. If Southwest is awarded the bid, there will be many issues to address and questions to answer. I have added yours to my list of “things my peeps want to know,” and I will try to respond as soon as that information materializes.
Anonymous588
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Paua, I understand and appreciate this busy time for you! I just hope that all involved in the process are considering all groups and not just the pilots, which sadly seems to be the norm in the airline business. My understanding right now is that WN has told the Teamsters that represent the mechanics were told yesterday only a handful would be brought over out of 450 with no seniority at all. Wondering what will happen to the dispatchers since they are represented as well. I'll look forward to any info you can provide.
Anonymous1155
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Hello, Since SWA lost the bidding process for Frontier, do you think there is a chance that they will still try to purchase Lynx, as a separate acquisition? Is that a possibility? I heard that many Lynx employees were excited for the opportunity to work for SWA. Thanks!
Anonymous3706
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I think blogs are funny stuff.
Anonymous2848
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Ding!...you are now free to prey on another airline