Friday, August 14, 2009

Labor Issues Scuttle Southwest Bid for Frontier

Front NPR reports this morning that Republic Airways was won the bankruptcy court auction for Frontier Airlines.  Southwest's higher bid was rejected because Southwest would not back down from its requirement that the pilots of both airlines agree prior to a merger on how they would integrate seniority lists. 

Labor issues often are overlooked in corporate deals, but as this shows, labor issues can be dealbreakers.


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Southwest's position seems reasonable. Seniority mergers in airlines are likely the knottiest issues in these cases. They can drag on for ages and prevent or complicate all the things that flow from seniority --- scheduling, bidding for lines, and so on. They can also lead to inter- or intra-union disputes that can block negotiated resolutions. The current USAir dispute is a classic example --- and that started out as two locals in the same union. Republic may be able to pull it off, but Southwest may have made a wise decision that the prize wasn't worth the hassle if the pilots couldn't agree on seniority.

Posted by: Dennis Nolan | Aug 14, 2009 7:09:01 AM

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