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SOUTHWEST AIRLINES’ BID TO ACQUIRE FRONTIER NOT SELECTED AT AUCTION

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The following information was issued today by Southwest Airlines via news release:

SOUTHWEST AIRLINES’ BID TO ACQUIRE FRONTIER NOT SELECTED AT AUCTION

Carrier’s Refusal to Remove Labor Requirement Key in Decision


Southwest Airlines 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 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. 

89 Comments
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I'm not upset by this news, but in the long run, I think F9 Employees may have regrets.
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Noooooooooo! Hope all turns out well for both airlines, but what a bummer.
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Even though we did not get Frontier I'm thrilled to see SW trying to grow, not standing still and fishing for options. You will never grow doing nothing. This was an opportunity and SW went right at it. I'm proud. Gary it's ON and you are rocking the boat!
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Good decision. Southwest culture is the competitive advantage and you don't want to lose it!
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Sort of a surprise to me. With Republic having absolutely zero experience in operating an airline (Republic only does regional service and follows protocols of carriers they are contracted for), I do not by any means think that Frontier and its' employees have any greater chance of survival than they would have had they been acquired by Southwest Airlines. Nonetheless, I wish everyone luck at Republic and Frontier. I caution, however, that the status quo will not lead to prolonged success of Frontier Airlines. Change is necessary in order to grow, secure financing from creditors, and provide return to shareholders. Rest assured, changes will still happen even under Republic's rule.
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bummer
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So sorry to hear that Frontier Airlines rejected Southwest Airlines bid offer. Best of luck to the winner. We all know the extreme friendliness and professionalism shown by all Southwest Airlines employees over the years. I, too am one of the many passengers who prefers this company when it comes to destinations, prices, schedules, etc. " Keep on travelin' ! "
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What is there to regret? Not having to re-apply for my job and losing all my seniority?
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CHANGE IS ALWAYS GOOD. This will give F9 and Republic a chance to grow together and offer more competition and more options. I like options!
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Excellent! Why mess around with a fancy mega merger, which you'll kick their butts in the marketplace anyway. They are bankrupt, because they are terrible. You make gobs of money because you rock. Why would you even want to deal with them. What a waste of time even starting down the path. Just keep running your great airline.
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You know what this means.... BIG fare sales and continued intense competition on routes to/from DEN! Lets get to work on those near-International routes.. on SWA metal.
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As a longtime Frontier flyer and an avowed avoider of Southwest, I couldn't be happier. And I'm glad the pilots won't be forced to take pay cuts and sit in the jump seat had they been absorbed by Southwest.
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I applaud SWAir for sticking to its core values and competencies. The airline continues to set not just examples, but standards for how to run a company, let alone an airline! This is why SWAir is content for so many business studies and why I regularly use the airline in examples in classes I teach about service deliver and cultures of excellence.
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Good luck Frontier and Republic. We'll see where Frontier Pilots are 2 years from now. Filling out applications for other airlines. Southwest is about to pounce all over Denver. They'll never survive. Southwest has been cutting flights system wide so there is a surplus of SWA pilots, FA's and aircraft to increase to 200 Flights in less than a year or maybe 18 months.
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I believe the better deal was selected! I agree with “F9 for” -- where is the regret? I am going to enjoy not having to re-apply and start over. Go F9!!!
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To the guy that avoids SWA -- The Frontier pilots are going to be taking a pay cut since Republic won. The most senior pilots at Republic make less than a First Officer that has been with Southwest for around 2 years. I am glad that the general loyalty for Frontier are people that aren't business savvy. This is going to end up hurting them in the long run, but oh well... sucks to be them. I love SWA, and I hope that they show by load factors and their profits that they can be profitable, without the protection of Chapter 11 bankruptcy protection.
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I'm glad to see it's not about who has the most money. I'm so proud of Frontier and the creditors for putting the employees first! Congrats Frontier and Republic!
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US labor law, specifically McCaskill-Bond, forces binding arbitration if the two pilots' unions can't agree. Southwest was correct to refuse that risk, requiring an agreement up front. Does Republic now have the option to sell gates and 737's to Southwest with no strings attached? This might cost more money than Southwest's bid, but it might be a win-win for Republic and Southwest. It would also be a huge loss for the Frontier pilots who gambled that Republic would provide better job security than Southwest. Fuel prices are heading up again, and I wonder whether customers will keep buying tickets on a carrier with nothing stronger than Republic backing it. It could be a difficult fall for Frontier and the rest of Republic. nsx at flyertalk.com's Southwest forum
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I am saddened to learn that Southwest and F9 were unable to come to agreement. Many people here in Atlanta, GA, were looking forward to the opportunity to fly with Southwest again, having moved to this area from areas serviced by Southwest. Their customer service is excellent, as are their prices and no-nonsense approach to running an airline. I believe Southwest's presence at Hartsfield-Jackson Atlanta International Airport would have provided a little more leverage to bring costs down among the other carriers. We will continue to hope that Southwest will one day come to Atlanta, and many other places not yet served by this great carrier. Best of luck to F9 and Republic in their future relationship.
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OH IT'S ON!!!
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this is great news as sw made no secret in their proposal that they had no intention of keeping any frontier employees had they of been able to cannibalise frontier. southwest has been losing millions of dollars in trying to compete with frontier in DEN, all one has to do is look it up. they figured if you can't beat them, buy them. frontier will continue to be one of the best low fare airlines out there and southwest will continue to be the walmart of the airlines industry.
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As much as I was excited to see my company try to expand and make a bigger presence in Denver, I am very pleased that the company put the employee's considerations first. It was and always will be the culture that makes Southwest Airlines thrive. Kudos to Gary Kelly and his staff for trying not to force a marriage that would of ended up in disaster for all the unions and employees involved with both airlines.
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Everyone is a winner here. F9 keeps its culture. WN keeps its culture. DEN remains a truly competitive market with THREE airlines not a sort of duopoly like like PHX and PHL. YX will get better aircraft for MKE-west coast routes and remain competitive with FL and WN. You can say all you want about Frontier being weakest of the three at DEN and it's probably true. But WN wanted this as an asset play and it should not come as a surprise that there was no labor agreement between WN and F9. This should really read integration agreement where F9 pilots would lose their seniority in exchange for WN providing "job security" by training selected pilots on 737s as the beloved Airbuses disappear. F9 gets to remain pretty much F9. WN won't have integration hassles. If the Morris Air integration was a mess with their all 737 fleet and being a virtual copy of WN just based in SLC what do you think absorbing F9 would have looked like?
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Given the fact that Southwest employees are among the highest paid in the industry and that the company has the longest record of profitability and stability, I'm surprised that Frontier employees would be so thrilled about the news of being purchased by a less stable and reliable airline. I was also surprised to see a quote in the Republic press release that said "Now, we have to turn our attention to the important work of integrating two great brands: Frontier and Midwest Airlines, which enjoy strong loyalty in Denver and Milwaukee.” That doesn't make it sound like Frontier will be staying the same old Frontier, as many of the Frontier employees have said they expected. I'm guessing there will be many challenges ahead, but it will be interesting. I wish all the employees well...and good luck. This industry needs it.
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Best news I've heard all day, I find it funny that Southwest employees are afraid of their "culture" and "values" being in jeopardy if their bid had been a success ... heh you guys can keep your khaki shorts and white tennys ; ) They obviously don't know Frontier very well : ) And I'm glad our pilots kept their dignity and respect during the labor talks, besides everyone knows the Airbus is a more comfortable ride ; ) And for those nay sayers who said Frontier wouldn't be around all those months ago, how's 9 consecutive months of profit and an exit partner sound? Cus that's music to my ears... (i'm givin' you SWA guys a hard time, i'm just glad this is over with!) I look forward to our ongoing friendly rivalry at DEN...
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I wonder how many frontier pilots have active job applications with southwest airlines as i write this
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I wonder how many frontier pilots have active job applications in at southwest airlines while i write this
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Did they think that they Frontier pilots would just sit silently as their names were put at the bottom of the seniority list? Hmmm... Usairways and American West are still trying to work out their pilot seniority list years later and the "boys at Dallas" thought this could be done in a couple of days? Seniority lists are 'everything' in the airline industry and something that airline employees will fight for--especially when it appears that it gives them some power. Hopefully it will work out for them in the longrun!
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We are sitting here celebrating the survival of a great brand that is a whole different animal. The F9 culture is the only alternative to UAL in DEN for us business travelers. A SWA win would have been a great boost to UAL but a severe setback for us DEN travelers.
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Hallelujah!! I am so thrilled to continue to have Frontier in Denver. They are a magnificent airline with excellent customer service and terrific employees. As a passenger, I look forward to the future!! In regards to the Frontier employees not having much of a future with Republic, I find that questionable as Southwest offered to layoff 150 pilots and staple the rest of the pilots to the bottom of the seniority list, and that is only the pilots. I cannot imagine what they would have done to the rest of the employees. It is just wonderful to see that arrogance and greed has finally bit the big one!!!
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The press releases from southwest are very professional and polished. SW employees may have decent salaries, but it is hard to win over passionate employees when they inform them in a meeting that very few (if any) other than the pilots group would be offered employment with Southwest. Especially the union represented groups whom would have had to bid for stations. Denver is a desireable location, what jobs that would have been created would have gone to senior employees and not necessarily those already here. The republic deal at leasts provides some respite from the gallows that was offered by the company. I respect that the CEO says it was too important for the employees for this to go forward, but he was never talking about integrated Frontier employees. That was apparent from the start.
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Iam so glad that this is all over with. So I guess now since WN, ran around how they were so going to win. Well I guess you shouldn't put the cart before the horse. The main thing is that atleast our jobs with Republic look more promising. And all your worries about senority issues are now over with. Lets call a trues, F9 and WN are both good airlines they both give good customer service, and do what's important and that's taking care of the passenger. Why don't we all focus on that and instead of wasting company time, or your time writting pointless blogs that apperently dosen't change anything. Because it sure didn't decide the winner at the courts final decision.
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HELLO!!!! This was a SELL not a merger. Their employees should be thankful a company like SWA would ever consider keeping them. Business is business. If no one bought them all their planes would be in the Mohave desert, not to say Republic won't send them there anyway. Why would you stay an Airbus pilot and the down grade later on to a RJ. That what's gonna happen. Republic won't keep the planes and they'll have a very small presents in DEN.
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Sorry guys. This isn't the end though. What did AirTran do when they failed to buy Midwest? Expanded in MKE and updated their product on their own in a successful and profitable manner. You can still enter into the new markets you want to enter into from Denver, go to Atlanta and Charlotte, do near international, and implement regional feed. Just don't let this scare you back 🙂 Thanks for doing such a terrific job on keeping everybody up to date, Paula, and best wishes to everyone at SW, F9, and RJET, you all deserve it.
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Thanks, Max 🙂
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How can you be so silly. SWA has been loosing money at an extreme rate in DEN only because Frontier is selling all the seats. Why do you think they wanted to destroy Frontier. HMMMMM, makes you want to think.
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I agree with MAX--Paula, you've had your HANDS FULL with this one and you've handled it with your normal perfect aplomb. You ROCK, PB....thanks from all 34,000 of us! at SWA!!!! Bill
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No sour grapes or anything, but I will enjoy looking forward to seeing how Republic intends to run a real airline for the first time. Frontier pilots may have blown an excellent opportunity to get in with THE premier domestic airline in the United States and make substantially more money. I would bet that Southwest did not anticipate FAPA coming into this situation making ANY sort of demands at all. It seems to me that they were not coming from any real place of leverage, and would have been (and were) completely out of line in expecting SLI. Even a 3 year WN FO earns more than an F9 captain.. Well at any rate, Frontier pilots made their stand and I hope they will be happy with the results. Let's all revisit this topic in 2012 for kicks, what do ya say?
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Congrats to F9 for keeping their company alive and not bowing to the pressure of SWAPA. WN kept saying they are concerned about the employee culture. Translation: we have to make sure all the pilots, and only the pilots are happy or we're out. It took a lot of guts for FAPA to say no we're not going to give up our entire career to start over, and by doing so also saved the jobs of many a mechanic who were told by WN you won't be coming along when we own you. Sadly, pilots think that they are the only workers who make an airline run smoothly. And apparently so does GK. This sounded more like a pilot union merger than the purchase of a bankrupt airline. I look forward to F9 continuing their operation and Denver and keeping WN from taking over. It's a good opportunity for Republic to create a stronger airline with strong employees with good character and morale, and nice clean airplanes with TVs and assigned seats instead of the cattle call rush by the sketchy folk trying to save a buck.
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This also shows that being the highest paid isn't the only factor when considering quality of life at an airline.
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No sour grapes or anything, but I will enjoy looking forward to seeing how Republic intends to run a real airline for the first time. Frontier pilots may have blown an excellent opportunity to get in with THE premier domestic airline in the United States and make substantially more money. I would bet that Southwest did not anticipate FAPA coming into this situation making ANY sort of demands at all. It seems to me that they were not coming from any real place of leverage, and would have been (and were) completely out of line in expecting SLI. Even a 3 year WN FO earns more than an F9 captain.. Well at any rate, Frontier pilots made their stand and I hope they will be happy with the results. Let's all revisit this topic in 2012 for kicks, what do ya say?
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swa isnt doing well in denver at all that is why swa wanted to purchase frontier. frontier has posted profits the last 4 quarters. look what swa did to morris air employees and how they put ata out of business and refused to hire any of their employees great work culture. http://www.usatoday.com/travel/flights/item.aspx?ak=68496411.blog&type=blog
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I don't understand why Frontier employees feel confident that they will keep their jobs with Republic. "Pilot labor expert and airline consultant Robert W. Mann said Southwest’s executives can’t be blamed for thinking that Frontier pilots would see the prospect of higher pay and potentially greater job security in the Southwest bid as attractive. “Frontier pilots need to look at the facts,” he said. Republic has said it would operate Frontier separately from its other regional jet operations, but Republic replaced all the pilots and planes at Midwest Airlines when it bought Midwest this year and could do the same to Frontier’s operations down the road, Mann said. " http://www.dentonrc.com/sharedcontent/dws/dn/latestnews/stories/0814dnbussouthwest.d75bbefb.html
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YAY I GET TO KEEP MY JOB!!
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Told you all last week that the pilots would block the deal. WN was going to basically liquidate F9 and that was the end of it. Again, we were counted out...and again..here we still are. To all the peeps bashing us, get over it, were winning in Denver and that's not going to change. It's amusing how people are "confused" why were happy about Republic buying us. Really? Yeah..we are all very happy we get to stay employed w/o our charity fail interview with WN. Status quo now, making money in Denver, keeping our airbuses, keeping our jobs. Our Pilots stood up for what was right, as did our MX group. We all thank you for that. To my coworkers who kept their head up for the last year and a half.....lol..now "It's On" lol.
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This quote from a news story sums up my point that it's just about the pilots and no one else: "None of the other unions at Southwest have been asked to create an integration agreement with Frontier. " “Frontier pilots need to look at the facts,” he said. Republic has said it would operate Frontier separately from its other regional jet operations, but Republic replaced all the pilots and planes at Midwest Airlines when it bought Midwest this year and could do the same to Frontier’s operations down the road, Mann said. " Frontier is not a regional airline and Republic can't just step in and replace the planes and capacity that F9 has, like the Midwest situation. As for the pilots' contract that remains to be seen. But again, RAH doesn't have 600 Airbus qualified pilots milling around ready to take F9 jobs. Lynx may be a different story altogether, but the Lynx pilots are not protected in any way.
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Southwest, is there a reason you are not posting all of the blogs here? Really, I know of few that were posted before some of the kool aid was posted, and...........nothing. Well, I guess this one won't get posted either. Tommy
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"Frontier said the plan calls for it and regional unit Lynx "to maintain normal operations" as a stand-alone Republic subsidiary. Because of that, Denver travelers may see little change. But the deal is huge for Republic." I don't think F9 employees have to much to worry about now other than possible pay cuts.
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Hey, Tommy -this is a manually moderated blog so sometimes it takes a few minutes for a comment to post, but I can assure you that all comments are being posted.
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Yeah!!!! The awesome employees and the really cool animal tail Airbus 318's, 319's, and 320's have been saved from the evil clutches of southworst!!!! long live Frontier Airlines!!! Southwest's current leadership has changed this company from a very unique airline into just another airline. It's time to return Herb and Colleen to the helm and get Southwest's flight path changed back to the award winning one that existed prior to them stepping down. Southwest is losing millions per month in it's Denver operations, and god only knows how much is going down the drain at LaGuardia, markets which the prior leadership would have never either returned to or gone into.