BNA Daily Labor Report: Court Rules That Frontier Airlines Can Terminate Contract with Teamsters

November 6, 2008: DENVER—A bankruptcy judge ruled Oct. 31 that Frontier Airlines may terminate its current collective bargaining contract with mechanics and other employees represented by the International Brotherhood of Teamsters in Denver (In re Frontier Airlines Holdings, Inc., Bankr. S.D.N.Y., No. 08-11298, 10/31/08).

Judge Robert Drain of the U.S. Bankruptcy Court for the Southern District of New York ruled in favor of Frontier in its motion for Section 1113 relief from its current contract with the Teamsters, Steve Snyder, spokesman for the airline in Denver, told BNA.

Frontier's proposal for relief includes continuing a concessionary contract which includes a 14 percent cut in wages and benefits, the Teamsters said. Officers of Local 961 of the Teamsters, which represents about 430 mechanics, tool room employees, aircraft appearance agents, material specialists and other employees, said they would appeal the decision.

Earlier in the year the pilots agreed to take a 14.5 percent pay cut from June 1 to Sept. 30. They also agreed to forgo the company's contribution to the tax code Section 401(k) plan, which is up to a 5 percent match. The pilots have already agreed to extend the cuts through December, but the company is working for a long-term concessionary contract (110 PBD, 6/9/08; 35 BPR 1280, 6/10/08).

Plan to Outsource Maintenance Jobs.

The company also had been seeking to permanently outsource about 130 maintenance jobs to Aeroman of El Salvador, citing the move as a cost-saving step. It backed away from that move, agreeing to maintain current staffing levels as long a it can furlough maintenance workers during slow times, Snyder said.

Although Frontier and the Teamsters earlier had reached a tentative agreement on the wage and benefits cuts, negotiations broke down over the outsourcing plan.

“The Teamsters are adamantly opposed to all aircraft maintenance outsourcing because it is unsafe, jeopardizes the flying public, costs more than in-house maintenance, and, especially in today's economy, further destabilizes the industry,” David Bourne, Teamsters Airline division director, said in a statement after the ruling.

“This is no way to run a U.S. airline,” he added.

By Tripp Baltz

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