Frontier Airlines Bankruptcy Postponed : Talks on Sale to United Continue Despite Impasse on Pilot Pay
Talks on the future of Frontier Airlines continued in inconclusive fits and starts Monday as the nation’s 15th largest airline teetered on the brink of bankruptcy, leaving 4,700 employees in what one Frontier pilot calls a “no man’s land” of uncertainty and frustration.
It was a day of slipping deadlines, postponed bankruptcy action and general confusion over what would become of Frontier, an airline that was once the envy of the industry. Frontier had ceased operations Sunday amid signs that it could be one of the largest casualties yet of airline deregulation.
United Airlines has been seeking to acquire Frontier from its parent company, People Express Inc., but United and the United pilots’ union--which is negotiating for Frontier’s pilots--broke off talks at 2 a.m. Monday over a wage scale for Frontier pilots who would join United. United has said it must reach contract agreements with Frontier’s five unions to complete any acquisition.
Total Buy-Out
But lawyers for United continued talks in Chicago with People Express lawyers--perhaps over ways to change the $146-million Frontier purchase agreement to get around the pilots’ pay issue. According to KOA radio in Denver, People Express offered also to sell its entire operation, “lock, stock and barrel,” to United, which rejected a total buy-out.
“There have been management-level discussions, and they are continuing,” Tom Germuska, a United spokesman, said. “There is no indication though that they are talking about the whole thing.”
Meantime, People Express Chairman Donald C. Burr said a bankruptcy filing, threatened for Monday if the pilots and United did not reach agreement, was postponed to today to allow time to explore “every other possible alternative.” Burr said the United talks with its pilots appear to be at an “impasse.”
“We’ve been livin’ with deadlines for three years now, but this one is the most nerve-racking,” said Bill Bates, 56, a reservations manager who has been with Frontier for 34 of its 39 years. “Emotionally--I don’t know the words. It’s very frustrating. I’m sure every one of us feels if we could just talk to them for a few minutes, we could change their minds.
“But I don’t think we’ll get the chance.”
‘We’re at the 11th Hour’
“We’re trying to be optimistic that things will work out at the 11th hour,” said Russ Perkins, 35, a marketing manager. “But we’re at the 11th hour, and nothing’s happening.”
At issue between United and the pilots’ association are pay scales for Frontier’s 560 pilots, who earn, on average, about 40% less than the 6,000 who fly for United. When talks broke down, United had proposed merging the two pay scales in five years; the union had proposed merging the pay scales in 30 months.
“I don’t think United ever intended or wanted to acquire the Frontier employees, based on what I saw (Sunday) night and how they were conducting themselves,” said Capt. Roger Hall, who heads the Airline Pilots Assn. at United. “I think they were looking to get People and Frontier into . . . bankruptcy, and then they’ll go in and pick up the pieces at cheaper prices. It’s always cheaper at a fire sale.
“They were trying to get us to (agree to their terms) and, if we didn’t, it would put People and Frontier on the ropes, and when it’s all over they’ll just go and pick up what they want and need at cheaper prices.”
Financial Pressure
Other union leaders here said that Frontier’s bankruptcy would put more financial pressure on People Express, which lost $132.48 million in the first six months of the year, than would a sale of Frontier’s assets. People Express, which offers discounted ticket prices, is a major competitor with United in Eastern markets.
Chuck Novak, a spokesman for United, countered that the union leaders’ charge was “not true. We wanted the entire acquisition of Frontier, assets and employees.”
The uncertainty loomed heavily over Frontier employees, who have lived with wage concessions and ownership uncertainties since Frontier began losing money in 1983 after 10 years of solid profits. Frontier has been losing $10 million a month so far this year, and People Express has said that that is far more than it can continue to put into the airline, which served 55 Western cities with 325 daily flights.
In Orange County, disruption caused by the suspension of Frontier flights appeared to be minimal.
Newport Beach-based AirCal Inc. said it accommodated about 15 Frontier passengers on its flights Monday from John Wayne Airport.
In Denver, a Frontier spokeswoman said the carrier has 15 full-time and two part-time employees at John Wayne Airport, where it operates five daily flights.
Pending action by the Orange County Board of Supervisors, the airline will retain its five daily take-off and landing slots in Orange County.
Bill Curry reported from Denver, Larry Green from Chicago and Jeff Rowe from Orange County.
