Southwest"s Plan B: A "slow dismantling" of AirTran?
- UPDATED: 12:06 p.m. ET
Southwest may have an "alternate plan" for AirTran if pilots at the latter vote against a deal to combine seniority lists with their Southwest counterparts.
That"s according to The Atlanta Journal-Constitution, where reporter Kelly Yamanouchi writes:
In an effort to encourage pilots to approve the deal, Southwest has raised the possibility of a Plan B: that AirTran may not fully integrate as planned into Southwest if the pilot proposal fails.
"If we receive a "no" vote, it means that we cannot execute the original integration plan and we will have to reset," Southwest spokesman Paul Flaningan says in a written statement to the Journal-Constitution.
THE ATLANTA JOURNAL-CONSTITUTION: Southwest raises possibility of alternate plan for AirTran mergerBLOOMBERG NEWS: Southwest considers stand-alone AirTran if pilot vote fails
The newspaper writes the prospect of a Plan B "came up shortly after AirTran"s pilots union leadership voted against an initial deal … ."
In that situation, Southwest CEO Gary Kelly expressed disappointment that the tentative deal on seniority was never put to AirTran"s union membership for a vote.
ALSO ONLINE: Kelly talks about AirTran seniority rejection (The Dallas Morning News; Aug. 22, 2011)
For now, Southwest says it"s continuing to integrate AirTran"s operations.
But things might look different if Southwest does eventually resort to the newly reported alternate plan.
ALSO ONLINE: Southwest Airlines photosALSO ONLINE: AirTran photos
In that scenario -- which at least one analyst suspects is a negotiating ploy -- Southwest would continue to operate subsidiary AirTran as a separate operation , a move that would still give it access to AirTran"s fleet, Atlanta hub and its international routes
But the Journal-Constitution reports such a plan could also set the stage for a "slow dismantling" of AirTran, perhaps similar to how Southwest handled its acquisition of now-defunct Muse Air in the 1980s.
Bloomberg News writes also picks up on the story, writing "keeping AirTran flying on its own would run counter to the goal of folding the discount carrier into Southwest, the biggest low-fare airline."
"I""m sure that"s not what management planned when they acquired AirTran," Hunter Keay, an analyst at Wolfe Trahan & Co. in New York, says to Bloomberg. "It probably is to some degree a negotiating tactic."
The Bloomberg report makes no mention any possible dismantling of AirTran. Referencing the same summary cited by the Journal-Constitution, Bloomberg quotes Southwest as saying simply "Plan B calls for AAI (AirTran) and SWA (Southwest) to remain separate and unintegrated."
As for the background of the AirTran pilots" seniority issue, the Journal-Constitution says some AirTran pilots believe going to arbitration could net them a better deal.
Others, however, appear to be fru