Union Says Company's SEC Filings Contradict Restructuring
The International Brotherhood of Teamsters (IBT), the certified
union representative of the pilots of Republic Airlines and
Frontier Airlines, has disputed a claim by airline adviser Michael
Cox that a lawsuit filed by the union earlier this month has placed
the financing the company is seeking in jeopardy.
Earlier this month, the union filed a lawsuit in U.S. District
Court in Denver against Frontier Airlines Inc., its parent company,
Republic Airways Holdings Inc. and a shell company set up by the
rejected former union of Frontier.
The lawsuit alleged that Frontier, Republic Airways Holdings and
the former union of Frontier pilots, the Frontier Airline Pilots
Association (FAPA), which recently lost a union representation
election to the IBT, entered into unlawful concessionary agreements
intended to interfere with the Republic subsidiaries' pilots'
choice of IBT to be their collective bargaining representative, and
to perpetuate FAPA's continued representation of Frontier pilots.
The lawsuit seeks to invalidate the agreements.
Teamsters' economist James Kimball, in a sworn affidavit,
disputed the claim by the airlines' consultant that their
restructuring plan was now in jeopardy. In fact, he says, the
company's own filings with the Securities and Exchange Commission
(SEC) contradicted that claim.
"This opinion is inconsistent with the company's August 2, 2011
SEC Form 8K report and its August 9, 2011 SEC 10Q quarterly report,
the company's most recent SEC filings," Kimball said.
"Straight-forward mathematics shows that the company's
Frontier-restructuring initiative can proceed without the LOA 67
concessions, assuming the accuracy of the Cox Declaration's
representations that other concessionary agreements by Frontier
vendor or employee groups require that the company achieve 80
percent of its $120 million goal of annual savings, i.e. $96
"There are no specific facts or documentation of any kind
offered or referenced to support any of these representations or
opinions in the Cox Declaration. The company's August 9, 2011 10Q
nowhere mentions that there would be a material adverse impact upon
the company's ability to raise additional liquidity or that the
Frontier restructuring plan would be placed in jeopardy if IBT
succeeded in this litigation. The company does estimate in the 10Q
the anticipated material adverse impact upon the company if the IBT
is successful in the litigation. It states only that if IBT is
successful in the lawsuit, Frontier would lose approximately $9
million to $10 million in cost savings per year over each of the
next five years," Kimball stated.
IBT says this reflects less than 10 percent of the value of the
restructuring plan and less than a $2 per barrel annual change in
the price of oil to the company.
"It's outrageous that the company would make false claims about
the financial path of the company to gain a perceived procedural
advantage in a lawsuit," said David Bourne, Director of the
Teamsters Airline Division.