Says The Airline Violated A 2011 Contractual Commitment To Increase Pay In 2016

An arbitrator has ruled that Frontier Airlines violated a 2011 contractual commitment to negotiate a pay increase in 2016 when the then-struggling airline was in danger of going out of business.

The arbitrator ordered Frontier to open negotiations on pilot pay as it had promised to do under the terms of a 2011 letter of agreement known as LOA 67. The LOA 67 negotiation is separate from Frontier’s ongoing contract negotiations with its pilots, who are represented by the Air Line Pilots Association, Int’l (ALPA).
 
“The arbitration decision confirms what we’ve known all along: that Frontier management has violated LOA 67 through its failure to bargain in good faith over further upward pay adjustments due to our pilot group,” said Capt. Tracy Smith, chairman of ALPA’s Frontier Master Executive Council. “In his award, the arbitrator has ordered the Company to bargain in good faith to establish new pay rates pursuant to the requirements of LOA 67, and has made it clear that he believes this process can be concluded within 45 days.”
 
Under the terms of LOA 67, pilots agreed to sacrifice $53 million in pay and benefits to save the carrier from another bankruptcy or possible liquidation. In testimony before the arbitrator, former Frontier CEO Bryan Bedford acknowledged that Frontier could not have been restructured without the participation of the pilots.
 
In exchange, the airline agreed to open negotiations on upward pay adjustments when the airline became financially stable and was making profits of 5 percent or more. However, even after Frontier began earning double-digit profits (16.9 percent in 2015 and 18.4 percent in 2016) it refused to open talks on pilot pay, citing unfavorable business conditions, even as it paid out $273 million in dividends to executive management and private-equity investors, and other bonuses to management employees.
 
“Frontier’s hypocrisy has been fully exposed thanks to the arbitration process,” Smith said. “This arbitration award confirms that Frontier Airlines has stonewalled negotiations through demonstrably false claims of ‘challenging business conditions.’ In fact, Frontier is one of the most profitable airlines in the country and has been for several years.”
 
The arbitrator’s ruling does not mean that the higher pay rates that ALPA proposed for the interim period will be implemented automatically. Rather, the Company is obliged to make a wage proposal consistent with its obligation to bargain in good faith over wage increases. Negotiations are scheduled to commence on September 12, 2017.

(Source: ALPA news release. Image from file)

FMI: www.alpa.org