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Judge Says Frontier Can Outsource Aircraft Maintenance Only As 'Last Resort'
U.S. Bankruptcy Court Judge Robert Drain on Friday granted Frontier Airlines' motion to reject its contracts with the International Brotherhood of Teamsters covering mechanics and material specialists.
The Teamsters, which represent Frontier's mechanics, have been struggling to stop Denver-based Frontier (NASDAQ: FRNT) from permanently outsourcing all of its maintenance work to El Salvador-based Aeroman.
Though Frontier and the Teamsters earlier reached an agreement regarding wage cuts, their negotiations broke down after Frontier insisted on the unlimited right to permanently outsource its heavy-check aircraft maintenance. The Teamsters refused to agree to Frontier's outsourcing demand and Frontier sought to reject the Teamster contracts.
The judge was then required by existing law to either reject the parties' collective bargaining agreement allowing Frontier to make changes as described in the decision or to deny Frontier's motion, leaving the Teamster agreements in place. In the end he sided with Frontier.
Despite his ruling, however, the judge made clear in his decision that Frontier may outsource its aircraft maintenance only as a last resort - after it has exhausted all other options to perform the heavy check work at its Denver repair station.
"While the Teamsters do not agree with Judge Drain's ruling, the ruling does at least anticipate that our mechanics will continue to work on heavy maintenance in Denver," said Matthew Fazakas, president of Teamsters Local 961, which represents Frontier's mechanics in Denver.
"The company also has to continue the full staffing of the heavy maintenance department," Fazakas said. "The economic concessions must be modeled after the Teamster concession proposals, and there must be a fair and transparent process to ensure the company works in good faith in its hiring practices so that it uses its outsourcing only as an absolute last resort."
Teamsters Airline Division Director David Bourne commended Judge Drain for trying to get Frontier to negotiate in good faith.
"However, we are bitterly disappointed with his ruling and anticipate appealing it," Bourne said. "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. This is no way to run a U.S. airline."
Fazakas noted that Frontier is a low-cost carrier that has among the lowest labor costs in the industry.
"Labor costs had nothing to do with Frontier filing for bankruptcy protection," Fazakas said. "But once it filed for bankruptcy, Frontier's top management and its high-priced lawyers decided to take advantage of the built-in flaws of the bankruptcy laws to slash our members' wages and to export 129 of our members' Denver-based jobs to El Salvador."
"Why on earth does Congress allow laws to encourage the foreign outsourcing of good, skilled, middle-class and critically important jobs to foreign countries?" Fazakas said. "Frontier's use of the bankruptcy laws to export our jobs and cut our surviving members' wages is nothing short of a national scandal."
"The bankruptcy laws are skewed in favor or debtors and against working people," Bourne said.
The case was heard in U.S. Bankruptcy Court for the Southern District of New York.
Founded in 1903, the Teamsters Union represents more than 1.4 million hardworking men and women in the United States, Canada and Puerto Rico.
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