Frontier Employees Blame United For Bankruptcy Filing
Frontier Employees Blame United For Bankruptcy Filing
Aug. 29, 1986
DENVER (AP) _ Frontier Airlines was forced into bankruptcy court because it became ''a tennis ball'' in United Airlines' fight with its own pilots union, an airline pilots union spokesman said.
Frontier's general counsel, Chuck Thompson, said the Chapter 11 reorganization petition filed in Denver U.S. Bankruptcy Court on Thursday bought the airline only ''a couple of days'' before it goes into Chapter 7 liquidation.
''Unless there is a white knight out there we'rew unaware of, Frontier will go to seven,'' Thompson said.
Lee Howard of Airline Economics Inc. of Washington, D.C., said Frontier was just another casualty of airline deregulation and the industry's trend toward consolidation.
''We foresee and have foreseen for some time that the industry will wind up by the end of this decade with possibly half a dozen strong, major carriers sharing amongst them about 90 percent of the total domestic air transport market,'' Howard said in a telephone interview Friday.
Frontier employees, however, were saddened and embittered Friday by the collapse of their airline, which had been grounded for five days before the bankruptcy court petition was filed. They tended to blame United and its pilots' union for failing to reach an agreement that could have led to United's purchase of the carrier from People Express, Frontier's parent company.
''We became a tennis ball in a match we had no control over,'' said Doug Bader, vice chairman of the Frontier unit of the Air Line Pilots Association.
''We're all very disappointed that United and their pilots' union let us down so badly,'' said Mike Knight, a Frontier flight attendant. ''But after being held hostage for the last six days, we can get on with our lives.''
People Express, which purchased Frontier for $300 million in 1985, shut down Frontier last Sunday and announced it would file a bankruptcy petition Monday. But the filing was delayed until Thursday while People Express waited to see whether United would go through with its $146 million offer to buy Frontier.
The 40-year-old Frontier had lost an estimated $10 million a month during the past six months. Every day the carrier was idle before the bankruptcy court filing cost another $1 million a day, Frontier spokeswoman Marilyn Mishkin said.
The sale to United, however, hinged on United's reaching agreement with Frontier's five unions and with its own United Air Line Pilots Association unit.
The issue blocking agreement between United and its pilots' union was the timetable for merging Frontier pilots into United pilots' 60 percent higher pay scale.
Negotiations broke down with United offering a five-year transition period and United ALPA seeking a 30-month transition. The United ALPA on Thursday said it would go along with United's terms, but United replied that it no longer was interested in purchasing Frontier.
After reports that a New Orleans investment firm was trying to put together a deal to buy Frontier for $150 million proved unfounded, Frontier's attorneys went to Denver bankruptcy court.
''There were no other options,'' said Frontier corporate counsel Rick Stoddard.
Denver bankruptcy expert Lawrence P. Gelfond of Laventhol & Horwath said Frontier's assets would be worth a fraction of their listed value when they are sold.
''What happens in a forced liquidation sale like this, is the vultures come in and prey on the carcass,'' he said.
After learning the United deal had fallen through and People Express had gone ahead with Frontier's bankruptcy court petition, about 900 Frontier employees gathered at Stapleton International Airport on Thursday night to vent their sadness and bitterness.
''My feeling is that United started this whole thing as a way to punish their pilots for the strike of June 1985,'' said Art Newman, a Denver radio reporter for 11 years who joined Frontier 14 months ago.
''I think that United didn't want us to survive,'' said Frontier Capt. Archie Van Beek. ''I think they wanted People Express and Frontier out of business. Without two airlines in Denver, it makes life easier. It's a dog- eat-dog world in the airline industry, and it seems as though employees aren't important anymore.''
Others blamed United pilot negotiators for not working hard enough to make the United-Frontier deal possible.
''What the United pilots and ALPA have done so us is sold us down the river,'' said retired Frontier pilot Robert Tersteeg. ''They looked the other way ... ALPA and the master executive council (which negotiated the Frontier deal with United management) literally raped the Frontier employees.''
ALPA spokesman Roger Hall said the union made a strong effort to reach agreement with United. ''We've made several offers over the past week, while Unied management has not budged,'' he said.
United spokesman Joe Hopkins said the union's last-minute offer Thursday was unspecific. ''In any event, from our standpoint, it is too late,'' he said.
Frontier's Chapter 11 petition listed $89 million in assets and $151.4 million in liabilities as of July 31. Its long-term debts were $76 million.
''These are trying times for Colorado companies,'' said bankruptcy expert Gelfond. ''The ripple effect is going to be terrible.''
Some Stapleton airport service firms already were feeling the effect. Sky Chefs Inc. said it had laid off about 60 workers in its flight kitchen. Allied Aviation Services, which fueled Frontier's fleet of 42 jets, said it laid off 24 employees.
United, which purchased Frontier's hangars in July, told Frontier it wanted to take possesion of them in 10 days, effectively evicting Frontier's management.