The Southwest Airlines Pilots Association (SWAPA) is gearing up for what could be a significant move by the carrier. The union recently announced that it has retained several law firms in anticipation of Southwest Airlines potentially acquiring another airline. This move signals that SWAPA is taking proactive steps to protect its members’ interests in the event of a merger or acquisition. Does SWAPA know something we don’t?
One of the law firms retained by SWAPA specializes in labor issues and would be tasked with ensuring that the pilots’ seniority list is integrated fairly. This is a crucial issue for pilots, as seniority determines many aspects of their career progression and benefits. The other firms would handle the business and equity side of the transaction, ensuring that pilots have a stake in the new entity’s capital.
Last month, SWAPA made the decision to retain several law firms if Southwest attempts to acquire another carrier. One of those firms would be an experienced labor firm tasked with protecting SWAPA Pilots in a seniority list integration. The second — and possibly third — firm would handle the business and equity side of the transaction to ensure our Pilots were invested in the capital of the new entity. In 2010, then-SWAPA President Carl Kuwitsky and then-CEO Gary Kelly failed to follow Delta/Northwest’s lead in allowing the Pilots to be equity partners in the transaction when Southwest acquired AirTran. SWAPA will not make that mistake again.
Message sent to Southwest pilots from SWAPA (h/t View from the Wing)
This proactive approach by SWAPA is in response to past experiences. In 2010, when Southwest Airlines acquired AirTran, SWAPA was not involved in the decision-making process, and pilots were not given the opportunity to be equity partners in the transaction. SWAPA is determined not to repeat that mistake and is taking steps to ensure that pilots are involved in any future acquisitions or mergers.
While SWAPA’s actions suggest that a merger or acquisition may be on the horizon for Southwest Airlines, the airline itself has not confirmed any such plans. In a message to pilots, SWAPA stated that neither the union nor its representatives have any knowledge of an acquisition or merger in Southwest Airlines’ future. However, the union emphasized that “hope is not a strategy,” indicating its belief that a merger or acquisition is a real possibility.
One potential target for Southwest Airlines could be JetBlue. Once renowned for its reliability and quality of service, JetBlue has seen its reputation take a nosedive as it struggles financially. Despite limited non-stop overlap between the two carriers, a merger could have significant implications for the industry. Southwest Airlines is already the nation’s largest domestic carrier, and a merger with JetBlue could further solidify its position in key markets.
Another perhaps less-likely target could be Sun Country Airlines. While much smaller, their all-Boeing 737 fleet would be a perfect fit for Southwest, as it would enable fleet commonality. I suppose time will reveal exactly what’s going on behind the scenes at Southwest.
LCCs have had a rough time in the last year or so. Domestic travel has taken a nosedive, disproportionately affecting LCCs, while the relative stability of international travel has kept the engines running at legacy carriers like Delta and United. Southwest is struggling too, but they do have a very deep war chest and could still very easily purchase a competitor.
However, any potential merger or acquisition involving Southwest Airlines would likely face scrutiny from the Department of Justice, especially under a Biden administration. The outcome of the presidential election could also play a role in the feasibility of such a deal; if Donald Trump returns to the White House, it’s likely we’d see the DOJ quickly become much more hands-off on antitrust matters such as this.
As much as I wouldn’t want to actually fly on JetBlue right now, competition benefits us all by placing downward pressure on airfares across the board. I’d hate to see JetBlue be acquired, removing another competitor from the market; however it seems the alternative would be allowing the airline to collapse altogether.
While the specifics of any potential merger or acquisition remain uncertain, SWAPA’s move here indicates that significant changes could be on the horizon for Southwest Airlines and the industry as a whole.
