On the heels of already-announced cuts in management salaries, it appears that Frontier Airlines is now telling employees that all employees are now looking at a mandatory pay cut through September.

Channel 9 in Denver posted today what it says is an internal employee memo from management at the airline.

In the memo, the airline says cuts in labor costs are necessary because,

“At this critical time when we are trying to secure DIP financing, we must show these potential investors and the creditors’ committee a viable business plan that will allow us to operate in this challenging environment of rising oil costs. They need to see that we are doing everything possible in relation to fuel costs and to improve Frontier Airlines Holdings, Inc. bottom line. Since we have entered bankruptcy, fuel has increased from $107/barrel to over $122/barrel. This represents an annual increase in expenses of nearly 75 million dollars. Unfortunately, these increases are no longer offset by fuel hedges as our hedging agreements became invalid when we entered bankruptcy.

Therefore, we need to make some significant changes to our cost structure in order to achieve a non-fuel cost per available seat mile (CASM) of 5.8 cents. We have aggressively been eliminating non-labor expenses as well as requesting cost reductions from our suppliers and vendors. Unfortunately, we cannot reach our CASM ex fuel goal by only reducing non-labor expenses. As a point of necessity, we are going to have to reduce our labor and benefit expenses very quickly. We recently announced pay cut reductions for the entire Frontier Airlines Holdings, Inc. officer group effective May 1. In addition, We are now asking that all employees also take a pay reduction through September 2008. At that time, we will review our financial situation and the market conditions again. We will also be suspending the 401(k) match for this period of time.”

According to the letter, both the pilots’ union and the dispatchers’ union (FAPA and TWU) have already agreed to concessions. The airline’s flight attendants are not unionized. The airline said that no agreement has been reached with the airline’s mechanics, who are represented by the Teamsters.

Ticker: (Nasdaq:FRNT)

Technorati Tags: airline employee pay cuts, airline stocks, airlines, Frontier Airlines

If you subscribe to PlaneBusiness Banter, please note!

Next week we are going to be physically moving the server that hosts PlaneBusiness Banter and PlaneBuzz to a new location.

We will make accommodations so that PlaneBuzz is hosted on a temporary server next week, so we should be online here without a break.

However, the PlaneBusiness.com  website, and PlaneBusiness Banter access will not be available from sometime Tuesday morning until later on Wednesday. (Yes, our server gets to take a little trip via Federal Express — so it’s not just an “around the corner, down the block” kind of trip.)

Thank you for your patience as we make this move. It should stop the problem we’ve had recently with sporadic downtimes affecting access to both PlaneBuzz and PlaneBusiness Banter.

One headline really takes the cake today boys and girls.

“Tilton to Groom US Airways chief if deal goes ahead”

Publication: Financial Times.

Justin Baer’s article talks today about how “United Airlines’ chief executive Glenn Tilton has offered to make US Airways’ Doug Parker a top contender to succeed him should the two carriers agree to merge, people familiar with the matter said.”

Now mind you, I’m not arguing with the premise behind this article, because, unfortunately, it tracks with what I have heard as well. This continued mandated ego trip by Glenn Tilton and his hand-picked board is a big reason no deal came to pass with Continental Airlines.

Note: Hubbub today about talks concerning a Continental-United “alliance” is another deal altogether.

But the very idea that Glenn Tilton has anything to offer Doug Parker, or is in any way his superior in terms of how he runs a company, works with his employees, manages a merger like this (Parker has actually done one) or communicates with anyone is ridiculous. No, it’s worse than that.

Or, then again, maybe I’ll try to look on the bright side. Maybe this implies that Tilton will cut Doug’s hair, give him manicures, and make sure his suits are pressed correctly.

Now that would be just fine.

Ticker: (Nasdaq:UAUA), (NYSE:LCC)

Technorati Tags: airlines, Continental Airlines, Doug Parker, Glenn Tilton, United Airlines, US Airways

Hello everyone.

Well, we here at the Worldwide Headquarters got smacked around pretty good yesterday, last night and again this morning by Mother Nature, as she ripped through with the usual cocktail mix of spring hoopla. You know, hail, wind, rain, thunder, lighting, tornados, more rain, more wind. You get the picture.

We did hit a new milestone for water creep in the back of the house however, as water actually hit the edge of the back of the house, and was just inches from coming into the back door. I guess there is a first for everything. Not surprising after I heard we had something like five inches of rain in about an hour. Just nowhere for it to go when it’s coming down that hard, that fast.

And, as is usually the case with high winds and rain, we suffered from an ongoing series of power outages last night and again this morning.

So my apologies for being a bit “off-line” more than usual. But I don’t like to tempt fate with computer equipment when power is “browning” and or flickering off and on. I learned that lesson years ago when I fried a processor.

Having said that, I’ll be back shortly with some comments after I finish up going through the trusty email bag. I already know which story is going to be first, and I’m sure you do too. It’s the headline from a Financial Times story.

Three guesses and the first two don’t count.

Be back shortly.

My earlier post produced a couple of notes to me from readers and I have to admit —  the story here may not be the fact that Southwest is pulling some of its leverage levers to increase its cash balance in the bank.

The story is ….why.

The airline has a $500 million credit line. (Or is it $600 million?) One of the two.

And it had $3.1 billion, give or take, at the end of the first quarter.

So the question has to be …why would they take on the “cost” to borrow another $600 million and mortgage 21 aircraft  if the airline has roughly $3.1 billion in the bank?

Is Southwest getting ready to buy something? Or someone?

Technorati Tags: Southwest Airlines

Heh.

I just disposed of my earlier note on Doug Steenland’s comments from yesterday, as  after I published them, I noticed that our esteemed guest columnist, Godzilla, aka Frank Arciuolo, had come in and done a much more thorough treatment of the subject.

That’ll teach me to write first before I look at what has already been posted.