The Teamsters union is trying to block bankrupt Frontier Airlines’ new $75 million financing agreement, objecting to labor cost cuts required by the deal.
The International Brotherhood of Teamsters, which represents 435 Frontier workers, including its mechanics, filed a motion today in bankruptcy court asking a judge to reject the agreement.
The Teamsters said Frontier is illegally trying to throw out its existing labor contracts.
Frontier’s “motion to secure financing on terms which require concessions is a blatant attempt to circumvent the strict requirements of (federal law). Similar tactics have been rejected by bankruptcy courts and must be rejected in this case as well,” the Teamsters said in its motion.
Frontier spokesman Steve Snyder declined comment. “I can’t speak to the specifics of the negotiations because we have a nondisclosure agreement,” he said.
Perseus LLC, a Washington-based private-equity firm with an Evergreen office, agreed last week to lend bankrupt Frontier $75 million in two installments in return for a future equity stake.
The first installment of $40 million would come later this month if a judge approves the agreement. The remaining $35 million would be paid to Frontier in October or November if the airline is able to secure wage concessions.
To receive the second installment, Frontier must obtain from its pilots and mechanics “new or revised collective-bargaining agreements or amendments containing concessions necessary to meet labor-cost reductions,” according to the agreement.
The pilots and mechanics unions agreed to temporary wage and benefit reductions in May. The pilots’ pay cut was 14.5 percent.
The Teamsters said the temporary concessions last until Sept. 26, but Frontier is allowed to reopen talks by Sept. 1 to extend those concessions if its financial condition deteriorates.
The Teamsters said Frontier’s financial position improved in June, which bars the company from extending the pay cuts.
Frontier reported an $8.8 million loss for June, compared with $22 million in May. Although fuel prices rose in June, Frontier president Sean Menke said the improved numbers resulted from cost cuts implemented after the company filed for bankruptcy protection in April.
Greg Griffin: 303-954-1241 or ggriffin@denverpost.com
