JetBlue Launches Hostile Takeover Bid for Spirit

JetBlue Launches Hostile Takeover Bid for Spirit

JetBlue is Launching a Hostile Takeover of Spirit

Justice at JetBlue
21 April 2022

Earlier this month, Spirit Airlines rejected an offer by JetBlue to purchase the airline in a $33 per share, all-cash bid, preferring a merger with Frontier instead. On Monday, JetBlue announced a counteroffer: to launch a hostile takeover of Spirit.

The escalating tensions are pitting multiple sides against one another. On one side is the Board of Directors at JetBlue, who has thrown its total weight behind a link-up with Frontier. Another faction is made up of shareholders, who stand to see shares take a sharp spike in the event of an outright buyout. Yet another litigant is the government, which must decide if passengers would get fleeced by the new airline.

Lost so far in the discussions are the workers at JetBlue. For all the apparent urgency to strike a deal with Spirit as soon as possible, the company has yet to explain how a merger will impact the carriers’ non-union employees. They lack explicit legally-binding merger protections and face a tense, uncertain future at JetBlue. A condition the company seems in no hurry to remedy.

However, the union that represents ramp workers at Spirit has not been so silent. The International Association of Machinists and Aerospace Workers (District 141), reassured members at Spirit in February that their jobs and contractual rights would remain intact in a merger. “First and foremost, I want you to know that our newly-ratified contract with Spirit remains in full force,” said District President, Mike Klemm in a message to union members following speculation that Spirit might merge with Frontier. These rights include, “essential provisions that protect ramp workers’ jobs, seniority, and wages, among other vital protections, during a merger,” Klemm said at the time.

The plan to merge Spirit and Frontier became public in February of this year. The Spirit Board of Directors is still pushing for a merger with Frontier, while JetBlue is working to merge with Spirit, hoping to block the Spirit / Frontier tie-up.

Federal law requires companies like JetBlue to honor agreements made to unionized employees, even if those agreements originated with the company they are buying out. According to Federal labor rules, a company that takes over another business becomes more than just the new owner of that company’s assets. They also own the business’s liabilities. In other words, if JetBlue buys Spirit Airlines outright, they also pick up the union contracts and other agreements currently in place at Spirit.

Ground Operations workers at Spirit’s Fort Lauderdale station are unionized with the International Association of Machinists and Aerospace Workers (District 141). As part of their agreement with Spirit, these employees have vital contractual protections. Notably, they cannot be lawfully laid off or contracted out in the event of a buyout or merger with another airline. If Spirit’s union workers have to combine with JetBlue workers in the new airline, the unionized workforce has legally-binding seniority rules that companies must follow.

JetBlue management has a wide range of options that it can consider imposing on non-union workers in a merger. Among these options; requiring existing employees to re-apply for their jobs. Such a move could allow JetBlue to purge “underperforming” employees and those with attendance or health issues.

At airlines, an employee’s seniority is critical. Typically, airline workers determine their work hours and work area, days off, and other factors based on how long they’ve worked at the company or in their current position. For this reason, seniority rules are a vital area of focus for union contracts in the aviation industry, with very clearly laid out language.

Tragically, no such legal agreements exist for Ground Operations workers at JetBlue. These are the workers that load and unload the aircraft, guide them to and from gates, and oversee aircraft handling while on the ground and at gates. JetBlue Ground Operations workers have been trying to organize with the International Association of Machinists and Aerospace Workers, the same union representing similar workgroups at Spirit, American, and United, among other airlines.

JetBlue management has a wide range of options that it can consider imposing on non-union workers. Among these options; requiring existing employees to re-apply for their jobs. Such a move could allow JetBlue to purge “underperforming” employees and those with attendance or health issues.

Jetblue released a statement to investors saying that, long-term, a merger of some kind is necessary for the carrier. According to the airline, a buyout of Spirit would grant access to a large fleet of compatible Airbus planes, lucrative routes and help reduce an increasingly-critical pilot shortage. A merger with Spirit would make JetBlue the fourth-largest airline in America. For its part, Spirit rejected an opening offer to merge with JetBlue in early May, saying that Frontier was a better option

Jilted by Spirits’ Board of Directors, JetBlue turned to shareholders with a $30 / share deal and asked them to vote down the merger with Frontier. In response, Spirit’s Board has chosen to withhold critical information from JetBlue, which would usually be made available before a merger. This move prompted JetBlue to reduce its offer from $33 a share to $30, but the airline said it would still pay the higher price if Spirit changed its mind and opened the carrier’s books to JetBlue auditors.

Shares of Spirit closed on Friday at $16.98.

“If the Spirit shareholders vote against the transaction with Frontier and compel the Spirit Board to negotiate with us in good faith, we will work towards a consensual transaction at $33 per share, subject to receiving the information to support it,” JetBlue said.

JetBlue CEO Robin Hayes said in a memo, “we’re also offering to buy their shares, now at a price slightly lower than our original offer because the Spirit Board didn’t follow a fair process or allow us to look ‘under the hood’ like they allowed Frontier to do.”

 

The memo did not spell out what kind of future non-union employees at the new airline would be facing.

An interesting plot twist involves Bill Franke, the former Chairman of Spirit, who is now the Chairman at none other than Frontier Airlines. It’s easy to speculate that his involvement could be part of Spirit rejecting JetBlue in favor of Frontier. However, Franke has not confirmed that he is pushing a Frontier-Spirit merger personally. Nevertheless, Robin Hayes seems eager to connect the two, alluding to the plot in his statement to employees.

“Our guess is that there are a lot of historical ties and personal relationships between the controlling shareholder of Frontier and some of the Spirit Board members who agreed to the Frontier deal.”

Spirit hasn’t directly denied the allegations but has insisted that its rejection of the JetBlue offer was based on the expectation that Federal regulators wouldn’t allow the deal on antitrust grounds. JetBlue is involved in a de facto merger with American Airlines called the “Northest Partnership,” centered in the Boston – New York markets. Last year, the Justice Department sued to stop that arrangement.

“I’ve heard all this before, said Frank Giannola. “I’ve been through three mergers myself with USAir. “I’ve been in this business for a long time,” he said. “And, in my opinion, this only ends in a merger.”

However, Spirit also rejected an offer by JetBlue to divest assets in Florida, New York, and Boston, which would have eased regulatory concerns. Additionally, JetBlue offered a $200 million contingency fee if regulators end up blocking a JetBlue / Spirit deal. The Spirit Board of Directors refused to agree to any of the proposals by JetBlue.

Employees at JetBlue should expect an eventual merger, no matter how the deal with Spirit shakes out, according to Frank Giannola. Giannola is Director of Membership Services at the Machinists and Aerospace Union, where he frequently helps non-union workers learn more about joining a union.

“This isn’t the first time that JetBlue has tried to hook up with another airline,” Giannola said. “Ground Operations workers at JetBlue have had to worry about partnerships with American, Frontier, and now Spirit,” he went on. “Spirit is just the latest. It’s obvious to anybody who’s looking that JetBlue is desperate to get a deal done with just about anyone that will take them,” he said. “The long-term health of this airline is not sustainable, and this is according to JetBlue, who keeps saying that they need these partnerships in order to compete,” he continued.

“I’ve heard all this before,” Giannola said. “I’ve been through three mergers myself with USAir. It’s clear that Jetblue has lost its identity, and is no longer a low-cost carrier. Today’s JetBlue is trying to compete with the Big Four airlines rather than get left behind. The Jetblue story almost reminds me of USAir – when it lost its identity and tried to merge with United twice, then wanted to merge with Delta, and then finally the airline took over American. That was also a hostile takeover. It’s the exact same thing today with JetBlue.”

“Nobody who works at a company like JetBlue should trust their managers to choose what’s best for employees and their families over what’s best for investors,” he went on. “Merger protections are critical in the modern airline workplace. Especially if it looks like a merger is more likely than not.”

“I’ve been in this business for a long time,” he said. “And, in my opinion, this only ends in a merger.”

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Lufthansa Technik Workers in Puerto Rico Vote to Join the Machinists Union

GoIAM.org
Organizing

WASHINGTON, May 5, 2022 –More than 200 mechanics and related who work in Aguadilla, Puerto Rico, at Lufthansa Technik, Puerto Rico, LLC. voted to join the International Association of Machinists and Aerospace Workers (IAM), the largest airline and transportation union in North America.

“This election is the voice and feeling of all of our co-workers who desire to progress here on the island without the need to abandon our families.,” said Lufthansa Technik Senior Aircraft Mechanic Jonathan Diaz. “It is very important for those who in the beginning and after so much training to try and reach their dream to feel proud of working in the aviation industry. A dream of many but at the same time so few attain it in the country. We will demonstrate that in Puerto Rico we do good and be better not only as humans but as workers.”

“We congratulate the Lufthansa mechanics and related work for choosing to join the Machinists Union,” said IAM International President Robert Martinez Jr. “This victory is a win not just for the Lufthansa workers, but for all workers in Puerto Rico who are trying to make their lives better. We urge Lufthansa to respect the decisions its workers have made and come to the negotiating table in good faith. I want to thank the amazing IAM team on the ground, including Javier Almazan, José “Lole” Rodríguez-Báez, and Juan Negron, for their dedication to getting the Lufthansa workers an opportunity for union representation.”

The National Mediation Board (NMB) election results come months after aggressive tactics and appeal to stop Lufthansa Technik workers’ right to join the IAM. Last year, Lufthansa mechanics and related sought IAM representation due to various workplace issues, including reduced work hours, irregular work rules, and inadequate wages and benefits. 

“The highly skilled aircraft mechanics and related at Lufthansa Technik have overcome many challenges over the past two years,” said Juan Negron, IAM Special Assistant to the International President. “I am proud of their courage and strength. It is time to sit down at the table and get a first contract to benefit the workers and their families. We will utilize the IAM’s full resources to ensure the workers at Lufthansa get what they deserve with a voice in the workplace and respect and dignity on the shop floor.”

“The Lufthansa Technik workers have spoken loud and clear,” said IAM Southern Territory General Vice President Rickey Wallace. “They now have the legal right to negotiate a contract that will improve their quality of life and give them respect and dignity. The IAM is fully committed to achieving a first contract at Lufthansa Technik.” 

Lufthansa Technik mechanics and related provided service for United Airlines, Allegiant, Spirit, Avianca, and JetBlue until recently. 

“Today we are full of hope because finally after overcoming so many obstacles, the day is here that we the Lufthansa Technik employees in Puerto Rico are united in one voice,” said Lufthansa Technik Aircraft Mechanic Carlos Santiago. “With this victory, all the employees working at Lufthansa will gain better working conditions.”

The International Association of Machinists and Aerospace Workers (IAM) is among the largest industrial trade unions in North America and represents nearly 600,000 active and retired members in the manufacturing, aerospace, defense, airline, railroad, transportation, shipbuilding, woodworking, health care, and other industries.

goIAM.org | @MachinistsUnion

 

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2022 Committee Conference
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The IAMAW District 141 Committee Conference brings together hundreds of labor leaders in the airline industry.

The Conference comes as the Machinists Union negotiates the biggest contracts in commercial aviation; the seven agreements between United Airlines and its primary workforces. These include the carrier’s Ramp and Gate Agents, Storekeepers, Security Guards, and Instructors and follow historic union agreements at American, Hawaiian, and Spirit Airlines.

This year’s Conference also comes as the Union inches closer to achieving a historic vote at JetBlue.

Despite reporting a hefty first-quarter loss, United Airlines’ CEO Scott Kirby recently announced that he expects record-breaking revenue over the summer flying season, suggesting the Airline had overcome pandemic-era hardships.

“The demand environment is the strongest it’s been in my 30 years in the industry,” Kirby said. “We’re now seeing clear evidence that the second quarter will be an historic inflection point for our business.”

While reporting a loss of nearly $1.4 billion in the first quarter of 2022, Kirby said the Airline expected 17% more revenue over the same period in 2019. He told investors that he expects the tidy profit for the Airline to come about even amid higher fuel prices.

Making sure that the women and men that actually do the work at United are not forgotten in all the rosy predictions is the Machinists Union.

“We made the airline successful,” said the Unions District President, Mike Klemm. “We did that. Managers didn’t do it. Company executives didn’t push back planes or load passengers onto flights,” he said. “They didn’t check a single bag. We did that.”

“Those profits are ours. We created them, and we deserve to benefit from them.”

The Union’s General Vice President, Richard Johnsen, who also spoke at the event, underscored the sentiments. “I’m not just talking when I say that we are the reason that these companies are successful. The employees are literally the reason. There’s only a United Airlines today because we made it. Because we sacrificed,” he said. “United Airlines employees in this room gave up wages that they needed for their families so that United Airlines could still have a company after 9/11.”

“I don’t say that off the cuff. We kept United Airines in business after 9/11, and now, today, we have a pandemic that we had to fight through. It was our Union, the Machinsts Union that kept United Airlines alive once again. It was our International President Bob Martinez and our Legislative Department, that lobbied hard for Payroll Support. That legislation kept us employed, covered our house notes and electric bills, and prevented any one of us from getting laid off or furloghed,” he reminded the assembled union leaders. “United is what it is, because we are who we are,” he said. 

Johnsen was recently named General Vice President for the Airline Territory, a development that he called “deeply humbling.” 

Also speaking was Airline Coordinator Tom Regan, who is also involved in negotiations with United. “United has committed to negotiating an industry-leading contract with us,” he said. “We intend to hold them to their word on that.”

While the ongoing negotiations at United were a major focus of the Conference, the assembly also discussed a wide range of issues. Among these was the Union’s use of safety cards at Hawaiian Airlines, which use a QR code to quickly link workers at the carrier to online safety reporting tools. Delegates also covered modernizing communications and the potential dangers of social media.

The continuing campaign to organize the Ground Operations workers at JetBlue was another hot topic for attendees.

“You might have noticed that there are no members of our Organizing Department here,” President Klemm said at one point during the Conference. “That’s because they’re working with JetBlue Crewmembers at this very second,” he said. “That’s how focused we are on getting these guys the Union representation they deserve,” he said.

 

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All across the nation, workers are fed up and fired up

2022 is turning out to be an incredible year as workers are voting to join unions and improve their lives. From baristas to warehouse workers and airline pilots to journalists and workers at cannabis dispensaries, working people all across the country are fed up and fired up.

There’s a super easy way to show you support working people: say the line Union Yes when placing your orders at the register, or add it in the app. Not sure which companies’ workers are organizing? That’s OK. There’s a good chance it’s happening everywhere!

Add Union Yes to your coffee order? CHECK!

To the memo line in an Amazon order? Yes, please.


Anywhere you shop online or in person, add Union Yes to your order.

As more people do this, working people will see your message and feel your support. And that means more individuals, especially young workers and workers of color, will feel empowered to collectively improve their own lives.

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IAM, United Negotiations Continue in Chicago

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IAM, United Negotiations Continue in Chicago

 

29 April 2022

Your IAM District 141 Negotiations Committee and United Airlines management representatives continued negotiations this week for over 25,000 workers covered by seven different contracts.

Negotiations progressed nicely this week, as both parties worked diligently towards realizing our shared goal of reaching acceptable tentative agreements by our self-imposed deadline of August 1, 2022.

United management committed to the Union that IAM members’ priorities will be addressed during our next session the week on May 16th in a comprehensive fashion. The Union reiterated to the Company what is needed to successfully conclude these expedited talks, which is industry-best agreements.

While we do not know how the Company will address IAM members’ stated priorities in its comprehensive proposal, we are cautiously optimistic that the Company fully understands IAM members’ needs. Our expectation is that understanding translates into Company proposals that further push this expedited process forward.

As was announced earlier this month, United expects its strongest second-quarter revenue performance in company history, and to be profitable for 2022. United CEO Scott Kirby said the following to investors:

“Our team continues to do an outstanding job of caring for our customers. The demand environment is the strongest it’s been in my 30 years in the industry – and United and its customers will benefit more than any other airline. We’re now seeing clear evidence that the second quarter will be an historic inflection point for our business. It leaves me more optimistic than ever about United’s future.”

CEO Kirby’s statements are welcome news for every dedicated and hardworking United Airlines employee. However, I would add that not only will United and its customers benefit more than any other airline due to the strongest demand environment in Mr. Kirby’s 30 year career, but so will IAM-represented United employees.

You can rest assured that your negotiations committee will remind United management that we are the reason United is in the position to return to profitability.

Negotiations will continue the week of May 16th.

In solidarity,

Your District 141 Negotiating Committee

Olu Ajetomobi
Joe Bartz
Victor Hernandez
Barb Martin
Andrea’ Myers
Terry Stansbury

Faysal Silwany
Erik Stenberg
Sue Weisner

Michael G. Klemm

President & Directing General Chair,
IAMAW District 141

Recording Secretaries: Please print and post on all IAMAW bulletin boards.

Justice at JetBlue: Union Organizing is a Federal Right

Justice at JetBlue: Union Organizing is a Federal Right

UNIONIZING IS A FEDERAL RIGHT; NO NEED TO BE AFRAID

Justice at JetBlue
28 April 2022

The right to organize and join a union are fundamental employment rights under federal labor laws.

JetBlue management is prohibited under federal law from ever knowing who signed an a-card or how anyone voted in a union election.

  • You have the right to join the union and to ask others to join.
  • You have the right to wear a union pin on the job, so long as it does not carry a controversial slogan or violate company policy or uniform requirements.
  • You have the right to hand out union leaflets on your own time.
  • You have the right to assist in, and encourage others to support, the union, so long as such efforts do not interfere with your work or violate posted company policy.

Here’s what management cannot do:

  • They cannot tell employees that they will fire or punish them if they engage in union activity.
  • They cannot lay-off or discharge any employee for union activity.
  • They cannot bar employee union representatives from soliciting cards or membership during non-work time, in non-work areas.
  • They cannot ask employees about confidential union matters, for example, whether you have signed a card, etc.
  • They cannot ask the employees about whether they support the union or a union representation election.
  • They cannot ask employees how they intend to vote.
  • They cannot threaten employees or coerce them in an attempt to influence their vote, or to prevent them from voting.
  • They cannot tell employees that existing benefits will be discontinued if the employees vote for a union.
  • They cannot promise or give employees promotions, raises or other benefits if they vote against the union.
  • They cannot prevent you from casting your vote.
  • They cannot know how you voted.

THESE RIGHTS ARE ENFORCEABLE UNDER FEDERAL LAW AND WE SHOULD NOT BE FEARFUL FOR EXERCISING OUR     S

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