CEO Menke tells employees it's business as usual

But outside observers warn that layoffs may be in the cards

Gargi Chakrabarty

Published April 11, 2008 at 11:30 p.m.

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Photo by Dennis Schroeder / The Rocky

It's business as usual Friday at the Frontier Airlines ticket counter at Denver International Airport.

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Frontier Airlines CEO Sean Menke wrote an empathetic letter Friday morning to the company's 6,000 employees, explaining the sudden decision to file for bankruptcy.

"I know you won't be able to read this letter with a clear head if I don't state that the (bankruptcy) filing does not change our day-to-day lives. We are still up and operational," Menke stated at the outset.

"You are still an employee of Frontier Airlines and will receive your pay and benefits as usual."

Menke's letter may have calmed many, but it didn't stop experts from warning that layoffs could be in the cards.

"I think it's inevitable," said Gary Chaison, professor of labor relations at Clark University in Worcester, Mass.

Chaison estimated Frontier would have to cut 20 percent of its work force, or about 1,200 employees, as it restructures its debt and tries to climb out of bankruptcy.

"If you are going to get laid off, this is the worst possible timing," Chaison said. "This is the beginning of a recession; housing is awful, which means it's hard to relocate. Plus, the skills of pilots and flight attendants are nontransferrable."

Anthony Sabino, a law professor in the Tobin College of Business at St. John's University in New York, also speculated that Frontier would "undoubtedly have to fire some folks at some point." However, Sabino didn't forecast a specific number.

Frontier spokesman Joe Hodas downplayed those concerns, as did John Stemmler, head of the Frontier Airline Pilots Association.

"While we don't currently anticipate any job cuts, this is a fairly tumultuous industry at this time, and we need to remain flexible and responsive to rapidly changing market conditions," Hodas said.

Menke's letter reiterated the airline's commitment to "provide employee wages, health care coverage, vacation, sick leave and similar benefits without interruption."

Stemmler admitted he was shocked by credit-card company First Data's decision to withhold 50 percent of the credit-card funds received from the sale of Frontier tickets, beginning Friday.

Stemmler said he believes the carrier's 700 pilots will continue to support management.

"I really don't believe (layoffs) are in the cards for us; I really don't," Stemmler said.

It is likely Frontier pilots and flight attendants will support the company through its reorganization, given their largely amicable relationship with management. In past years, flight attendants have turned down four separate campaigns to unionize.

"We wish it wasn't happening right now because we really felt that we were getting ready to turn some corners," Frontier employee Jerome Staverosky said.

A few hours after Menke's e-mailed letter went out to employees on Frontier's intranet, the company headquarters at 7001 Tower Road looked calm from the outside. Cars packed the parking lot that wraps around one side of the sprawling building.

Inside the lobby, three women juggled calls as phones were ringing off the hooks - obviously a busy morning.

"No, we are flying as usual," one said, then put down the receiver to pick up a new call. "We haven't canceled any flights," she told another caller.

Behind the reception counter, small groups of employees loitered, drinking coffee and talking in hushed tones.

"I am not too worried about the bankruptcy," said an employee who stood outside the building, smoking a cigarette. He declined to reveal his name but said he has been with the airlines for 10 years.

"I think it's just a survival tactic," he said. "They'll sort it out with the credit-card company."

chakrabartyg@RockyMountainNews.com or 303-954-2976 Staff writer Chris Walsh contributed to this report.

Struggling airlines' scorecard

* CARRIERS THAT FAILED IN '08

Aloha Airlines: Flew inter-island in Hawaii and to mainland. Filed for bankruptcy protection March 20; shut down March 31

ATA Airlines: Flew mostly between Hawaii and West Coast, plus military charters; shut down April 3

Champion Air: Charter carrier said it will cease operations May 31.

Maxjet Airways: Flew to London from several U.S. cities; shut down on Christmas Eve 2007

Skybus: A Columbus, Ohio, deep- discount airline that drew attention offering 10 seats on every flight for $10; shut down April 4

* CARRIERS TO WATCH

Alitalia: Italian government owns 49.9 percent and has tried unsuccessfully to sell. Airline is running out of cash; bankruptcy possible

ExpressJet: Offshoot of regional airline mostly serving Continental. Had losses of nearly $115 million in 2007, its first year of flying

Sun Country: Minnesota-based discounter will lay off nearly 30 percent of its pilots May 1 to Oct. 31 and cut back on flights because of high fuel prices. Summer is slower season for the leisure airline, which flies more passengers in winter fleeing Northern cold.

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