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Spirit Airlines Plans New Talks

Talks between Spirit and its pilots, on strike since Saturday, have been scheduled for Tuesday.
Author:

MIRAMAR, Fla.

TheStreet

) --

Spirit Airlines

says it has canceled flights through Wednesday, assuring that a pilots' strike will last at least five days and raising concerns about the airline's survival.

However, talks are set to resume Tuesday, at the request of the National Mediation Board.

While industry consolidation seems to have diminished the possibility of a strike at a major airline, which would likely be considered too big to fail, Spirit carries just 1% of U.S. airline passengers and does not face similar barriers.

"We haven't really seen (a strike) in the passenger industry for quite a while," said aviation consultant Robert Mann. "The issue with consolidation is that airlines will be too big to allow them to strike -- maybe only small guys will be allowed to do that."

The ongoing strike, which began Saturday and has stranded thousands of passengers, is troubling because "there is no guarantee that Spirit survives," said aviation consultant Michael Roach. "Spirit does not have a guaranteed place in the airline industry, so its pilots are putting themselves at risk."

Roach was founding president of America West Airlines. After he left, the airline sought bankruptcy protection in 1991, and Bill Franke took over as chairman. Franke is now chairman and principal investor in Spirit. "He saved the airline, but he is not to be messed with," Roach said. "He is not sentimental."

Mann noted that the Spirit fleet, composed of relatively new Airbus A319 and A320 aircraft, could have value to other airlines where Franke is the principal investor. "I hope the pilots consider the possible end game," he said.

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Spirit pilots say they have been negotiating for four years and have failed to secure a satisfactory contract offer. Pilots were released from mediation on May 12. "No one wanted this strike -- certainly not this pilot group," said Sean Creed, who heads the Spirit chapter of the Air Line Pilots Association, in a prepared statement.

"We have sacrificed so much to see this company prosper," Creed said. "Now we are sacrificing our paychecks until we get a contract that reflects our contributions to this airline."

Spirit said its 450 pilots have turned down a 29% increase over five years, which would cost the company $70 million. The increase, combined with annual step increases, is equivalent to a 47% pay increase over five years, the airline said. Additionally, the airline offers pilots a four-day break between every trip, a benefit not contained in any other ALPA pilot contract; a $3,000 signing bonus and an 8% 401(k) match, increasing to 9% in year four.

"It is surprising to me that ALPA would turn down this generous offer that would have paid senior captains over $200,000 per year," said CEO Ben Baldanza, in a prepared statement. "I am concerned that our employees are being used in a broader political game that may not be in the interest of their careers or their families. This deal should be about Spirit and Spirit only, not about the pilots whose contracts are under negotiation at other ALPA carriers, but it would appear other forces have intervened."

Competing carriers including

American

(AMR)

, which operates a Miami hub, and

AirTran

(AAI)

, the only other airline that serves Atlantic City. They have been filling empty seats with stranded Spirit passengers, but in general, excess capacity is limited.

-- Written by Ted Reed in Charlotte, N.C.

.