In the wake of Southwest Airlines flight attendants' overwhelming rejection of a tentative new contract late last week, a couple of significant related developments have surfaced.
Chief among them is the possibility Dallas-based Southwest Airlines (NYSE: LUV) and its CEO Gary Kelly could be contemplating another merger in the not too distant future.
According to sources, the three most likely merger targets are Alaska Airlines, Hawaiian Airlines and JetBlue. "Many of us are just sitting back waiting to see if it will be Hawaiian, Alaska or JetBlue," noted one source.
Southwest completed its protracted, four-year-long merger with AirTran late last year. That merger gave Southwest instant access to the sizable Atlanta market, where rival Delta Air Lines has a huge hub and its corporate headquarters.
So the deck is now clear, theoretically, for Kelly to do another merger deal.
As some Southwest flight attendants now view the situation, Kelly's urge to merge again could explain why the CEO suddenly was so eager to get a new contract with flight attendants (his largest single unionized worker group) ratified as quickly as possible. If a contract had been ratified, any F/As joining Southwest from another airline would likely be bound to it as well.
Whether Kelly would green light another merger deal without a ratified contract with flight attendants remains to be seen.
But either Alaska or Hawaiian Airlines would make sense as merger candidates given their route systems. Either would give Southwest immediate access to a major leisure destination, the Hawaiian Islands, that the low-fare behemoth hasn't yet tapped.
Though Southwest flight attendant sources says rumors of another merger have been circulating among employees for months, a Southwest spokesman said, to his knowledge, another merger hasn't been a topic of discussion at Southwest headquarters in Dallas.
However the merger rumors play out in the weeks and months to come, Southwest flight attendants are planning to get back to the negotiating table, perhaps as early as mid-August, sources indicated.
Efforts are also afoot, sources said, to recall as many as a dozen or more of Transport Workers Union Local 556's executive board and install a largely new executive board and contract negotiating team as soon as possible.
More than 13,500 Southwest flight attendants belong to Local 556, with more than 1,800 of them domiciled in Chicago, where Southwest has its largest hub at Midway Airport.
Sources said Local 556 executive board members based in Chicago, Denver and Phoenix were among those voting to reject the tentative contract put forth for ratification earlier this month, and Local 556 rank and file are pushing to keep those three board members in place as the union navigates its way through more bargaining talks.