Southwest Airlines Pilots Union's Board Backs Tentative Pact

   DOW JONES NEWSWIRES 
 

The board of Southwest Airlines Co.'s (LUV) pilots union unanimously endorsed a tentative labor pact and agreed to send it to members for ratification in October.

The Southwest Airlines Pilots' Association's rank and file narrowly rejected an earlier proposal by the airline in June.

The new five-year agreement allows more flexibility to improve pilots' quality of life, maintains long-standing scheduling programs, gives a retirement benefit increase to pilots sooner, and further restricts the company's ability to codeshare U.S. and international flights. However, compensation under the new proposal is slightly less than under the previous one.

The new proposal also ties the next two years' compensation to the company's performance, Southwest said.

The low-fare giant lost a bankruptcy-court auction for Frontier Airlines Holdings Inc. to much-smaller rival Republic Airways Holdings Inc. (RJET) last month after refusing to drop a contingency clause requiring pilots to first sign off on the takeover.

The protracted recession has halted Southwest's decades-long track record of fast growth and fat profits. Some investors are nervous about Southwest's expansion prospects, and a growing number of analysts predict the airline this year could post an annual loss for the first time since its first two years of existence in 1971 and 1972.

Southwest's shares closed Thursday at $9.70, down 1.8%, and were inactive after hours. The stock has lost more than a third of its value in the past year.

-By Kathy Shwiff, Dow Jones Newswires; 212-416-2357; [e-mail]