Southwest Airlines 2011 Annual Report Download - page 26

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Company is subject to the risk that air travel inconveniences and economic downturns may, in some cases, result
in permanent changes to consumer behavior in favor of surface transportation and electronic communications.
Seasonality
The Company’s business is somewhat seasonal. Generally, in most markets the Company serves, demand
for air travel is greater during the summer months, and therefore, revenues in the airline industry tend to be
stronger in the second (April 1 – June 30) and third (July 1 – September 30) quarters of the year than in the first
(January 1 – March 31) and fourth (October 1 – December 31) quarters of the year. As a result, in many cases,
the Company’s results of operations reflect this seasonality. Factors that could alter this seasonality include,
among others, the price of fuel, general economic conditions, extreme or severe weather, fears of terrorism or
war, or changes in the competitive environment. Therefore, the Company’s quarterly operating results are not
necessarily indicative of operating results for the entire year and historical operating results in a quarterly or
annual period are not necessarily indicative of future operating results.
Employees
At December 31, 2011, the Company (including AirTran) had 45,392 active fulltime equivalent
Employees, consisting of 19,647 flight, 3,135 maintenance, 20,185 ground, Customer, and fleet service, and
2,425 management, accounting, marketing, and clerical personnel. The Railway Labor Act establishes the right
of airline employees to organize and bargain collectively. As of December 31, 2011, approximately 82 percent of
the Company’s Employees were represented by labor unions, including 82 percent of Southwest’s Employees
and 81 percent of AirTran’s Employees. The various labor groups are covered by 18 different collective-
bargaining agreements. Under the Railway Labor Act, collective-bargaining agreements (“CBAs”) between an
airline and a labor union generally do not expire, but instead become amendable as of an agreed date. By the
amendable date, if either party wishes to modify the terms of the agreement, it must notify the other party in the
manner required by the Railway Labor Act and/or described in the agreement. After receipt of the notice, the
parties must meet for direct negotiations. If no agreement is reached, either party may request the National
Mediation Board to appoint a federal mediator. If no agreement is reached in mediation, the National Mediation
Board may determine an impasse exists and offer binding arbitration to the parties. If either party rejects binding
arbitration, a 30-day “cooling off” period begins. At the end of this 30-day period, the parties may engage in
“self-help,” unless a Presidential Emergency Board is established to investigate and report on the dispute. The
appointment of a Presidential Emergency Board maintains the “status quo” for an additional 60 days. If the
parties do not reach agreement during this period, the parties may then engage in “self-help.” “Self-help”
includes, among other things, a strike by the union or the airline’s imposition of any or all of its proposed
amendments and the hiring of new employees to replace any striking workers. The following table sets forth the
Company’s and AirTran’s Employee groups subject to CBAs and the status of the respective CBAs:
Employee Group Representatives Status of Agreement
Southwest Pilots Southwest Airlines Pilots’
Association (“SWAPA”)
Amendable August 2012
Southwest Flight Attendants Transportation Workers of America,
AFL-CIO, Local 556 (“TWU 556”)
Amendable May 2013
Southwest Ramp, Operations,
Provisioning, Freight Agents
Transportation Workers of America,
AFL-CIO, Local 555 (“TWU 555”)
Currently in negotiations
Southwest Customer Service Agents,
Customer Representatives
International Association of
Machinists and Aerospace Workers,
AFL-CIO (“IAM 142”)
Amendable October 2012
Southwest Materials Specialists
(formerly known as Stock Clerks)
International Brotherhood of
Teamsters, Local 19 (“IBT 19”)
Amendable August 2013
20