Southwest Airlines 2006 Annual Report Download - page 26

Southwest has ten collective bargaining agreements, which agreements covered approximately 82 percent of
Southwest’s Employees as of December 31, 2006. Our relations with labor unions are governed by the Railway Labor Act
(the “RLA”), which establishes the right of airline employees to organize and bargain collectively. Under the RLA, a
collective bargaining agreement between an airline and a labor union generally does not expire, but instead becomes
amendable as of a stated date. If either party wants to modify the terms of such agreement, it must notify the other party in
the manner required by the RLA and/or described in the agreement. After receipt of such notice, the parties must meet
for direct negotiations, and, if no agreement is reached, either party may request the National Mediation Board (the
“NMB”) to appoint a federal mediator. If no agreement is reached in mediation, the NMB may determine that 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 disputes. 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 Employee groups and collective bargaining status:
Employee Group Represented by Agreement Amendable in
Pilots Southwest Airlines Pilots’
Association
Currently in negotiation
Flight Attendants Transportation Workers of America,
AFL-CIO (‘‘TWU”)
June 2008
Ramp, Operations, Provisioning,
and Freight Agents
TWU July 2008
Stock Clerks International Brotherhood of
Teamsters (‘‘Teamsters”)
August 2008
Mechanics Aircraft Mechanics Fraternal
Association (“AMFA”)
August 2008
Customer Service and Reservations
Agents
International Association of
Machinists and Aerospace Workers,
AFL-CIO
November 2008
Aircraft Appearance Technicians AMFA February 2009
Flight Dispatchers Southwest Airlines Employee
Association
December 2009
Flight Simulator Technicians Teamsters November 2011
Flight/Ground School Instructors
and Flight Crew Training
Instructors
Southwest Airlines Professional
Instructors Association
January 2013
Item 1A. Risk Factors
In addition to the other information contained in
this Form 10-K, the following risk factors should be
considered carefully in evaluating Southwest’s business.
The Company’s business, financial condition, or results
of operations could be materially adversely affected by any
of these risks. Additional risks not presently known to the
Company or that the Company currently deems imma-
terial may also impair its business and operations.
Southwest’s business is dependent on the price and
availability of aircraft fuel. Continued periods of
high fuel costs and/or significant disruptions in the
supply of fuel, could adversely affect our results of
operations.
Airline operators are inherently dependent upon
energy to operate and, therefore, are impacted by changes
in jet fuel prices. The cost of fuel, which was at an
historically high level over the last two years, is largely
unpredictable and has a significant impact on the Com-
pany’s results of operations. Jet fuel and oil consumed for
fiscal 2006 and 2005 represented approximately 26 percent
and 20 percent of Southwest’s operating expenses,
respectively. Fuel availability, as well as pricing, is also
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