1. RunningHead:CASESTUDY: SOUTHWEST AIRLINESMERGER WITH AIRTRAN
“Fun-LUVing” the Southwest Way
Southwest Airlines and AirTran Merger
HRMN Issues and Problems
December 12, 2014
Stanford F. Phillips

2. MERGER: SOUTHWEST AIRLINES ANDAIRTRAN 1
Introduction
This paper will analyze two organizations, Southwest Airlines (“Southwest”) and
AirTran, their strengths and weaknesses, cultures, people, and business processes related to
human resources. It will review all significant events that affect human resources (HR),
synthesize employee concerns, and provide outcomes, both quantitative and qualitative, locally
and internationally. The HR leadership at both airlines will proactively assimilate Southwest’s
culture, align HR objectives to organizational objectives, use proactive communication to all
union members, and assess job analysis methods and training programs for two airlines to
ultimately become one.
Merger Concerns
When two organizations of any type merge, as in the Southwest-AirTran airline merger,
the impact on each organization raises concerns. The framework, culture, and human capital of
the organization are, or should be, the most important considerations to assimilate current and
new employees. Strategically, from a business mindset in past mergers executives always wanted
to just get the merger done, and deal with the fallout when it happens. American business has
been, especially in the past, more concerned about quarterly reports to stakeholders today rather
than the impact of decisions on employees tomorrow, resulting in lost opportunities (Marks &
Mirvis, p.868. para. 1, 2011). Both organizations have human capital resources, unions,
stakeholders, and a unique climate and culture that is the culmination of twenty plus years of
experience of knowing “how we do business around here.” There is precedent in the airline
industry of airline mergers failing, yet Southwest and AirTran have been differentiating
themselves in their segment, against their competition, as low-cost leaders, while remaining
profitable for over thirty-years, and twenty-years, respectively.

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Unions, Non-Union Concerns
The merger of two airlines with non-union employees may be fairly straight forward
beyond the legal hurdles of satisfying the Federal Trade Commission (FTC, n.d.). There are no
labor contracts involved with non-union employees. However, the merger of Southwest and
AirTran have a unique set of circumstance; two separate Airline Pilot and Flight Attendant
Associations resprsented by four different unions. Just the Airline Pilots Association agreement
has been noted as “the most important” for the merger to take place. Without this single
agreement being ratified with the two pilot unions, the single underlying issue of seniority could
crumble the merger and result in Southwest running one airline under two separate names. A
scenario that The Dallas Morning News quoted as “not good for AirTran Pilots (Maxon, 2011).
Therefore, labor relations management must be proactive in acknowledging union
members concerns to ratify a new contract, beyond business systems and stock options, in a
positive “people direction” to show AirTran employees a sense of urgency and respect for their
seniority and compensation agreements that make for a fluid contract agreements. Otherwise,
either segment of employees can literally cause the merger to fail resulting in Southwest running
two separate airlines, or at the very least cause a lengthy mediation, or arbitration to resolve
specific concerns resulting in significant delays to the merger (Maxon).
Organizational Culture
Executives have come to learn in modern day business that most organizations who
integrate organizational culture are more successful than their competition (Mankins, 2013). This
includes having a clear mission, a leader with vision, espoused values that employees eventually
practice and teach to others; values that empower employees and create added value for all
stakeholders (Mankins). In merging two airlines, especially a casual, customer service oriented

4. MERGER: SOUTHWEST AIRLINES ANDAIRTRAN 3
“fun airline” such as Southwest may cause concern if you were just about any other employee,
executive, or human resource professional at any other airline. Where human resources can help,
is to proactively engage leaders to prompt them before culture clashes happen, and to provide the
same “vision” of the HR desired end-state, while assessing the culture of AirTran prior to any
merger (Marks & Mirvis, p. 874, para. 2).
Merger: Strengths, Weaknesses, Opportunities, and Threats (Both airlines)
Strengths
 Great climate/culture for employees.
 Dedication of employees (less than 5% turnover).
 Strong employee grievance procedures.
 Training and leadership development.
 Perks (free travel), benefits (profit sharing).
Weaknesses (challenges)
 Communicating the cultural, espoused value message to new AirTran employees.
 History of grievance resolved, but untimely.
Opportunities
 Increase labor relations communications for positive outcomes.
 Demonstrate to all employees the value of the merger.
 Reassure AirTran employee’s equal access to all Southwest employment opportunities.
 Engage AirTran employees in a comprehensive, timely review, of all compensation and
benefit concerns (seniority, vacation, salary, benefits/rewards).
Threats (HR related)
 Collective bargaining of union contracts of similar nature.
 Gauge/observe behaviors, and decisions made of senior Southwest managers transferred
to AirTran in promotion opportunities, for bias, adverse impact, and diversity.

5. MERGER: SOUTHWEST AIRLINES ANDAIRTRAN 4
Results of SWOT Analysis
Southwest and AirTran have engaged in low-cost airline segments in different regions of
the country, with few overlapping routes. The reason Southwest purchased AirTran is to secure
those unrealized opportunities into new routes (25%) and International markets. Both companies
are well run with Southwest having an edge on the overall favorable view of the climate, culture,
and people they work with. Glassdoor.com reports employees rated Southwest of 4.1 and
AirTran 3.3 on a scale of 1-5 (AirTran, 2014). The employee feedback on review of 500
employees, Glassdoor data found that employees of both companies highlighted benefits, and
“free flying” perks. Equally, both groups also stated wages and hours sometimes negligible
(AirTran).
The results indicate that non-union employees are paid much less, but usually are
customer service and support positions, and not union related pilot, flight attendant, or machinist
positions that typically are higher paying union positions.
The implications to human resources in aligning local and international employees will
be to focus on short-term retention during the merger, reducing any turnover. Communicate to
both sides through the intranet, group meetings, and union meetings the positive growth this
merger will have for both airlines. Engage the leadership on the importance of using the new
routes into international territories to exploit the opportunity in recruiting a diverse workforce
that aligns itself to the new locations served. Southwest especially has been successful on its
short-trip routes in the U.S. and traditionally has not flown into international territories. Human
resources will need to assess the demographic make-up of current employees that have been
flying on international routes.

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International Expansion: Recruiting and Problems
Southwest will encounter several important human resource issues when expanding into
international territories. Some human resource issues for addressing local, and international
expansion are:
 Compliance with international law.
 Cultural diversity, affirmative action programs.
 Benefits and compensation promoting a work/life balance.
 Training and development.
 Pensions, profit-sharing.
 Overcoming language cultural, and language barriers in recruiting.
 An understanding of the culture related to time, conflicts in negotiations, and
contract agreements in collective bargaining (EU for example).
(Bradley, 2014)
The resulting issues for international expansion would be very complex, and Southwest
would run into mandated international laws that U.S. companies do not mandate. Such as on-site
childcare, paternity leave, flexible hours, extended holidays, etc. which are “normal” for EU
countries. How to manage employees, social norms, and language classes would be other barriers
to overcome are just some of the HR issues facing expansion internationally (Bradley).
Training and Development
Human resource opportunities for training and development will focus on the integration
of AirTran employees into the culture of Southwest, at least for the first twelve-months. During
this time assessments will be carried out of any collective bargaining rules, along with reviewing

7. MERGER: SOUTHWEST AIRLINES ANDAIRTRAN 6
job descriptions, and which segment each “new” employee falls into. For example, Pilot’s
Association, Flight Attendant’s Association, or customer service. Through consulting with
current AirTran executives in HR, practices of diversification and how employee reviews are
carried out, including promotional opportunities and the review of grievances filed with the
union specifically based on any discrimination claims from the past.
Webinars, or group meetings of each segment will be carried out to inform all AirTran
employees of equal opportunity, not only in hiring, but of opportunities internally upon
reviewing an employee’s qualifications. Southwest operates a training facility for new
employees, and leadership opportunities. One training module, face-to-face training, provides
coaching and development opportunities for new employees, and the enhanced leadership
module has several steps to promote internal candidates to executive positions (Bryant, E.,
2007).
Upon integrating AirTran employees, beyond learning the internal systems of Southwest,
and adjusting to the culture of Southwest, they will be treated equal to any Southwest employee.
Southwest will honor any union contracts for seniority and any promise of training opportunities
presented before the merger occurred, which will be reviewed on a case-by-case basis.
HR Metrics
In some respects HR metrics, especially when measuring time, are superior (in being
effective) to the culture of an organization. Metrics can make an impact faster than changing
organizational culture. A few HR metrics to consider would be:
 Retention during the merger
 Productivity before, during, and after the merger

8. MERGER: SOUTHWEST AIRLINES ANDAIRTRAN 7
 Training outcomes of merged employees once training is completed
 Employee relations, compliance, and EEO requirements (Bryant).
HR has many measurable areas, but focusing on a few high-impact metrics like productivity,
retention, and employee satisfaction can prove to the CFO that other functions of HR are also
running well (Social, 2012).
Conclusion
Strategically we have learned that HR is important when aligning recruiting,
compensation, culture, and areas including rewards to shape behaviors for motivation,
productivity, and training. We have also seen how unions can impact organizations, sometimes
to benefit the organization through consistency in labor talent and productivity, and other times
causing challenges that create barriers to overcome. Ultimately, in this case, the success over
thirty-years in a tough competitive segment would lead me to believe Southwest Airlines is
committed to the long-term vision of assimilating AirTran into their culture across all
boundaries.
The resources of both organizations need to focus on assimilating into one organization.
This is not only a test case for Southwest running operations extending to “local international”
countries, but Southwest may look to Alaska and Hawaii next. At this point expanding beyond
these points would be a complex challenge sapping resources otherwise better used locally. The
future of this merger will certainly enhance the global footprint of Southwest Airlines and
continue to provide a great culture, and a “Fun-LUVing” place to work.

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References
AirTran Reviews. (n.d.). AirTran Holdings. Retrieved from Glassdoor:
http://www.glassdoor.com/Reviews/AirTran-Holdings-Reviews-E3640.htm
Bradley, J. (2014). International HR Issues. Retrieved from Chron Small Business:
http://smallbusiness.chron.com/international-hr-issues-61937.htm
Bryant, E. (2007). Leadership Southwest Style. Training and Development, 61(12), 36-39.
Retrieved December 11, 2014, from
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b=f5h&AN=27746434&site=eds-live&scope=site
Federal Trade Commission. (n.d.). Anticompetitive Practices. Retrieved from Federal Trade
Commission: http://www.ftc.gov/enforcement/anticompetitive-practices
Mankins, M. (2013). The Defining Elements: Winning Culture. Harvard Business Review.
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Marks, M., & Mirvis, P. (2011). A Framework for the Human Role in Managing Culture During
Mergers and Acquisitions. Human Resource Management, 50(6), 859-877.
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http://aviationblog.dallasnews.com/2011/11/southwest-airlines-airtran-pil.html/

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