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bluWave Airlines to Outsource Maintenance; Layoff Mechanics

Denver, CO — Later this afternoon, executives from bluWave Airlines and ST Aerospace are expected to give a press release on the outsourcing of the low-cost carrier’s maintenance, repairs, and overhauls (MRO) with the Singapore-based firm [ST Aerospace] in San Antonio, TX. The airline hasn’t kept quiet the fact that its service agreements with Boeing are set to expire near the end of 2013, and it doesn’t come as a surprise that a company like ST Aerospace would jump on this opportunity.

Although it is unclear which specific product the airline is interested in, sources say that the airline will be laying off a “decent chunk” of mechanics by the end of the year, eluding to a classic labor-management “fire-pit” scenario in Henderson, NV–the airline’s headquarters.

“We never know what [the executives] are up to,” Hank Finley, chief mechanic at the airline’s maintenance facility in Las Vegas told reporters. “But they earned our loyalty when they managed to bring us out of bankruptcy without laying off any of my guys here at McCarran [in 2011].”

bluWave filed voluntary petitions for Chapter 11 bankruptcy with the U.S. Bankruptcy Court for the District of Nevada in January 2011 and managed to get back into the market within a year. However, despite a short turnaround, promising earnings, and steadily increasing performance, the company has failed to show any signs of significant expansion post the addition of San Antonio and Austin to the firm’s route structure in July. A source close to the airline’s management team in Henderson told us that in each board meeting–consisting of the airline’s half-dozen investors; Connor Levens, President and CEO; and Johnathon Neilsen, COO–one side of the room wants to push for further expansion, while the other side wants to remain conservative and keep the company’s money in one spot.

“You can’t operate a company that way,” the source, who asked to remain anonymous, told us. “Leadership needs to have one overall goal with one main viewpoint. They [can't] be two and the same.”

Whether or not signing ST Aerospace as the airline’s sole MRO provider falls into the “expansion” category or the “conservative” category is another story, but the source says the rumors have had off-domicile mechanics squirming. However, outsourcing this operation isn’t uncommon to most airlines. Almost every legacy carrier in the business outsources at least a fraction of their MRO, while low-cost carrier jetBlue Airways [NASDAQ: JBLU] outsources the operation in its entirety.

There are many industry analysts that swear by this type of outsourcing, yet there are also many who say it has the capability of severely reducing employee morale. Earlier this week, it became official that American Airlines would be closing their Alliance maintenance base by the end of this year and that they’d be shipping the work overseas to Hong Kong. Such a change has the employees of American in angst, and is a result of “corporate greed,” the President of the Transportation Workers Union told NBC 5 reporters.

“If [bluWave] does go through with this contract, it will be interesting to see how they address the morale issue,” industry analyst Alex Barnes told us over the phone. “I’ve always thought highly of the firm, and what I’ve always loved most was how they treated their employees. But if they don’t handle the issue responsibly, they’ll end up with stir-fried labor contracts up the kazoo.”

bluWave Airlines Director of Human Resources Michael Shaw declined to comment on any rumors about the supposed layoffs in the airline’s maintenance department, as did COO Johnathon Neilsen about any rumors to outsource the company’s MRO operations.

NOTE: This document is fictional. There is no real-world corporation known as bluWave Airlines, Inc., nor does the corporation have any affiliation with and/or have entered into any contracts with ST Aerospace.

The full press release will be available via the bluWave Airlines Blog by 2:15pm PT later this afternoon.


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