Dave''s Fuzzy Math

[Pacemaker]

Last week Dave made the public statement that if he had the cost structure of low-cost airlines we would be profitable, and Jet Blue pays their employees half of what US Airways pays.
These remarks have created a groundswell of outrage and opposition and a close and honest look at the data is needed.
One of US Airways' pilots undertook a study of public data and made the discovery that US Airways employee cost structure has improved to the point that our employee costs as a percentage of total costs are now lower than Southwest by a margin of 39.2% to 38.8%. For a hub & spoke carrier with all its inherent inneficiencies this is truly remarkable when compared with a carrier with Southwest's cost structure.
When presented with this data Dave's response was The data is not correct. Our employee costs are about 50% of our revenue
versus 35% for Southwest, JetBlue, AirTran and America West. That is our
problem.
First of all it needs to be emphazied that this data came right out of US Airways' public SEC filings yet Dave says the data is incorrect! Second you need to understand the subversive and disingenuous nature of Dave's math - he slyly switches gears and compares costs to revenues yet some simple calculations will show that if US Airways paid all employees $7/hr. and then revenues dropped to zero then employee costs as a percentage of revenues would climb to 100% and infinity. Thus Dave unwittingly reinforces the growing contention that US Airways core problem is revenue and no amount of further employee concessions is going to solve our problems.

 

[autofixer]

PineyBob, U's upper middle management is uable to adapt and come up with new ideas. Most have their positions due to nepotism. If it requires new thinking and inovation, they are unable and/or unwilling to do it! They are used to the way it was, when U had no competition in its markets. A former CEO stated, If we offer a good product, we do not need to advertise. Dave did not remove these people after he came on board. This signaled to me that he did not intend to run the airline as an independent entity; contrary to stated goals. What may seem obvious to you, is blinded to the U management team by the past and their unqualifications.

 

[Rob]

Using the just-filed SEC 10Q report, one of US Airways' pilots would seem to be correct. Personnel expense was $748 million (38.69%) out of $1933 million total expense. One of Siegel's possible justifications for a higher percentage is the other expenses figure $464 million - some of that could be personnel-related; another possible out is accrued but unpaid pension liabilities.

This brings up the uncomfortable subject of shedding pension liabilities in discharge of bankruptcy. Is Chap 7 necessary to do that?