Eastern Continental | Usairways Virginusa ?

[mweiss]

Crazy,

You are absolutely right. One of the things that ends up being a major problem is the contract structure. When things start to get good, the old contract is still in place, so wages can't rise with the better times. When things get bad, the only recourse an airline has is to furlough or get concessions. This is a big part of why things seem to always get worse and not better.

 

[deltawatch]

Back on the topic, can anyone explain what Branson is up to?

UPDATE - Virgin Atlantic to expand fleet, staff and routes
Tuesday March 23, 8:06 pm ET
By Daniel Morrissey


LONDON, March 24 (Reuters) - NO-FRILLS IN THE USA

Branson also plans to start up a low-cost airline in the United States and will begin talks with Boeing and Airbus next week for an order of up to 35 A320s or Boeing 737s.

He said the as-yet-unnamed U.S. no-frills carrier, which will have airline industry veteran Frederick Reid as its chief executive from early April, was expected to begin services early next year but he was hopeful it could start earlier than that.

Branson, who will only have a 49 percent interest in the U.S. start-up because of foreign ownership restrictions, said Virgin was also talking to regional jet makers Embraer (Sao Paolo:EMBR4.SA - News) and Bombardier (Toronto:BBDb.TO - News) about an additional 20 planes for short-distance flights.

He said the Virgin Group was in talks with an unnamed U.S. airline about acquiring some slots in the United States and could be interested in some assets at U.S. Airways (NasdaqNM:UAIR - News).

"If something happened there (with U.S. Airways) we might well find they become partners instead of us having equity partners. There also might be some equity partners but they (U.S. Airways) would become a major shareholder in the company," he said.

 

[BoeingBoy]

mweiss,

You are right - when times turn good, the contracts entail a delay before a better contract can be negotiated. While it IS this way, it doesn't have to be. As you've seen, management has no qualms calling for opening the contracts for change when times are bad, but will entertain no such thoughts when times are good - then it becomes "a contract is a contract".

And in the real world, why should they. Once the contract is signed, labor has very little leverage over management, but management can have plenty of leverage over the employees, as you've seen. Just one reason for employees to take a long hard look at what you're agreeing to before signing on the dotted line.

Jim

 

[mweiss]

Jim,

I was talking about this very issue with one of my profs. He's trying to figure out if it's possible to structure a contract such that it is able to change with changing market conditions. If he does, it could prove to be revolutionary to the industry. I pointed out to him, however, that unions are likely to resist such a change because it reduces their raison d'etre.

FWIW, this is the guy who literally wrote the book on how to sustain competitive advantages in a changing marketplace. He's a mighty sharp guy.