Required Reading

[BoeingBoy]

mweiss,

I agree with you - both on how unions get played and your intrepretation of Piney's comments.

As for union's getting played, you need look no further than LOA 91 and ALPA. The supporters claimed there were no concessions contained in it (there weren't for us non-furloughed folks) and it was necessary for the airline's survival (job security for the same group of us). The primary argument by most of those against it was not that it could adversely affect the furloughed pilots, but that those of us still here weren't getting enough returns (any?) for granting the relief the company sought. Of course, we all know how that vote turned out.

The problem I see for the IAM is this: My guess (and that's all it is) is that the company's wish list for them will see 60% or more feel a lot of pain so that 40% or less will feel only a little pain. That's how not to play a union.

Jim

 

[tug_slug]

Amen and Praise the Lord, the sooner the better.

Lets just hope its sooner.

 

[USA320Pilot]

BoeingBoy:

BoeingBoy said: “Pure and simple, Southwest has a business model that makes productive use of ALL assets - labor and non-labor. Hence their low cost per ASM in both catagories. US, on the other hand, has a business model that uses all assets - both labor and non-labor - inefficiently, and the effects of the inefficient business model were magnified by 25% shrinkage in the post-911 environment. Hence our high cost per ASM in both catagories. Management has been trying to increase efficiency by "doing more with less people" since 911 - how many of the people that have left since then have been replaced (not counting upper management). We carry more passengers further and produce more ASM's than when we emerged from bankruptcy. The result of this means of being efficient - basically nil, since our CASM is pretty much the same.â€￾

USA320Pilot comments: The article that started this topic was well written I agree with your comments above. The company is trying to change and reinvent itself. Consolidating training facilities, consolidating reservation facilities, implementing new IT systems, and the transformation plan are all examples of maximizing productivity of “ALL assets - labor and non-labor.â€￾

I believe Bruce Lakefield is an honest man and there are many aspects of the new business plan that make sense that can dramatically lower unit costs. However, all aspects of the business must be competitive and that includes labor. Therefore, the company must obtain Southwest like productivity or the company will likely cease to exist.

Respectfully,

USA320Pilot

 

[DCAflyer]

USA320Pilot said: I believe Bruce Lakefield is an honest man and there are many aspects of the new business plan that make sense that can dramatically lower unit costs.

DCAflyer replies: I seem to remember you saying the same thing about Dave S.


USA320Pilot said: ... all aspects of the business must be competitive and that includes labor. Therefore, the company must obtain Southwest like productivity or the company will likely cease to exist.

DCAflyer replies: That is true. But for that we need a level playing field, to wit, a junior workforce. That is the only way, as I see it, to make Bruce's numbers work.

Respectfully,

DCAflyer

 

[PITbull]

USA320,

What do you say about the RJs and the effect they have on U's CASMs? If the goal is to reduce the CASM, but include RJs in the business plan, the only way is to unrealistically reduce all costs, and substantially with labor subsidizing such a rediculous plan.


The RJ part of the business plan that can not be undone. The reality is managment is behind the 8ball with the RJ orders, and I mean too many. To walk away from them would be too much of a penalty. Therefore, we are stuck with them and their effects on our overall CASM.

I already know Lakefields take on it, how about yours?

PS: And DCFlyer, they are NOT Bruce's numbers; they are Siegel's...its his plan.

 

[PITbull]

The problem I see for the IAM is this: My guess (and that's all it is) is that the company's wish list for them will see 60% or more feel a lot of pain so that 40% or less will feel only a little pain. That's how not to play a union.

Jim

Jim,

That sentiment is for all the labor groups.

 

[BoeingBoy]

Well, as I've said before, this ain't rocket science. Short of management being able to dictate the terms of contracts, seeking lower costs thru labor concessions is a time consuming business - how long has it been since Siegel started talking about needing more concessions? There has not been $1 in concessions granted to this point.

Lacking the ability to dictate terms, the most "bang for the buck" comes from increased aircraft utilization. The incremental cost of the "new" ASM's is slightly less than half that of the "old" ASM's - below that mythical 6 cent figure Siegel said he wanted. Letting valuable time slip by because of an insistance that the "new" flying be done with existing crews is a waste of not only valuable time, but the aircraft as well.

The next biggest "bang for the buck" is additional mainline airplanes. Assuming A320's of the age of our current type average, the "new" ASM's could again cost under half that of our current ASM's even though there would be the cost of acquisition (presumably lease costs). Unfortunately, this option is made somewhat difficult by having pretty much all available financing tied up in RJ orders.

Jim

 

[USA320Pilot]

PITBull & BoeingBoy:

Pitbull, I agree with your comments on RJs, especially with the new business model focusing on high revenue O&D markets, the three big East Coast focus cities, and quick turn point-to-point flying.

BoeingBoy is correct in regard to increasing the current aircraft utilization rate and adding airplanes to lower CASM, both of which will have the greatest impact on averaging down unit costs.

In my opinion, it's the productivity of all assets, non-labor and labor that's the key to success. In the short-term, to comply with the loan guarantee covenants, labor cuts will likely be necessary to meet the cash flow, unrestricted cash, and EBITDAR requirements. However, once the company turns a profit I believe employees must have meaningful returns for their continued sacrifices.

Respectfully,

USA320Pilot

 

[PITbull]

USA320,

I'm looking for more of "snap backs" then returns, my friend.

Don't trust the stock or the manipulation of any "profit sharing".

So far the latter two didn't pan out for any labor group...specifically speaking to the $1.2 billion cost savings in the hands of management, and no returns on any investment, and only created uch pain for 45% of our employee ranks out on the street.

 

[mweiss]

Don't trust the stock or the manipulation of any "profit sharing".

Then why trust the manipulation of snapbacks?

 

[BoeingBoy]

I assume that by "snapbacks" PitBull means a contract provision requiring a specific wage increase at a specific point in time (that's the usual meaning). A little harder to "manipulate" than stock price or profits - as long as the language doesn't contain qualifiers (i.e., "financial conditions permitting" or the like.

Jim

 

[mweiss]

I was always under the impression that there were financial qualifiers. If not, it's really kind of silly to have them now. The industry isn't in a temporary condition; it's a wholesale shift.

 

[jack mama]

We still haven't gotten down to the beef of all of this. Saying Southwest has the highest paid labor group is misleading....it would be better to compare job function by job function. The reporting and categorizing of labor expenses doesn't show the big picture of total cost, burden rate, etc.

plant mtc, cleaners, rampers, utility, gse, gate agents, res, etc....I don't know how they compare, but it seems like Southwest has less people getting paid more to do highly skilled jobs, and more people getting paid less to do lower skill set jobs.

That is what the highly skilled unions need to realize. If you want to get paid more for highly skilled work, then you have to allow the other areas go back down to market levels.

 

[delldude]

We still haven't gotten down to the beef of all of this. Saying Southwest has the highest paid labor group is misleading....it would be better to compare job function by job function. The reporting and categorizing of labor expenses doesn't show the big picture of total cost, burden rate, etc.

plant mtc, cleaners, rampers, utility, gse, gate agents, res, etc....I don't know how they compare, but it seems like Southwest has less people getting paid more to do highly skilled jobs, and more people getting paid less to do lower skill set jobs.

That is what the highly skilled unions need to realize. If you want to get paid more for highly skilled work, then you have to allow the other areas go back down to market levels.

well said,and some will loudly disagree.

 

[Beef or Chicken]

Suggestion to Management:

Offer more Voluntary Leaves for F/a's..!!

While some of the more senior people take a couple of years off from flying, the more junior b-scalers can come back to work and you're saving $$$ on the payroll expense.