Swa Expects To Maintain Low Cost Advantage

[ngneer]

Gary Kelly says that he expects SWA to maintain their low-cost advantage vis a vis the legacy carriers even though some are cutting costs through bankruptcy. He says his major concern is fuel prices, though he says SWA has "bought a lot of time" due to the fuel hedges. He also says they're working with pilots and FAs to further reduce costs.

Gary Kelly speaks.

 

[Bagbelt]

Jet Blue has lower costs than WN and they are ruuning out of steam. Where else are they going to save big money except by "talking to the pilots and flight attendants" ?

 

[Bagbelt]

After reading about what NW wants to do wih their f/a's; $28,000 a year! My God how can we afford that! We better see if the UN has any detention camps with people who want to work! It's hard to believe anyone anymore.

 

[corl737]

Jet Blue has lower costs than WN and they are ruuning out of steam. Where else are they going to save big money except by "talking to the pilots and flight attendants" ?

[post="303654"][/post]​

LONG HAUL!!!

Takeoffs are the most expensive part of a flight. The longer the flight, the lower the cost per available seat mile (CASM) as the expense of the takeoff can be offset by the cheap miles at altitude. Jet Blue's 1000+ mile stage length reflects their predominantly trans-continental/ NE to Florida route structure. SWA's flights, on the other hand, average less than 600 miles. In time, as SWA expands with more long haul, JB will similarly see saturation on their longest routes forcing them to go to shorter legs.

The question remains if JB can keep their CASM down flying shorter lengths with smaller aircraft while their maturing labor force demands increased compensation.

 

[SWAFA30]

Jet Blue has lower costs than WN and they are ruuning out of steam. Where else are they going to save big money except by "talking to the pilots and flight attendants" ?

[post="303654"][/post]​

B6 shares may not be in the stratosphere like they where awhile back. However, the company remains wildly popular...is a major player if not dominant in the NYC to Florida market, and still has a strong balance sheet. The first E190 is on the property and the industry is watching to see if they can successfully maintain the LCC model with a second fleet type. jetBlue is maturing and encountering the issues inherent to becoming a major...that being said..."running out of steam" is a bit of stretch.

As far as SWA "talking" to the Flight Attendants and Pilots. I can't speak for Flight Ops but, the Inflight contract was just ratified last year and is not ammendable until 2008. Management can "talk" all they want but, it would take a whole lot of red ink to get the union to open any negotiations...let alone concessionary talks.

 

[Bagbelt]

Good, someone needs to hold on. We'll need the pattern bargining strategy for the 2013 negotiations.

 

[hobbes]

B6 shares may not be in the stratosphere like they where awhile back. However, the company remains wildly popular...is a major player if not dominant in the NYC to Florida market, and still has a strong balance sheet. The first E190 is on the property and the industry is watching to see if they can successfully maintain the LCC model with a second fleet type. jetBlue is maturing and encountering the issues inherent to becoming a major...that being said..."running out of steam" is a bit of stretch.

As far as SWA "talking" to the Flight Attendants and Pilots. I can't speak for Flight Ops but, the Inflight contract was just ratified last year and is not ammendable until 2008. Management can "talk" all they want but, it would take a whole lot of red ink to get the union to open any negotiations...let alone concessionary talks.

[post="303824"][/post]​

I don't think Gary Kelly is looking at monetary concessions. Especially when you consider that the pilots just got a raise. Gotta love Southwest, where pay concessions and layoffs are genuinely considered the last option. Gary's looking at ways to get us to be more productive with all of our workgroups. I firmly believe that you can have the highest paid employees, as long as they are also the most productive employees.

Having said that, this company is looking at any and all possible ways to cut waste. That includes things such as more efficient scheduling, etc.

Trust me, even those at the LUV Shack are doing more with considerably less. Does it suck sometimes? You bet. But I firmly believe that we can either choose to be proactive about our costs now and give a little more in terms of our effort, or we can pay the price in the end in terms of monetary concessions and (eek!) layoffs. The downhill slide can start pretty fast...just ask the good folks at United.

Southwest is not an endless barrel of cash. Yes, we're doing well compared to the other airlines, but our fuel hedges are lower next year. Don't fool yourself into thinking we're immune, so management can just "talk" to the wind about finding ways to save money with our pilots and flight attendants. Not to sound pessimistic, but that type of attitude is what will get us walking right along with USAir, United, Delta, and Northwest.

 

[hobbes]

Here's some info (as I think somebody said that Southwest no longer has the lowest costs)...

This information is for adjusted stage length. This is SWA's 2004 information.

The CASM ex-fuel is the number we should really be looking at. Our fuel hedges have saved us considerably, but remember, we're hedged at a lower percentage (and a higher cost per barrel) for 2006.


SWA JetBlue AirTran
Labor 3.18 2.78 2.51
Fuel 1.30 1.91 2.08
All Other 3.29 3.95 3.97
TOTAL CASM 7.77 8.64 8.56
CASM Ex-Fuel 6.47 6.73 6.48

Just something to think about. I think jetBlue's costs will continue to rise, especially with them bringing the EMB190 on. I think the estimation I read is that would add a full cent to their CASM, in terms of training costs, maintenance stock, etc. Adding another fleet type has significant implications in several areas.

Airtran is where I would be concerned. They've really come along quite well over the last few years, emerging into a better brand, and I think they'll be our most powerful competition in the next few years.

JMHO

 

[SWAFA30]

Trust me, even those at the LUV Shack are doing more with considerably less. Does it suck sometimes? You bet. But I firmly believe that we can either choose to be proactive about our costs now and give a little more in terms of our effort, or we can pay the price in the end in terms of monetary concessions and (eek!) layoffs. The downhill slide can start pretty fast...just ask the good folks at United.

Doing more with less is one thing. Fundamental changes in work rules is a whole other ballgame.

Southwest is not an endless barrel of cash. Yes, we're doing well compared to the other airlines, but our fuel hedges are lower next year. Don't fool yourself into thinking we're immune, so management can just "talk" to the wind about finding ways to save money with our pilots and flight attendants. Not to sound pessimistic, but that type of attitude is what will get us walking right along with USAir, United, Delta, and Northwest.

[post="303881"][/post]​

None of us is sufficiently naive to think that the GO has the ability to print money. At least I'm not. However, it is more than a little disconcerting when talk of concessions starts getting bandied about before the red ink even begins to flow. Obviously, we must do everything we can as a company to maintain our low cost advantage. I just think it's interesting that Flight Ops and Inflight always seem to come up in the discussion before any of the other labor groups. Positive employee relations are one of the corner stones upon which this airline is built. The only way to preserve that is to make sure that if and when the time comes to reopen CBAs...everyone shares in the pain. Flight Ops, Inflight, CSA/Res, Ramp/Ops, Dispatch, Sim Techs, Mechanics, you name it... along with each and every management and or non union employee on the property all the way up to the top of the ladder needs to take the hit. Either we're all in this together or management will end up pitting one workgroup against the other. Do that and efficiency suffers, costs suffer and eventually the Customer suffers. That will take SWA down just as fast if not faster than $60bbl oil and dwindling fuel hedges.

 

[KCFlyer]

Doing more with less is one thing. Fundamental changes in work rules is a whole other ballgame.
None of us is sufficiently naive to think that the GO has the ability to print money. At least I'm not. However, it is more than a little disconcerting when talk of concessions starts getting bandied about before the red ink even begins to flow. Obviously, we must do everything we can as a company to maintain our low cost advantage. I just think it's interesting that Flight Ops and Inflight always seem to come up in the discussion before any of the other labor groups. Positive employee relations are one of the corner stones upon which this airline is built. The only way to preserve that is to make sure that if and when the time comes to reopen CBAs...everyone shares in the pain. Flight Ops, Inflight, CSA/Res, Ramp/Ops, Dispatch, Sim Techs, Mechanics, you name it... along with each and every management and or non union employee on the property all the way up to the top of the ladder needs to take the hit. Either we're all in this together or management will end up pitting one workgroup against the other. Do that and efficiency suffers, costs suffer and eventually the Customer suffers. That will take SWA down just as fast if not faster than $60bbl oil and dwindling fuel hedges.

[post="303914"][/post]​

SWAFA30...from what I've seen in this thread, the only ones who are talking concessions are employees of other airlines.

 

[hobbes]

Doing more with less is one thing. Fundamental changes in work rules is a whole other ballgame.
None of us is sufficiently naive to think that the GO has the ability to print money. At least I'm not. However, it is more than a little disconcerting when talk of concessions starts getting bandied about before the red ink even begins to flow. Obviously, we must do everything we can as a company to maintain our low cost advantage. I just think it's interesting that Flight Ops and Inflight always seem to come up in the discussion before any of the other labor groups. Positive employee relations are one of the corner stones upon which this airline is built. The only way to preserve that is to make sure that if and when the time comes to reopen CBAs...everyone shares in the pain. Flight Ops, Inflight, CSA/Res, Ramp/Ops, Dispatch, Sim Techs, Mechanics, you name it... along with each and every management and or non union employee on the property all the way up to the top of the ladder needs to take the hit. Either we're all in this together or management will end up pitting one workgroup against the other. Do that and efficiency suffers, costs suffer and eventually the Customer suffers. That will take SWA down just as fast if not faster than $60bbl oil and dwindling fuel hedges.

[post="303914"][/post]​

Totally agree with you on that one. And trust me when I say that ALL groups are being looked at right now...take a look at what's going on in Ground Operations out in PHX. They're really taking a look at how to improve our processes out there.

I'm not sure why the original poster mentioned only Flight Ops and Inflight. Maybe because those are the two workgroups he knows best. Or maybe it was one of the groups that Gary was specifically asked about when he made that quote. But the cost-cutting measures and intense focus on efficiency ARE being looked at in all workgroups, from Executives and down. You're right: we are all in this together. There's no intention of pitting one workgroup against another. Please have a little faith in your senior Leadership who has gotten us this far. Perhaps it's just that one workgroup isn't fully aware of what's happening within other workgroups to increase efficiency.

 

[Tanker]

All the other work groups are being looked at for more productivity, some have already done it. For example less Op Agents are needed with the new electonic weight and balance. They aren't being laid off, just new ones aren't being hired. The same thing with CSAs due to the kiosks and internet checkin. SWA is also combining Pilot and Inflight scheduling to make them more efficient and therefore productive. As to waiting for a sction 6 to change the work rules all it takes is a side letter. Bit it does take a side letter that the unions agree to, it just can't be imposed by the company.

 

[WNjetdoc]

B6 shares may not be in the stratosphere like they where awhile back. However, the company remains wildly popular...is a major player if not dominant in the NYC to Florida market, and still has a strong balance sheet.  The first E190 is on the property and the industry is watching to see if they can successfully maintain the LCC model with a second fleet type.  jetBlue is maturing and encountering the issues inherent  to becoming a major...that being said..."running out of steam" is a bit of stretch. 

As far as SWA "talking" to the Flight Attendants and Pilots.  I can't speak for Flight Ops but, the Inflight contract was just ratified last year and is not ammendable until 2008. Management can "talk" all they want but, it would take a whole lot of red ink to get the union to open any negotiations...let alone concessionary talks.

[post="303824"][/post]​

I didn't see where Gary mentioned the word "concessionary". He talked about productivity, however I did wonder why he mentioned that we are in talks with the pilots and will soon be with the f/a's and not talking about EVERYONE in the company.

I know we all will share in the burden of keeping our company profitable while keeping it a great/fun place to work. We have to stay on top of costs and expand our product when opportunities exist, which one would think should happen soon.

As long as the company keeps an honest and open dialogue with the different employee groups we should ALL be able to keep our product top notch and profitable.

 

[wnbubbleboy]

I didn't see where Gary mentioned the word "concessionary". He talked about productivity, however I did wonder why he mentioned that we are in talks with the pilots and will soon be with the f/a's and not talking about EVERYONE in the company.

I know we all will share in the burden of keeping our company profitable while keeping it a great/fun place to work. We have to stay on top of costs and expand our product when opportunities exist, which one would think should happen soon.

As long as the company keeps an honest and open dialogue with the different employee groups we should ALL be able to keep our product top notch and profitable.

[post="304342"][/post]​

I agree. NO employee group should consider them self first. That's the beginning of the end. All of us have our missions to make it successful.

If your name is not on Spirit One you need to listen to those who are. We have seen the company change but if bring the me first attitude or brand X attitude here we WILL fail, rotting from the inside out.

 

[bwipilot]

I didn't see where Gary mentioned the word "concessionary". He talked about productivity, however I did wonder why he mentioned that we are in talks with the pilots and will soon be with the f/a's and not talking about EVERYONE in the company.

[post="304342"][/post]​

Reservations has been made more productive via the computer and reassignments/early retirements.

The GO has been downsized.

Mechanics are pretty lean--most overhaul work outsourced.

SW ramp works the hardest in the industry--by far. Same goes for ops agents. Cutting overtime and decreasing errors about the only way to save money.

CSA's positions have been reduced via electronic ticketing/combined gate areas.

The pilots and FAs are pretty much the only groups with work rules creating inefficiencies: VJA at the beginning of the month, dumping trips into open time, monthly and vacation overlap, 14% sick rates, to name a few. These are the low hanging fruit the company is targeting.

There isn't too much other fat left to cut. SW is almost down to 70 employees per aircraft. Our fat has been targeted--the outcome is to be determined--and won't be smooth.