Swa Pay Cuts A Coming?

[luvthe9]

If UAL and USAir would just shut down already, WN and other airlines won't have to keep coming back to the employees for concessions.

I will work for half of what SWA pilot makes if that what it takes to survive. You should count on paycuts SOON. 197 vs 124. Enjoy the good pay while you can it does not last for ever. We have been down that road.

 

[ELP_WN_Psgr]

I have no clue as to whether or not Southwest will come after pay concessions.

I do know that their management has managed to avoid it thus far by squeezing the company for every drop of efficiency it can.....streamlined operations, one fleet type, decent work rules, good utilization of equipment, personnel, and airport facilities.

If the bankruptcy courts and engine manufacturers of this world continue to fund dying carriers, I guess i could see as how it might be necessary.

One thing I think Southwest employees can count on, however, is if it comes to that...it won't be a management vs labor thing. You will see Gary Kelly and everyone up at the head shed having their paychecks chopped and none of them will be handed bonuses for having cut the salaries of their employees.

That's what makes them different.

 

[TheDog2004]

Gary Kelly was made CEO for a reason, and it wasn't because of great employee relations. He's a financial guy and a bean counter.

Y'all can figure the rest out from there.

I happen to have a source on this that's pretty dang good (out of sheer luck).

BTW the ATA codeshare is an extremely bad move. Southwest should bail on it now.

 

[KCFlyer]

WHAT!!!! They come into a market and charge 1/3 of the previous fare and you only get a 65% LF??? There must be fewer and fewer repeat customers if load factors don't climb dramatically when you only charge $39. I thought WN priced it's seats to stimulate a market. Wasn't that the whole premise behind the so-called "Southwest effect"?

[post="266950"][/post]​

A little snippet for you from the latest annual reports:

Delta load factor 74.7% - net loss $5 billion
NOrthwest load factor - 80.2% - net loss $862 million
Continental load factor - 77.6% - net loss $363 million
American load factor - 74.8% - net loss $761 million
United load factor - 79.2% net loss - $1.7 billion
USAirways load factor - 73.5% net loss $611 million

Southwest load factor 69.5% net profit $313 million

Apparently enough markets are being stimulated to result in a profit.

 

[ELP_WN_Psgr]

Gary Kelly was made CEO for a reason, and it wasn't because of great employee relations. He's a financial guy and a bean counter.

Personally, I think the thing has come full circle.

The very first President/CEO of Southwest Airlines Co was a financial guy and bean counter. A pretty good one, too.

In fact, I can make a really good argument that the fundamentals that has made Southwest successful for so many years were all put into place by that very first President/CEO and that all Putnam and Kelleher did were hold the thing together and not upset the apple cart.

So, the truth be known, sometimes having a bean counter in charge is a really good thing. I'd say it is much wiser to put your airline in the hands of a finance guy than to risk having a marketing guy or a pilot running the thing.

The company has gotten pretty big. Four hundred and some odd airplanes is a really big airline. It's not too big to grow it some more.

Stagnation is dangerous. Growth is prosperity. What the employees really ought to do is encourage the airline to grow more and grow faster.

Want to avoid wage concessions? Grandfather existing employees in, allow a "B" scale for new hires, and give the company a whole lot of incentive to double the size of the company.

Growth like that reduces the unit cost, makes the stock go up, which means the profit sharing is worth more, and everyone is happy except maybe the newest hires....but they can be placated by a gradual increase to regular scale over a 5 to 7 yr period.

 

[hobbes]

"Gary Kelly was made CEO for a reason, and it wasn't because of great employee relations."

I think a large part of why Gary Kelly was made CEO was to help get our costs under control. Herb and the BOD aren't dummies. They saw the trend with other airlines slashing their costs through concessions and layoffs, and they knew that the needed to bring on the guy with a strong financial background. Being a bean counter doesn't equate to concessions and layoffs. In fact, mass layoffs generally come because an airline is shrinking its operations. Trust me...Southwest isn't shrinking.
And actually, Gary does have a pretty good relationship with our Employees. I've been told that the pilots in particular are quite fond of him. He's no Herb, but who could be? And Kelly has far more charisma than Parker. I personally think he was an excellent choice for CEO. I think the employee relations will continue to develop positively over time.

And remember, it was Gary Kelly who had the forsight to put into place the fuel hedging, even before 9/11. People love to say, "If it weren't for your hedging..." as though it was sheer luck. Bull. You have to have money to be able to hedge. We planned in the good times for the inevitable tough times ahead. And it paid off. Kudos to Kelly.

"I happen to have a source on this that's pretty dang good (out of sheer luck). "

I bet my source is better than yours.

"BTW the ATA codeshare is an extremely bad move. Southwest should bail on it now."

Oops...better check your numbers on that one. Last I heard, the ATA codeshare has already met expectations for generating revenue. In fact, there's now speculation that it will actually exceed expectations.

 

[luvthe9]

A little snippet for you from the latest annual reports:

Delta load factor 74.7% - net loss $5 billion
NOrthwest load factor - 80.2% - net loss $862 million
Continental load factor - 77.6% - net loss $363 million
American load factor - 74.8% - net loss $761 million
United load factor - 79.2% net loss - $1.7 billion
USAirways load factor - 73.5% net loss $611 million

Southwest load factor 69.5% net profit $313 million

Apparently enough markets are being stimulated to result in a profit.

[post="266987"][/post]​

You boys are in trouble when your fuel hedge is up!!!!!!!!

 

[SWAFA30]

You boys are in trouble when your fuel hedge is up!!!!!!!!

[post="267158"][/post]​

Fair enough, meet you back here when the hedges run out in 2010 and we'll see how it all turned out.

The following is excerpted from the press releasing announceing Southwest Financial Results for the First Quarter of 2005:

"DALLAS, April 14 /PRNewswire-FirstCall/ -- Southwest Airlines (NYSE: LUV) today reported first quarter 2005 net income of $76 million, or $.09 per diluted share, compared to $26 million for first quarter 2004, or $.03 per diluted share. These first quarter 2005 results compare favorably to the First Call mean estimate of $.05 per diluted share.

Gary C. Kelly, CEO, stated: "Considering the many challenges our industry continues to face, we are grateful to report first quarter 2005 earnings of $76 million. Our rigorous focus on cost reduction and successful fuel hedging program shielded us from record high energy prices and enabled us to report our 56th consecutive quarter of profitability. For first quarter 2005, we were 86 percent hedged, which reduced fuel and oil expense by $155 million. In addition, we recorded $27 million in "other gains" in accordance with Statement of Financial Accounting Standard No. 133 (SFAS 133), 'Accounting for Derivative Instruments and Hedging Activities.'

"We are 83 percent hedged for second quarter 2005 with crude oil prices capped at $26 per barrel. Based on current market conditions, we expect our jet fuel costs per gallon for second quarter 2005 to exceed first quarter 2005's 90.3 cents. We remain 85 percent hedged for second half 2005 at $26 per barrel; 65 percent in 2006 at $32 per barrel; over 45 percent in 2007 at $31 per barrel; 30 percent in 2008 at $33 per barrel; and over 25 percent in 2009 at $35 per barrel.

 

[ELP_WN_Psgr]

You boys are in trouble when your fuel hedge is up!!!!

What you fail to understand....the fuel hedges are never "up".

Even as we speak Southwest has folks negotiating fuel hedges for 2009 and beyond.

Care must be taken, however, to avoid hedging fuel at a price for 2009 and then we see a big drop in fuel prices.

I think that, right now, about 35% of 2009 fuel is hedged at something around $32 a bbl.

When Southwest determines what sort of fuel price they expect to see in 2009.....then they can expose themselves to additional hedges.

Besides, right now, Southwest employees are among if not the best paid airline employees in the country.

If management had to come to the employees for wage concessions, it would be the first time.

Over at every other carrier.....management has run back and forth to the well multiple times to get wage concessions from employees. That well is about to run dry.

So right now, Southwest's labor costs relative to other carriers is probably as bad as it can possibly get, and they still have a decided cost advantage over everyone else.

Southwest has some breathing room or wiggle room or whatever you want to call it. Everyone else is just up the creek.

 

[sfb]

I will work for half of what SWA pilot makes if that what it takes to survive.

I bet management loves you! Of course, your scheduling would have to come closer to the productivity of WN's for this to matter... I'm sure it won't bother you when your upper management takes seven-figure bonuses as their reward for "saving the company."

You should count on paycuts SOON. 197 vs 124. Enjoy the good pay while you can it does not last for ever. We have been down that road.

The pay doesn't last forever if the productivity isn't there to go along with it. Average pay per employee at WN last quarter was about 2.5% higher than at US. However, each WN employee on average produced 17% more ASM's.

 

[WNjetdoc]

You boys are in trouble when your fuel hedge is up!!!!!!!!

[post="267158"][/post]​

Im 'skeerd.

 

[luvthe9]

However, each WN employee on average produced 17% more ASM's.

[post="267199"][/post]​

[/quote]
I can't speak for all the employee groups but I know the U pilots are more productive. They have us at around 95 to 105hrs. per month. The 5 over 100 are credit time. I'd love to go back to 85, 20 days is to much.

 

[ELP_WN_Psgr]

I can't speak for all the employee groups but I know the U pilots are more productive. They have us at around 95 to 105hrs. per month. The 5 over 100 are credit time. I'd love to go back to 85, 20 days is to much.

You know, I'd be real interested in seeing some sort of concrete evidence about the USAirways pilot productivity other than your anecdotal evidence.

Here's my take on it -

If your company pays its employees like Wendy's pays their's, works the pilots 100 hrs a month, rejects all sorts of leases, stiffs any number of creditors, throws the pensions they promised out the window, outsources reservations to some country where English is not spoken all that well, has a 75-80% load factor, charges $450 one way for a 1 hr flight in markets where Southwest has not shown up (yet) and continues to lose money, I'd say you had a very significant problem.

 

[Bear96]

I can't speak for all the employee groups but I know the U pilots are more productive. They have us at around 95 to 105hrs. per month. The 5 over 100 are credit time.  I'd love to go back to 85, 20 days is to much.

[post="267326"][/post]​

When you are talking about productivity for an entire work group, the generally accepted way to do it (so apples are being compared to apples) is not to look at one statistic, like how much some pilots fly per month (or how much $ per flight hour is paid on certain equipment at a certain point in the pay scale). Rather, you'd really need to see the total number of block hours flown systemwide for a certain period divided by the total number of pilots to see how many hours are actually "worked" per pilot on a systemwide average basis. That takes into account differences between carriers in terms of sick leave and vacation policies, training, scheduling inefficiencies, etc.

Anyone have those numbers? I don't but I would bet WN comes out ahead of U when looking at the full picture like that.

 

[luvthe9]

If UAL and USAir would just shut down already, WN and other airlines won't have to keep coming back to the employees for concessions.

But if those bankrupt airlines continue to depress domestic yields, every airline is gonna have to continue to slash costs, and pay cuts for everyone will be inevitable.

[post="266524"][/post]​

You got to be kidding SWA has been the cancer of the industry for years, driving down prices, salaries and working conditions. Steve Wolf hit the nail on the head predicting the SWA presence in the east!!!!!!!