Trouble Ahead

[JS]

The cancer analogy is perfect. Unions are a cancer, and the only question is how fast does it grow, killing the business. Unlike a parasite, the union/cancer dies along with its host -- not too smart!

Southwest's cancer was unusually slow-growing (going on 30 years), slow enough to the point where people said "Well, Southwest has unions and they make a profit!".

Looks like the party is over; it's metastasized.

 

[SWAFA30]

SWA may need an aspirin and a good nights sleep but she's a long way from life support.

The rest of the unions are pretty content for the time being and Herb stepping into the picture puts a whole new spin on the flight attendant negotiations. The concept that the business model is bigger than the unions has been kicked around on this board before with lots of lively discussion ensuing. Setting aside the current unpleasantness, the WN management teams past and present are the very best at what they do and that is ferociously watching the bottom line. It has been pointed out to me and I tend to agree that my or any union whose demands pose a clear and present danger to SWA's low-cost advantage will be handed their walking papers.

I don't think Herb coming to table means the company is any more willing to pay the flight attendant group more per se...if anything it is a realization that sometimes it not so much what is said...as who is saying it. That being said I don't think Herb is any less ready and willing to tell us where to go than Jim...he will just be nicer when he says it. SWA is financially sound....management as always is in overdrive making sure it remains that way.

Of course even if the worst happened and SWA went into the red...that would not necessarily mean SWA were headed for oblivion. Taking up the "party" analogy. If failing to turn a profit means the party is over....someone might want to break the news to a couple of the other U.S. majors...they have WAY overstayed their welcome. On an individual basis they are losing more than the Gross Domestic Product of some Third World Countries on a quarterly basis and save for one or two...they don't look to be goin anywhere anytime soon. This is one of the few industries where some companies can bleed red ink for years on end and keep right on keepin on. It'll take a whole lot more than a single labor skirmish to bring SWA down...she's not invincible but she's one hell of a fighter.

 

[mweiss]

If WN posts a loss, even once, the company is heading for oblivion. Part of what makes the Southwest Mystique so powerful is the never-lose track record. Do not underestimate the psychological power of the 52 quarters of profits.

I, too, worked for a company that grew to somewhat ugly proportions during the 90s. It, too, was forced to hire some people that never would have been given the time of day during any other economic period. It, too, had a legendary culture that got diluted year over year. Believe me, I understand what it feels like to be disillusioned by those changes.

But part of WN's success is based on that very cult(ure). Lose it, and you lose WN's greatest asset. Why? Because without it, all of the logistical stuff associated with quick turns and the like go out the window. Without the culture, the attitude of "get the problem fixed now, and then we'll figure out how to prevent it later" will be replaced by "it's not my problem; that's why they pay the big bucks in Dallas."

I don't fly WN much, because I am not WN's target demographic. But I have tremendous respect for how well the company serves it's target demographic. Precious few other companies do as well at that task, but the ones that do always dominate oligopolistic markets.

 

[FWAAA]

SWA may need an aspirin and a good nights sleep but she's a long way from life support.

Of course even if the worst happened and SWA went into the red...that would not necessarily mean SWA were headed for oblivion. Taking up the "party" analogy. If failing to turn a profit means the party is over....someone might want to break the news to a couple of the other U.S. majors...they have WAY overstayed their welcome. On an individual basis they are losing more than the Gross Domestic Product of some Third World Countries on a quarterly basis and save for one or two...they don't look to be goin anywhere anytime soon. This is one of the few industries where some companies can bleed red ink for years on end and keep right on keepin on. It'll take a whole lot more than a single labor skirmish to bring SWA down...she's not invincible but she's one hell of a fighter.

Wow. If you are representative of the typical WN FA, then WN is in trouble.

"The other airlines seem to be plodding along ok with massive losses, so my employer could do the same if it had to."

It's been a good ride, but it may be time to sell.

WN earned $26 million in Q1 2004. Just how far in the red should WN go to make the FAs happy for a few more years?

BTW, if the FAs take more, with what will WN pay Boeing for the 47 new airplanes to be delivered in 2004, the 31 scheduled for delivery in 2005, 22 more in 2006 and 25 additional in 2007??

 

[SWAFA30]

If WN posts a loss, even once, the company is heading for oblivion. Part of what makes the Southwest Mystique so powerful is the never-lose track record. Do not underestimate the psychological power of the 52 quarters of profits.

SWA will celebrate her 33rd birthday in June of this year. That is 132 quarters. Since we just posted our 52nd consecutive profitable quarter it stands to reason that at some point we posted a loss and the wheels did not come off the wagon.

But part of WN's success is based on that very cult(ure). Lose it, and you lose WN's greatest asset. Why? Because without it, all of the logistical stuff associated with quick turns and the like go out the window. Without the culture, the attitude of "get the problem fixed now, and then we'll figure out how to prevent it later" will be replaced by "it's not my problem; that's why they pay the big bucks in Dallas."

The basic problem is that the essence of SWA culture is fostering a sense of community. Once a payroll grows to the size of ours despite the most hurcelean efforts the culture inevitably becomes more and more difficult to foster. Community implies and requires closeness...we are simply getting too big to be close.

 

[SWAFA30]

Wow. If you are representative of the typical WN FA, then WN is in trouble.

Close to a decade on the payroll with only a handful of days missed. All of them with appropriate notice given and supporting documentation. Front Line since day one but not so much as a single letter of complaint but conversely numerous commendations for going above and beyond. Committed to caring for the Customer in the cabin despite labor discontent. Of course that could all be made up. This is of course the internet and I could be a 16 year old with bad skin and a prediliction for aviation message boards. But I'm not. What I am is an SWA employee that is capable of forming opinions that don't subscribe to either the Company or Union GroupThink mentality that seems to run rampant in many of these threads. I come to work do my job, do it well and save my skirmishes for the internet. If that makes a bad employee and WN is "in trouble" so be it.

"The other airlines seem to be plodding along ok with massive losses, so my employer could do the same if it had to."

I'll make you a deal. I won't put words in your mouth if you don't put words in mine.

It's been a good ride, but it may be time to sell.

Your portfolio is of course your business.

WN earned $26 million in Q1 2004. Just how far in the red should WN go to make the FAs happy for a few more years?

Where exactly did I say this or any company should go into the red to pay for any employees wages?

The assertion was made that a failure to make a profit was the immediate deathknell of an in general, this airline in particular. I refuted that statement by pointing out that there are airlines, multiple airlines that continue to put planes in the air year in and year out without consitently putting money in the bank. That is just a fact. I have read my post repeatedly and I cannot for the life of find where I made the leap to saying that SWA should bleed red ink in the interest of fattening my pocketbook. In fact I did say..."SWA is financially sound....management as always is in overdrive making sure it remains that way." and "It has been pointed out to me and I tend to agree that my or any union whose demands pose a clear and present danger to SWA's low-cost advantage will be handed their walking papers." If anything, I conceded the point that Southwest would replace the entire flight attendant corps or any other union lock stock and barrel before they allowed us to push the company so much as a single nickel into the red.




BTW, if the FAs take more, with what will WN pay Boeing for the 47 new airplanes to be delivered in 2004, the 31 scheduled for delivery in 2005, 22 more in 2006 and 25 additional in 2007??

So, if the flight attendant get a payraise, Southwest as we know it ceases to exist? Is that where we are going with this line of thinking. Who knew 7,300 people crazy enough to get sealed into a metal tube with the stars of "Airline" could wield so much power...(tongue firmly planted in cheek). Southwest has built a near mythical reputation for their ability to manage cost. What if like the rising price of jet A or copy paper, flight attendant labor were simply viewed as another cost to be managed and SWA got about the business of managing it. I guess maybe I have more faith in my company's ability to generate a continuous profit than others do. Economics are fluid and none of us has ever said that we were opposed to increasing our productivity in some form or another in exchange for a bigger paycheck. But of course that side of the argument never gets mentioned because it's much more fun to label the flight attendants as greedy and myopic with one hand in the cookie jar while the other is strangling the goose that lays the golden eggs. But, like I have said before. I'm reasonable, show me the black and white numbers that say a fair payraise will raise our CASM to the point that we can't pay the electric bill or buy airplanes and I'm willing to give them an objective look. But after almost 2 years at the bargaining table I am still waiting for those numbers.

 

[NewHampshire Black Bears]

"FWAAA", now I ask you, "How do you like them apples" ???????

EXCELLENT REBUTTAL POINTS, SWAFA30 !!!!!!!!

NH/BB's

 

[mweiss]

SWAFA, here's where my concern comes in.

Until 2001, WN's wages and benefits only consumed about 30% of income. While this is three percentage points lower than the legacies (or 9% less), it is well in line with the cost ratio of the other LCCs.

Since 2001, it has risen sharply, to where, in 2003, wages and benefits consumed 37.5% of income.

Granted, WN's net income in 2003 was $442M, but let's look at it from a different angle for a moment.

WN's RASM has risen by an average of 3% year over year in the past fifteen years (50% better than the industry average). Thus, keeping pace with future revenue increases would equate to 18% over the six years. They're offering 20. In other words, they're offering a 10% increase in the share of the projected revenue pie. Why on earth is this a bad thing?

About the only thing I see wrong with the current distribution of wealth, aside from the absurd increases that the other unions got, is the ESO grant distribution. I don't get why Res/CSA is as high as it is, compared to mechs.

Beyond that, I concur that FAs and pilots should get holiday pay. Most of the remaining issues strike (no pun intended) me as minor quibbles.

 

[WNjetdoc]

Excellent post SWAFA30. You beat me to the punch about WN posting a loss. We had a couple of quartery losses during the first Gulf war, and you're right, we didn't fall apart.

FWIW, we also actually had a strike, back in the 70's, and we didn't fall apart. So all you people hoping this is the end of WN, forget it. We made it through 9/11 without losing any money, plus we didn't layoff ONE SINGLE PERSON, how many other airlines can make that statement?

I've heard the same naysayers saying that WN can't fly in bad weather and how the delays from flying up north would kill us, well it hasn't and it won't. Its just one thing after another, they keep wishing something will stop us.

There seems to be lots of turds on this board wishing bad luck on WN, I suppose if I still worked for a loser airline and kept getting my @ss kicked I'd have to create a reason for it.....Hey, lets blame WN for our problems.

 

[Boeingguy]

The title of this thread is "Trouble Ahead" when it should be "Good Things Ahead". Why? Because SWA management is showing they won't cave if the deal isn't right to them -- which is in the long term benefit for the future of SWA. They are sending a message that no group will hold SWA's future hostage like the UAL pilots did to UAL a few years ago......this is a sign of good strong management who knows where things stand and has the big picture. This also shows other labor groups that SWA management won't buckle and has a limit. Every other labor group has had things settled in a reasonable time-frame since 9/11 so why is this group different?

Herb may re-structure the offer but there won't be much, if any, increase in cost to the company vice what's already been offered and the company will not shrink from taking a strike if they have to in order to maintain long term cost control. The education requirement is a high school diploma and there are lots of unemployed people out there.

 

[JS]

Originally posted by WNjetdoc:

Excellent post SWAFA30. You beat me to the punch about WN posting a loss. We had a couple of quartery losses during the first Gulf war, and you're right, we didn't fall apart.

The first Gulf War ended a while ago. The difference between that and labor strife is that angry labor stays angry forever. What is the purpose of declaring war on yourself?

FWIW, we also actually had a strike, back in the 70's, and we didn't fall apart. So all you people hoping this is the end of WN, forget it. We made it through 9/11 without losing any money, plus we didn't layoff ONE SINGLE PERSON, how many other airlines can make that statement?

Good. I hope the flight attendants go on strike. Southwest will hire a new crop of flight attendants and life will go on without the old-timers. The striking flight attendants can be the next California grocery workers.

In fact, should the flight attendants go on strike or be locked out, I hereby pledge to support the company by driving all the way to RDU and flying somewhere on WN. I usually don't fly WN because RDU is a four hour drive from my home and WN doesn't fly to NYC or DFW or DEN or COS (etc etc), but I suppose I could visit PVD or someplace like that.

 

[ITRADE]

The title of this thread is "Trouble Ahead" when it should be "Good Things Ahead". Why? Because SWA management is showing they won't cave if the deal isn't right to them -- which is in the long term benefit for the future of SWA. They are sending a message that no group will hold SWA's future hostage like the UAL pilots did to UAL a few years ago......this is a sign of good strong management who knows where things stand and has the big picture. This also shows other labor groups that SWA management won't buckle and has a limit. Every other labor group has had things settled in a reasonable time-frame since 9/11 so why is this group different?

I'm starting to like SOuthwest more and more....

 

[WNjetdoc]

The first Gulf War ended a while ago. The difference between that and labor strife is that angry labor stays angry forever. What is the purpose of declaring war on yourself?



Good. I hope the flight attendants go on strike. Southwest will hire a new crop of flight attendants and life will go on without the old-timers. The striking flight attendants can be the next California grocery workers.

In fact, should the flight attendants go on strike or be locked out, I hereby pledge to support the company by driving all the way to RDU and flying somewhere on WN. I usually don't fly WN because RDU is a four hour drive from my home and WN doesn't fly to NYC or DFW or DEN or COS (etc etc), but I suppose I could visit PVD or someplace like that.

Very good, the Gulf war ended a while ago, whats your point? My point was in response mweiss saying, "if WN posts a loss, even once, the company is going into oblivion". I pointed out that we had infact posted, I believe, two quarterly losses and had not gone into "oblivion". You may want to read the whole thread prior to making a post so quickly.

That other junk you had about the F/A's going on strike and grocery workers, etc, was way out there. I suppose to you it made sense. I was making another valid point to you posters implying if WN's F/A's went out on strike then that would be the end of labor peace at WN. I stated that a group had went out on strike at WN and labor peace didn't crumble to the ground. The company continued to make money.

You must not let blind hatred rule your posts there sparky.

I back our F/A's and hope there is a settlement that is good for both them and our company.

 

[WNjetdoc]

I'm starting to like SOuthwest more and more....

Hey, thats progress, .

 

[JS]

Very good, the Gulf war ended a while ago, whats your point? My point was in response mweiss saying, "if WN posts a loss, even once, the company is going into oblivion". I pointed out that we had infact posted, I believe, two quarterly losses and had not gone into "oblivion". You may want to read the whole thread prior to making a post so quickly.

That other junk you had about the F/A's going on strike and grocery workers, etc, was way out there. I suppose to you it made sense. I was making another valid point to you posters implying if WN's F/A's went out on strike then that would be the end of labor peace at WN. I stated that a group had went out on strike at WN and labor peace didn't crumble to the ground. The company continued to make money.

You must not let blind hatred rule your posts there sparky.

I back our F/A's and hope there is a settlement that is good for both them and our company.

Thanks but I have been reading the thread since its inception.

My point is that the reason for posting a loss is more important than the loss itself. This is true for any company, not just Southwest.