A Crisis That Tops Them All

[Redmeat]

Joe,

Maybe you didn't know this yet, but the legacies have been lowering their costs dramatically. The average Delta employee WAS paid 23% higher than the average Southwest employee in March of 2004. As of May 2005, the average Delta employee is now paid 7% less. Delta let go over 6000 employees in that time frame also, and increased efficiency. The problem we have is debt and pension payments. Those pensions payments will either be extended by Congress, or dropped. The debt looks like will be worked on in court. All of the legacies are having problems, but most are fixing them and after a stint in court could come out stronger. But, Southwest has a one type fleet and does domestic flying, whereas most legacies have INTL flying and hubs. You can't always compare Southwest to the others.


Bye Bye--General Lee

I agree, only from the opposite point of view, the only routes that are profitable at NW are the international routes period. Management would just as soon dump domestic routes to regional flying and keep the profitable Asia routes.

The International stuff should be a profit center for the legacy's. LCC's and Southwest cannot compete here.

 

[Redmeat]

Since 2000, the airline industry has lost more money than it has made since the Wright brothers first flew.

True. And in 1999 the airline industry made more money (profit) than it had TOTAL (cumulative) since the Wright brothers first flew.

 

[General Lee]

I agree, only from the opposite point of view, the only routes that are profitable at NW are the international routes period. Management would just as soon dump domestic routes to regional flying and keep the profitable Asia routes.

The International stuff should be a profit center for the legacy's. LCC's and Southwest cannot compete here.

You need to be able to feed those INTL routes, and 70 seaters or even 100 seaters cannot do it alone. Also, mainline rates have been going down as of late, and regional pay has been the same. Soon, we at the mainline will be forced to fly at regional rates thanks to a judge, and the 50 seat regionals will mostly be parked. It will take years to replace all of those 50 seaters, and I think I read a report saying we would have 10 billion (?) people flying per year domestically by 2010. Southwest and Jetblue will not be doing all of that.


Bye Bye--General Lee

 

[Redmeat]

You need to be able to feed those INTL routes, and 70 seaters or even 100 seaters cannot do it alone. Also, mainline rates have been going down as of late, and regional pay has been the same. Soon, we at the mainline will be forced to fly at regional rates thanks to a judge, and the 50 seat regionals will mostly be parked. It will take years to replace all of those 50 seaters, and I think I read a report saying we would have 10 billion (?) people flying per year domestically by 2010. Southwest and Jetblue will not be doing all of that.


Bye Bye--General Lee

Don't get me wrong. I am on your side, but domestically most markets are covered with some sort of LCC. Legacy's will have to be competitive there. International stuff is pure profit for the Legacy's. I think the domestic pilots rates and the heavy (International) pilots rates at a particular airline will have to meet in the middle for a Legacy to be profitable, and yet fair to the whole pilot group.

 

[JoeMerchant]

NWA MEC SPECIAL MEETING (9/01/05)
MEC Chairman Mark McClain reconvened the meeting at 9:27 a.m. today. After some opening remarks, the meeting was closed as the MEC discussed negotiating options. The MEC debated and discussed this issue for the majority of the day. After the discussion ended, the MEC voted and unanimously passed Resolution #05-65 (MEC Direction to the Negotiating Committee).

NWA MEC RESOLUTION #05-65
SUBJECT:
MEC Direction to the Negotiating Committee

PROPOSED RESOLUTION:
WHEREAS the NWA MEC has carefully considered the present circumstances facing Northwest Airlines, and

WHEREAS the NWA MEC has concluded that it is in the best interests of the NWA pilot group to engage in negotiations with management in the near term to determine whether a reasonable plan of action, including a revised pilot agreement which will produce significant levels of cost reductions and revenue enhancements, can be developed,

NOW THEREFORE BE IT RESOLVED the NWA MEC authorizes the Negotiating Committee to commence such negotiations with Northwest management, and

BE IT FURTHER RESOLVED that any tentative agreement from these negotiations will be submitted to the membership for ratification unless the tentative agreement is rejected by the MEC,

BE IT FINALLY RESOLVED the NWA MEC Chairman shall continue his attempts to encourage other NWA labor unions to participate with ALPA in these efforts.


###

The MEC unanimously passed Resolution #05-65 (MEC Direction to the Negotiating Committee) because NWA’s financial situation continues to worsen and ALPA believes NWA will file for bankruptcy if new labor agreements are not agreed upon in the near future. Your union leadership continues to believe it is in the best interests of all NWA pilots and all NWA employees to avoid a Chapter 11 filing, if appropriate agreements can be reached. The MEC recognizes that a new concessionary agreement does not guarantee NWA’s viability or even the avoidance of a Chapter 11 filing, but taking no action does guarantee a chapter 11 filing and hands us a bankruptcy judge’s decision. If the MEC Negotiating Committee is able to reach a tentative agreement with NWA management, the Negotiating Committee will present it to the MEC at a future MEC meeting. Unless the MEC rejects the tentative agreement, it will be sent to the membership for ratification.

 

[JoeMerchant]

AP
Northwest Warns Bankruptcy Looming
Thursday September 1, 7:38 pm ET
By Joshua Freed, AP Business Writer Northwest Airlines Warns of Up to $400M Loss, Says Time Running Out to Avoid Bankruptcy

MINNEAPOLIS (AP) -- Northwest Airlines Corp. warned on Thursday that it is running out of time to avoid bankruptcy because of spiking fuel prices, and that it will lose as much as $400 million this quarter. Company pilots said they would negotiate a new round of pay cuts.

The carrier said in a filing with the Securities and Exchange Commission that its cash had fallen to $1.7 billion as of Wednesday, down from $2.1 billion on June 30. Some of the decrease was due to holdbacks required by the company that processes its credit card transactions, a situation that has also squeezed rival Delta Air Lines Inc. in recent weeks.

Northwest said it expects to pay $1.90 to $1.95 per gallon of jet fuel, for a total of $900 million for the quarter. It expects to spend at least that much in the fourth quarter, for a total of $3.3 billion for all of 2005. That's a 50 percent increase over the $2.2 billion it spent on fuel in 2004.

Northwest mechanics are on strike, but the nation's fourth-largest carrier has continued to fly by using replacement workers. On Thursday, it said the strike has not had a significant impact on revenue.

Northwest said it has run out of collateral for additional loans.

 

[canyonblue]

The International stuff should be a profit center for the legacy's. LCC's and Southwest cannot compete here.

They said we would never win in Texas. Then they said we would never win in California. No way Southwest would ever fly and make money on the East Coast. Southwest takes 8 legs to fly coast to coast, they could never do it nonstop. Putting Southwest and "cannot" in the same sentence, priceless.

 

[Redmeat]

They said we would never win in Texas. Then they said we would never win in California. No way Southwest would ever fly and make money on the East Coast. Southwest takes 8 legs to fly coast to coast, they could never do it nonstop. Putting Southwest and "cannot" in the same sentence, priceless.

Well ALL you guys (and I stress ALL) better go get another type then smarty pants!

Or is your company waiting for the 737- Intercontinental model? 737-1000 maybe? Hmmmm?

 

[xanderman]

maybe...

This has been studied by ALPA up, down, side-ways, back-ward, forward and around in circles. The fact is if you raise fares 5% you lose 5% of the flying public, 10%, 10% of the flying public etc, etc. ALL with diminishing returns. It is NOT that simple to just raise fares. Do you think that if Steenland could make more money for his bonus by raising fares he would? YES! The LCC's will always have lower operating costs than the Legacy's, pure and simple. Their pay structure's are the future. It sucks but it is the "end of an era".

While I'm sure ALPA did their homework on the whole "raise the fairs and watch demand fade" bit, I must bring up one example that suggests that basic economic theory is not the end-all-be-all. GASOLINE!!!!! How many of us have honestly changed the way we drive? I for one haven't really changed my driving habits much. So if the theory sticks then why haven't we seen a major drop in gasoline consumption. I mean c'mon how much has the cost of gas gone up in the last 2 years? Almost 60%! Yet the consumer still craves the 50 ton freeway battle-wagon. I do believe there is room for elasticity(sp?). I believe it would be the same for this industry! Yes you would see some initial decline in sales but now that we have tasted the ease of air travel how can our economy live without? Raise the fare and stop funding the cost of the operation with labor pay and benefits...

Andy

 

[General Lee]

They said we would never win in Texas. Then they said we would never win in California. No way Southwest would ever fly and make money on the East Coast. Southwest takes 8 legs to fly coast to coast, they could never do it nonstop. Putting Southwest and "cannot" in the same sentence, priceless.

Again, he shows his cocky side. Really, read his response and try not to roll your eyes.


Bye Bye---General Lee