whymeworry?
Well-known member
- Joined
- Sep 17, 2005
- Posts
- 701
WADR, you really need to wake up. The money has ALWAYS been there. Unfortunately it gets wasted in poor business decisions. Nearly a billion dollars wasted on grossly inept fuel hedging decisions. Over $350 million wasted in downsizing attempts (parking aircraft, furloughing pilots, closing markets, etc). More than $100 million paid in executive severance packages (execs who made the most pathetic decisions and were paid to leave). And let's not forget the $600 million for planned Terminal B improvements at IAH or the infamous $300 million wasted on LHR slots. Those flights are still going out bone-empty every time except for the holidays. Need I go on? There is plenty more to that list.
Now let's look at the cost of employee moral. Ever negotiated with someone where you thought you got the better part of the deal and the other party got the shaft? Eventually, if you have no choice but to remain in business with them, that other party will do everything they can to equalize the transaction. That is basic behavior economics. It is the reason why city government construction projects often run over budget. Contractor A underbids to get the job. Once he realizes he can't make any money he withdraws enthusiasm for the project. The gov't must fire him and bring in a new contractor which charges them cost-plus; either that or they capitulate, and cater to original contractor's demands in order to finish the job. As they say, there is no such thing as a free lunch. CAL mgmt has no choice but to do business with it's pilot group. It can either chose to continue to take advantage of the situation, as it has done with our concessionary contract, or it can negotiate in good faith, put the issue to bed and move forward. Failure to do the latter will result in increased employee demoralization, which will in fact deteriorate the bottom line in an expotentially worse manner the longer it choses to delay. Due to economies of scale, messing with a pilot group of 5,000 angry professionals can literally destroy the company over time. Show me one carrier out there who has succeeded over the long run by over-reaching cost-cutting. When employees are the major working parts of your business, it simply doesn't work. How much has CAL lost over the past 6 months by battling the mechanics? How much of a raise are they asking for? How much will it cost CAL to continue a protracted battle with said group?
Granting the pilot group a fair process towards a new CBA is not an exercise in benevolence. It is about making sound and prudent business decisions. Unfortunately as we all know too well, Harvard MBAs don't understand this concept, which is why labor will most likely have to force a strike to get it's point across. In the meantime, billions will be wasted. Get your financial affair in order because this is what it will take.
So the money is there (don't forget, CAL did not get to $3.5 billion in the bank mysteriously; $2.5 billion of that money has been put away during the post 9/11 years of losses). In fact, without being biased, I am of the firm belief that a swift conclusion in all of CAL's labor contracts will result very real savings to the bottom line. Remember, we're not asking for the moon here. Our openers were accomplished through the advise of NMB experts who told us to be realistic in our expectations in order to effectuate a TA as quickly as possible.
You need to educate yourself about the inner-workings of this business. Mgmt will always claim the money isn't there, even when we're profitable. But just as they said we would go out of business as oil went from $30-60-80-90-120-$150, so too will they claim that any increase in pilot costs will undermine the viability of the carrier as a whole. To that I say, how much will is cost them to have extremely unmotivated managers in charge of their operation (make no mistake about it, we are in charge of the frontline operations; our decisions collectively save or lose them hundreds of millions of dollars each year)? I don't disagree that capital expenditure and improvements are part of the business. But just the same so too are raises (though ours is less a raise and more of a loan repayment as we gave them a loan to grow the business).
Remember, as a pilot you are actually losing money each year with our present concessionary contract. As our benefits in health costs aggressively rise while coverage decreases (this costs you thousands in increased prescription costs/ health costs, etc). As our costs to do our job increase requirements for internet usage/ disability ins/ getting to/ from work, etc. And as inflation eats into your purchasing power. If we don't manage this problem now though a livable CBA, the airline will cease to exist (in the same manner as mgmt suggests due to increased pilot pay) as more and more pilots simply lose interest in being a productive and effective employee. As a businessman, I view labor as more of a tool than as a problem. How I effectively extract the most efficiency out of that tool is a very important dance of economics as well as persuasion. We certainly can't give away the company store to any one entity. But we can't demoralize our skilled labor either. Recall it probably costs $50-75,000 to train and recruit a pilot. Even if we were to fire everyone today (a frankly unrealistic option) the cost to bring in an entirely new labor talent would've probably out-weighed any real reward of such a gamble.
I think when you factor in all the variables, these openers are a windfall for CAL mgmt. And the only reason I can support them is that it is only for a 3-year deal. Certainly there is even more money in there for pilot compensation.
They will either continue to bury their head in the sand that it is not necessary to work with labor (just as they buried their head in the sand about hedging oil costs/ or about over-paying for LHR slots). Or they can roll up their sleeves and agree to a fair and equitable CBA and focus on their real job of taking on competition, and over-bearing governments. As pilots we all know the outcome. We will win. The question remains, how much money will mgmt spend (read: WASTE) to delay the inevitable?
Now let's look at the cost of employee moral. Ever negotiated with someone where you thought you got the better part of the deal and the other party got the shaft? Eventually, if you have no choice but to remain in business with them, that other party will do everything they can to equalize the transaction. That is basic behavior economics. It is the reason why city government construction projects often run over budget. Contractor A underbids to get the job. Once he realizes he can't make any money he withdraws enthusiasm for the project. The gov't must fire him and bring in a new contractor which charges them cost-plus; either that or they capitulate, and cater to original contractor's demands in order to finish the job. As they say, there is no such thing as a free lunch. CAL mgmt has no choice but to do business with it's pilot group. It can either chose to continue to take advantage of the situation, as it has done with our concessionary contract, or it can negotiate in good faith, put the issue to bed and move forward. Failure to do the latter will result in increased employee demoralization, which will in fact deteriorate the bottom line in an expotentially worse manner the longer it choses to delay. Due to economies of scale, messing with a pilot group of 5,000 angry professionals can literally destroy the company over time. Show me one carrier out there who has succeeded over the long run by over-reaching cost-cutting. When employees are the major working parts of your business, it simply doesn't work. How much has CAL lost over the past 6 months by battling the mechanics? How much of a raise are they asking for? How much will it cost CAL to continue a protracted battle with said group?
Granting the pilot group a fair process towards a new CBA is not an exercise in benevolence. It is about making sound and prudent business decisions. Unfortunately as we all know too well, Harvard MBAs don't understand this concept, which is why labor will most likely have to force a strike to get it's point across. In the meantime, billions will be wasted. Get your financial affair in order because this is what it will take.
So the money is there (don't forget, CAL did not get to $3.5 billion in the bank mysteriously; $2.5 billion of that money has been put away during the post 9/11 years of losses). In fact, without being biased, I am of the firm belief that a swift conclusion in all of CAL's labor contracts will result very real savings to the bottom line. Remember, we're not asking for the moon here. Our openers were accomplished through the advise of NMB experts who told us to be realistic in our expectations in order to effectuate a TA as quickly as possible.
You need to educate yourself about the inner-workings of this business. Mgmt will always claim the money isn't there, even when we're profitable. But just as they said we would go out of business as oil went from $30-60-80-90-120-$150, so too will they claim that any increase in pilot costs will undermine the viability of the carrier as a whole. To that I say, how much will is cost them to have extremely unmotivated managers in charge of their operation (make no mistake about it, we are in charge of the frontline operations; our decisions collectively save or lose them hundreds of millions of dollars each year)? I don't disagree that capital expenditure and improvements are part of the business. But just the same so too are raises (though ours is less a raise and more of a loan repayment as we gave them a loan to grow the business).
Remember, as a pilot you are actually losing money each year with our present concessionary contract. As our benefits in health costs aggressively rise while coverage decreases (this costs you thousands in increased prescription costs/ health costs, etc). As our costs to do our job increase requirements for internet usage/ disability ins/ getting to/ from work, etc. And as inflation eats into your purchasing power. If we don't manage this problem now though a livable CBA, the airline will cease to exist (in the same manner as mgmt suggests due to increased pilot pay) as more and more pilots simply lose interest in being a productive and effective employee. As a businessman, I view labor as more of a tool than as a problem. How I effectively extract the most efficiency out of that tool is a very important dance of economics as well as persuasion. We certainly can't give away the company store to any one entity. But we can't demoralize our skilled labor either. Recall it probably costs $50-75,000 to train and recruit a pilot. Even if we were to fire everyone today (a frankly unrealistic option) the cost to bring in an entirely new labor talent would've probably out-weighed any real reward of such a gamble.
I think when you factor in all the variables, these openers are a windfall for CAL mgmt. And the only reason I can support them is that it is only for a 3-year deal. Certainly there is even more money in there for pilot compensation.
They will either continue to bury their head in the sand that it is not necessary to work with labor (just as they buried their head in the sand about hedging oil costs/ or about over-paying for LHR slots). Or they can roll up their sleeves and agree to a fair and equitable CBA and focus on their real job of taking on competition, and over-bearing governments. As pilots we all know the outcome. We will win. The question remains, how much money will mgmt spend (read: WASTE) to delay the inevitable?
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