Dear FLTops TODAY subscriber:
United Parcel Service supplied its pilots--and, in a way, the rest of the
industry--some good news late last week when it announced that it would
suspend its plans to furlough up to 100 pilots this year.
The first of the furloughs had been slated for this month, and UPS had
reportedly mailed 30-day furlough notices to 19 pilots. With more than
6,400 major airline pilots already on furlough, some may question why 19 at
UPS is so significant as several passenger airlines continue to furlough
pilots.
First of all, every pilot furloughed is significant. Not only for the
obvious reasons (his/her ability to put food on the table, etc.), it also
trickles down in so many ways. It also trickles "up," meaning pilots who do
survive often get displaced (downgraded aircraft or downgraded from captain
to first officer or, in rare cases in these two-pilot aircraft days,
downgraded from first officer to flight engineer).
Secondly, the financial performances of passenger airlines and cargo
airlines tend not to be parallel. Even as nearly every major airline
struggles to return to profitability, cargo operators--especially the very
large ones like UPS and FedEx--have remained profitable. As four major
passenger airlines posted net loss margins of at least 20 percent of
revenue last year, UPS reported a net profit of more than $2.3 billion, or
8 percent of revenue. While an 8-percent profit margin at a passenger
airline is nearly impossible to find (don't bother looking beyond Southwest
Airlines), it is average for UPS. FedEx also has a steady recent history of
profitability, in the range of 4 percent of revenue.
In the last industry downturn, in the early 1990s, cargo operators often
recruited as their passenger airline counterparts furloughed. They provide
a fairly limited number of jobs when compared to the global passenger
airlines that can hire 1,000 pilots in one good year--40 percent of UPS'
total number of pilots—-but they do tend to provide "stable" jobs that, to
date, have not been quite as sensitive to the ups and downs of the cyclical
airline industry. UPS, for example, has never furloughed a pilot in the 15
years it has employed them. I cannot recall FedEx ever furloughing pilots.
Of nearly 8,100 pilots employed by major cargo operators, only 44 are
currently on furlough, which is about one-half of 1 percent. About 11
percent of all major passenger airline pilots are currently on furlough.
I am not trying to build up flying for a cargo operator vs. a passenger
airline; they are different jobs with different pros and cons. My point is
to illustrate that, if the big cargo operators begin to furlough pilots,
then the pilot employment industry--and not just the passenger airline
industry--takes a hit.
Thankfully, UPS suspended its furlough "for the foreseeable future."
Obviously, I don't think it is realistic to expect UPS to hire pilots this
year, and the same can probably be said for FedEx. Everybody knows this
downturn is different from those in the past--including the last one in the
early '90s--and all we can hope is that the turnaround that follows is just
as good as this downturn is bad.
Sincerely,
David A. Jones
Executive Editor
FLTops.com
email: [email protected]
United Parcel Service supplied its pilots--and, in a way, the rest of the
industry--some good news late last week when it announced that it would
suspend its plans to furlough up to 100 pilots this year.
The first of the furloughs had been slated for this month, and UPS had
reportedly mailed 30-day furlough notices to 19 pilots. With more than
6,400 major airline pilots already on furlough, some may question why 19 at
UPS is so significant as several passenger airlines continue to furlough
pilots.
First of all, every pilot furloughed is significant. Not only for the
obvious reasons (his/her ability to put food on the table, etc.), it also
trickles down in so many ways. It also trickles "up," meaning pilots who do
survive often get displaced (downgraded aircraft or downgraded from captain
to first officer or, in rare cases in these two-pilot aircraft days,
downgraded from first officer to flight engineer).
Secondly, the financial performances of passenger airlines and cargo
airlines tend not to be parallel. Even as nearly every major airline
struggles to return to profitability, cargo operators--especially the very
large ones like UPS and FedEx--have remained profitable. As four major
passenger airlines posted net loss margins of at least 20 percent of
revenue last year, UPS reported a net profit of more than $2.3 billion, or
8 percent of revenue. While an 8-percent profit margin at a passenger
airline is nearly impossible to find (don't bother looking beyond Southwest
Airlines), it is average for UPS. FedEx also has a steady recent history of
profitability, in the range of 4 percent of revenue.
In the last industry downturn, in the early 1990s, cargo operators often
recruited as their passenger airline counterparts furloughed. They provide
a fairly limited number of jobs when compared to the global passenger
airlines that can hire 1,000 pilots in one good year--40 percent of UPS'
total number of pilots—-but they do tend to provide "stable" jobs that, to
date, have not been quite as sensitive to the ups and downs of the cyclical
airline industry. UPS, for example, has never furloughed a pilot in the 15
years it has employed them. I cannot recall FedEx ever furloughing pilots.
Of nearly 8,100 pilots employed by major cargo operators, only 44 are
currently on furlough, which is about one-half of 1 percent. About 11
percent of all major passenger airline pilots are currently on furlough.
I am not trying to build up flying for a cargo operator vs. a passenger
airline; they are different jobs with different pros and cons. My point is
to illustrate that, if the big cargo operators begin to furlough pilots,
then the pilot employment industry--and not just the passenger airline
industry--takes a hit.
Thankfully, UPS suspended its furlough "for the foreseeable future."
Obviously, I don't think it is realistic to expect UPS to hire pilots this
year, and the same can probably be said for FedEx. Everybody knows this
downturn is different from those in the past--including the last one in the
early '90s--and all we can hope is that the turnaround that follows is just
as good as this downturn is bad.
Sincerely,
David A. Jones
Executive Editor
FLTops.com
email: [email protected]
