Consider Taking Off The Rose-Colored SWA Glasses For a Moment and Discuss...

[ultrarunner]

...
What makes people think that SWA won't find itself in the same position as a UAL (recently the holy grail, now the polar opposite)? Yeah, maybe they have much better management than UAL...but HOW do they survive (and continue to survive) in these unprecedented conditions and remain "low cost"?

VOR, the issues are multi-faceted....

But as others have said, from a cost-structure standpoint, SWA is the leader...

First the obvious:

One plane type. Every bloody airframe is essentially the same. This keeps pilot training costs at a minimum, spares costs at a minimum, etc...

Think about UAL, DAL, AAL and the costs associated with maintaining spares for 6 or 8 fleet types. Sims, spares, crews...etc...it goes on and on.

Secondly, SWA, in some markets, utilizes some outlying airports. So at the time, they can get a massive bang for the buck by agreeing to serve that airport.

It's no secret SWA hits their vendors pretty hard, so that also makes a big difference in cost savings.

These are just a few examples...but big ones whe you start looking at costs.

Legacies like I mentioned above need hundreds of millions a day just to turn on the lights....

Massive international hubs, half a dozen or more fleet types....

REALLY big training centers..

HUNDREDS of sims....ever been to AAL training academy? I have...it can be seen from oribit!

So, with all that said, these legacies are burnded with day-to-day fixed costs that is not supported by current fare levels.

SWA, simply by its nature, avoids that type of burden.

Now, I admit, this is a very simplistic view, but I'm not that smart...so that's all I gots!

Ultra

 

[Voice Of Reason]

Now, I admit, this is a very simplistic view, but I'm not that smart...so that's all I gots!

Ultra

...But that's a lot! :beer:
Thanks Ultra, and everyone else who helped this non-economics major understand a bit!

 

[Skybus]

There are even a couple of SWA Captains who make >$300,000 and one who made over $400,000 last year. Not unusual for some F/Os to make > $130,000

And many F/As in the 120-130K range by WORKING HARD.

Instead of trying how to make as much as possible doing as little as possible we understand by working hard we can all prosper.

 

[Skyboy722]

but those fuel hedges were complete luck - no one saw fuel going where it did today when they locked in those contracts.

I GUARANTEE you, HUNDREDS of MILLIONS of dollars were NOT thrown into a hedging investment that was a shot in the dark. And Southwest was one of few that had (and continues to have) the kind of cash to make such investments.

I for one can not wait until everyone is on a level playing field.

Even ex-fuel, Southwest has the second lowest CASM in the business. (Second only to Airtran, and only by a little). So even on a "level playing field", SW still has a significant cost advantage, for alot of reasons mentioned above.

That being said, the reality is, we are one bad CEO away from a very different reality...

 

[BrokenWing]

We pay $350. The other airlines pay $500. We can charge less for a ticket.

The other reasons include:
Great leadership, common goals, efficiency, teamwork, forward thinking mgmt., and luck. Luck is where timing and preparation come together. Was it Parker that said, "Southwest has predicted 10 out of the last 2 recessions."

The point that you're missing is even if SWA is paying $350 and everyone else is paying $500, airline travel as we know it will not be the same. There will be massive consolidation and reduction because people won't be flying. So, even if you're hedged at $350, you will not be able to sell enough tickets at the price required to support your current schedule. You might be the only game in town, but people just aren't going to fly. Luck will only get you so far, it won't fill airplanes when americans are struggling to pay bills and feed ther families.

 

[jhill]

Considering that not too long ago UAL was the "holy grail set-for-life" pilot job, and most people thought that nothing could change that...I have a topic for discussion about SWA.

Please don't turn this into a SW hating thread, or a "we'll always be on top thread" from the opposite side.

I'd like to hear from some people who feel they might have a bit of financial sense (of which I have absolutely none) which might explain to me HOW SWA can succeed in THIS economic climate (and worsening), especially once the effects of no longer benefiting from smart fuel hedges kicks in.

The only rational-seeming way for airlines to survive, seems to be to clear out the negativity that makes them so hated in the eyes of the general public, AND raise prices and pass costs along to customers, not cheap tickets from employee subsidies....

Which brings me to SWA... just HOW will they be able to continue (in THIS economic env & worse) to pay employees the way they do (well) and keep tickets dirt cheap? I just don't see how people are talking one minute as if these low cost carriers will survive (in THIS climate) and then how fares need to raise exponentially another minute (which seems to be the solution I see).

I could understand if SWA was on a Wal-Mart type road (cheap/mass product/PITIFUL wages)...but I don't get how they can continue to be on top with their current model (as the economic climate worsens, and the effects of loss of great fuel hedges kicks in).

What makes people think that SWA won't find itself in the same position as a UAL (recently the holy grail, now the polar opposite)? Yeah, maybe they have much better management than UAL...but HOW do they survive (and continue to survive) in these unprecedented conditions and remain "low cost"?

Again...break it down for the financial knowledge impaired... I am genuinely curious as to how to gauge this and not get in the mode of jumping from ship to ship (remaining at the bottom at each ship) following a good job that may not exist anywhere transporting passengers in any venue (that doesn't involve the following : being away 7 or 8 days at a time for your entire careers, justifying your flight plans to some (fractional) CEO you're flying that think he knows it all, or
going to a foreign country and fly for an Emirates type operation)....

Someone else aready said productivity. It is one of the keys. Another is employee attitude. Most folks here care about the company and even each other. Most try very hard to save the company money when and where ever we can. Back to productivity. We have some ofthe highest paid mechanics in the industry but we only have 4 per A/C. If that many. Everone here is addicted to overtime. Hard work pays off around here. I have never had so much flexibility with my schedule or so many ways to make extra money. This place is not perfect and we bitch and moan but we also work hard and pitch in to help when needed. Another key is we know damn well we are not immune to this industies woes. Every year things seem to get tougher and tougher. We are lucky to have very smart, good people in management that we can trust. They are not over paid and they work hard. They keep coming up with better ways to do things and control cost.

This is a career of luck. Wether some of these guys will admit it or not we are just lucky, especially right now. Will it last? Who knows. I just hope we all keep trying like we do now. As long as that is the case I like our chances. If we get greedy and lazy it will surely go the way of many others. With Herb gone who knows what could happen. This place is woth a lot of money and we all know what can happen there.

PS. The emirates gig is a good deal for some of us.. I've got a buddy that loves it over there and he's making big bucks with a 3 year upgrade. Mega growth planned as well.

 

[Voice Of Reason]

Someone else aready said productivity. It is one of the keys. Another is employee attitude. Most folks here care about the company and even each other. Most try very hard to save the company money when and where ever we can.

That is so true...

I wish more of these aviation execs could get it through their skulls that employees will WILLINGLY be like that if paid well and treated well.

Honestly, that's all it takes for us to go the extra mile and SAVE these companies, MAKE them successful, yet so many execs just don't get it...or egos won't LET them get it.

I'll bet that behind every snarly F/A or unbearable CA at a legacy (or frac run into the ground), there was most likely once someone who DID give a ***t early on.

Also a lot of that attitude becomes the self-fulfilling prophecy of pax who have already decided they are ALL like that and make things hell for those still trying to do a good job....

 

[Jet41]

Smart management, employees that know the value of hard work, management that knows the value of said employees, productivity, employee and management groups that work truely toward the common good

 

[say again]

Smart management, employees that know the value of hard work, management that knows the value of said employees, productivity, employee and management groups that work truely toward the common good

What a concept!! To bad others cant fathom the idea.

 

[Benjamin Dover]

And like KaptainKiwi said, we are a productive group. By the end of June I will be close to 500 hours so far, and that is with between 14-17 days off each month. I'm ok with that because I have no problem earning my paycheck. When you are getting paid to stay home, deadhead, sit in your hotel, etc., its great for you, but not the group.

Work hard, play hard, go home. Works for me.

RDG,

You are are "poster tool" for guys that give SWA a bad name. Having worked at a two different "majors" before SWA I'm sorry to deliver the news that we have the same mix of pilots as anywhere else. Our "productivity" has nothing to do with us, but it is our business model. My buds at other airlines would love to have my duty days, length of layover and average days off. You are being a d0uchebag bragging on here about how much block you fly and how hard you work. You fly more block at SWA because you have to.

I used to have 12+ hour scheduled duty days and 10 hour scheduled layovers which often became 14+ and min 8 hour FAR rest. I have yet to see anything close to that at SWA. We fly more block but have far shorter duty days and much longer layovers than other airlines. You can thank our lack of "hub and spoke" and quick turns for this, or keep believing it is all because of you if it feels better.

Humility is a beautiful concept.

BD