Dennis Miller
What about my Member
- Joined
- Mar 13, 2003
- Posts
- 200
Duane Woerth's Message to the Board of Directors.
This is Duane Woerth with a message to the Board of
Directors on Sunday, January 23.
Late last week, most of the passenger airlines-once
again-reported staggering losses. Several decided that
the last quarter of 2004 was also a particularly good
time to take extraordinary one-time charges, such as
Delta's decision to write down significantly the book
valuation of wholly owned subsidiaries Comair and
Atlantic Southeast. But at the end of the day, the
story for 2004 seemed to be fuel costs. Northwest and
American, for example, each claimed that they would
have made about $300 million for the year had fuel
prices stayed the same as 2003. Other airlines made
similar claims. Even Southwest, which made $56 million
last quarter because of 85 percent of its fuel is
still hedged at $26.00 a barrel-even Southwest without
that hedge would have lost about $110 million in the
fourth quarter, too.
Well-fuel prices did not remain at 2003 levels, and,
unlike every other industry in the world, the airline
industry seems to be the only industry that can't seem
to pass on fuel prices to its consumers. Every other
form of transportation--not just air cargo but the
taxicabs, bus companies . . . incredibly every single
industry that delivers any kind of product, from food
to raw materials to finished goods of every kind--are
passing on increases in fuel prices. Construction
companies that routinely add a fuel surcharge to
deliver their construction materials to a job site-now
there is lots of competition in the construction
business, but that doesn't stop them from passing on
fuel prices as well as the increases in the price of
the lumber, plywood, or bricks. They don't say that
they have no pricing power just because there is
competition.
After a steady diet of deep concessions for the last
three years, airline workers, airline shareholders,
and airline creditors have every right to no longer
salute passively as airline managements continue to
lower prices to World War II levels in 2005 and simply
use the lame excuse that they just can't help
themselves. Network carriers like to blame,
exclusively, LCCs, which now represent about 30
percent of the market, for their pricing problems.
However, the largest LCC--Southwest--serves only 60 of
the nation's 429 airports. JetBlue and other LCCs
serve even fewer. Can network carriers that still
control 70 percent of the total capacity of the
domestic market and nearly 100 percent of the small to
medium-size cities-over 300 of those cities-continue
to blame LCCs for everything? Perhaps all the capacity
increases--the senseless Internet wholesaling by
massive amounts of total capacity and the below-cost
price-cutting experiments--are causing more
self-inflicted damage than the LCCs. Could that be
possible? Southwest doesn't use Internet wholesalers.
Southwest did not surrender control of its
distribution systems, and hence, Southwest still
controls the price of its tickets. And all of you know
that Southwest is more expensive in many cities than
our network carriers are today.
It is time to hold management accountable for their
abysmal revenue performance. In terms of bankruptcies,
the sagas of United and US Airways are given massive
media exposure. However, the bankruptcies of Hawaiian,
Aloha, ATA, and Polar and Atlas are also causing
particular damage to our industry in terms of the
piloting profession. They are also giving clear
evidence of how the bankruptcy process has changed.
The bankruptcy process used to focus on restructuring
debt. Now it focuses primarily on using 1113 to hammer
labor, sometimes exclusively. Incredibly, at
Hawaiian--with the exception of Boeing and Ansett--all
of the creditors and vendors are to receive 100
percent of everything owed to them--no haircuts at
all, not even a tiny trim--100 percent of everything
owed. However, Hawaiian's management is using 1113 to
gouge the pilots simply because the law says they can
try. Aloha says they have to do the same thing because
Hawaiian is. This is becoming all too familiar.
American's Trans Air pilots are still reeling from
their abrupt fragmentation, where there is plenty of
money for DIP loans, lots of money for the gates at
Midway, lots of money for the aircraft
leaseholders--just no money for the pilots.
On the pension side-on pension legislation-months of
intense efforts to consolidate an airline coalition to
propose long-term, meaningful pension solutions is
coming to a boil. I am pushing all affected parties to
resolve their few remaining differences of opinions
and priorities so that we can get a new bill and sign
up cosponsors and launch this new bill in the Senate
ASAP. On February 3, I am speaking to a special
pension forum hosted by the Government Accountability
Office, where I hope we can stir up considerable
support for our bill--a pragmatic approach that will
save pensions and prevent the avalanche of terminated
plans winding up on the PBGC's doorstep.
This is Duane Woerth with a message to the Board of
Directors on Sunday, January 23.
Late last week, most of the passenger airlines-once
again-reported staggering losses. Several decided that
the last quarter of 2004 was also a particularly good
time to take extraordinary one-time charges, such as
Delta's decision to write down significantly the book
valuation of wholly owned subsidiaries Comair and
Atlantic Southeast. But at the end of the day, the
story for 2004 seemed to be fuel costs. Northwest and
American, for example, each claimed that they would
have made about $300 million for the year had fuel
prices stayed the same as 2003. Other airlines made
similar claims. Even Southwest, which made $56 million
last quarter because of 85 percent of its fuel is
still hedged at $26.00 a barrel-even Southwest without
that hedge would have lost about $110 million in the
fourth quarter, too.
Well-fuel prices did not remain at 2003 levels, and,
unlike every other industry in the world, the airline
industry seems to be the only industry that can't seem
to pass on fuel prices to its consumers. Every other
form of transportation--not just air cargo but the
taxicabs, bus companies . . . incredibly every single
industry that delivers any kind of product, from food
to raw materials to finished goods of every kind--are
passing on increases in fuel prices. Construction
companies that routinely add a fuel surcharge to
deliver their construction materials to a job site-now
there is lots of competition in the construction
business, but that doesn't stop them from passing on
fuel prices as well as the increases in the price of
the lumber, plywood, or bricks. They don't say that
they have no pricing power just because there is
competition.
After a steady diet of deep concessions for the last
three years, airline workers, airline shareholders,
and airline creditors have every right to no longer
salute passively as airline managements continue to
lower prices to World War II levels in 2005 and simply
use the lame excuse that they just can't help
themselves. Network carriers like to blame,
exclusively, LCCs, which now represent about 30
percent of the market, for their pricing problems.
However, the largest LCC--Southwest--serves only 60 of
the nation's 429 airports. JetBlue and other LCCs
serve even fewer. Can network carriers that still
control 70 percent of the total capacity of the
domestic market and nearly 100 percent of the small to
medium-size cities-over 300 of those cities-continue
to blame LCCs for everything? Perhaps all the capacity
increases--the senseless Internet wholesaling by
massive amounts of total capacity and the below-cost
price-cutting experiments--are causing more
self-inflicted damage than the LCCs. Could that be
possible? Southwest doesn't use Internet wholesalers.
Southwest did not surrender control of its
distribution systems, and hence, Southwest still
controls the price of its tickets. And all of you know
that Southwest is more expensive in many cities than
our network carriers are today.
It is time to hold management accountable for their
abysmal revenue performance. In terms of bankruptcies,
the sagas of United and US Airways are given massive
media exposure. However, the bankruptcies of Hawaiian,
Aloha, ATA, and Polar and Atlas are also causing
particular damage to our industry in terms of the
piloting profession. They are also giving clear
evidence of how the bankruptcy process has changed.
The bankruptcy process used to focus on restructuring
debt. Now it focuses primarily on using 1113 to hammer
labor, sometimes exclusively. Incredibly, at
Hawaiian--with the exception of Boeing and Ansett--all
of the creditors and vendors are to receive 100
percent of everything owed to them--no haircuts at
all, not even a tiny trim--100 percent of everything
owed. However, Hawaiian's management is using 1113 to
gouge the pilots simply because the law says they can
try. Aloha says they have to do the same thing because
Hawaiian is. This is becoming all too familiar.
American's Trans Air pilots are still reeling from
their abrupt fragmentation, where there is plenty of
money for DIP loans, lots of money for the gates at
Midway, lots of money for the aircraft
leaseholders--just no money for the pilots.
On the pension side-on pension legislation-months of
intense efforts to consolidate an airline coalition to
propose long-term, meaningful pension solutions is
coming to a boil. I am pushing all affected parties to
resolve their few remaining differences of opinions
and priorities so that we can get a new bill and sign
up cosponsors and launch this new bill in the Senate
ASAP. On February 3, I am speaking to a special
pension forum hosted by the Government Accountability
Office, where I hope we can stir up considerable
support for our bill--a pragmatic approach that will
save pensions and prevent the avalanche of terminated
plans winding up on the PBGC's doorstep.
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