Frontier Asked for 20% Cut?

[radarlove]

YIPPPPEEEEEEEE! HORAAAAAAAY! This has detereorted into another mil vs. civ thread.

Hey, he started it.

"Mom! Mo-ooooom! The military guys are bragging again!"

 

[YourPilotFriend]

If United pays say 135$ and Frontier is paying 155$


A couple of comments:

1. There is not a pilot at Frontier making $155 per hour.

2. Why no mention of SW. We all know a 737 CA makes alot more than a Frontier or United equivalent.

Since the size of SWA is so much bigger than any other single fleet LCC, it can still afford to pay it's pilots extra according to unit cost. i.e. the more airplanes you got the lower the operational costs the more avialable pay there is for pilots. SWA has not asked for paycuts yet because its structure still has the pricing power to produce profits. However, simply put SWA pricing power is artificial since most legacies can take the hit of charging SWA type prices on their own routes and make large profits. So current legacies are simply following SWA rate increases becuase it makes them even bigger profits. If the legacies keep up with this trend, which I expect they will, SWA will not change and offer its pilots their current contract at all costs. However, if the legacies choose not to increase fares along with SWA as their fuel hedges run out SWA will see large drops in its capacity. SWA will then have to cut fares in order to maintain capacity, since falling below break even capacity would liquidate that company in a less than a year. To gain back the competive edge gained by the atrocious paycuts the leagacies have got from employees, SWA would need to cut pay and benifits by up to as much as 40%.

 

[Benhuntn]

YPF

When Herb and Gary are gone make sure you send in your ap for the CEO position. Sounds like you have it all figured out already....but some how it smell like dog doo to me. Or as some call it Bovine Scatology

 

[YourPilotFriend]

YPF

When Herb and Gary are gone make sure you send in your ap for the CEO position. Sounds like you have it all figured out already....but some how it smell like dog doo to me. Or as some call it Bovine Scatology

Ok explain to me the success of SWA, and don't give me that employee/management relationship Bull$hit. Since we all know the legeacy airline way of life before it went down the $hitter was way better than SWA.

Personally, I think SWA made its money because it charged lower fares and could make money doing it. That's because it had a lower operational cost and paid its employees less. Remember SWA senior captains are the original airline concessions pilots. Now they are an even cost operator and without fuel hedges are the highest cost operator.

 

[radarlove]

The UAL machinists leaked the company's proposal for a loan. In it, McKinsey consultants showed that the difference of efficiency between a network (hub and spoke) and a point-to-point airline is 20%, using their numbers.

So a point-to-point airline, of the same scale as a network airline will have costs 20% cheaper--it's built into the business model.

Smaller point-to-point airlines don't have the same advantages, due to economies of scale. That's why JBLU is trying to grow up so fast, they've done the math.

 

[FlyBoeingJets]

However, if the legacies choose not to increase fares along with SWA as their fuel hedges run out SWA will see large drops in its capacity. SWA will then have to cut fares in order to maintain capacity, since falling below break even capacity would liquidate that company in a less than a year.

To gain back the competive edge gained by the atrocious paycuts the leagacies have got from employees, SWA would need to cut pay and benifits by up to as much as 40%.

I'm hearing you. Please elaborate on the 40% number. I know there is some rounding done for simplicity, but what are you looking at? Fuel hedge changes, debt reduction at legacies, comparison of non-fuel and employee costs?

I tend to use the CASM and RASM info from quarterly reports. Lots of interesting info like debt servicing payments, employees per airplane and lease payments.

 

[YourPilotFriend]

I'm hearing you. Please elaborate on the 40% number. I know there is some rounding done for simplicity, but what are you looking at? Fuel hedge changes, debt reduction at legacies, comparison of non-fuel and employee costs?

I tend to use the CASM and RASM info from quarterly reports. Lots of interesting info like debt servicing payments, employees per airplane and lease payments.

That's the problem, what you see in the quartely reports are averages at the legacies. They take all their CASM and average them together. At NWA the CASM spread looks like this international is running about 20 cents a mile domestic is about 8.5 cents a mile, and regional is about 15.5 cents per mile. When put together it's about 11 cents a mile for the entire operation. SWA has only one CASM that is about 8.0 cents. When SWA fuel hedges run out it will go up to about 9.5 cents a mile. So at NWA the competeing seat will be about 1 cent lower per mile 11% lower than SWA. When you consider that SWA has such an absolutely lean operation, the only place the can get cuts is in the employee area. SWA employee costs are 3.14 cents a mile and NWA is 2.12 cents a mile. So for SWA to get an exact match of the CASM it would need to reduce the CASM by 1 cent per mile. A 33% reduction for all employees, but since that would be too much for some employee groups more would have to be taken from the pilots.

Furthermore, NWA will be offering additional service on domestic flights because of the higher RPM on the international routes. So not only will SWA be more expensive, it will offer less service. This is all compliments of the United States bankruptcy law.

 

[radarlove]

Wow. So SWA should be running scared of NWA? Dogs living with cats!

 

[AnimalTale]

First year pay cut to 30 an hour
years 4-10 will have a 2 year pay freeze
we gain more 401K (less years to get vested)
they get the two year freeze to help pay for Lynxx
The pilot group is paying for Lynxx so as secure the future
Jeff Potter sent out a letter one week ago, and the last line sais it all. We need Lynxx to survive in the current market. Once agian the fear factor is alive at f9 and everyone is will to cut their pay. Say hell know and lets see potter sell some of his 195000 stock options to help pay for it. FAPA GOOD LUCK BOYS, YOU SHOUD HAVE GOTTEN AN EDUCATION SO YOU COULDN'T BE BULL********************TED

NO pay cuts for FOs. Only new hire pay will go down.
Captain Pay freeze 1 to 2steps.
401k matching monthly
B-Fund Included


Cya

 

[FlyBoeingJets]

SWA employee costs are 3.14 cents a mile and NWA is 2.12 cents a mile. So for SWA to get an exact match of the CASM it would need to reduce the CASM by 1 cent per mile.

Looking at the employee portion of CASM is a good place to start.

But the pieces don't seem to be fitting together. With oil down near 60 we should see some serious competition instead of shrinkage at NWA. Perhaps it is too early to tell. Many say the economy, and travel, may be slowing down for awhile.

There seems to be a belief at AA and perhaps at NWA that keeping the number of furloughed pilots up is good for the corporation. Force a lean structure on the pilots to "help" them fly extra in the summer and let them fly normally in the fall and early spring. Some need the extra flying to make ends meet with the lower pay. I bet its also good for bargaining.

How does this affect Frontier? What is Frontier's CASM again? If UAL is now kicking you in the rear-end on CASM then expect a bonafide push to cut your pay by 20%. Don't even mention SWA pushing around the dirt in your sandbox. What will you do?