Frontier pay cuts?

[Cardinal]

$20-30 million.

 

[CitationUltra]

Can't speak for the others, but at NWA our pay cuts went directly to the NWA executive management team. With 30% pay cuts and drastic work rule changes, we gave NWA 500 million and they shortly there after awarded themselves 400 million in the form of bonuses. I think the last 100 million went towards buying EMB175s for Compass.

The AA paycuts also went to the management "team". Plus AA never declared bankruptcy, but that wasn't why. They always maintained a very large cash warchest, that was partially funded by AMR, when it owned Sabre.

 

[CitationUltra]

FBN makes an excellent point. F9's managers already gave themselves a protected six month severance package.

I see a big difference between the cuts being a required condition of DIP financing and the scenario you are presented with. In your case they are promising nothing in exchange for your pay.

In the grand scheme of the airline's budget, the cuts are not even going to make a marginal difference. The fix for your problem is increased revenue. Raise the ticket prices, the other airlines will follow and F9 has a nice product.

Good luck with a tough decision.

If it were really to obtained DIP financing, they would identify a financing source, and the source would likely make certain cost reductions a contingency of the financing--not the other way around.

As it now stands, in the event that Frontier finds a DIP financing source--no certainty by any means in this market--they may insist on further cuts!

 

[CitationUltra]

Heck, on Friday the COO (who was hired by Potter) said it's unfortunate Menke didn't get here sooner.

He's probably right. But it's only accurate if the new CEO would have made the critical decisions that needed making back in 2006, or would have avoided some or all of the major bonehead moves that Frontier made in '06.

 

[CitationUltra]

Wonder how big a dent the DHC ops put in their finances??

They burned up something north of $25 million, or about three times what it should have cost.

This is an example of an area in which the Frontier management was definitely asleep at the wheel during the last quarter of 2006 and the first half of 2007. They kept making press statements that this was the fault of the FAA, and it was definitely NOT the fault of the FAA.

 

[StaySeated]

tic toc tic toc

Alright, read as slowly as necessary to comprehend the following info.

No one at F9 is stating that a pay cut is going to save the airline.

This paycut vote is a desperate measure to reduce our casm to the lowest in the industry in an effort to attract financing.

Noone should be talking about snap back in the fall. Without DIP, we are done. I would love it if we could hold off the concession until we have financing, however, you need to attend a roadshow if you think we have time to get DIP, then vote, then convince the creditors committee to keep this place in business.

The fate of this company is going to be decided by seven people in a room in NY, and very soon.

 

[The Victors]

For the rest of 2008 and 2009, it is pretty simple. Frontier burns about 200 million gallons of fuel a year but pays about between $1 to $1.25 a gallon more than Southwest. That equates to about a $250 million dollar a year advantage. Fuel costs are now about 50% of total costs whereas pilot labor cost are usually about 10% of total costs. That why fuel matters much more than labor.

Southwest airlines is a well managed airline. When you feel your competition is on the ropes, you go for the kill. They know their cost advantage is greatly reduced on Jan. 1, 2010, so they will try like hell to make sure United and Frontier don't see 2010. Southwest has a strong brand, so it usually doesn't take them long in new markets to grab a signicant amount of revenue.

What exactly are you talking about? The fuel hedges go into 2013 and I'm sure that GK will be up for buying more.

 

[The Victors]

That internal memo reads just like the one we got at Independence Air. You can fly the planes for free and still go out of business. Say "NO", make a good pay check and start looking for a new job, Say "Yes", make a smaller pay check and still end up looking for a new job.

Yes is sucks guys/girls, been there done that and have the T-shirt. No one can really tell you what to do or how to vote, just understand that your pay is not what drove your company into CH.11 it was your over paid management team that does not know how to run an airline.

Indy Air management team walked away with millions in their pockets, we got nothing....

Good Luck.....

This guy is exactly right.

 

[maxblast72]

What exactly are you talking about? The fuel hedges go into 2013 and I'm sure that GK will be up for buying more.

It is true that they have hedges past 2010, however from what I have heard, their major advantage ends Jan 1, 2010. Yes, Southwest has the cash for future hedging, but as of right now, not many good future hedges are being offered right now.

 

[Golden Falcon]

At the end of the day, paycuts never saved an airline did they???

 

[slaquer5]

It is true that they have hedges past 2010, however from what I have heard, their major advantage ends Jan 1, 2010. Yes, Southwest has the cash for future hedging, but as of right now, not many good future hedges are being offered right now.

So great one , I am taking it that you think oil is no longer going to go up. Please tell me the reasoning so I can invest accordingly

 

[pipe]

based on the average pilot there at F9 making $100k-- you're looking at giving the company a little more than $2.5 million over the 3 months- ($10million if it lasts a year) -- in the airline financing world, is that really going to save the situation? Think about what that actually will buy frontier- it's not nothing, but it's close.

One quarter's pilot paycuts will not cover the bankruptcy costs of ONE DAY!!!!

This pay cut will make no difference in the survival prospects of the company -- it will make a difference in a family's bottom line.

DON"T DO IT!!! And yes, I have been through it before, and I've even worked at F9 before.

PIPE

 

[USMC319]

DON"T DO IT!!! And yes, I have been through it before, and I've even worked at F9 before.
PIPE

Pipe,
You are one of the level headed FI guys, but (everyone) please don't get on here and tell F9ers how to vote.

Here are the simple facts;
The vote does not matter. The company is worth more dead than alive right now. The LOA for the temporary pay concesion is simply part of a comprehensive effort to lower F9s CASM to a point that they may attract DIP. It may or may not work, but that is what the company is pitching to WaLL Street and that is what they will deliver. So, that means a NO vote will trigger a 1113e which will most likely abrogate the FAPA CBA. In that case not only will F9ers lose their 14.5% pay but they will also most likely lose their work rules, which relatively speaking aresome of the best in the industry. So a YES vote will allow you to talk tough at the bar, how you stood on your principles but really that and $4 will buy you your next beer.

Whether the vote is YES or NO, F9 will need DIP to continue past September. If oil is still at $125/bbl at that time these temporary pay cuts will look modest in comparision to what will lie ahead.

So at the end of the day, why don't you all save your comments and suggestions for your own pilot group when (not if) you are presented with this scenerio in the next 12 months.

Good luck to all. US aviation is dead.

 

[hawk996]

USMC, you are correct. No one can tell what or how to vote. Just understand that I was in your shoes and no matter what or how I voted, we still lost our jobs. Your family sure could use that 14.5% each month you stay in business.

If I could find the memo from Indy Air, it would read just like the one your management sent to you. Our management turned away Branson in the final moments. Our management team walked away from a deal that would have kept money and food on the table for my family, but instead turned the deal down and walked us right out of business. They ran away with millions in their pockets and we were left high and dry.

What has your management team given up? What will they get when the doors close?

Your pay will not mean a thing to the people making the call in a few days, but it sure means a lot to your family.

Keep what you have while you still have it, it will pay off for your family down the road.

Good Luck, god bless my friends. It is a long hard road to walk in front of you, so keep you heads up and do what you feel is the right thing for your families.

Hawk

 

[vtwo]

Ditto

management is very good at using your emotions against you. After all they have no Emotion involved. just Numbers. your family needs are not thier concern.

They will use tried and true methods to get what they can from you. It will have no bearing on the outcome.
That Is from experience. I was told the same things as My airlines kept cutting down.

"we need paycuts so you can keep your Jobs"
next was "we are still loosing money. now we will layoff and still need more cuts, Oh thanks and your the reason we are a great team". Bla Bla Bla. next was Bk court. we need more cuts from employees to save jobs .

Then "thanks for the cut guys we're in this together". Bla Bla Bla. then in the middle of the night they slam the door closed and screw us all anyways. while they move assets to other parts of their company's and take tier wages, bonuses and retirement.

Don't take any pay cuts. If they truly are needed then they will get them. Labor has never bankrupted an airline. Mismanagement has. and Mismanagement won't be fixed by employee's subsidizing Managements failures.