Gordon Bethune

[doh]

I had a bunch of friends over for dinner last night. Yes, we are all airline yahoos. Some one said Gordon Bethune did an interview and said the airline problems are caused by high executive/ management pay. Any one else see that interview?

 

[Publishers]

NO

No but having seen him in action I am sure he said that it caused a problem. That is still far from being the overall airline problems.

What has happened is that the pay is not from operations but a result of stock price. That tends to change the focus of management decisions to one of short term thinking to get the instant boost.

 

[zonker]

Actually he blamed high labor costs (stunning, I know). He didn't mention his own outrageous bonus and salary...

http://www.aviationnow.com/avnow/news/channel_aviationdaily_story.jsp?id=news/beth09263.xml

Bethune Attacks Critics Of Network Carrier Model
By Adrian Schofield
September 26, 2003


Debunking critics who compare traditional hub-and-spoke carriers to dinosaurs, Continental CEO Gordon Bethune says the business model for airlines like his remains attractive and will be crucial to recovery of the global economy.

Speaking recently at the International Aviation Club in Washington, D.C., Bethune said there will always be a place for "a good airline that offers good value and good service on a large network." Airlines that prosper today are those that listen to the market, he said, and the market says people still want to fly internationally and to smaller domestic destinations.

Calling hub-and-spoke carriers the "engines of the global economy," Bethune said without the access they provide "global trade would not exist at the accelerated level and universal scope it has today."

Bethune allowed that traditional carriers' costs are higher, but said this was because staff are more senior than at low-cost carriers that have started up in the past few years.

Continental recently calculated its 2002 financial statements assuming it had the same revenue and network, but the labor cost structure, of JetBlue. Instead of a $350 million loss, Bethune explained, Continental would have had a $450 million profit. The difference is "directly attributable to wage rates and seniority levels," he said.

The Iraq war and the SARS pneumonia scare drastically curbed major carriers' international travel, he noted, while low-cost carriers do not have to worry about international traffic. Some blame also lies with the U.S. government, Bethune said, as the cost of new security measures has been hard for airlines to meet.

Bethune insisted he doesn't want government bailouts, including bailouts of its pension program, but does want government to do its part to move passengers quickly through airports. He said the Homeland Security Department should establish a goal of 30 minutes for moving international passengers through customs and immigration, similar to the 10-minute goal it has set for security screening.

 

[nimtz]

I had a bunch of friends over for dinner last night. Yes, we are all airline yahoos. Some one said Gordon Bethune did an interview and said the airline problems are caused by high executive/ management pay. Any one else see that interview?

I doubt that was his conclusion, cause that would be the ultimate case of the pot calling the kettle black. See Gordo's 13 million compensation package for 2002. He's gone on record as blaming United's ills on management not the employees. BTW, how's the 'ragweed' over at Jetblue these days.

 

[enigma]

Bethune Attacks Critics Of Network Carrier Model
By Adrian Schofield
September 26, 2003

..............................

Continental recently calculated its 2002 financial statements assuming it had the same revenue and network, but the labor cost structure, of JetBlue. Instead of a $350 million loss, Bethune explained, Continental would have had a $450 million profit. The difference is "directly attributable to wage rates and seniority levels," he said.
...............................

I actually respect Continental and Bethune, but I have to ask: are not CAL's wage rates the result of NEGOTIATED contracts? I find it disengenous for management to demagog pay and seniority as the problem when they had the opportunity to reject those rates at the bargaining table.

regards,
enigma

 

[SuperFLUF]

Bethune was willing to give the CAL pilots a higher rate of pay than they have now if they only had the b@lls to stand up and ask for it back in 97'.

He told many a pilot back then that he couldn't believe they took the first offer.

SO, I think some of you may be taking this story out of context. He's not saying that the CAL pilot's make too much. (They've essentially been working under a concessionary contract since 97')
He's just making a valid point about why JB's financial performance is so out of the ballpark. They have a good operation and I think they'll be around for quite a while, but once the airline matures their performance will be on par with the rest.

 

[merikeyegro]

good point

Gordon Bethune seems to have a good head on his shoulders. If any of your read his book, as I am sure you have, he ain't no dummy. He mentioned that high labor costs and seniority are the reason for higher costs in general. Sounds like a pretty fair assessment, if you ask me. He knows you must pay for experience. JetBlue will have the same problem someday. Didn't sound like he was blaming ills on labor.