Is SWA Untouchable?

[Bake]

[/color]Yes, LUV will be here tomorrow.

This scares me, you haven't been correct on one thing in the last year. I sure hope you are on this one. You remind me of stock brokers!! What ever they say buy, I sell and vice versa -- so far it works pretty darn good.

 

[satpak77]

Southwest has been very careful to promote from inside the corporation.

In the book, "Good to Great", a zillion times over worldwide bestseller, they indeed identified "greatness" with corporate American when they promoted from within, not from external (note: this is not a guarantee for success, but overwhelmingly those that promoted from within had better performance than the others that did not).

In addition, the "great" leaders (VP's, CEOs, etc) were the ones that came from the "action", whether it be a sales job, operations type job, or something similar. People rarely rose the ranks from admin type job into CEO.

I am not ex-military, but I would think that this is also applies there too.

later

 

[skykid]

To contine... the world is in turmoil. I would be bet that before we exit our current war, well, we never really exit unless we loose..that we'll will be at war in Korea and in Iran. Maybe both at the same time. This will keep oil prices high.

You are getting a little bit out carried away. If we go to war with Korea and Iran, the airlines with big planes are going to get them "borrowed" by our government, and there isn't going to be anybody flying domestic. I'd stick to your "if only" hope for others demise.

 

[FR8mastr]

I think SWA's hedge numbers will stand up over the next several years. If only there would be a significant liquidation, or two, so that capacity would be reduced and prices would rise....

We can only hope.

Yea lets put a couple hundred thousand people out of work so I can fly across the country for 50 bucs. that will be great!!

Thanks buddy, right back at ya!

 

[SWA tech]

Yes, LUV will be here tomorrow. I just question the chemistry of the relationship if the company hits a wall. I hope I'm wrong.

We have hit walls and worked around them. SWA people make it happen it's
called team work.

 

[Dizel8]

Rez O. Lewshun says:"SWA works with thier unions.... Jetblue is adamently against them".

That is not the case, certainly I have never heard neither David nor Dave say it, however, Neeleman have said, that if jblu gets a union, he hasn't done a good job of keeping the employees happy.

As for SWA, if they continue to execute their plan well, and all indications are such, they will continue to prosper.

 

[FlyBoeingJets]

HUH?

SWA: 41% of expense costs are labor, and labor is 37% of the revenue...both growing numbers over the course of the last few years. Please rephrase, how is labor part of revenue? Are we paying to work?
CASM costs will become meaningless as more pressure is exerted as the lack of pricing power will become more evident in the next few years.
Dude - CASM meaningless? Get a grip: The airline with the lowest costs sets the prices. That is still us, will be us tomorrow and the day after. Sell that POS EMB stock and get some LUV.

Ivauir,

Lowecur is just quoting another way to look at labor cost as a percentage of something. A statistical tool.


You can compare labor costs to total expenses or total revenue. But you can't use these tools in a vacuum.

If SWA's labor costs are a large percentage of total costs, so what. If SWA's TOTAL costs are still lower than someone elses SWA has the advantage. It is then a strength that SWA has very, very low non-labor costs.

Labor costs being a high percentage of total revenue is a different story. For SWA, and other airlines, it means that revenue is declining or not growing like it should. Every company should be worried about their revenue stream. Good revenue can mask an inefficient company's high costs while poor revenue demands a brutally efficient cost structure. Again, this statistic must be weighed against total costs. As long as SWA has lower total costs than other airlines and total costs lower than total revenue, all is reasonably o.k.

But passenger airline revenue needs to improve at some point for the longterm health of even SWA, IMHO. Otherwise changes will occur like concessionary labor contracts.

 

[FlyBoeingJets]

On the flip side, I am very positive about SWA. Low debt is an awesome advantage that will continue to be huge in the years ahead. Costs have to be that much lower at a debt laden carrier to compete against SWA, JetBlue and Airtran.

For this reason I do not see mergers between low debt and high debt airlines. High debt carriers will either find a way to start paying off debt or stay in Ch 11 (or "GE Capital") protection.

 

[Rez O. Lewshun]

Rez O. Lewshun says:"SWA works with thier unions.... Jetblue is adamently against them".

That is not the case, certainly I have never heard neither David nor Dave say it, however, Neeleman have said, that if jblu gets a union, he hasn't done a good job of keeping the employees happy.

As for SWA, if they continue to execute their plan well, and all indications are such, they will continue to prosper.

I've listened to a DN webcast type presentation (2 years ago?) at a business college where he stated that unions were beneficial in the industrial revolution in terms of work rules, child labor, etc but there wasn't really a place for unions in todays business world. I took that to mean certianly not in his business world.

At the risk of running this thread into a 'union at jB' discussion, the fact is you can't have the DA represent both the gov't and the defendant at the same trial.

This is not to say that labor/managment is the difference between right and wrong, it's just that management can't objectivly apply the interest of labor. (even at LUV) AND vice versa. That is why unions (thank god) don't run companies.

The E190 rates at jB are and indication of what I am talking about....

SWA understands all of this and uses its unions as partners and a player on the same team, for the same goal. And just like any team there are disagrements between the players, but in the end all the players want the same thing...to win.

A managment/union team that understands this, will do well....

Thoughts?

 

[CSY Mon]

I still believe that once UAL discharges their pensions, they will merge with AMR

Ha-ha, that's a good one.
Been smoking crack Mr. Cure...?

Nuff said

 

[lowecur]

Ha-ha, that's a good one.
Been smoking crack Mr. Cure...?

Nuff said

Smok'ns better n sniffing one's own crack, you double jointed pin-head!

 

[Dizel8]

"The E190 rates at jB are and indication of what I am talking about"

I think that is a disingenious argument. The pilots at SWA has only recently been amongst the highest paid, for years they were "languishing" on the lower end of the spectrum. Yet, ask any furloughed pilot and I would imagine he or she would much prefer the steady income at SWA to the on again, off again life. As for the SWA bunch, they seem pretty content as a whole.

Secondly, even during the best of times, there were plenty of bitching going on at the big legacies, so apparently, the money did not cure all ills.

Could the pay at jetblue be better, of course it could, it could be like the halcyon days in the late 90's early 2000's, but with the invariable fluctuations of the economy, we have been shown, that it was not working. Not so much because of pay, but because the pay vs productivity was not working.

When the legacies was able to dictate prices to the last minute traveller, all was well, but as for now, those days are gone and we have to face reality, it is currently a consumer driven market. A market in which SWA thrives and prospers.

I am fascinated by the argument, as previously seen, that jblu will have a second class citizen on the 190. If anything the pay is pretty darn logical and based on seats, unlike what you see at some other carriers. If I recall correctly, the NWA pay on the 74, if based on the DC-9 and seats, should be $450. It isn't, yet I do not hear about the second class citizens at NWA. Nor do I hear an outcry, because AWA has a single payscale.

Obviously, jblu management are not dummies, they are well aware of the markets they wish to serve and what profits, if any, they will be able to make. Is it better to underpromise and overdeliver or should they set a payscale that would be unsustainable?

As for the union argument, unless I see compelling reason to differ, I will take Neeleman at his word, that if he does right by his employees there will not be a need for representation. Now having said that, there are other reasons for a union, which does not have to do with pay, but simply about prioritizing what the pilots want and speaking with unified voice, not of threats but of desire and reasons. That would be similar to what is at SWA.

To bring it back to the topic at hand. SWA, as long as they continue to execute the gameplan so exceedingly well, they will continue to prosper.

 

[Rez O. Lewshun]

Dizel8,

Good reply...

It's not that the B747 rates should be at $450, its the Dc-9 rates should be less.

The heavies subsidize the FK100 pilot rates at AMR for example, not the other way...

So...does that mean the E190 rates are about right? In the traditional Legacy world, maybe not. But in the jB world...maybe so...

Thoughts?

 

[FlyBoeingJets]

Dizel8,

It's not that the B747 rates should be at $450, its the Dc-9 rates should be less.

The heavies subsidize the FK100 pilot rates at AMR for example, not the other way...

So...does that mean the E190 rates are about right? In the traditional Legacy world, maybe not.

Thoughts?

The above may not be right or wrong, just a point of view. The pay rates on smaller, and larger, aircraft affects how management uses them in the fleet mix. To improve profit will management expand the 100-150 aircraft fleet or the 180-240 aircraft fleet??

It could be the smaller fleet feeds the bigger, international fleet and they both grow at the same time. This is also why the scope clause issue is hot.

The small hairs on my neck stand up when I hear "the traditional way things have been are...." There is nothing traditional about this industry lately. I don't think it will ever get back to it either.

 

[superrav]

i think its a insult to the hard working individuals in the industry to sell tickets for 99 dollars across the country. Yes, business is business...your flying in a multi million dollar airplane, it just shouldnt be this cheap.....my opinions of course..

 

[Dave Siegel]

Just because they know how to save a nickle at Marriot does not mean it will work at an Airline.

Great analogy, Canyon!