Is the Southwest pay/contract sustainable at current market?

[jonjuan]

Delta's off-balance-sheet liabilities increased more than the reduction in on-balance-sheet debt. From 2010 to 2011 pension liabilities increased $2.8 billion and stand at roughly $14 billion. American went into bk with $8 billion in pension obligations. Keep up the record profits though, you need it to get your retirement.

http://blog.newconstructs.com/wp-co...edStatusPensionsAndPostretirementBenefits.pdf

I dont think delta has a retirement pension anymore, at least for pilots. They have a 15% of w-2 contribution dumped into a 401k. How does that compare to what you get?

 

[Lear70]

Delta's pensions got frozen in the bankruptcy.

Payments will continue on that debt, but the debt will slowly reduce to zero as retirees stop drawing benefits (death. sorry to be morbid, but it's a balance sheet fact).

As long as the other debt is paid down, Delta should be fine, pension debt will flux up and down yearly until the last of the covered retirees no longer draws a pension, but as long as other debt goes down at the same Dollar amount that pension liabilities go up on a long-term scale (not just yearly, but over a 7-10 year snapshot), they aren't any worse off. Definitely something to watch for...

 

[BILL LUMBERG]

Pretty weak arguement Bill.

Southwest has fought tooth and nail year after year when the larger carriers tried to sue them into oblivion. Southwest succeeded with every roadblock thrown it's way.

Your throwing up the Wright Amendment? It was yet another political ploy by Jim Wright to stifle an airline that American was concerned about. Even then, we succeeded by using thru flights for our passengers to reach other cross country destinations.

Undercut employee benefits and peanuts? There have been plenty of SW pilots retire multi-millionaires because they were included in the success of the company, but that doesn't fit conveniently into your arguement. Delta was the one that raped their pilots by striping the pensions. Those that were close to retirement and elected to not take an early out (maybe because they still believed in Delta as a company) were left with nothing thanks to going into bankruptcy.

So not paying your people a commensurate wage or offering them a pension is honest competition? I just want to see if I got that straight. Because airlines promised their people a steady retirement, they shouldn't get court help when that adds up to billions?

It's easy to claim success and "be the price leader" on a route when you don't have to pay Billions in promised employee benefits established before you guys were a scribble on Herb's Wild turkey fueled business plan.....

If another competitor comes in and pays nothing and tries to undercut the warriors, don't blame them......again, I wish a strong Southwest for the good of the industry and it's people. We don't need to race to the bottom and both of our airlines have contributed in one way or another.

 

[Scoot 11]

Delta's pensions got frozen in the bankruptcy.

Payments will continue on that debt, but the debt will slowly reduce to zero as retirees stop drawing benefits (death. sorry to be morbid, but it's a balance sheet fact).

As long as the other debt is paid down, Delta should be fine, pension debt will flux up and down yearly until the last of the covered retirees no longer draws a pension, but as long as other debt goes down at the same Dollar amount that pension liabilities go up on a long-term scale (not just yearly, but over a 7-10 year snapshot), they aren't any worse off. Definitely something to watch for...

Wrong. Delta's pensions got TERMINATED in bankruptcy. NWA, however, is a complete different animal.

 

[Lear70]

Well, since they're merged now, I was speaking in terms of their general balance sheet, but if you want to get technical about it.

 

[Scoot 11]

Well, since they're merged now, I was speaking in terms of their general balance sheet, but if you want to get technical about it.

You're still not talking in technical terms. 2 separate groups have 2 different retirement plans. But don't let facts get in the way of a good argument.

 

[Lear70]

You're still not talking in technical terms. 2 separate groups have 2 different retirement plans. But don't let facts get in the way of a good argument.

So you're trying to say Delta keeps two sets of books for legal reporting purposes? One for Delta and NWA separate pension obligations and one for both combined that they report to Wall Street?

Yeah, didn't think so...

The point was that the debt is reducing for pensions and isn't being further incurred as it relates to the Company's balance sheet. Wasn't trying to make a DAL/NWA pension comparison.

 

[igneousy2]

So the government deregulates the airlines, the free market has a chance to take over, people show that allowed to choose they would rather pay less for a ticket, than get a steak and lobster dinner on the flight. Airfares are lower than they ever were. There are more airline pilot jobs at the majors than there ever were. There are more people flying, more miles on more airplanes than ever. And deregulation is a failure?

The failures cost the governent a whole bunch of money because the government chooses to bail these companies and their employees out. And you see the problem is the deregulation? The growing culture of turning to the government to solve all of our problems has nothing to do with this?

The PBGC, FDIC, Fannie, Sallie, Freddie; they all need to go. The government needs to get out of the business of back-stopping just about every financial transaction americans undertake. The problem is not too little government, the problem is too much government.

 

[pilotyip]

So the government deregulates the airlines, the free market has a chance to take over, people show that allowed to choose they would rather pay less for a ticket, than get a steak and lobster dinner on the flight. Airfares are lower than they ever were. There are more airline pilot jobs at the majors than there ever were. There are more people flying, more miles on more airplanes than ever. And deregulation is a failure?

The failures cost the governent a whole bunch of money because the government chooses to bail these companies and their employees out. And you see the problem is the deregulation? The growing culture of turning to the government to solve all of our problems has nothing to do with this?

The PBGC, FDIC, Fannie, Sallie, Freddie; they all need to go. The government needs to get out of the business of back-stopping just about every financial transaction americans undertake. The problem is not too little government, the problem is too much government.

Hey this is FI, stop dealing in reality. This site lives in a fantasy world that if the gov't stepped in and reimposed regulation, all pilots would all be paid the same as they were in 1977. Being in the upper 10% of all wage earners in the US working 15 days a month, just isn't good enough for some people. But if you because you...........disappointed

 

[Lear70]

So the government deregulates the airlines, the free market has a chance to take over, people show that allowed to choose they would rather pay less for a ticket, than get a steak and lobster dinner on the flight. Airfares are lower than they ever were. There are more airline pilot jobs at the majors than there ever were. There are more people flying, more miles on more airplanes than ever. And deregulation is a failure?

The failures cost the governent a whole bunch of money because the government chooses to bail these companies and their employees out. And you see the problem is the deregulation? The growing culture of turning to the government to solve all of our problems has nothing to do with this?

The PBGC, FDIC, Fannie, Sallie, Freddie; they all need to go. The government needs to get out of the business of back-stopping just about every financial transaction americans undertake. The problem is not too little government, the problem is too much government.

Oh I agree with you 100%.

The problem is, Washington doesn't.

Or, more to the point, Washington doesn't believe in less government. They talk about it a lot, but it doesn't happen; just the opposite in fact.

I've preached ad nauseum on here about the need to regulate an industry that won't regulate itself by simply requiring that EVERY flight segment be priced AT or ABOVE it's CASM point on a per-ticket basis, OR fixing the bankruptcy code to avoid multiple stops in Bankruptcy as a cost-management tool.

Absent that, the only way to fix the problem is to re-regulate the industry. Management won't fix the problem (or can't because other airlines will undercut them), new start-ups continuously come in to undercut costs when other airlines' (even former LCC's) costs creep up due to the age of employees, and it never ends.

Not many other alternatives.

 

[Lear70]

Hey this is FI, stop dealing in reality. This site lives in a fantasy world that if the gov't stepped in and reimposed regulation, all pilots would all be paid the same as they were in 1977. Being in the upper 10% of all wage earners in the US working 15 days a month, just isn't good enough for some people.

Oh yes, making the same thing now (which is actually less when adjusted for inflation) that I made 14 years ago is SO awesome... and I just LOVE being compared to the average American who likes being on government assistance and has no interest in getting off the dole.

Do you have ANY idea how many people get on full disability every, single day in this country for B.S. reasons, how hard it is to get them OFF disability once they're on it, and how few people actually INVESTIGATE the NEED for them to be on disability? We have 8 physicians in the immediate family who see this every day and talk about how the problem is spiraling out of control. But you want to compare us to an income demographic that INCLUDES people LIVING on Welfare? Or compare us to people who flip burgers at McDonald's?

How about you compare our income to people who graduated college. Here's your sign:

http://www.payscale.com/research/US/Country=United_States/Salary/by_Degree

Now go through all the B.S. degrees and average THOSE salaries, including B.S. Engineering, B.S. Computer Science, etc. Take out the Masters and J.D.'s / Ph.D's / M.D.'s, and just do B.S. degrees. You're going to find that pilots are right around the 60-65% level. So you might want to revisit your "10%" idea.

You really think we're compensated appropriately as an industry? With most Legacy carriers still living in a Bankruptcy contract? Sorry, but barely cresting 6 figures over age 40 being in this career over 20 years isn't exactly what I'd call an industry "success story" when, corrected for inflation, I should be making over twice that compared to what the industry was when I started my flight training in the 80's.

But if you because you...........disappointed

I'm sorry, what? drinking after your all-night flying? (been there, done that... BREAKFAST BEER!)

:beer:

 

[jonjuan]

Oh I agree with you 100%.

The problem is, Washington doesn't.

Or, more to the point, Washington doesn't believe in less government. They talk about it a lot, but it doesn't happen; just the opposite in fact.

I've preached ad nauseum on here about the need to regulate an industry that won't regulate itself by simply requiring that EVERY flight segment be priced AT or ABOVE it's CASM point on a per-ticket basis, OR fixing the bankruptcy code to avoid multiple stops in Bankruptcy as a cost-management tool.

Absent that, the only way to fix the problem is to re-regulate the industry. Management won't fix the problem (or can't because other airlines will undercut them), new start-ups continuously come in to undercut costs when other airlines' (even former LCC's) costs creep up due to the age of employees, and it never ends.

Not many other alternatives.

If you were to put in place regulations like you espouse, there would be fewer pilot jobs and fewer people traveling. Heck, there would be fewer jobs in general as people also travel via airlines to grow their businesses.

 

[Lear70]

If you were to put in place regulations like you espouse, there would be fewer pilot jobs and fewer people traveling. Heck, there would be fewer jobs in general as people also travel via airlines to grow their businesses.

That's fine with me. Airlines have been cutting ASM's, fleet size, and pilot forces, in small increments, for a while now.

We're going to retire, by sheer Age 65 numbers (barring an increase in age that I don't think you'd get passed because of ICAO requirements), about 20,000 pilots over the next 10 years at the Legacies (Delta, UAL, AA, UAir). If we only replaced 50% of those because of a 25% shrinkage of the business model due to actually MAKING AIRLINES PROFITABLE, you'd still have upward mobility of 10,000 pilots at those carriers (1,000 per year, easily sustainable from Regional/Charter/Ad-hoc carrier pilot supply), while simultaneously increasing the basis for bargaining for better wages.

I don't have a problem with that... Not going to upgrade until I'm 54 anyway at this point. What's another 3 or 4 years if the money is better anyway? It's less of a passion or a calling at this point than a job, so show me the money (and a profitable industry).

 

[jonjuan]

How about you compare our income to people who graduated college. Here's your sign:

http://www.payscale.com/research/US/Country=United_States/Salary/by_Degree

Now go through all the B.S. degrees and average THOSE salaries, including B.S. Engineering, B.S. Computer Science, etc. Take out the Masters and J.D.'s / Ph.D's / M.D.'s, and just do B.S. degrees. You're going to find that pilots are right around the 60-65% level. So you might want to revisit your "10%" idea.

Sorry Lear, but if a B.S. Degree were a requirement to become a pilot, we would be facing a massive shortage (and likely much higher salaries). I'll bet that less than 30% of pilots have an engineering, math, physics, or chemistry degree.

 

[Lear70]

Sorry Lear, but if a B.S. Degree were a requirement to become a pilot, we would be facing a massive shortage (and likely much higher salaries). I'll bet that less than 30% of pilots have an engineering, math, physics, or chemistry degree.

I didn't say they did.

But I bet you over 50% of us have a B.S. degree of some kind (I have one in INFS as well as Aviation), and if you're going to do a salary comparison, do it with other degreed professionals. Don't use the McDonald's worker.

Apples to Apples, my friend. Not Apples to rotted lemon.