I tend to agree. If for no other reason, how does a reporter from the Dallas News get information on what was mentioned in an internal memo sent to employees as well as the contents of an employee only hotline?
Welcome to Flightinfo.com
- Register now and join the discussion
- Friendliest aviation Ccmmunity on the web
- Modern site for PC's, Phones, Tablets - no 3rd party apps required
- Ask questions, help others, promote aviation
- Share the passion for aviation
- Invite everyone to Flightinfo.com and let's have fun
Kelly: SWA costs too high
- Thread starter Flying the Line
- Start date
- Watchers 58
Welcome to Flightinfo.com
- Register now and join the discussion
- Modern secure site, no 3rd party apps required
- Invite your friends
- Share the passion of aviation
- Friendliest aviation community on the web
I tend to agree. If for no other reason, how does a reporter from the Dallas News get information on what was mentioned in an internal memo sent to employees as well as the contents of an employee only hotline?
humveedriver
M1165A1
- Joined
- Oct 17, 2004
- Posts
- 1,005
GogglesPisano
Pawn, in game of life
- Joined
- Oct 20, 2003
- Posts
- 3,939
You are being sarcastic, I hope. Most "internal memos" are leaked to the media or posted on a forum like this within minutes.
General Lee
Well-known member
- Joined
- Aug 24, 2002
- Posts
- 20,442
Found this on another board
SOUTHWEST AIRLINES CO.
Gary C. Kelly
Chairman of the Board, President &
Chief Executive Officer
P.O. Box 36611
Dallas, Texas 75235-1611
To: All Southwest and AirTran Warriors
From: Gary Kelly
Date: December 5, 2011
RE: American Airlines – More Challenges for Southwest than Opportunities
The past week has been extraordinary with the bankruptcy of American Airlines and the
unexpected retirement of their Chief Executive Officer. Not surprisingly, I have had questions
from our People about what this means for us. I have heard comments like, .I’m sure glad I’m
not at American. I’m glad to be at Southwest.. I can assure you, in this season of giving
thanks, it is the correct perspective. In this time of enormous world-wide economic uncertainty,
it is the right perspective.
Just as I wrote in an article in LUVLines after 9/11: While an airline needs to be good at many
things to be successful; low costs and profitability, ultimately, mean the difference between
survival or not. To be clear, American Airlines, as you knew it, will not survive. Bankruptcy, by
definition, means that it will be radically reorganized, or it will be completely shut down and
liquidated.
American isn’t the only airline not to survive without bankruptcy. Let’s look back to 1989—the
year Southwest became the newest member of the old major airline club, based on annual
revenues. All the majors from 1989 have gone bankrupt. Pan Am. Eastern. Braniff.
Continental. America West. TWA. US Air. United. Delta. Northwest. And now, American.
Every single one failed. Why? Not because of Customer Service, but because of high costs.
Great Customer Service cannot overcome high costs. That is the imperative I wrote about a
decade ago: low costs.
Southwest Airlines is the only major airline from 1989 that has survived this tumultuous industry
without bankruptcy. Why? Because our low costs have preserved our profits. Period.
If American Airlines emerges from the ashes of bankruptcy, and I believe they will, you can be
certain their costs will be substantially lower, especially their labor and aircraft costs. If they
can’t achieve that, they will cease to exist (like Pan Am, Eastern, Braniff, and TWA). If they do
emerge from bankruptcy, as I believe they will, they will join the New United, New Delta, and
New US Airways as giant, lower-cost airlines. They are, collectively, much more formidable
competition than their predecessors. The term, .Legacy Carrier,. no longer will apply.
December 5, 2011
Page 2
In the good old days, when the Legacy Carriers’ costs were higher, we brought our low costs
and low fares to their markets, stimulated demand, and expanded dramatically. Now, while our
costs are still lower, our advantage has been cut in half. We currently do not have a sufficient
cost advantage to stimulate the market – because our fares are much closer to our New Airline
competitors. These New Airlines, reconstituted from their Legacy ashes, join younger, lower-
cost airlines like JetBlue and Frontier, as well as an even newer group of ultra low-cost airlines
like Allegiant and Spirit. As predicted, the industry has transformed to lower costs.
Of course, one major point of low costs is to drive profits. The old airline industry was famous
for not achieving profits, which rendered them very weak competitors. The New Airline industry
is profitable. In fact, the New Delta and New United had better profit margins than Southwest in
the third quarter, despite the magnificent gains we’ve made over the last four years with our
Customer Experience enhancements and our revenues. On that front, we have outperformed
all competitors. We have a cost challenge, and it is one that looms large.
American Airlines lost its way. It made promises it could not keep. It tried very hard to avoid
bankruptcy. As every other major airline used that tortured strategy, American became higher
and higher cost relative to the New Airline industry. Just when we thought 2011 would be safe
from the perils of the 2009 recession, American is posting another massive loss. The New
Delta and the New United are producing strong profits. Why? You know – lower costs. It puts
New Delta and New United in a position to grow from here. American has shrunk dramatically
this past decade. They will shrink more. That may provide Southwest some opportunities to
capture more Customers and grow; however, we will have to compete with a stronger
marketplace for American’s customers. You know how much harder that is because of our
diminished cost advantage.
American’s employees will make many sacrifices. It is convenient to lay the blame at the feet of
American’s management. Certainly, they deserve their share of the blame. But, just as
employees deserve credit when a company does well, so do they deserve some of the blame
when it does not. American has outdated and inflexible work rules that render it less productive
than the New Airline industry. That’s just one example of how the company lost its way, and
just one example of what is imperative to change, lest they be shut down.
For us, the bottom line is simple. There may be some near-term opportunities for Southwest as
American shrinks and is distracted with the human struggle of bankruptcy. American will be
governed through a bankruptcy court and a creditor committee, and it will be sheer hell for them.
Once they get through it though, several years from now, they will join the New Airline industry
as a much more formidable competitor. We need to prepare ourselves better right now for this
New Airline industry.
So, what if we don’t? As stated earlier, Southwest is the only 1989 major airline that has
survived without bankruptcy. Why? Because our low costs have preserved our profits.
December 5, 2011
Page 3
Our labor rates are now, far and away, the highest in the industry. Through bankruptcy, very
large New Airlines have emerged with lower rates than us and better productivity. Next to fuel,
labor is our highest expenditure. We can’t have lower overall operating costs if our labor costs
aren’t lower. We can’t have lower labor costs if we aren’t more productive. The good news is
that we have a lot of opportunities to improve our productivity, eliminate waste, and preserve our
pay rates and benefits for the foreseeable future. It’s crucial that we take advantage of those
opportunities.
The imperative I spoke about nearly a decade ago has been fulfilled by our remaining, formerly
.Legacy,. competitors. The imperative is now squarely upon Southwest. I know you all
understand the evidence – hundreds of airlines perished since deregulation. No 1989 major
airline has survived without bankruptcy – except Southwest. We are the maverick. We are
different. That’s how we have prevailed with a Warrior Spirit, a .Never Give In. resolve, and a
burning desire to be the very best. The sloth-like industry you remember competing against is
now officially dead and buried. We fought them, and we won.
Now, the enemy is our own cost creep, our own legacy-like productivity, and our own
inefficiencies. Fighting this cost enemy is an imperative to remain the Maverick. We will fight,
and we will remain the Maverick.
It is important to say that low costs, alone, will not win the day. Our People are most important.
It is our People who produce this great low-cost airline. It is our People who serve our
Customers in an outstanding way. And, it is our People who will continue to transform
Southwest with four big initiatives: AirTran, All-New Rapid Rewards, B737-800, and a new
reservation system.
Finally, please remember, all the great things our People do will be for naught without low costs.
Just ask the old .Legacy. airlines.
I am very grateful and very thankful for all of you.
Bye Bye---General Lee
SOUTHWEST AIRLINES CO.
Gary C. Kelly
Chairman of the Board, President &
Chief Executive Officer
P.O. Box 36611
Dallas, Texas 75235-1611
To: All Southwest and AirTran Warriors
From: Gary Kelly
Date: December 5, 2011
RE: American Airlines – More Challenges for Southwest than Opportunities
The past week has been extraordinary with the bankruptcy of American Airlines and the
unexpected retirement of their Chief Executive Officer. Not surprisingly, I have had questions
from our People about what this means for us. I have heard comments like, .I’m sure glad I’m
not at American. I’m glad to be at Southwest.. I can assure you, in this season of giving
thanks, it is the correct perspective. In this time of enormous world-wide economic uncertainty,
it is the right perspective.
Just as I wrote in an article in LUVLines after 9/11: While an airline needs to be good at many
things to be successful; low costs and profitability, ultimately, mean the difference between
survival or not. To be clear, American Airlines, as you knew it, will not survive. Bankruptcy, by
definition, means that it will be radically reorganized, or it will be completely shut down and
liquidated.
American isn’t the only airline not to survive without bankruptcy. Let’s look back to 1989—the
year Southwest became the newest member of the old major airline club, based on annual
revenues. All the majors from 1989 have gone bankrupt. Pan Am. Eastern. Braniff.
Continental. America West. TWA. US Air. United. Delta. Northwest. And now, American.
Every single one failed. Why? Not because of Customer Service, but because of high costs.
Great Customer Service cannot overcome high costs. That is the imperative I wrote about a
decade ago: low costs.
Southwest Airlines is the only major airline from 1989 that has survived this tumultuous industry
without bankruptcy. Why? Because our low costs have preserved our profits. Period.
If American Airlines emerges from the ashes of bankruptcy, and I believe they will, you can be
certain their costs will be substantially lower, especially their labor and aircraft costs. If they
can’t achieve that, they will cease to exist (like Pan Am, Eastern, Braniff, and TWA). If they do
emerge from bankruptcy, as I believe they will, they will join the New United, New Delta, and
New US Airways as giant, lower-cost airlines. They are, collectively, much more formidable
competition than their predecessors. The term, .Legacy Carrier,. no longer will apply.
December 5, 2011
Page 2
In the good old days, when the Legacy Carriers’ costs were higher, we brought our low costs
and low fares to their markets, stimulated demand, and expanded dramatically. Now, while our
costs are still lower, our advantage has been cut in half. We currently do not have a sufficient
cost advantage to stimulate the market – because our fares are much closer to our New Airline
competitors. These New Airlines, reconstituted from their Legacy ashes, join younger, lower-
cost airlines like JetBlue and Frontier, as well as an even newer group of ultra low-cost airlines
like Allegiant and Spirit. As predicted, the industry has transformed to lower costs.
Of course, one major point of low costs is to drive profits. The old airline industry was famous
for not achieving profits, which rendered them very weak competitors. The New Airline industry
is profitable. In fact, the New Delta and New United had better profit margins than Southwest in
the third quarter, despite the magnificent gains we’ve made over the last four years with our
Customer Experience enhancements and our revenues. On that front, we have outperformed
all competitors. We have a cost challenge, and it is one that looms large.
American Airlines lost its way. It made promises it could not keep. It tried very hard to avoid
bankruptcy. As every other major airline used that tortured strategy, American became higher
and higher cost relative to the New Airline industry. Just when we thought 2011 would be safe
from the perils of the 2009 recession, American is posting another massive loss. The New
Delta and the New United are producing strong profits. Why? You know – lower costs. It puts
New Delta and New United in a position to grow from here. American has shrunk dramatically
this past decade. They will shrink more. That may provide Southwest some opportunities to
capture more Customers and grow; however, we will have to compete with a stronger
marketplace for American’s customers. You know how much harder that is because of our
diminished cost advantage.
American’s employees will make many sacrifices. It is convenient to lay the blame at the feet of
American’s management. Certainly, they deserve their share of the blame. But, just as
employees deserve credit when a company does well, so do they deserve some of the blame
when it does not. American has outdated and inflexible work rules that render it less productive
than the New Airline industry. That’s just one example of how the company lost its way, and
just one example of what is imperative to change, lest they be shut down.
For us, the bottom line is simple. There may be some near-term opportunities for Southwest as
American shrinks and is distracted with the human struggle of bankruptcy. American will be
governed through a bankruptcy court and a creditor committee, and it will be sheer hell for them.
Once they get through it though, several years from now, they will join the New Airline industry
as a much more formidable competitor. We need to prepare ourselves better right now for this
New Airline industry.
So, what if we don’t? As stated earlier, Southwest is the only 1989 major airline that has
survived without bankruptcy. Why? Because our low costs have preserved our profits.
December 5, 2011
Page 3
Our labor rates are now, far and away, the highest in the industry. Through bankruptcy, very
large New Airlines have emerged with lower rates than us and better productivity. Next to fuel,
labor is our highest expenditure. We can’t have lower overall operating costs if our labor costs
aren’t lower. We can’t have lower labor costs if we aren’t more productive. The good news is
that we have a lot of opportunities to improve our productivity, eliminate waste, and preserve our
pay rates and benefits for the foreseeable future. It’s crucial that we take advantage of those
opportunities.
The imperative I spoke about nearly a decade ago has been fulfilled by our remaining, formerly
.Legacy,. competitors. The imperative is now squarely upon Southwest. I know you all
understand the evidence – hundreds of airlines perished since deregulation. No 1989 major
airline has survived without bankruptcy – except Southwest. We are the maverick. We are
different. That’s how we have prevailed with a Warrior Spirit, a .Never Give In. resolve, and a
burning desire to be the very best. The sloth-like industry you remember competing against is
now officially dead and buried. We fought them, and we won.
Now, the enemy is our own cost creep, our own legacy-like productivity, and our own
inefficiencies. Fighting this cost enemy is an imperative to remain the Maverick. We will fight,
and we will remain the Maverick.
It is important to say that low costs, alone, will not win the day. Our People are most important.
It is our People who produce this great low-cost airline. It is our People who serve our
Customers in an outstanding way. And, it is our People who will continue to transform
Southwest with four big initiatives: AirTran, All-New Rapid Rewards, B737-800, and a new
reservation system.
Finally, please remember, all the great things our People do will be for naught without low costs.
Just ask the old .Legacy. airlines.
I am very grateful and very thankful for all of you.
Bye Bye---General Lee
GogglesPisano
Pawn, in game of life
- Joined
- Oct 20, 2003
- Posts
- 3,939
The 777 pilots are roughly as productive because they generate roughly the same revenue.
Using fares from both airlines' websites:
DELTA
LAX/SYD economy fare ($3740) x 224 seats (wag) = $837,760
LAX/SYD Businesselite fare ($6337) x 45 seats (wag) = $285,165
Throw in $100,000 worth of cargo and Economy Comfort fees = $1,222,925
$1,222,925/4 pilots = $305,731/Delta pilot.
SWA
HOU/AMA fare ($277) x 140 seats (?) x 15 legs = $581,700
$581,700/2 pilots = $290,850/SWA pilot.
YMMV
Hopefully a Delta history lesson will help the guys at SWA if it ever came down to this. Don't give concessions in hope of avoiding bankruptcy. Delta pilots did this and management got the opportunity to take TWO bites from the apple. When management threatens concessions or bankruptcy...they are just trying to squeeze more from the turnip! Most likely they know already that they are going for protection. If you give concessions...what assurances are given to avoid getting your contract gutted in bankruptcy? Answer: NONE!
Ky.BrownBourbn
Well-known member
- Joined
- Nov 29, 2005
- Posts
- 553
United WAS the place to work about 15 years ago...Don't think it's your turn!!!
Of course they are making money because the PAY sucks! When that comes up, they will not be making enough money!
Did you guys get rid of ALPA? Otherwise it ain't gonna happen, They have their own agenda, not sure what it is but it's not getting higher pay... If someone figures it out, PLEASE let the rest of us know! Remember the Parity Plus 1 years, that's long gone!
Good Luck, My next pay raise is counting on you!
KBB
johnsonrod
Well-known member
- Joined
- Feb 25, 2006
- Posts
- 4,218
To me, this sounds like rationale for selling off the 717 sooner. If 717 pilots are paid the same rates as 737 pilots with fewer seats and fewer rotations, how can they make money at those high wages? I've heard that SW thinks they can operate more turns at ATL than AirTran does today - that means productivity can be improved at ATL. As GL pointed out, at least SW is indirectly getting cash through AirTran's bag fees to cover the difference...
How exactly are the pilots generating revenue? Your assumptions are based on a 100% load factor which depends on the quality of the product being put out and the consumers willingness to pay for it.
Share this page
Latest resources
-
-
-
-
-
AC 90-89C - Amateur-Built Aircraft and Ultralight Flight Testing HandbookAmateur-Built Aircraft and Ultralight Flight Testing Handbook
- Neal
- Updated:
