Kelly: SWA costs too high

[lakemead1]

Everyone mocks and laughs at United, but I'm beginning to see a money making machine. In a few years, I think United will be the hot place to be. Especially if we get a good contract, it'll be hard to get an interview. With the upcoming movement and retirements, this will be the place to be.


You guys need to get your seniority list figured out or it will be like trying to go to LCC!

 

[SKC]

Just out of curiosity, what does SW offer on their flights? DirectTV or Wifi? Do you guys have loyalty credit cards or frequent flyer accounts? Lieflat seats on transcons? I'm not bashing or flaming, just don't know the answer.

DirecTV - no
Wifi - yes, on an ever increasing number of -700s
loyalty CC - yes
FF - yes
lie flat seats - if you really don't know this....nevermind, there's no one that would actually think SWA has lie flat seats in an all coach config

 

[LandGreen]

GENERAL CHEESE, How many block hours for you this year on the 767?

Would DAL have made money last year w/o charging for bags? Should your airline be in the "CARGO" section?

Geez whataburger!

question for you: would you rather have your airline charge for bags and keep your nice pay and contract? Or...have GK take some pay cuts from you and the rest of the labor group to allow him to pay for the bags fly free campaign.

i would love to know what SWA management put in your koolaid! i need it to put in my 10 y/o son's cheerios in the morning!!!

 

[Jim Smyth]

When you work for an Airline you need to work with them in Good and Bad times. Hopefully SWA management can right the ship before its too far gone. SWA has struggeld with profits for a while now and competition has become very aggressive through Banktrupcy and Large cost cuts on other employee groups in the industry. If SWA management believes they need to lower costs to be competative then they need to do that and the employee's need to work with the Company.

 

[filejw]

Hope you guys are comparing monthly hard time because that is all that matters to the airlines bottom line. I think you will find SWA does lots more with less pilots.

 

[SWA/FO]

and just like that..... nothing happen :cartman:

 

[Donald]

I figured this was coming. It does seem like a cycle for all airlines. Charging for bags may help, but now the Feds are pushing taxes for those fees. I do feel that the company will explore every avenue of possible revenue or savings before asking for concessions. If worse comes to worse, what is better, giving in to concessions or losing your contract in bankruptcy?

 

[Linedriver]

A lot of speculation here. SWA has always been an employee focused airline and it makes sense to me that if they needed an increase in the bottom line wouldn't GK do something like charge for bags before asking for money from the employees?

That's just my thinking, am I on the right or wrong track?

 

[madjack]

"Bags fly Free" campaign has been successful...our load factors are through roof and we are making money...but with fuel costs and the great recession II looming we may face hard decisions at SWA...the legacies are flourishing because mgmt was able to achieve concessionary contracts in bankruptcy and has systematically raised fees and reduced capacity....all these measures are bad for pilots and bad for customers...

 

[Coool Hand Luke]

The Delta and SWA pilots fly the same amount of hours. Some months the 777 guy flies more, some less (seasonal changes). But overall, when a 777 Captain flies 85 hours, and a SWA Captain flies 85 hours, it's the same. The main difference is that they 777 Captain can get 15 hours in ONE LEG (LAX to SYD), and you guys have to do 15 intra Texas legs to get the same.

. And there are guys at Delta that only fly a couple different plane types in their career. He is just as "productive" as any SWA pilot, but nobody likes to bring that up.....



Bye Bye---General Lee

General, let me expose the fallacy of your post in regards to productivity.

Using your theory, it takes the Delta crew 15-hours on the 777 to transport 268 passengers. Over that same 15-hours (@ 1-hour per leg) the Southwest crew can potentially transport 2250 passengers...or 1,982 more passengers in the same 15-hour flight block as the Delta crew can. So, how can it be possible when you say that the Delta crew is just a productive as the Southwest crew because they each flew 15-hours?

 

[717capt]

I think if you "listen between the lines", GK just asked for concessions.

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]

Every AT employee knew this was coming. I guess it may be a shock to some SWA folks. But seriously is anyone surprised by his comments? He played both sides during SLI. He's on a roll and isn't about to quit anytime soon.

 

[GogglesPisano]

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?

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]

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

 

[GogglesPisano]

General, let me expose the fallacy of your post in regards to productivity.

Using your theory, it takes the Delta crew 15-hours on the 777 to transport 268 passengers. Over that same 15-hours (@ 1-hour per leg) the Southwest crew can potentially transport 2250 passengers...or 1,982 more passengers in the same 15-hour flight block as the Delta crew can. So, how can it be possible when you say that the Delta crew is just a productive as the Southwest crew because they each flew 15-hours?

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