Kelly: SWA costs too high

[Flyer1015]

Alright Mr. economics, what is a sustainable 737 wage?
Mainline's 777 wage should be what you're focusing on not SW. What does that mean you should make in your unsustainable CRJ? You should have probably paid Pinnacle to come to work this month by your logic.

A sustainable wage changes over time. Sorry, but there is no fixed answer to this question. It changes based on the economic conditions (which currently, suck and are not likely to get better for the foreseeable future), oil prices, and what other players (the big boys) are paid in todays market. And unfortunately for you, your labor costs are now far higher than the rest of the competition.

Southwest figured out a long time ago common sense money saving techniques that, even today, delta and other carriers can't match. (Training, aircraft usage, common type, fact they never wait 30 minutes for the ramp to show up) Look how much more Pinnacle is going to spend on training then Southwest. Should you have to pay for that too?

True, SWA nickel/dimes a pilot initially by not paying for the type rating. But even that pathetic, low ball move will not be enough to save them long term with their current labor cost structure.

Pilots over-estimate their value to the airline almost as bad as they over-estimate their cost to the company. Airlines/airplanes are expensive, pilots are cheap (in more ways than one).

It's not what your worth, it's what you negotiate!

Quick fun fact from a family friend. He earned $98,000 dollars in 1978 on the 727. Adjusted for inflation that would be ~$345,000.

Pilots are a hell of a deal.

Sure, I could negotiate $750/hr to fly a 737. But it won't happen once the airline can't pay those kinds of labor costs anymore. Have you listened to Kelly?! EVERY single major (legacy) since deregulation has gone through bankruptcy, and many in the last 10 years alone. The post 9/11 world is drastically different, and your competition is far cheaper than you. Highest costs at any airline are fuel and labor. Now fuel you could hedge, and SWA did well, but that time is coming to an end. Next up, labor costs: the legacies have already gone through a bankruptcy adjustment (concessions and cuts) to reach a new equilibrium. That's the key word here, a labor equilibrium. IF every single legacy 737 pilot was making $200k as Captain, you'd be fair game to keep those kinds of costs around. But the reality is that is not the case anymore. Do you really think your airline can continue operating with $200k+ for Captains for the next 10 years? I'd bet money that in the next couple years, SWA will have a "labor cost adjustment" and you will fall in line with your peers at the legacies. You can say "this RJ pilot is stupid and doesn't know what he's talkin about" or you can just look at what's happened this past decade in the airline industry and learn.

It's people like you that have f*&ked that up.

No, don't blame me. I'm a relatively new entrant in this career. Those who have f*ked up this career were pilots before my time. Those who scoped out RJ flying to protect senior interests, those who were always against one-list, etc.

 

[Flyer1015]

An F/O making 200K is ridicuolus and should never happen. If F/O's over there are making this then they are doomed. Heck, that is too much for a 737 Capt let alone an F/O.

Agreed. Heck, even pre-9/11, a Delta 777 Captain topped out at $320/hr with a 65 hr guarantee, netting $250,000. Those were one of the best times for airline labor for a Captain, one of the highest payrate at the time in the country. So if in our best times, a 777 legacy Captain made that much, there is no way a 200k+ wage is sustainable for 737 pilots in TODAYS environment, with post-bankruptcy lower cost legacies with far lower costs and labor rates.

 

[laker4284]

The long held requirement to have a type to be hired at SWA is not based on saving a few bucks. Long ago it was enshrined by Kelleher as a requirement that showed commitment to employment at SWA. The employee has some skin in the game. Same with profit sharing, if the company prospers YOU prosper. Same with upgrade to Captain. Kelleher was quoted as saying he didn't want pilot employees who didn't want to advance in their profession. It's all part of the company's legacy and philosophy which is why they stand apart from so many other carriers.

I personally admire it.

 

[pilotyip]

The long held requirement to have a type to be hired at SWA is not based on saving a few bucks.

The 737 type goes back to the start of SWA. For a small airline to give type ratings, you need a Fed to come in for the oral, Sim PC, and bounce PC. remember in the 70's we had to do 85% checks in the sim, 15% in the airplane. This is a scheduling nightmare. Feds don't normally work, nights when your airplanes are not making money. By having the type rating, a company PC check airman can do all the of required checks to allow that person to fly as PIC. SWA also could have very easily requested a reduction in training hours due to the fact everyone had a 737 type. If remember right when SWA started they had a pipeline to the USAF Navigator School where they flew the 737.

 

[jonjuan]

The long held requirement to have a type to be hired at SWA is not based on saving a few bucks. Long ago it was enshrined by Kelleher as a requirement that showed commitment to employment at SWA. The employee has some skin in the game. Same with profit sharing, if the company prospers YOU prosper. Same with upgrade to Captain. Kelleher was quoted as saying he didn't want pilot employees who didn't want to advance in their profession. It's all part of the company's legacy and philosophy which is why they stand apart from so many other carriers.

I personally admire it.

You do know that kellihers no longer there?

 

[freightdogfred]

SWAPA supported equal pay for both fleets and captain seats for all AAI captains. That is a fact. Let the water go under the bridge bro.

I don't remember SWAPA beating that drum, and it was only 2 months ago.

 

[spitfire1500]

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?

From what I've seen in this industry ..is once concessions are asked for bankruptcy is inevitable. Name one group of airline employees that stopped a bakruptcy by taking pay concessions...

 

[nordo_2]

From what I've seen in this industry ..is once concessions are asked for bankruptcy is inevitable. Name one group of airline employees that stopped a bakruptcy by taking pay concessions...

It doesn't happen. Never take two pay cuts.

 

[PCL_128]

Flat spin?
Maybe pilots will turn off Am radio & fox, get in the game and start supporting unions again...(?)
Maybe??

I wouldn't count on it.

In todays enviornment, with oil being over 100/barrel, 737 Captains making over $200k is unsustainable.

No, $200k is certainly sustainable for a 737 captain. The problem isn't the CA making $200k, the problem is the CA who manipulates the system to the limits and pulls in over $400k. Yes, there are a decent number of SWA captains making that number, and there are a good number of FOs cracking $200k. More power to them, since the contract currently allows it, but it isn't sustainable long-term. Unfortunately, I think a lot of those pilots who pull in those kinds of numbers are leveraged to the hilt and won't be able to pay their bills if they can't make that kind of money, so they're probably going to suffer when Gary gets the "productivity enhancements" that he wants.

Agreed. Heck, even pre-9/11, a Delta 777 Captain topped out at $320/hr with a 65 hr guarantee, netting $250,000. Those were one of the best times for airline labor for a Captain, one of the highest payrate at the time in the country. So if in our best times, a 777 legacy Captain made that much, there is no way a 200k+ wage is sustainable for 737 pilots in TODAYS environment, with post-bankruptcy lower cost legacies with far lower costs and labor rates.

Your numbers are way off. Using a 65 hour guarantee doesn't give you even close to the real numbers of the pre-9/11 contracts. Sure, some guys were only doing guarantee, but most were crediting far more. Remember, those contracts had incredibly generous work rules which created tons of soft time. A 777 CA topped out at $320/hr could push $500k, which is why so many Delta captains in Peachtree City had to sell their $900k houses and move out to Brooks and Fayetteville in the last 7 years after the draconian pay cuts. A pre-9/11 777 captain who only made $250k was a very lazy pilot.

 

[The Prussian]

The 737 type goes back to the start of SWA. For a small airline to give type ratings, you need a Fed to come in for the oral, Sim PC, and bounce PC. remember in the 70's we had to do 85% checks in the sim, 15% in the airplane. This is a scheduling nightmare. Feds don't normally work, nights when your airplanes are not making money. By having the type rating, a company PC check airman can do all the of required checks to allow that person to fly as PIC. SWA also could have very easily requested a reduction in training hours due to the fact everyone had a 737 type. If remember right when SWA started they had a pipeline to the USAF Navigator School where they flew the 737.

Yip is pretty close to what the real truth was...gonna say that the first approx. 30-35 pilots hired at Southwest were hired w/o the type requirement. Mid 70's...airlines weren't hiring...times were tough. Somewhere in there, a couple guys showed up from the Air Force with 737 experience, and type already paid for, to enhance their hiring prospects. They were hired...liked what they were experiencing at Southwest...called back to their buds to do the same, and a pipeline of sorts was established. From that point forward, to be competitve for hiring at Southwest, the type, for all intents and purposes, became a necessary prerequisite...and Southwest realized that so long as they could keep getting qualified applicants already typed, they were going to save a boatload of money in training costs. It wasn't their plan A by design...just a natural evolution that made sense. So there you have it...

 

[Flopgut]

Instead of doing stock buybacks SW could use it's cash to approach the AMR creditors and try to tempt them with a strong offer for a bunch of -800 leases, 737 delivery positions, east coast slots/gates and whatever other parts that they could use. Maybe it's a longshot but SW could help to make AMR less of a competitor by trying to force a partial liquidation/downsizing of AMR by making an offer to the BK court for pieces or possibly even buy the whole operation while it's still in BK and break it up, keep what they want and liquidate/reject/reorganize/spin-off the rest. The creditors just want their money and AMR is going to try to give them as little of it as possible. AMR can offer equity to secured creditors but SW can offer cash, cash is better. This is ATA only bigger, SW should introduce a competing plan to the creditors in court and throw a wrench into this thing. Back AMR management into a corner to prevent them from getting too good a deal and becoming a thorn in the side of SW.

If SW is worried about a rejuvinated AMR with lower costs why not try to prevent if from happening in the first place? SW should be on Boeing's case as well (and enlist their help) as it appears they are ready, willing and able to come to the aid of AMR at the expense of SW. SW should twist Boeing's arm as hard as they can to get some sway with them and make them less generous to AMR, AMR's 737's and delivery slots could solve a big fleet rejuvination issue for SW.

There's a potential "grand bargain" here to be made and if SW doesn't jump in as a spoiler it's probably going to be between AMR and LCC which will give SW another huge competitor with low costs. SW may be able to force a breakup of AMR and get some valuable parts instead of letting LCC get it all. If nothing else they can try to jack up the price that LCC will have to pay.

You can either complain about the competition or you can do somehting about it. SW has the cash to do something about it. SW should never have allowed LCC to survive when they were down, let's see what they do with AMR. SW has the chance to jump in the ring and greatly complicate the situation at AMR's expense, that's what competitors are supposed to do; create chaos for the competition. This is a dirty industry, you have to get down in the dirt and fight dirty to win.

I don't have any ill-will towards American employees but in this industry it's kill or be killed, there is no middle ground. It's like the TWA situation except this time AMR is TWA.

I don't want to be a bigger A-hole than I've already been about this, but... I'm pretty sure this is what Braniff and Amercian had in mind for SWA back in the day. If what was done to protect SWA back then, was done now for American, SWA would be in real trouble.

Also, as you warriors demonize American's BK and that they might end up with a cost advantage to you. Remember who flew first with no pension...

 

[BILL LUMBERG]

After lurking this whole thread.....

It's fun watching the Herb Turds sweat a little.

 

[Dash Power]

Geeze people. Do any of you even pay any attention? Every Airline CEO has and always has preached the same thing. This isn't just about costs for Pilots. This is about labor costs for the entire airline. Fuel and then labor costs have always been the highest two expenses for an airline. This is just the usual rant to keep employees aware that we work within a weak industry and Gary took advantage of AA's bankruptcy to make a point. It is not that he wants cuts. He is attempting to keep the status quo. And maybe keep people not taking this great thing for granted. This is not the first time I heard this type of talk from both Gary and Herb. It is part of their job description.

No one is sweating here at good ol SWA. On the contrary, we are setting this place up to kick some serious a$$ in the next few years.

 

[minrest]

Geeze people. Do any of you even pay any attention? Every Airline CEO has and always has preached the same thing. This isn't just about costs for Pilots. This is about labor costs for the entire airline. Fuel and then labor costs have always been the highest two expenses for an airline. This is just the usual rant to keep employees aware that we work within a weak industry and Gary took advantage of AA's bankruptcy to make a point. It is not that he wants cuts. He is attempting to keep the status quo. And maybe keep people not taking this great thing for granted. This is not the first time I heard this type of talk from both Gary and Herb. It is part of their job description.

No one is sweating here at good ol SWA. On the contrary, we are setting this place up to kick some serious a$$ in the next few years.

I hope you're right, but that sounds very overoptimistic. Letters like this are typically the prelude to the coming storm. The next letter will describe how SW has attempted to cut costs through productivity and preserve pay rates but that it is still at a competitive disadvantage. It will go on to say that management will sit down with the Unions and work groups to try to brainstorm other avenues of increased productivity. The letter may even solicit ideas from the "front line" employees on what can be done.

A few weeks will pass before the third letter. The third letter was actually written well before the first letter, but couldn't be made public until the employees were mentally prepared for it.

Or, it could just be that Gary wants to keep everyone in the loop about how tough it is to manage an airline.

 

[dicko]

No, $200k is certainly sustainable for a 737 captain. The problem isn't the CA making $200k, the problem is the CA who manipulates the system to the limits and pulls in over $400k. Yes, there are a decent number of SWA captains making that number, and there are a good number of FOs cracking $200k. More power to them, since the contract currently allows it, but it isn't sustainable long-term. Unfortunately, I think a lot of those pilots who pull in those kinds of numbers are leveraged to the hilt and won't be able to pay their bills if they can't make that kind of money, so they're probably going to suffer when Gary gets the "productivity enhancements" that he wants.

Isn't it cool when a Union leader criticizes a great contract and pilots using it to make a great wage.

We are ALPA, and we are defeated before the first shot is fired.