ASA_Willy said:
Hosehead,
I really do think you are sincere and not just a management stooge. No seriously. I keep reading the numbers you are throwing around and it seems like you never took ECON 101. It's not about cash flow, it's about cost v. investment. You're talking about cash flow numbers, but investors, including JA, are interested in their return on investment.
If the profit looks good against the return, then you can throw expenses out the window. They don't give a crap about the money flowing through the place. That is basic business. It is all a question of whether the company produces a good return on the $$ invested. ASA has a good return on investment, which is why JA bought it to begin with. He doesn't care if the company's monthly cash flow is 3 bucks or 300 million bucks
Good point - you are right - its not the absolute numbers - its the profit numbers
in relation to the cost structure - that is in fact the point I was trying to make with my figures. (Don't look at the absolute numbers - look at the profit numbers
in relation to the cost numbers). A good non-airline example that also illustrates your point is oil company profits. Their percentage profit hasn't gone up but the price per barrel has - its the producer's price increase that is giving them the huge profit numbers - they are not gouging the public by charging more (in the sense of increasing their profit margins).
But nonetheless every business (and private individual) needs to hang on to some money to weather through the droughts, some money to improve and update infrastructure, and some "play" money available to take advantage of industry opportunites. Its hard to do that on a 7% profit margin with the volumes (cash flow) we are currently looking at, the vunerabilities we have to forces outside our control (fuel price, terrorism, etc.), and the increasing downward pressure on ticket prices as the number of players in our industry increases providing more choice for the customer.
When we are looking at asking for a contract that will cost the company $23+ million dollars, that takes a sizable chunk out of an already relatively low profit figure - we need to understand how what we are asking for may affect the company's ability to weather a serious downturn in their fortunes (and thus ours). Example, what happens when the cash flow dries up as would happen if Delta dropped us the first chance the contract allows? Failing to consider this perspective is the exact mistake the majors made during their last contract negotiations - their companies burned through their cash in a relatively short period of time. On the surface, if a major had 1 billion dollars in cash reserves, that sounds like a huge amount. But as you say, against the total amount of cash flow through the company on a given day,
on a relative basis, it may not be much at all.
My goal was to get my peers to see the problem from a different perspective. My point here in this post is that listening to
some of my peers, I am struck by their viewpoints: one-sided, narrow, and apparently unable to view the problem from other perspectives and apparently don't want to for fear that their absolute belief in their viewpoint may be called into question by logic and reason. Believing that your viewpoint is the only valid viewpoint and that it should rule the roost is dangerous and is quite simply autocractic, dictatorial and some would say, fascist. Certainly in a
representative body that a union is, where in theory, the elected officials job is to
represent the majority opinion of the pilots, and in order to have, as one instructor pilot put it to me, an
objective, informed opinion, such narrow and rigid perspectives are not appropriate.
And speaking of representation, I agree with ASADriver - why weren't these proposals presented to us, the rank and file pilot for discussion? Like ASADriver, I am tired of sending my union thousands of dollars a year to be represented only to have my positions and decisions dictated to me. The history of representation at this union is rife with this problem.
Thanks for a reasoned rejoinder - I appreciate your maturity and professionalism.
:laugh:
