NJ Recalls

[gunfyter]

Reality,

Lets say I owe $100 K on a second home. I sell the home for $100 K. I just paid off $100 K in debt!

Will my income increase $100 K per year from now on?

I do not know how NJ is paying off debt but it is NOT decreasing the profit except for whatever portion Interest payments are reduced.

 

[gret]

No. This is incorrect. Its now $200 M Positive cash flow... instead of $100M in positive cashflow. Thats a good thing.

But in your example there was a $200M profit before and after liquidating the debt. No change in profit by paying off debt.

You are 100% correct. Sales less cash expenses produces cash flow from operations that is used to pay down debt. Sales less operating expenses, including depreciation, less taxes and interest equals net income (profits).

One should remember that once old debt is paid off, new debt is created to acquire fixed assets such as new aircraft and other equipment used to operate the company. While the clients fund part of the purchase price of new aircraft, the core fleet must be acquired and paid for by the company.

Also, the $200 million in operating profit that has been referred to has decreased, they (Berkshire) aren't saying anymore how much NJ makes, other than it has decreased. If my memory is correct, the reported numbers (I think they referred to it as operating profit) didn't include charges for taxes and interest.

 

[jetlag7]

By the way, ROI is a REALLY BIG DEAL. The investors own the company. They want to make money. If we don't make them enough money in comparison to other companies and investments, the investors will take their money away from us and put it somewhere else.....

Fair enough, but do you happen to know ANYONE who owns shares of NJ stock? I sure don't....

I do however know plenty of folks who own shares in Berkshire Hathaway -- myself included. (side note: B shares are trading below $100/share .. if you ever wanted to own a piece of "the mothership" now is a good time!)

Since some believe shareholder ROI trumps the strength of a brand and quality of the product, let's examine this for a moment....

I don't hold BRK.B shares because of NJ. I hold my B shares because of the stakes in companies like GEICO, BNSF, Mid American, Coke, and AMEX.

NJ accounts for less than .05% of the Berkshire Hathaway portfolio. Profit or loss, they will NEVER "move the needle" in any direction. NJ is a drop in a very large ocean of holdings. Any contribution to the BRK bottom line is fantastic, but the belief the Shareholders will "close the doors" because they don't see 6% ROI is absurd.

I can only speak for myself, but if I ever decide to dump any of my B shares, it won't be because of the machinations of a microscopic subsidiary like NJ.

 

[gret]

You are smart...it is merely a pimple on an elephant's butt when it comes to numbers...once in awhile a PR nightmare, but basically a rounding error to Berkshire.

 

[gunfyter]

I just think its important people are not under the FALSE impression there will be some $500 M a year windfall once NJ pays off the debt.

In cash flow perhaps but not in profit ....

 

[realityman]

Gun,

I'm sorry. I'm not the smartest person financially. I'm still not understanding why it is, when NJA pays off their debt, the amount of 'unencumbered money', ie 'profit', won't increase.

Using your house example, true, if I sell a house I owed $100k on for $100k my income doesn't actually rise. HOWEVER, the monthly payment I had been making on the house is no longer being paid out. So that money now goes into my pool of 'unencumbered money' or 'profit', that I can use for whatever I want. Buying another house, college education, or paying my housekeeper more.

My revenue hasn't changed, no increase in income, but my personal 'profit' has now increased by the amount of the monthly payments I am no longer making on that house.

Why doesn't it work like that at NJA? When they pay off the debt the revenue to the company does not change. I get that. But now there is no longer $500 million being paid out each year to cover the debt. So that $500 million is still coming in to the company (part of the revenue stream), but not going out anymore. So what column would you put that money in? I guess it wouldn't go under the profit column if they chose to just spend it elsewhere, such as part of it going for ADDITIONAL EMPLOYEE COMPENSATION. But if they don't go on a spending spree, and it's still incoming revenue, what do you call it?

Same as the house. I still have my monthly income (revenue), but as I no longer need to make a mortgage payment anymore, I now have more spendable money (profit).

What am I missing?

 

[pilotyip]

Wow, I know for someone like yourself, who has never worked for a respectable company, getting decent pay and work rules is probably something you've never experienced. But for the rest of us professionals, getting a salary and benefits above that of your average high school educated person, is not too much to ask.

And what's your interest in NJA anyways? Dreaming of being able to work at a respectable company?

You're funny, knowing nothing of me; you get to determine that I have never done anything respectable. You know like 26 years service in the Navy, Finishing top of my class from Navy Flight Training, having Squadron Command, OOD (U) on a Nuc Aircraft Carrier, Corporate pilot for a Fortune 500 company. A member of ALPA at the countries largest supplemental carrier, and being offered a job at NJ back in 99, 00, and 01. But I couldn't take the pay cut.

Back in 83 when I had lost my Corporate job to the recession, I was unemployed. CAL hired a guy from my P-3 reserve unit, he told me I should apply they were looking for Check Airman. Being unemployed, I asked my ALPA buddies what they thought. One quote I remember was, "Randy if you cross the line you will be branded as a SCAB and end up your career working for some non-sked at KYIP". Now no one wants to end their career at a non-sked at KYIP. So I did right thing and never returned the call.

However unemployment and age 53 suddenly make a non-sked job at KYIP look much better. I have worked hard to make JUS a better place to work, to give crews proper training. JUS became a major source of pilots for NJ, over the years nearly 30 pilots have left JUS for NJ, in fact 4 came back after being furloughed by NJ in 2008. To see these pilot move on to career positions is truly satisfying.

This career has been a ball and I do not have to dream of anything. I am fulfilling the child hood dream of a 5 year old who saw the P-51 buzz his house in Detroit back in 1948. I love what I do and can not wait to get up and go to work every morning.

So sorry I do not fill your definition of professional, but I am happy with my lot in life, what I have and the accomplishments in my life. Which is more than I can say about many of the posts I see here.

BTW: As posted here many times before there is an element of luck and timing in this career, that in my opinion often out weight the elements of skill and desire. Best of luck in the yet to be determined future of the Fractional Business model

 

[nordo_2]

You're funny, knowing nothing of me; you get to determine that I have never done anything respectable. You know like 26 years service in the Navy, Finishing top of my class from Navy Flight Training, having Squadron Command, OOD (U) on a Nuc Aircraft Carrier, Corporate pilot for a Fortune 500 company. A member of ALPA at the countries largest supplemental carrier, and being offered a job at NJ back in 99, 00, and 01. But I couldn't take the pay cut.

Back in 83 when I had lost my Corporate job to the recession, I was unemployed. CAL hired a guy from my P-3 reserve unit, he told me I should apply they were looking for Check Airman. Being unemployed, I asked my ALPA buddies what they thought. One quote I remember was, "Randy if you cross the line you will be branded as a SCAB and end up your career working for some non-sked at KYIP". Now no one wants to end their career at a non-sked at KYIP. So I did right thing and never returned the call.

However unemployment and age 53 suddenly make a non-sked job at KYIP look much better. I have worked hard to make JUS a better place to work, to give crews proper training. JUS became a major source of pilots for NJ, over the years nearly 30 pilots have left JUS for NJ, in fact 4 came back after being furloughed by NJ in 2008. To see these pilot move on to career positions is truly satisfying.

This career has been a ball and I do not have to dream of anything. I am fulfilling the child hood dream of a 5 year old who saw the P-51 buzz his house in Detroit back in 1948. I love what I do and can not wait to get up and go to work every morning.

So sorry I do not fill your definition of professional, but I am happy with my lot in life, what I have and the accomplishments in my life. Which is more than I can say about many of the posts I see here.

BTW: As posted here many times before there is an element of luck and timing in this career, that in my opinion often out weight the elements of skill and desire. Best of luck in the yet to be determined future of the Fractional Business model

Yip, just tell me when the shortage is gonna start???

 

[gunfyter]

Reality,

Profit does not increase, except by the amount of INTEREST no longer paid ... which if memory served is about $35 Million a year. So if NJ paid all the debt our profit will be $35 million more per year.... Not $500 Millions

With your house ... you don't make more profit, except that you no longer pay interest once its paid off. Your Cash Flow is Better but your profit remains essentially the same.

When you make a house payment, the principal is like putting money into a tax free savings account. No different... except for liquidity.

Consider if you switched to Interest Only loan .... Would you now be making more profit than previously? You are no longer making principal payments ... are we not richer then?

 

[BentOver]

You're funny, knowing nothing of me; you get to determine that I have never done anything respectable. You know like 26 years service in the Navy, Finishing top of my class from Navy Flight Training, having Squadron Command, OOD (U) on a Nuc Aircraft Carrier, Corporate pilot for a Fortune 500 company. A member of ALPA at the countries largest supplemental carrier, and being offered a job at NJ back in 99, 00, and 01. But I couldn't take the pay cut.

Back in 83 when I had lost my Corporate job to the recession, I was unemployed. CAL hired a guy from my P-3 reserve unit, he told me I should apply they were looking for Check Airman. Being unemployed, I asked my ALPA buddies what they thought. One quote I remember was, "Randy if you cross the line you will be branded as a SCAB and end up your career working for some non-sked at KYIP". Now no one wants to end their career at a non-sked at KYIP. So I did right thing and never returned the call.

However unemployment and age 53 suddenly make a non-sked job at KYIP look much better. I have worked hard to make JUS a better place to work, to give crews proper training. JUS became a major source of pilots for NJ, over the years nearly 30 pilots have left JUS for NJ, in fact 4 came back after being furloughed by NJ in 2008. To see these pilot move on to career positions is truly satisfying.

This career has been a ball and I do not have to dream of anything. I am fulfilling the child hood dream of a 5 year old who saw the P-51 buzz his house in Detroit back in 1948. I love what I do and can not wait to get up and go to work every morning.

So sorry I do not fill your definition of professional, but I am happy with my lot in life, what I have and the accomplishments in my life. Which is more than I can say about many of the posts I see here.

BTW: As posted here many times before there is an element of luck and timing in this career, that in my opinion often out weight the elements of skill and desire. Best of luck in the yet to be determined future of the Fractional Business model

It is fairly obvious, from your posts, that you either have very little respect for your worth as an employee, or you are just a bit scared at the idea of pilots attempting to get a tad bit more money every contract. It's called, at the very least, a cost of living increase.... (not even talking about longetivity increases yet).... Your notion that asking for some extra coin is going to put a company out of business is akin to a 22 yr. old regional pilot signing off on a contract because of SJS or furlough threats.

NJA, makes money, (supposedly?).. The money they make is a direct result of the pilots hard work satisfying the customer.. Unlike 121 airlines, where the pilots hardly see the passengers, NJA pilots are truly the life blood of the operation. They deserve to be compensated accordingly, especially the SIC's who have seen their expected career progression grind to a decade long halt.

The importnt part of all this you don't seem to see... If NJA was non-Union, or if JUS needed it, pilots would get paid peanuts and have zero work rules other than FAA minimums... Because we all know that younger pilots would gladly do the job for experience.... Unions in aviation, especially at larger companies, are almost an absolute must in todays cut throat business world. Case in Point...JetBlue's fall from grace over the last few years.

And it's not that I care where you work. I took a job at a two bit turbo prop operator to get by after NJA... But at no time did I ever tell myself that this is as good as it's gonna get. Nor did I ever voluntarily offer to work for less so the company would prosper. It's like Jesse James tattoo says, "Pay Up $ucker" I don't work for free, and when push comes to shove I want a raise every so often to ..

What I do have concerns with is your attitude towards pilots (employees) seeking to better themselves through incremental raises. The owners certainly get paid, the professional employees should as well.

I have no dog in this fight. Resigned from NJA and have moved on to the majors. But I'm still interested to see how NJA pans out.

 

[BuckMurdock1]

When you sacrifice delivering a quality product to your customers in exchange for shareholder ROI, things start to go downhill. Companies that embrace this twisted philosophy never remain in business for long.

And yet, like industry cockroaches, airlines like AMR & USAir remain...

I know--I'm frustrated by the concept too.

 

[OPECJet]

I'll get flamed for this, but I have to give Pilotyip some credit. When I was job hunting trying to escape my regional he gave me a straight answer about going to work for USAJet, which dissuaded me from working there. My domestic situation would have made me miserable there, and he knew it although he needed pilots and I needed an escape path. He gave good and honest advice.

We may not see eye to eye with him on labor / management topics, but he ain't no dummy.... I also give him credit for taking back guys who previous resigned and went to NJA. At least two guys in my class at Netjets flew there and both spoke highly of him even when they thought they were done with USAJet.

 

[Xcorporate]

Completely agree.....

 

[gret]

pilotyip is cool and does have respect for himself and the profession.

 

[G4dude]

pilotyip is cool and does have respect for himself and the profession.

Yep, I would hire Yip over Bentover any day. Getting kinda tired of Bentover, by the way.

 

[jetlag7]

Yep, I would hire Yip over Bentover any day. Getting kinda tired of Bentover, by the way.

Bent makes intelligent arguments in a polite fashion - I'm surprised you of all people wouldn't at least appreciate his civility.

If you re-read his post, there was never an attack on YIP's self-worth or self-respect (which would certainly be an insult) but rather questioning his sense of "worth as an employee." I interpreted that statement as simply a call for YIP to question whether he has been selling himself short or not.

I was actually enjoying the mature exchange between YIP and Bent..... Nice change of pace for Flight Info.

 

[B727FA]

A good first start for recalls would be for the newly-elected NJASAP President to vacate his 18-Day schedule for the 7/7 schedule.

I love seeing anti-unionists, spouting union gripes.

 

[Jack Campbell]

I love seeing anti-unionists, spouting union gripes.

I'm actually pro-union, out of necessity. The company has a union; its called "management". They are united. The pilots should also be united.

What I can't stand is when union leadership talks about promoting jobs and then they behave in a way that does the opposite.

 

[jetlag7]

I'm actually pro-union, out of necessity. The company has a union; its called "management". They are united. The pilots should also be united.

That's one of the best arguments for collective bargaining I've ever read.

What I can't stand is when union leadership talks about promoting jobs and then they behave in a way that does the opposite.

The President rarely flies the line. His salary is paid by membership dues. (which currently is a bargain for us considering he is on FO pay whereas his predecesdor was drawing a Captain's check) If he were on the 18-day schedule, it's only on paper.

 

[nordo_2]

I’ll take the middle way. The extreme of anything is ultimately detrimental. But, when the scales are imbalanced.

Good Union. Bad Union. Whatever. Pilots always need a contract. Your management doesn’t work without an individual contract, that delineates all party’s responsibility.

We don’t buy cars without a contract. You don’t buy a house without a contract. Contracts are how business is transacted. What are those things worth? Yet, airline managers expect you to be treated as if you’re a charity, and like it. You trade some of your most valued assets: Your time, and your expertise.

 

[Pervis]

Nordo, excellent analogy. Does company put trust in OEMs to deliver and warranty a product without a contract? They contract with every single supplier they utilize, yet try their utmost to avoid contracts with the very asset that is far more necessary than some VP of toiletries. Why should those on the very pointy end of the spear be treated at will? Those who choose to do so are more the fool for it.

If anyone thinks those writing the checks are some benevolent overseers, guess again. They will pay you as little as they can get away with, as each and every one of us does when making any large scale investment. Do you offer the car salesman more so he gets a better cut? I bet not.

 

[G4dude]

Bent makes intelligent arguments in a polite fashion - I'm surprised you of all people wouldn't at least appreciate his civility.

If you re-read his post, there was never an attack on YIP's self-worth or self-respect (which would certainly be an insult) but rather questioning his sense of "worth as an employee." I interpreted that statement as simply a call for YIP to question whether he has been selling himself short or not.

I was actually enjoying the mature exchange between YIP and Bent..... Nice change of pace for Flight Info.

Yeah, you are right. Sorry Bent. I was feelin a little cranky. I tend to admire Yip and don't like some of the things said about him on this forum.

 

[G4dude]

Nordo, excellent analogy. Does company put trust in OEMs to deliver and warranty a product without a contract? They contract with every single supplier they utilize, yet try their utmost to avoid contracts with the very asset that is far more necessary than some VP of toiletries. Why should those on the very pointy end of the spear be treated at will? Those who choose to do so are more the fool for it.

If anyone thinks those writing the checks are some benevolent overseers, guess again. They will pay you as little as they can get away with, as each and every one of us does when making any large scale investment. Do you offer the car salesman more so he gets a better cut? I bet not.

I agree with y'all about contracts, except I believe in INDIVIDUAL contracts, not collective.

 

[G4dude]

Nordo, excellent analogy. Does company put trust in OEMs to deliver and warranty a product without a contract? They contract with every single supplier they utilize, yet try their utmost to avoid contracts with the very asset that is far more necessary than some VP of toiletries. Why should those on the very pointy end of the spear be treated at will? Those who choose to do so are more the fool for it.

If anyone thinks those writing the checks are some benevolent overseers, guess again. They will pay you as little as they can get away with, as each and every one of us does when making any large scale investment. Do you offer the car salesman more so he gets a better cut? I bet not.

I want to make as much as I can, and they want to pay me as little as they can. This tension is the wage leveling mechanism, and it works fine, seems to me.

 

[gunfyter]

I agree with y'all about contracts, except I believe in INDIVIDUAL contracts, not collective.

I can't negotiate to save my ass... and i can't afford my own lawyer/agent to negotiate for me....

What's wrong with pooling resources for this purpose?

 

[G4dude]

I can't negotiate to save my ass... and i can't afford my own lawyer/agent to negotiate for me....

What's wrong with pooling resources for this purpose?

Great question. Here are the answers:
We all don't want the same things. For instance, some want a pension, whereas I would rather get all my compensation up front so I can plan my own retirement.
Unions seem to morph, over time, into a bureaucracy with its own agenda just like any other grouping of human beings.
Unions tend to try to coerce members who don't agree with the leadership.
Unions tend to slow the employer's ability to quickly adapt to changes in the marketplace, endangering the long term survival of the company.
Pilot unions tend to protect bad pilots who REALLY need to do something else for a living.
Unions tend to forget the company's prosperity is essential to the continued employment of it's members. NJASAP post Luthi does not seem to be headed that way, so far.
Unions sometimes strike, which drives me nuts. If I don't like my job, I will leave, not dreaming of pressuring others to strike.
When unions strike my company, voluntarily leaving their jobs, and I don't voluntarily leave MY job to join the mob, I get yelled at and called a "scab". Yet I don't mistreat the strikers at all because they don't agree with me.
In general, I believe humans behave better individually than they do collectively.
Mark Luthi. What a GREAT argument against unions.
I believe my way is not perfect, but it is better than the union way. Cheers! And thanks again for the good question.

 

[brokeflyer]

its not a perfect system. Until management treats its employees fairly and pays them what their worth, they're going to get the union they deserve.

management are the only ones who can change the way the system works.

 

[Secret Squirrel]

Great question. Here are the answers:
We all don't want the same things. For instance, some want a pension, whereas I would rather get all my compensation up front so I can plan my own retirement.
Unions seem to morph, over time, into a bureaucracy with its own agenda just like any other grouping of human beings.
Unions tend to try to coerce members who don't agree with the leadership.
Unions tend to slow the employer's ability to quickly adapt to changes in the marketplace, endangering the long term survival of the company.
Pilot unions tend to protect bad pilots who REALLY need to do something else for a living.
Unions tend to forget the company's prosperity is essential to the continued employment of it's members. NJASAP post Luthi does not seem to be headed that way, so far.
Unions sometimes strike, which drives me nuts. If I don't like my job, I will leave, not dreaming of pressuring others to strike.
When unions strike my company, voluntarily leaving their jobs, and I don't voluntarily leave MY job to join the mob, I get yelled at and called a "scab". Yet I don't mistreat the strikers at all because they don't agree with me.
In general, I believe humans behave better individually than they do collectively.
Mark Luthi. What a GREAT argument against unions.
I believe my way is not perfect, but it is better than the union way. Cheers! And thanks again for the good question.

Then you would be negotiating AGAINST both the company and other employees. New hires would be your worst enemy because they would sell their soul to get hired on with some companies. Maybe even willing to pay the company to start. Now you are competing with that . Who decides who flies as captain? The biggest ass kisser? They guy willing to fly for the cheapest? There are so many problems with your answer, you might as well say we compete for our contract via MMA fighting.

 

[G4dude]

Then you would be negotiating AGAINST both the company and other employees. New hires would be your worst enemy because they would sell their soul to get hired on with some companies. Maybe even willing to pay the company to start. Now you are competing with that . Who decides who flies as captain? The biggest ass kisser? They guy willing to fly for the cheapest? There are so many problems with your answer, you might as well say we compete for our contract via MMA fighting.

You are not all wrong. I compete with all the other pilots out there. I better do a good job and make the company want me to work here. They can fire me whenever they want, in my preferred world. The job belongs to the company, not to me, because it is their investment money and organizational and administrative energy, not mine. If I want to own my job, I should start my own company, which I am now doing, by the way.
As an employee, I want to make as much as I can, while the company pays me as little as it takes to keep me, as long as they want me to work here. They better treat me right or I will leave. I better do good work or they will replace me. Our association is VOLUNTARY. I enjoy working at NJA. They apparently like having me here, go figure.
Unions brought pilots the Seniority System, which pays, for instance, senior captains more than junior captains for doing the same job. This drives up the costs of a mature company and opens the door to the ValueJets and XOJets of the world who can compete by employing junior pilots in their startup. When the older company gradually loses ground due to this seniority overhead problem, where do the pilots go?
The concept of Seniority amazes me. Why should I make more in 2013 than a more junior captain? Our cost of living is the same. If a rival company with a seniority system wants to hire me away from NJA, they can't because I would have to start as an FO. FlexJet can't compete for my allegedly wonderful flying skills because of the seniority system. Delta can't vie for my services. Bummer.

 

[OPECJet]

The concept of seniority is a safeguard to ensure the captain with the most writeups doesn't get fired over it. Without it you can guarantee that the guy willing to fly through the thunderstorms rather than wait them out, or even deviate stays in the seat. Same with fatigue calls, sick calls, etc.

I won't say it's a perfect system, but can you name something that couldn't be taken advantage of by a company? I feel pretty confident that several guys would be downgraded due to exercising captain's authority more than a company likes.