Freebrd
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Rumor SkyWest Inc. receives new jet financing?
- Thread starter JustaNumber
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General Lee
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Management wanted the talks to start early, so I think they have something else they are thinking about. As far as airplanes, there are a lot of planes that need replacing, but that is already being addressed by Management. Have you seen the number of MD90s coming onboard lately? They supposedly cost around $7 million each used, including the engines.(third world countries? China and Japan? They tend to take fairly good care of their planes. The Saudia ones may have some dust in them, but they may become spare parts, allowing those planes to continue to live on forever) Throw in 120 717s that are out there, and 100 new 737-900ERs. Most of the airbus fleet is fairly new (not all, there are some that were bought back in 1988), and even the MD88s are in fairly good shape. I was told by a jumpseater that even the DC9s will be staying around for an extra year, 2014, and that maybe an extra sim (that makes 2) will be moved to ATL from MSP. Add to that every 757 you see with winglets are supposedly staying, and not being replaced by the 739s. I seem to fly those regularly. So, it appears the domestic market will be taken care of, and the company has been retrofitting the 744s/767ERs/ and some A330s for extended use. All of them have gotten crew rest mods, and new interiors for passengers. That means at least 10 more years for each.
So, scope OR pay, eh? I don't think so. I do think they will want some extra 76 seaters, and hopefully ALPA will squash that before it comes to us. They know the priorities according to that survey.
Bye Bye---General Lee
Last edited:
General Lee
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From Seeking Alpha
Delta Refinery Deal All About Southwest
May 1, 2012 by: Dana Blankenhorn
Delta Airlines' agreement to buy a ConocoPhilipsrefinery in Pennsylvania is all about Southwest Air.
Delta's ongoing battle with Southwest is about costs. Delta's hub-and-spoke system is inherently less efficient than Southwest's network of short flights that just go back-and-forth. But because Southwest has now been around for a generation and accepted unions, while Delta has always pushed back against workers, it may actually have an advantage in labor costs.
The deal is for a refinery near Philadelphia, plus pipelines and other assets that reach its New York hubs. There are $30 million in government incentives on the deal, and Delta has already made deals with BP and Phillips for sourcing oil and selling products other than jet fuel.
Delta figures it can handle 80% of its U.S. jet fuel needs through the deal,saving up to $300 million per year. Put those savings onto its bottom line and profits rise 15%.
While the bet carries risks, the bigger risk may have been not pulling the trigger. There were no other bidders on the property, which could have shut down, meaning a net increase in Delta's fuel costs. Now, in theory, it has the kind of cost advantage on profitable East Coast routes.
Quietly, Delta has been on kind of a tear in its growing competition with Southwest, which entered Delta's home market of Atlanta just this year. Since the start of the year the stock is up by a third, while LUV is flat. Last year Delta had a net income of $854 million on revenues of $31.28 billion, against net of $178 million on $14.87 billion in revenue for Southwest. So a few more pennies on each dollar are already flowing to Delta's bottom line than its rival's.
There remains one big problem for Delta. Its fleet averages 15.9 years in age, against 12.1 years for Southwest. The two airliners' fleets are becoming increasingly similar, however. Southwest flies Boeing 737s almost exclusively, and Delta ordered 100 of those same planes to replace it's aging DC9s, among the oldest planes in the air.
So Delta has competitive labor costs, lower fuel costs, and a compatible fleet. I have to head to Houston next week, and even with the single bag charge Delta's price is slightly below the Southwest "gotta get away" fare.
This just got interesting.
This guy didn't mention that Delta is actively looking at replacement of the older mainline domestic planes, including 120 717s or 75 A319s (coming off leases soon). It's already in the plans. He did mistake though the 100 737s Delta ordered are intended to replace older 757s, not DC9s. Those will be replaced eventually by something else (mentioned above).
Bye Bye--General Lee
Delta Refinery Deal All About Southwest
May 1, 2012 by: Dana Blankenhorn
Delta Airlines' agreement to buy a ConocoPhilipsrefinery in Pennsylvania is all about Southwest Air.
Delta's ongoing battle with Southwest is about costs. Delta's hub-and-spoke system is inherently less efficient than Southwest's network of short flights that just go back-and-forth. But because Southwest has now been around for a generation and accepted unions, while Delta has always pushed back against workers, it may actually have an advantage in labor costs.
The deal is for a refinery near Philadelphia, plus pipelines and other assets that reach its New York hubs. There are $30 million in government incentives on the deal, and Delta has already made deals with BP and Phillips for sourcing oil and selling products other than jet fuel.
Delta figures it can handle 80% of its U.S. jet fuel needs through the deal,saving up to $300 million per year. Put those savings onto its bottom line and profits rise 15%.
While the bet carries risks, the bigger risk may have been not pulling the trigger. There were no other bidders on the property, which could have shut down, meaning a net increase in Delta's fuel costs. Now, in theory, it has the kind of cost advantage on profitable East Coast routes.
Quietly, Delta has been on kind of a tear in its growing competition with Southwest, which entered Delta's home market of Atlanta just this year. Since the start of the year the stock is up by a third, while LUV is flat. Last year Delta had a net income of $854 million on revenues of $31.28 billion, against net of $178 million on $14.87 billion in revenue for Southwest. So a few more pennies on each dollar are already flowing to Delta's bottom line than its rival's.
There remains one big problem for Delta. Its fleet averages 15.9 years in age, against 12.1 years for Southwest. The two airliners' fleets are becoming increasingly similar, however. Southwest flies Boeing 737s almost exclusively, and Delta ordered 100 of those same planes to replace it's aging DC9s, among the oldest planes in the air.
So Delta has competitive labor costs, lower fuel costs, and a compatible fleet. I have to head to Houston next week, and even with the single bag charge Delta's price is slightly below the Southwest "gotta get away" fare.
This just got interesting.
This guy didn't mention that Delta is actively looking at replacement of the older mainline domestic planes, including 120 717s or 75 A319s (coming off leases soon). It's already in the plans. He did mistake though the 100 737s Delta ordered are intended to replace older 757s, not DC9s. Those will be replaced eventually by something else (mentioned above).
Bye Bye--General Lee
Even Boyd gets it!
Monday, April 30, 2012
Dealing With The Virtual Airline
It happened in the petroleum industry. It's happening in the airline business. Or, more accurately, it's already happened in the airline business. Brand virtualization.
Today, you go to the gas station and pump a brand of gas in to the tank of your SUV. But where that unleaded came from, how it was produced, who produced it, who moved it and who put it into the filling station storage tank, are all different companies, and they can change month to month, and even gas station to gas station across town. The only thing that's the same is that the sign at the station says "Conoco" or "Shell."
Twenty years ago, oil companies were involved from the wellhead to the gas pump. Today, it's different vendors and suppliers for every part of the logistics stream. It's all been farmed out to independent surrogates. Tumble to this: that's exactly what's happened in the US airline industry over the last 15 years. Today, it's not only possible, but probable, that you can book a trip on a major airline from a mid-size community on the East Coast to one on the West Coast, and never in the process deal with anybody directly working for the airline brand. It's all been outsourced.
Think about it. You book the seat on-line. No contact whatsoever with an airline employee. And in the event that you do need human intervention, there's a better than even chance the guy on the other end of the phone is in a call center in some Third World country. He's successfully completed Level Three of English As A Second Language, and thinks that "FRA" is the code for "France." You go to the airport. Get a boarding pass at a kiosk. Or, have it sent to your iPhone. You flash it at the gate, which, like the rest of the airline brand's operation at the airport, is staffed by outsourced vendors, or a "regional" airline. You board the RJ, operated by an outsourced vendor. You fly to the connecting hub - to a concourse again where staff are outsourced to a "regional" airline. Board another outsourced flight, and fly to your final destination.
Not one interaction with any staff or employees of the airline brand from which you bought your ticket. Just like at the gas station - the whole process is now virtual. You have no contact with anybody that is directly working for the airline. Vendors, all. And, you'd best believe that this is sooooo much more cost-effective than having the airline itself do it with their own employees. Airline employees tend to want to make a career at the carrier. They stay around for years, moving up the pay scale. And - yikes! - they may even be in a union, one of those pesky groups that want to bargain for things like pay and working conditions. Truly, it's much more enlightened to just farm the work out.
Just Like The Fast Food Business. Youbetcha, it's better from a cost-approach to outsource this work to vendors. They just hire kids, or maybe not-so-kids, and pay 'em wages that will encourage them to work a while, and then move on, to be replaced by other bottom-of-the-scale new hires, creating a cycle that keeps labor costs low. It's the same approach that's been used in the fast food industry for years. Turnover is the key to low labor costs and a real barrier to union entry.
Sounds great. But what's been created is a system that is not focused on service. Not focused on excellence. It's just focused on labor costs. And it's one that offers employees almost zero potential for career growth - just ;ike at the local Burger World. This extends across the board: The ramper at East Upchuck has a career path that will last until the ground contract is re-bid in two years. The pilots and flight attendants on the "regional" airline to which flights have been outsourced are really caught in a special bind: there are limited flow-through opportunities to majors, and worse, those mainstay 50-seat jets are going to get retired faster than new jobs will open at majors. (See recent comments by Republic Airlines CEO on the matter, by the way.)
The point is this: there's not a lot of long-term career-play for employees involved in this oh-so-cost-efficient virtual airline system. But, so what? It works, right? Here's a clue: airlines are not the same as Burger World. Slapping secret sauce on a hamburger and keeping the yogurt machine churning out sugary glop is not the same as the skills and training needed to professionally handle an airport passenger service and ramp operation.
So, let's touch that third rail that we're not supposed to mention: a lot of this outsourced work is shamefully done. To be sure, there are stellar companies in the business, like SkyWest, where there is a career path, and the training infrastructure in place to make it work. But that's not the norm. It's not uncommon for consumers to get abused (unintentionally, usually) by vendors where the "customer service" staff has less training than a day-old puppy. Situations where they are clueless as to why the flight's late, or visually looking like they just came from a street fight. Or, hamstrung with really incompetent rules - like, the incidents where people actually standing in line to check-in for a 34-seat airplane are cut off 30 minutes before departure - and responding aggressively when consumers get understandably ticked off.
Why should they care? It's just a temporary job. If the customer doesn't come back, no big deal. Training in customer service skills? Sure, we do a half-day program, you might hear. But to do more would be un-economic, don't ya know: There's too much turnover to spend the money,
Future? Two dynamics are emerging: Ground outsourcing will continue and expand. But in the cockpit, the trend will be toward flying shifted back to the major, simply because of changes in airplane economics. As 50-seaters get retired, we can expect that 80+ seaters be the capacity floor - and they will be flown in-house. Plan on it.
Monday, April 30, 2012
Dealing With The Virtual Airline
It happened in the petroleum industry. It's happening in the airline business. Or, more accurately, it's already happened in the airline business. Brand virtualization.
Today, you go to the gas station and pump a brand of gas in to the tank of your SUV. But where that unleaded came from, how it was produced, who produced it, who moved it and who put it into the filling station storage tank, are all different companies, and they can change month to month, and even gas station to gas station across town. The only thing that's the same is that the sign at the station says "Conoco" or "Shell."
Twenty years ago, oil companies were involved from the wellhead to the gas pump. Today, it's different vendors and suppliers for every part of the logistics stream. It's all been farmed out to independent surrogates. Tumble to this: that's exactly what's happened in the US airline industry over the last 15 years. Today, it's not only possible, but probable, that you can book a trip on a major airline from a mid-size community on the East Coast to one on the West Coast, and never in the process deal with anybody directly working for the airline brand. It's all been outsourced.
Think about it. You book the seat on-line. No contact whatsoever with an airline employee. And in the event that you do need human intervention, there's a better than even chance the guy on the other end of the phone is in a call center in some Third World country. He's successfully completed Level Three of English As A Second Language, and thinks that "FRA" is the code for "France." You go to the airport. Get a boarding pass at a kiosk. Or, have it sent to your iPhone. You flash it at the gate, which, like the rest of the airline brand's operation at the airport, is staffed by outsourced vendors, or a "regional" airline. You board the RJ, operated by an outsourced vendor. You fly to the connecting hub - to a concourse again where staff are outsourced to a "regional" airline. Board another outsourced flight, and fly to your final destination.
Not one interaction with any staff or employees of the airline brand from which you bought your ticket. Just like at the gas station - the whole process is now virtual. You have no contact with anybody that is directly working for the airline. Vendors, all. And, you'd best believe that this is sooooo much more cost-effective than having the airline itself do it with their own employees. Airline employees tend to want to make a career at the carrier. They stay around for years, moving up the pay scale. And - yikes! - they may even be in a union, one of those pesky groups that want to bargain for things like pay and working conditions. Truly, it's much more enlightened to just farm the work out.
Just Like The Fast Food Business. Youbetcha, it's better from a cost-approach to outsource this work to vendors. They just hire kids, or maybe not-so-kids, and pay 'em wages that will encourage them to work a while, and then move on, to be replaced by other bottom-of-the-scale new hires, creating a cycle that keeps labor costs low. It's the same approach that's been used in the fast food industry for years. Turnover is the key to low labor costs and a real barrier to union entry.
Sounds great. But what's been created is a system that is not focused on service. Not focused on excellence. It's just focused on labor costs. And it's one that offers employees almost zero potential for career growth - just ;ike at the local Burger World. This extends across the board: The ramper at East Upchuck has a career path that will last until the ground contract is re-bid in two years. The pilots and flight attendants on the "regional" airline to which flights have been outsourced are really caught in a special bind: there are limited flow-through opportunities to majors, and worse, those mainstay 50-seat jets are going to get retired faster than new jobs will open at majors. (See recent comments by Republic Airlines CEO on the matter, by the way.)
The point is this: there's not a lot of long-term career-play for employees involved in this oh-so-cost-efficient virtual airline system. But, so what? It works, right? Here's a clue: airlines are not the same as Burger World. Slapping secret sauce on a hamburger and keeping the yogurt machine churning out sugary glop is not the same as the skills and training needed to professionally handle an airport passenger service and ramp operation.
So, let's touch that third rail that we're not supposed to mention: a lot of this outsourced work is shamefully done. To be sure, there are stellar companies in the business, like SkyWest, where there is a career path, and the training infrastructure in place to make it work. But that's not the norm. It's not uncommon for consumers to get abused (unintentionally, usually) by vendors where the "customer service" staff has less training than a day-old puppy. Situations where they are clueless as to why the flight's late, or visually looking like they just came from a street fight. Or, hamstrung with really incompetent rules - like, the incidents where people actually standing in line to check-in for a 34-seat airplane are cut off 30 minutes before departure - and responding aggressively when consumers get understandably ticked off.
Why should they care? It's just a temporary job. If the customer doesn't come back, no big deal. Training in customer service skills? Sure, we do a half-day program, you might hear. But to do more would be un-economic, don't ya know: There's too much turnover to spend the money,
Future? Two dynamics are emerging: Ground outsourcing will continue and expand. But in the cockpit, the trend will be toward flying shifted back to the major, simply because of changes in airplane economics. As 50-seaters get retired, we can expect that 80+ seaters be the capacity floor - and they will be flown in-house. Plan on it.
General Lee
Well-known member
- Joined
- Aug 24, 2002
- Posts
- 20,442
Future? Two dynamics are emerging: Ground outsourcing will continue and expand. But in the cockpit, the trend will be toward flying shifted back to the major, simply because of changes in airplane economics. As 50-seaters get retired, we can expect that 80+ seaters be the capacity floor - and they will be flown in-house. Plan on it.---Mike Boyd
Careful, Jon Rivoli doesn't want to hear any part of this.
Bye Bye---General Lee
Careful, Jon Rivoli doesn't want to hear any part of this.
Bye Bye---General Lee
IBNAV8R
Stand-up Philosopher
- Joined
- Jul 3, 2008
- Posts
- 843
If close your eyes really tight, click your heels and repeat it often enough, dreams will come true.
...says the guy who dreams of scope being eroded. Not happening!
General Lee
Well-known member
- Joined
- Aug 24, 2002
- Posts
- 20,442
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