SkyWest, Not Paid in Training, et al

[Theflyingtito]

For the outsiders,
I realize that this my sway some on the decision on SkyWest or not. Honestly, it would have been hard to swallow if that was the case for me when I started a little over a year ago. But...now after being here, you can bet your life I would do whatever it took. There isn't one day where I would rather be anywhere else. No, it's not perfect. But knowing what I know now...every piece of me is glad I'm here and no where else. Yes, they may not pay the newhires in training(still pay for the hotel), exective level management also took a 20% cut in pay and that's so they don't have to cut the crew pay in order to stay competitive with lesser quality airlines.

BIG PICTURE...

Questions, email me
[email protected]

 

[Kmedchill]

But let's talk about payroll. I expect to be in training, if I make it all the way, a total of 7 weeks; that's 1.75 months @ 65 hours @ $19.02 per hour @ 20% tax bracket equating to an out-of-pocket deficit of $1730.82.

The thing that sucks is i just went through the December 2nd class and im STILL not out of training. Im waiting at home for IOE to get scheduled! They are telling us that they are so backed up it may not be until mid feb or so. Not trying to bring you guys down, still a great company, but this is the reality of things. It just may be a bit more than the $1730.

 

[realitycheck]

kmedchill,

SkyWest will start paying me immediately after my flight check. So, if IOE is backed up 4 weeks, which I understand it is, then that's fine by me... since I'll be getting 65 hours sitting on the couch (while I keep up with my flows, profiles and procedures).

Good luck with IOE; God's speed.

 

[Beechnut]

Why only 65 hours?

S.

 

[WhiteCloud]

<SkyWest will start paying me immediately after my flight check>

Is that what they are saying today? How about tomorrow.? ziggy1

 

[Kmedchill]

realitycheck,

That makes me feel better. 4 week paid vacations after you get hired are nice. Good luck in training...

K

 

[p.b.]

"They essentially advanced their careers by two years, which equates to $400,000 in today's terms. Pay $20,000 to get $400,000- pretty good risk v. reward scenario."

How does two years at a regional equal $400,000? Have I been working for the wrong regionals?

 

[greg20]

NPV

p.b. said:

How does two years at a regional equal $400,000? Have I been working for the wrong regionals?

I believe what "realitycheck" meant (and please, correct me if I'm wrong) was that those investing $20,000 today may effectively "skip" 2 years of "low wage" flying and therefore may have 2 "extra" years at the end of their career at an assumed $200,000/year (in today's dollars). This assumes that everyone is on a level playing field, the # of years to a $200,000 job is known, etc etc.

If the salary in 2050 was $200,000 in real, "2050" dollars, (just an example), it would have to be discounted back to today using a net present value (NPV) equation and a given discount rate to find out how much that amount of money is worth today. It would be something less than $400,000 (and possibly even less than $20,000) depending on the discount rate assumed and the # of years left before the individual reaches mandatory retirement. If you knew your final salary, and what age (what year) you would be working to at that salary, you could discount that back to today's dollars using an accepted discount rate and use the result to determine whether or not two extra years at that salary is worth investing $20,000 today.

 

[realitycheck]

NPV, Other

Kmedchill- Thanks. I need all the help I can get!

Beechnut- Why only 65 hours? That's what SkyWest considers the gaurantee when you're on reserves (I believe); 80 hour gaurantee for line holders. BTW, my daughter loves your food

p.b.- greg20 is correct, and I have exact numbers and more explanation below.

ziggy1- Everything in life is face value. You have to bank on what someone says today; if I went through life thinking everything is a preface to a series of precipitous deceptions, I'd never leave my room.

When I said $20,000 versus $400,000, greg20 was right on. If a pilot can advance his/her career by two years by writing a check for $20,000 he/she should be able to enjoy an additional two years at an average max pay of $200,000 per year in today's terms.

I didn't necessarily want to complicate the issue, but greg20 is again correct stating you must discount the future annuity to get the net present value (NPV). Basic finance suggests a dollar today is worth more than a dollar tomorrow for two simple reasons- first, you can invest the dollar at x% and earn a dividend; second, the cost of living increases each year making your future dollar worth less.

So, applying the NPV function for 30 years at 8% and 10% (assuming 3% cost of living to maintain apples to apples comparison) results in $99,608 and $58,193 respectively. In other words, investing $20,000 today at 8% results in $300,392 thirty years from now- but you'll be earning $400,000 ($200,000 x 2) thirty years from now, resulting in a gain of $99,608. This also assumes you can earn 8% on your money for the next 30 years, which is do-able. 10% may be more of a stretch.

To conclude, greg20 is correct- but the comparison of $20,000 to $99,608 @ 8%, or $20,000 to $58,193 @ 10%, still makes writing a check for $20,000 to get a 2 year jump on your colleagues(competitors) a wise investment. There are also intangibles- getting more valued experience (e.g., Part 121, turbine) earlier may suggest more job protection, easier job-hopping, etc. (remember, I say *MAY*).

Hope this helps-

 

[greg20]

Realitycheck,

Thanks for solidifying what I said with some real numbers. I wasn't sure how detailed you wanted to get!

Just as an aside, all of this assumes that you won't have a medical issue, you will in fact make it to retirement age (a bit morbid, but true). Working out the numbers is a valuable exercise, and I agree with everything you said.

The intangible"what ifs" still have to be considered, and one has to shop around and see if a higher return can't be earned elsewhere on that $20,000 for the same (or lower) perceived risk. I don't believe you'll find anything projected to earn +10% over the majority of a lifetime that is "safer" than investing in yourself. At least I haven't found it yet.