So was B19 right or wrong?

[T-1GUY]

Wow, nothing like calling out the village idiot...

 

[gunfyter]

Thus, my question. Now, what if the contract is renegotiated to survive? Is that the final stake in the heart (for lack of a better term) of this debate?

Honesty is what I am seeking here. Outside of the personal attacks on B-19 there were some good points made, but the trend he/she (B-19) has talked about in the past, certainly appears to be happening....no?

Again, best wishes to everyone here that is getting furloughed or has been furloughed. Maybe I will try and stay in Iraq longer.

a little math here. If you looked at the Berkshire 3rd quarter report you will see NJ losses for the 1st 9 months in the neighborhood of $550 million. That would translate to a rate of $750 million per year.

The savings during furlough are about $40 million a year.

$750M vs $40 M.

Now $40 M is an important amount of money to save. But let's keep 19's statements in mind. He claims union pilot contracts destroy companies. I think we can clearly see furloughs aren't solving anything. In fact, if you furloughted every pilot or paid every one $zero dollars a year ... You would still be $300m to $400m in the hole


So I ask you, 7777, is 19 right? Is the union the downfall of the company?

No. I think you can see someone got caught with their skivvies down when the financial crisis hit in late 2008. But despite this the Berkshire Report also states they are projecting NJ to be profitable again in 2010. This with the current union and CBA!


.

 

[BlueNose]

A little better math

a little math here. If you looked at the Berkshire 3rd quarter report you will see NJ losses for the 1st 9 months in the neighborhood of $550 million. That would translate to a rate of $750 million per year.

The savings during furlough are about $40 million a year.

$750M vs $40 M.


.

That's a bit of an apples to oranges comparison. Much of Netjets loss is from a/c value depreciation, which hits asset value and shows as a loss. But that loss isn't truly realized unless and until the aircraft are wholesaled out. The real issue here is cashflow - the actual cash in vs cash out over a period of time. The entire industry has had a cash problem since the slowdown. Cash in (sales, hourly and management fees) is waay down; cash out is up because of redemptions, but also because fixed costs (core fleet, leases, salaries and benefits) don't go down with flying hours.

Businesses can show a net loss for many years and still survive, but when they hit a liquidity crisis (out of cash and can't finance more), it's pretty much over. Crew salaries and bennies have to be a large piece of cash flow, so furloughs will have a much larger impact than you imply.

Just an outsider's opinion here, but that's also why there's a big risk of more next year if the industry situation doesn't pick up. Netjets burned a lot of cash by waiting so long after the other fracs to take this action, and the initial voluntary actions probably didn't do enough to improve cashflow - so it's no wonder Mr. Santulli left so suddenly to "pursue other interests." BRK is not a charity.

 

[gunfyter]

Even better math

Agree on the cash flow but that is not reported on the quarterly report. You can't get those details.... Thats why I didn't want to get into the cash flow issue.

If the reported losses from decreased value of airplanes is several hundred million ... How much was the TOTAL value of airplanes that NJ bought back from owners? That's the negative cash flow.

I am thinking of a number with 10 figures but I don't know ... its not reported.

$40 M (Furlough savings) is a BIG number but only has 8 figures....

Pilots, unions, and their contracts ain't the problem here....

 

[gunfyter]

BTW.... You really have to hand it to FLOPS management. They shrunk their fleet and RIFd the pilot force from almost 1000 strong down to about 300 or so ... LONG BEFORE the financial crisis of September 2008.

They must have been prescient! They saw it coming or consulted the writings of Nostradamus.

 

[7777]

a little math here. If you looked at the Berkshire 3rd quarter report you will see NJ losses for the 1st 9 months in the neighborhood of $550 million. That would translate to a rate of $750 million per year.

The savings during furlough are about $40 million a year.

$750M vs $40 M.

Now $40 M is an important amount of money to save. But let's keep 19's statements in mind. He claims union pilot contracts destroy companies. I think we can clearly see furloughs aren't solving anything. In fact, if you furloughted every pilot or paid every one $zero dollars a year ... You would still be $300m to $400m in the hole


So I ask you, 7777, is 19 right? Is the union the downfall of the company?

No. I think you can see someone got caught with their skivvies down when the financial crisis hit in late 2008. But despite this the Berkshire Report also states they are projecting NJ to be profitable again in 2010. This with the current union and CBA!


.

Nice post and good points! You seem to be right on the money there. Thanks

 

[7777]

That's a bit of an apples to oranges comparison. Much of Netjets loss is from a/c value depreciation, which hits asset value and shows as a loss. But that loss isn't truly realized unless and until the aircraft are wholesaled out. The real issue here is cashflow - the actual cash in vs cash out over a period of time. The entire industry has had a cash problem since the slowdown. Cash in (sales, hourly and management fees) is waay down; cash out is up because of redemptions, but also because fixed costs (core fleet, leases, salaries and benefits) don't go down with flying hours.

Businesses can show a net loss for many years and still survive, but when they hit a liquidity crisis (out of cash and can't finance more), it's pretty much over. Crew salaries and bennies have to be a large piece of cash flow, so furloughs will have a much larger impact than you imply.

Just an outsider's opinion here, but that's also why there's a big risk of more next year if the industry situation doesn't pick up. Netjets burned a lot of cash by waiting so long after the other fracs to take this action, and the initial voluntary actions probably didn't do enough to improve cashflow - so it's no wonder Mr. Santulli left so suddenly to "pursue other interests." BRK is not a charity.

Another good post! This is the kind of stuff I was looking to read. Thanks fellas. I am learning here and we are not name calling and acting like high school kids in doing so. This IS the reason for me posting this thread.

It is kind of like an economics/business class for me as I am an outsider looking in and wanting to make a good decision on where to keep flying after I get out. Thanks very much for these type of posts (Gunfyter, B-19 and Blue Nose).

 

[B19 Flyer]

Flawless memory... let's do ALL the numbers...

You've gotta love the flawless memory of a computer. Another example of B19 trying to twist the facts to make them fit his agenda.

Does the 17% include all those that took the "golden parachutes" and already stepped away? If not, what is the pct then?

Just how many fewer pilot are working at NJ then we started the year with?

They really need to be included in the numbers, they are pilots that are not working and didn't intend on stepping away when they did. If they hadn't taken the golden parachutes, the furloughs would have been lot worse.

It really is a fair comparison if you are going to compare them against the other pilots and use the pct. figures.

Let's not twist the numbers... let's call it like it is.

How many fewer pilots are flying at NJ today than started the year?

Then, compare those numbers against the other fracs.

 

[B19 Flyer]

It's gonna cost ya......

Netjets burned a lot of cash by waiting so long after the other fracs to take this action, and the initial voluntary actions probably didn't do enough to improve cashflow - so it's no wonder Mr. Santulli left so suddenly to "pursue other interests." BRK is not a charity.

Cash burn will be he next issue. NJ will shed as much as they can, and when the union chooses to not act, the cash burn will increase. When the cash burn becomes uncontrollable and the union won't act, this will be the next step.

It's all part of aviation history my friends... let's go back to the "Industry Leading Contracts" of United, American and Delta...

Same exact thing happened then, and it's going to happen now. The first batch of furloughs have come. There will be another batch. Then, cash be become increasingly tighter and the union will hold on to the contract after the company requests to open it. All the while, the cash burn gets worse. Then... hopefully it won't happen at NJ like at the majors, it will come to a point where a judge will get involved.

There is nothing here that is new or hasn't happened in recent history. It's the same old union tactic... expensive contract, union wants to hang on to it, cash burn, bankruptcy, contract reduction, ongoing turmoil.

All the while, those non-union fracs just keep adjusting to the market place and keep chugging along. They will grow quicker when they can, the pilot group will go through a lot less misery and life will be good...

God bless America...

 

[7777]

Dual post.