Some truth in the second Tutt letter

[EMB to CRJ]

There is a big difference between operating and net profit. All the stuff derived from the dot like that Consulting firms report or the Aviation Daily numbers we have been looking at recently are about operating profit.

If you look at the tables for the 4th quarter 2005 dot press release and the SkyWest press release about the 4-quarter 2005 earnings report (the link to the pdf file page 4) you will see the difference.

From the DOT Stuff
Operating Revenue , Operating Cost, Operating Profit
ASA 320, 278, 42
SKY 422, 379, 43

Totals 742 , 657, 85

From the SkyWest press release
​

Operating Revenue, Operating income, NET Income or profit ​

Total for both
ASA and Sky 742.4, 85.3, 38.7

All the numbers line up so it looks like the net profit is about half that of the operating profit. So what that means to me it any number that comes from the dot form 41 showing total profits or total cost is not the whole story since something is taking about half the operating profit away. According to the earnings report it is mostly taxes and interest which I guess could be the cost of the airplanes leases / payments.

To ignore that difference would be like saying you can afford to have $4800 in monthly bills if your salary was $5000 a month. As we all know the take home or the net income is far less the pre tax or operating income.

So lets say ASA is making half of that 40 million a quarter net profit for Sky West Inc. 20 million a quarter, which is of course 80 million a year, net profit from ASA. I am not sure if it was Tutt or the MEC that put a 20+ million a year cost of the ALPA compensation proposal but can the company truly afford as the union has been suggesting or better yet is it good business in the best interest of the company (that is the place the sends us the pay checks not ALPA national) to give up 1/4 of the total profits for a pilot raise.

There is big difference in what is fair and what is over the top. The QOL issues that have been TA’ed are not free for the company but are not totally out of line with every one else. The changes in section 13 alone will make my life at ASA a lot better. Going on strike for a 70 seat rate to only then have the airplanes take away will not. When we cast the ballot we must think about what is best for us in the long run vs. a raise at the cost of airplanes and the victory over the man of stopping the race to the bottom.

I know the union hardliners will say I am management and that pilot costs don’t matter to an airline. That the company is going to do what they want with airplanes anyway. There must be some strange force causing airline management to want to move the airplanes to different pilot groups or airlines. Could it be the same force that caused you to get the gas that is 2.75 a gallon vs. the gas that is 2.90 a gallon since your car run just as well on either one? It is only .15 cents a gallon but over the course of a year it sure adds up.

If you were to only look at the hourly wage and not the total benefit package what is a 80 hour average month * 55 dollars average hourly rate * 1800 pilots * 12 months a year?

$95,040,000.00 but that number getting bigger or smaller by 10% or 15% has no affect on the airline it is just chump change.


If you don't believe me see the sources of the data at a computer near you.


http://www.skywest.com/invest/investor_releases/2006/Feb/SKYW_Earnings4Q05.pdf

http://www.bts.gov/press_releases/2006/bts024_06/html/bts024_06.html

http://www.transtats.bts.gov/databases.asp?Mode_ID=1&Mode_Desc=Aviation&Subject_ID2=0

 

[atrdriver]

Whether you look at operating profit OR net profit, both ASA and Skywest made a lot of money last year, period. And them asking me to take a paycut at the same time that they give BL 800,000 in stock is an insult to every pilot at this company. If you can't see that maybe you had better see an eye doctor.

 

[ASARJMan]

Whether you look at operating profit OR net profit, both ASA and Skywest made a lot of money last year, period. And them asking me to take a paycut at the same time that they give BL 800,000 in stock is an insult to every pilot at this company. If you can't see that maybe you had better see an eye doctor.

Isn't it just like management to make bonehead moves like this in the middle of heated mgt/labor battles. What are they thinking when they do stuff like this. It just turns labor against them even more I would think.

 

[EMB to CRJ]

Whether you look at operating profit OR net profit, both ASA and Skywest made a lot of money last year, period. And them asking me to take a paycut at the same time that they give BL 800,000 in stock is an insult to every pilot at this company. If you can't see that maybe you had better see an eye doctor.

What kind of stock? What is the source of this information? I would sure like to know some details do you have them? I agree getting a bonus is not a good thing to do when you are asking people to give of there money up.

 

[suupah]

They are just pitting brothers against eachother here. INHO the only ones who can stop this are the skywest pilots. But they are excited to get the fast upgrade and more planes so i don't think that will happen. sucks. it is terrible and iron fisted. I hope the best for you asa guys.

 

[Redan]

I know the union hardliners will say I am management and that pilot costs don’t matter to an airline. That the company is going to do what they want with airplanes anyway. There must be some strange force causing airline management to want to move the airplanes to different pilot groups or airlines. Could it be the same force that caused you to get the gas that is 2.75 a gallon vs. the gas that is 2.90 a gallon since your car run just as well on either one? It is only .15 cents a gallon but over the course of a year it sure adds up.


What is so frustrating for so many of us is having to watch this same scenario played over and over and over and over. Same game, different pilot group. You say "union hardliners," but one doesn't have to be a union hardliner to figure this out. It's all right there in the history books. Son, there are so many examples available it's mind boggling. Same game since the advent of airlines...and this game is by no means exclusive to airlines. Myself and others have taken the time to post our insight and perspective, yet so many still don't get it. All you have to do is a little research on the history of American "labor relations," regarding airlines or any number of other industries to prove it to yourself. The evidence is frankly, overwhelming. The situation here at ASA is just the latest chapter in a very very long book.

A management decides to try to eek even more from it's labor. Company could be in bankruptcy, or wildly profitable...it matters not. Typically, one of the first steps is to hire a bunch of "labor relations" lawyers, (You've heard of Ford and Harrison, right? OMG, how much has ASA paid these guys? Hint: plenty enough to cover a nice raise for the pilots). They conclave and come up with a spin which is designed to sound credible. Usually involves "growth," being "competitive," or "saving the company." They may parade shiny new airplanes to titillate the pilots. They may threaten them in some way...for example: taking away airplanes, or closure. They may promise new planes with new flying and faster upgrades. They offer up many rationale for these changes, but will never completely open up the company's books to definitively prove their claims, and will very seldom totally commit to the benefits the pilot group is being asked to sacrifice for. Oh so frequently the management neglects to detail what other changes and sacrifices will be forthcoming. What other efficiencies of operation will be implemented? What sacrifices from other labor groups within the company (particularly management) will occur? Then as the plot thickens, the mgmt will make attempts to create discord between labor groups within the company. For example: blaming the pilots for aircraft we're not getting or which are going away, consequently, it's the pilot's fault we're not growing or are shrinking.

The saddest aspect is that we fall for it so often. One of the biggest mistakes is taking the management claims or theats at face value. We simply have to remember this is just the most credible sounding spin they came up with to cause us to cave. Another is accepting that it's the pilots duty to subsidize new equipment or business. I can think of very few other industries who depend on employees to finance equipment or growth. And along these same lines, we must develop adequate sophistication in our insight to realize this new growth and equipment, and etc is not based on wresting a couple bucks out of the pilots. These are long range planning aspects of business. This, you see, is why we keep repeating how the projected growth, or loss (if, and only if it is a truly valid claim to begin with...we have no way to validate these mgmt claims) will occur regardless of what we pilots do. Therefore, it is no surprise that the advertised benefits mangement offers with our sacrifice very seldom come to pass. If you don't believe this, RESEARCH IT! And simple math proves how insignificant our "couple bucks" really are to the overall cost of the operation. Why does mgmt do this so often? Because we constantly allow them to make us a very easy target. If we once establish that we will cave, guess what? They're back again and again. We cannot allow this cycle to begin here at ASA. Now Folks, please do not take my word for any of this. The evidence is very readily available...and overwhelming. RESEARCH IT! ASA pilots, it appears that here lately the only labor groups who have "grown a pair" and stood up to management are flight attendants.

 

[JoeMerchant]

Whether you look at operating profit OR net profit, both ASA and Skywest made a lot of money last year, period. And them asking me to take a paycut at the same time that they give BL 800,000 in stock is an insult to every pilot at this company. If you can't see that maybe you had better see an eye doctor.

Some of you need some econ. lessons. Net profit and profit margin are the important numbers. If my income doubles this year, but my expenses triple, I am doing worse this year than I was last year. I don't know how to make that more simple. The fact is, ASA's net profit margins have been decreasing since '98.

The other half of the equation is our income is entirely dependant on "winning" bids of flying for mainline carriers that are in dire financial straights. As unpleasant as it is, and as much as we don't like it, the "buyers" are setting the market for what our service is worth, and the price is going down.

 

[JoeMerchant]

What is so frustrating for so many of us is having to watch this same scenario played over and over and over and over. Same game, different pilot group. You say "union hardliners," but one doesn't have to be a union hardliner to figure this out.

Your right it is frustrating. What is more frustrating is ALPA has contributed to this problem by allowing us to bid against one another. If scope hadn't been "sold" over 20 years ago, this problem wouldn't be as severe today. To make matters worse, ALPA isn't even trying to put the genie back in the bottle.

 

[blueridge71]

he changes in section 13 alone will make my life at ASA a lot better. Going on strike for a 70 seat rate to only then have the airplanes take away will not. When we cast the ballot we must think about what is best for us in the long run vs. a raise at the cost of airplanes and the victory over the man of stopping the race to the bottom.

What you don't take into consideration is that the 50 is a dying fleet. The production line is shut down and there will be very little growth unless we get GECAS airplanes or some transfer from another source. Future growth is 70+ seats. That is why they want the pay cut on the 70.

As an ASA pilot who made less than $15000 last year, I find it very insulting to hear that BL is making $800,000 is stock options while they ask me for a 12% pay cut. Do they not realize that we can read?

If scope hadn't been "sold" over 20 years ago, this problem wouldn't be as severe today. To make matters worse, ALPA isn't even trying to put the genie back in the bottle.

Joe, I think that everyone involved on the labor side realizes that ALPA and the legacy MECs screwed the pooch on scope. DAL flights should be flown by DAL pilots. But realize this: The genie is not going back into the bottle. Not now. Not ever. Get over it and move on. Let 's focus on what we can do to improve our careers and jobs in the real world.

 

[Redan]

Your right it is frustrating. What is more frustrating is ALPA has contributed to this problem by allowing us to bid against one another. If scope hadn't been "sold" over 20 years ago, this problem wouldn't be as severe today. To make matters worse, ALPA isn't even trying to put the genie back in the bottle.

Joe, I have to concur. My frustrations with ALPA are numerous. My postings on here are my humble opinion. But I strongly believe what I say. I'm convinced our first best option is to go with ALPA on this. And to avoid caving in to management at all costs. I also believe it is imperative to see ALPA established at SKYW thus allowing us to work in concert most effectively with our SKYW brothers and sisters. My firm belief is that unity amongst pilot groups is of foremost importance. It appears to me ALPA will be the best option to achieve this...I just don't see any alternative. Particularly since ALPA is already established here at ASA. I strongly believe we have a tremendous opportunity to create some unity here this way. This could be a huge first step, it has to start somewhere, why not with us? If these developments were to come to pass as I hope they will, this skirmish in our little corner of the universe could easily be the first step in stemming the tide. Our prominence would increase in ALPA and there could then be efforts by us to begin to bring needed change to the Association. IMHO we must look beyond the mistakes of the past, learn from them, and move forward into the future.

 

[JoeMerchant]

Joe, I think that everyone involved on the labor side realizes that ALPA and the legacy MECs screwed the pooch on scope. DAL flights should be flown by DAL pilots. But realize this: The genie is not going back into the bottle. Not now. Not ever. Get over it and move on. Let 's focus on what we can do to improve our careers and jobs in the real world.

If that is true, then there is no way to make significant improvements long term in pay and work rules. If you don't have an effective section, then all the improvements in the rest of the contract will not last over time - it's that simple. If you don't have effective scope, collective bargaining won't work no matter how bad you want it to.

 

[blueridge71]

What I'm saying is that I agree with Redan. Our best bet is to become one pilot group with Skywest and protect our flying that way within the holding company.

As to the rest, how do we scope DCI flying that we don't own? Delta owns the flying and can give it to whomever they please. If the market forces allow them to dictate a contract that will allow DAL to cancel the contract whenever they want and place the flying elsewhere, then what good is scope? All we can do is prevent our flying from going to our western cousins or other alter ego.

All DAL flying will never again be done by all DAL pilots. That is the way that it should be, but it would take concessions of Mesa-like proportions to buy back that scope. Even then, I'm not sure that management would be willing to agree.

 

[atrdriver]

If that is true, then there is no way to make significant improvements long term in pay and work rules. If you don't have an effective section, then all the improvements in the rest of the contract will not last over time - it's that simple. If you don't have effective scope, collective bargaining won't work no matter how bad you want it to.

While I certainly believe in a strong section 1, our current section 1 sucks, and our current contract has certainly lasted, and when it was signed it was industry leading. With the exception of managements creative interpretations, that section 1 had nothing to so with, it has lasted just fine for 8 years now.

 

[US Flyer]

Definition of profit

The problem that I see is that some pilots do not have any idea what some of the basic terms mean, and Mgmt exploits this.

Profit is defined as money "left over" or in excess after all operating expenses are paid out. So if ASA is profitable, and we definitely are, then they can afford the raise. Joe, I understand where you are coming from, but PROFIT is PROFIT. It means there is money leftover- regardless of what your expenses are.

Competitive can mean anything to anyone, but net profit is a fairly easy concept to understand.

I'll bet if you wanted to, someone could factor in ASA's net profits for the last year, and what it would have been had they not paid Ford and Harrison several million dolars in legal fees each year for the last five. If the profit margins aren't quite as high as they were a few years ago, this should be taken into consideration first.

Bottom line is that many companies can figure out a way to make a pay raise work for employees if THEY WANT TO. Net profit ends up in the pockets of mgmt and shareholders- we don't see any of that money in our pockets.

First rule in business and personal investing is PAY YOURSELF FIRST!

FWIW, I've had five years at one of the best business schools in the US, so I think I understand what is going on here.

I don't care about the shareholders and mgmt. getting rich, I'm just trying to support my wife and kids, and make a living. In my opinion, anyone that owns stock in our company is probably not that informed to begin with, or one hell of a risk taker.

 

[JoeMerchant]

Blueridge and Redan, looks like we agree that a single list is a priority. However I believe that must be done as part of this contract negotiations. Waiting for SKYW to join ALPA will take much longer. IMO, we don't have that long. By then we will be one group, we all be SKYW and may get preferential interviews if we are lucky. They don't have to join ALPA first for us to become one group. The MESA/Freedom/CCAir, CHQ/Republic are two examples. In both of these examples, the groups were united in section 6 contract negotiations.

 

[JoeMerchant]

While I certainly believe in a strong section 1, our current section 1 sucks, and our current contract has certainly lasted, and when it was signed it was industry leading. With the exception of managements creative interpretations, that section 1 had nothing to so with, it has lasted just fine for 8 years now.

Has it? We are losing 70 seat flying because our 70 seat costs are higher than the competition plain and simple. It isn't working. The only reason we aren't losing 50 seat flying is because it is below the industry average. Cost structure and the Delta Connection agreement are doing more for us than our current section 1. If we aren't careful, we will lose what little protection we currently have.

 

[JustaNumber]

While I certainly believe in a strong section 1, our current section 1 sucks, and our current contract has certainly lasted, and when it was signed it was industry leading. With the exception of managements creative interpretations, that section 1 had nothing to do with, it has lasted just fine for 8 years now.

Let's see here, all of our SLC 700's being transferred to another subsidiary within the holding company, five new 700's "lost" (according to management) to same company, six 900's announced as ours, but "transferred" because we're not playing well, with another 13 "on the table", yeah, our current section 1 is lasting just fine. And if you think it's okay now, just wait another few years when they hit us up for another pay cut, threatening the transfer of huge numbers of aircraft if we don't play along.

Could they do that? With our current section 1, absolutely. I believe section 1 needs to be the most airtight we can make it, to at least stop the Skywest Inc. whipsaw. At this point, I would even consider drastic measures to merge the ASA/Skywest seniority lists.

 

[atlcrashpad]

Say we do take concessions and SKYW Holdings still stick it to us, what then? Oh my I be done tooks a pay cuts and now I bez losing flying too. Oh yeah, I now have a five year, plus negotiations time, contract. WTF wuz I be done thunking?

 

[atrdriver]

Has it? We are losing 70 seat flying because our 70 seat costs are higher than the competition plain and simple. It isn't working. The only reason we aren't losing 50 seat flying is because it is below the industry average. Cost structure and the Delta Connection agreement are doing more for us than our current section 1. If we aren't careful, we will lose what little protection we currently have.

Did we have the 70 seaters when we signed the last contract? I didn't think so. We have more ac overall now than we did when the current contract was signed. We also lost 7 ATR's, but we didn't have them when the last contract was signed either, did we?

 

[79%N1]

Problem = SKYW pilots don't want to be on a list with ASA, and why would they?!?!? They are currently reaping the rewards of ASA's woes. Upgrades for everyone!!!! Lines for reserves!!!! Life is good! Who needs ALPA? ASA is senior to SKYW, relatively. They will fight tooth and nail to keep separate, and don't think for a second JA will wine and dine them to death to keep them happy enough to not vote in ALPA and join up for a 4,000 strong force to be reckoned with. No, we're on our own, unfortunately.

 

[COOPERVANE]

Redan,
I was not around for the last contract negotiations. I have said MANY, MANY times that these guys with 1-3 years in the airline industry claiming to be so knowledgeable need to realize that they really have no credibility.

ASA pilots need to listen to those who have been around a while.

Having said that, my ONLY concern is that for YEARS the corporate culture within ASA is to be dishonest and subversive. Therefore we don't believe ANYTHING they say. They have used these tactics on many occasions. Well NOW they are being serious and leveling with us and we are so pissed and disillusioned maybe we can't tell the difference.

Other pilot groups have lost the war after winning the battle. Why are we different?

I currently plan on making a stand and voting for a strike if it becomes necessary. I am basing this on info available to me, and opinions of captains like YOU that I have flown/spoken with. But you and the other senior "hard-liners" need to step up, lead the way, and be absolutely SURE. DEAD SURE, that ASA MGMT hasn't chosen this occasion, because they believe the threat is so great, to be honest. This can't be an emotional decision. You have the MOST to lose.

 

[Redan]

Redan,
I was not around for the last contract negotiations. I have said MANY, MANY times that these guys with 1-3 years in the airline industry claiming to be so knowledgeable need to realize that they really have no credibility.

ASA pilots need to listen to those who have been around a while.

Having said that, my ONLY concern is that for YEARS the corporate culture within ASA is to be dishonest and subversive. Therefore we don't believe ANYTHING they say. They have used these tactics on many occasions. Well NOW they are being serious and leveling with us and we are so pissed and disillusioned maybe we can't tell the difference.

Other pilot groups have lost the war after winning the battle. Why are we different?

I currently plan on making a stand and voting for a strike if it becomes necessary. I am basing this on info available to me, and opinions of captains like YOU that I have flown/spoken with. But you and the other senior "hard-liners" need to step up, lead the way, and be absolutely SURE. DEAD SURE, that ASA MGMT hasn't chosen this occasion, because they believe the threat is so great, to be honest. This can't be an emotional decision. You have the MOST to lose.

Coop,

What can I say brother, except that you're right. This is an agonizing, gut-wrenching situation. We all have lots to lose...in continuing to allow the devaluation of our profession. This transcends just the pilots here at ASA. We have a huge opportunity to make some headway in stemming the tide...or tidal wave we all face, and forging unity with the SKYW pilots. The eyes of the aviation world are focused directly on us.

Just as you say, we have the problem of dealing with a mgmt who has worked so diligently to destroy any shred of crediblity they've ever owned. When it's to the point where everyone involved thinks that if their jaws are flapping the BS is flowing, then how can you ever recognize anything credible? When every single move they've made with negotiations have all been right out of the union busting playbook, how can I ever find a way to trust them? The thing with the 700s and 900s is text book. It appears that we're being punished for our intransigence. But what would Jerry, Brian, Charlie, etc do if they were in our shoes? You can bet they would feel just as we do.

I would hazard a guess that if we took some impartial person and assigned them the task of studying the history of airline labor relations, especially relating to pilots at "regional" carriers, they would form the following conclusions: 1) Never trust management. 2) Never take concessions. 3) Never give up anything for growth. This applies even when one's company is in bankruptcy. And we're part of possibly the most profitable airline in the country. There are simply so few examples where giving up anything ever paid off, almost always it ends up in the making of sacrifices then realizing even less desirable circumstances than before. Managements will work so hard to get the hook in us for the first time because once that happens, we're theirs.

It becomes a situation of: "Fool me once, shame on you, fool me twice, shame on me." I don't know how many multiples of "fool me twice" we're on now, but it must be in the thousands. You know, so often the road into the future is paved with lessons learned from the past. History is stacked against the company. ASA history, and airline history in general.

One final illustration: Many seem to think it would be ok to sacrifice a few at the top on the 700, and go with a one rate deal realizing a small gain on the 50. Sounds good, until in the not too distant future when the 50s begin to be replaced with 700s, 705s, 900s or who knows what else...and here we are flying them for 50 rates for, at the current pace, maybe ten years. Mr. Jerry Adkins (or however the hail you spell it) has already pulled this one on the SKYW pilots. Those guys have taken massive heat for this but I think they really were trying to work with management in the spirit of cooperation, on a temporary basis. Now JA (or GA or whatever) is not honoring their aggreement and they are still flying the 700 for 50 seat rates. This does not build credibility in my eyes. My suggestion for management if there truly is something unique about our present situation: You are going to have to find another way to convince us rather than the conventional anti-union anti-labor game you continue to play. Meaning for one thing...egos checked at the door, lots of humility, and souls bared. Coop, this is all we have to go on, the ball is in their court.

 

[ASARJMan]

.The only reason we aren't losing 50 seat flying is because it is below the industry average. quote]

Then why isn't SKYW transferring all the 200s to us Joey. What is it that management has offered you to buy you off like this. They tell you they'd buy one of your properties you're worried about losing? You're like a broken record, I mean broken CD. You still think we lost the 900s that SKYW just got on property today too huh. Us greedy pilots.