Southwest to ‘trim headcount’ after growth in costs

[General Lee]

I don't think it's quite THAT dire.

Yes it's a critical juncture. No I don't believe 88 planes will come out of service in the next 3 years. No evidence to that at all.

However, if there isn't expansion and they try to shrink to profitability (which hasn't worked anywhere, really, not as a long term solution), they would do it using attrition and classic retirements once the transition is complete. No reason to do it before then, since they've already taken out the unprofitable markets from AirTran's network.

Still a critical time...

I think the 88 planes he was referring to were the 88 717s. They will probably leave your fleet within the next 3 years. (going to DL, right?) Now, will SWA keep old 737-300s/500s on the property instead of retiring them, or get 88 new airplanes? Will there be a combo?


Bye Bye---General Lee

 

[GhettoBeechjet]

I think the 88 planes he was referring to were the 88 717s. They will probably leave your fleet within the next 3 years. (going to DL, right?) Now, will SWA keep old 737-300s/500s on the property instead of retiring them, or get 88 new airplanes? Will there be a combo?


Bye Bye---General Lee

The current company line is that the 88 717s that are leaving the fleet will be replaced by a combination of extending the life of some of the classics that were scheduled for retirement and the deliveries from Boeing plus some airframes from the used market. When you consider 1. We already have too many airframes for the ASMs we are producing. 2. Next years economic outlook is not good. 3. A 737 produces more ASMs per departure than a 717. 4. Some merger synergies will begin to be realized as the networks are connected. 5. High fuel costs in a weak economy. When I add all this up I come to the conclusion that they will continue to retire classics and the fleet will shrink by 88 airframes or more. Even with retirements that leaves us at least 500 pilots overstaffed. I am interested to see how the company responds to that in a time when they are seriously and openly saying our labor costs are too high. Anyone at SWA who isn't concerned is whistling past the graveyard IMHO.

 

[Lear70]

I think the 88 planes he was referring to were the 88 717s. They will probably leave your fleet within the next 3 years. (going to DL, right?) Now, will SWA keep old 737-300s/500s on the property instead of retiring them, or get 88 new airplanes? Will there be a combo?


Bye Bye---General Lee

No, he's referring to the idea that the Classics will go away ALSO, in ADDITION to the 717's, in the next 3 years.

Right now Southwest (we) are sub-leasing 88 717's to Delta while taking delivery of 86 737's. That's pretty close to 1 for 1, which will yield a net GROWTH of ASM's while yielding 2 fewer hull numbers, which fits with what GK has said about growth being "relatively flat" during the integration.

Even with those relatively equal numbers, we will be overstaffed by approximately 400 people (FLT OPS numbers) by the end of the integration because of the higher pilot utilization at SWA. It takes 2 years of FURTHER retirements after 2014 (2015 and 2016) to really fix that.

IF, as Ghetto suggests, the Classics start going away during that time period, we will be even MORE overstaffed, which could be problematic. That said, with the expansion GK has planned into the Caribbean with the incoming deliveries, and wanting to keep most of the routes we already have (both SWA and AAI, as they've already trimmed most of the obvious fat), there's no real reason to think the Classics will go away before the integration is done.

Might they go away soon thereafter? Maybe. Maybe not. There are, however, more pressing long-term issues with SWA that I'm concerned with than the Classics going away. Just my opinion... there are probably better ones out there.

 

[Lear70]

Was typing at the same time Ghetto was... :beer:

 

[GhettoBeechjet]

Was typing at the same time Ghetto was... :beer:

I think we have done that at least twice today. I hope you are right and I'm wrong. The history of this industry has made me pessimistic.

 

[Lear70]

Remember... Murphy was an optimist.

And I always hope for the best,,, but I plan for the worst, too. Kind of comes with the job description for our generation, doesn't it? lol oh well, whatchagonnado? Have another frosty adult beverage and stop worrying about the stuff we can't control.

 

[General Lee]

No, he's referring to the idea that the Classics will go away ALSO, in ADDITION to the 717's, in the next 3 years.

Right now Southwest (we) are sub-leasing 88 717's to Delta while taking delivery of 86 737's. That's pretty close to 1 for 1, which will yield a net GROWTH of ASM's while yielding 2 fewer hull numbers, which fits with what GK has said about growth being "relatively flat" during the integration.

Even with those relatively equal numbers, we will be overstaffed by approximately 400 people (FLT OPS numbers) by the end of the integration because of the higher pilot utilization at SWA. It takes 2 years of FURTHER retirements after 2014 (2015 and 2016) to really fix that.

IF, as Ghetto suggests, the Classics start going away during that time period, we will be even MORE overstaffed, which could be problematic. That said, with the expansion GK has planned into the Caribbean with the incoming deliveries, and wanting to keep most of the routes we already have (both SWA and AAI, as they've already trimmed most of the obvious fat), there's no real reason to think the Classics will go away before the integration is done.

Might they go away soon thereafter? Maybe. Maybe not. There are, however, more pressing long-term issues with SWA that I'm concerned with than the Classics going away. Just my opinion... there are probably better ones out there.

I hope you are right Lear. But, I don't know about "expansion in the Caribbean." Jetblue pretty much took all of the AA stuff out of SJU, and they also hit a lot of it from MCO and FLL. Throw in AA at MIA, and I don't know if you can add too much. Maybe you can, maybe you can't. That's another lower yield area. I remember flying Song 757s to SJU from MCO and TPA, and then it went to JB and FL. I don't know if it is a huge cash cow. And let's not forget Spirit Airways in FLL going all over that area.


Bye Bye---General Lee

 

[scoreboardII]

I'm getting a better feel for the company keeping the classics longer as it appears the fuselages have been repaired at cost to Boeing so there is no likelihood of another cabriolet. So my guess is all the classics stay till they can't compete because of fuel costs.

 

[texman]

The current company line is that the 88 717s that are leaving the fleet will be replaced by a combination of extending the life of some of the classics that were scheduled for retirement and the deliveries from Boeing plus some airframes from the used market. When you consider 1. We already have too many airframes for the ASMs we are producing. 2. Next years economic outlook is not good. 3. A 737 produces more ASMs per departure than a 717. 4. Some merger synergies will begin to be realized as the networks are connected. 5. High fuel costs in a weak economy. When I add all this up I come to the conclusion that they will continue to retire classics and the fleet will shrink by 88 airframes or more. Even with retirements that leaves us at least 500 pilots overstaffed. I am interested to see how the company responds to that in a time when they are seriously and openly saying our labor costs are too high. Anyone at SWA who isn't concerned is whistling past the graveyard IMHO.

This post is spot on. I think of the FA's. If we have attrition on the pilot side what about the 10,000 plus FA's?

 

[GhettoBeechjet]

I did some research and math. My exact prediction is that after the integration is complete we will see a net loss of 70 airframes from where we are today for a fleet total of 624 vs the 694ish we have on property now. I think we will keep 100 classics with the evolve interior and thats it. So a net loss of 68 classics and 88 717s offset by 86 Boeing deliveries. That leaves us 700ish overstaffed plus the 400ish overstaffed we will be from the increased pilot utilization that Lear mentioned leaves us overstaffed by 1100 offset roughly 300 retirements leaves us overstaffed by 800 or so.

 

[funnyman12]

Longetivity also plays a part. The 140 pilots hired this year were hired for pilots having additional vacation time. Over the next few years that wilk akso have a snall effect.

 

[Lear70]

I did some research and math. My exact prediction is that after the integration is complete we will see a net loss of 70 airframes from where we are today for a fleet total of 624 vs the 694ish we have on property now. I think we will keep 100 classics with the evolve interior and thats it. So a net loss of 68 classics and 88 717s offset by 86 Boeing deliveries. That leaves us 700ish overstaffed plus the 400ish overstaffed we will be from the increased pilot utilization that Lear mentioned leaves us overstaffed by 1100 offset roughly 300 retirements leaves us overstaffed by 800 or so.

We'll see.

FWIW the orders that were deferred are supposed to pick back up in 2015, which would make sense as replacement aircraft for the Classics starting to go away.

My prediction is that we get the 86 replacement airplanes through the integration, keeping the fleet flat, then the classics that they aren't going to retrofit start going away at the same pace that new deliveries come on property, letting attrition take care of the overstaffing issue on the pilot side of the house, and by 2017, the dust will finally settle from integration issues and we will have roughly the same fleet size we have now.

The big question then is: will we grow or will this company stay stagnant? My hope is that we grow, but my mindset is prepared for Southwest to become more like a legacy carrier with only 1-2% growth annually over time (some years flat, some years 5-6%). Plan for the worst, hope for the best.

We can all have this thread to look back on in a few years and see who wins the bet. Anyone want to put a bottle of Balvenie 12 Year Single Malt Caribbean Cask on it?

 

[Lear70]

This post is spot on. I think of the FA's. If we have attrition on the pilot side what about the 10,000 plus FA's?

I think you're going to see the loss of quite a few ATL F/A's as the integration process happens and more and more of them have to commute out to LAS, PHX, or OAK for long periods of time.

We have a lot of F/A's who treat this as a day job, they have kids and bid day trips only or only stand-ups so they can get home every day. Take that away and they will likely quit. Talked to one of them last night, she took this job for health benefits for her kids (one is quite ill) and travel benefits for her and her husband and she won't commute so when she has to go over, she will likely resign.

With our system still primarily set up as a hub-and-spoke system, we still have the flexibility to do things like that, but I'm sure that will go away when ATL opens on the SWA side. I bet the F/A situation will take care of itself over the first few years after the integration is done.