SWA blurb

[lowecur]

"That's not good enough. This airline needs to make 10-15% profit margins."

Lowcur, while I rarely agree with anything you say on this board, in that area you are correct. Southwest generally aims for a 15% profit margin, and in the past few years, we haven't even come close. If we want our investors to stick around, profits need to start increasing. It's one thing to say, "Hey, we're still profitable where other airlines aren't!" But the investors quite frankly don't care, because they don't have to invest their money in the airline sector, period. There are thousands of publically traded companies in which to invest one's money. My point exactly.

And yes, I do worry at times that some of our Employees think SWA is invincible. I've had some Employees tell me as much. Some of them think that Gary Kelly and our management Team will take care of them forever. What those select Employees don't realize is that if we don't keep our costs down and remain the most productive, the greatest management Team on earth won't make a bit of difference. And keeping costs low has to happen at BOTH the management and frontline levels. Well spoken. Is your name Colleen?

But you know what? Our pilots, in my experience, are the workgroup that demonstrates the "greed" trait the least. They truly take ownership of Southwest. They have a pride and sense of responsibility to this Company that I wish every workgroup had (although the mechanics come close, IMHO). So I think you're barking up the wrong tree when you try to talk to the SWA pilots on this board about the "me" syndrome. The next section 6 will be interesting.

Also, in a time where costs are of utmost concern, that seems to give more fuel to the fire of reasons we WON'T bring the ERJ onboard. I personally don't see how that could lower our CASM. I can see, however, where another fleet type would actually increase our CASM. Southwest's mentality has always been that if an airport can't support 737 service, we won't fly there. And there are still a lot of airports that we don't fly into that are seeking our service. If you've listened to SWA Leadership as of late, you would know that the ERJ debate has been effectively closed. We're not getting them anytime in the forseeable future. Much to your dismany, I'm sure. Oh well, you can't blame a guy for trying.

.....

 

[FarginDooshbahg]

Little lowcur,

I know I am, but what are YOU. Amateur? Amateur fargin dooshbahg? Ok...but you sure seem on the way to being a professional. Keep up the good work, sonny. You just might make it yet.

 

[exphojump]

Lowecur,

ACAI mangement presented a CASM vs stage length graph in Jan 04.

The basic ratios were:

800 mile CASM = 1.18 x 1000 mile CASM

600 mile CASM = 1.36 x 1000 mile CASM

400 mile CASM = 1.81 x 1000 mile CASM

200 mile CASM = 3.00 x 1000 mile CASM





LUV Q2 8.09 CASM 571 mile stage length

1000 miles ~ 5.66 CASM

800 miles ~ 6.68 CASM

600 miles ~ 7.69 CASM

400 miles ~ 10.25 CASM

200 miles ~ 16.98 CASM


Applying these ratios to LUV's fare structure it appears that their lowest fare is actual cost for the seat and the other fares are mutliples of cost.


Do you agree or disagree with this assesment of stage length adjusted CASM?


I find that LUV still has the lowest CASM in the industry on a stage length adjusted basis. However, I agree with you that employee groups pushing for a greater piece of the pie will diminish margins in the future.


Thanks

 

[lowecur]

Lowecur,

ACAI mangement presented a CASM vs stage length graph in Jan 04.

The basic ratios were: This is for all airlines?

800 mile CASM = 1.18 x 1000 mile CASM

600 mile CASM = 1.36 x 1000 mile CASM

400 mile CASM = 1.81 x 1000 mile CASM

200 mile CASM = 3.00 x 1000 mile CASM





LUV Q2 8.09 CASM 571 mile stage length,
1000 miles ~ 5.66 CASM

800 miles ~ 6.68 CASM

600 miles ~ 7.69 CASM

400 miles ~ 10.25 CASM

200 miles ~ 16.98 CASM


Applying these ratios to LUV's fare structure it appears that their lowest fare is actual cost for the seat and the other fares are mutliples of cost.


Do you agree or disagree with this assesment of stage length adjusted CASM? Sounds reasonable to me. I just hate to see futures trading included in the CASM, don't you? Could you plug in Jetblues numbers, ATA, and then Airtran.


I find that LUV still has the lowest CASM in the industry on a stage length adjusted basis. I agree. However, I agree with you that employee groups pushing for a greater piece of the pie will diminish margins in the future.


Thanks

.....

 

[exphojump]

Those ratios were for the LCCs.

My guess is LUV's cost advantage over the other LCCs is in its secondary market strategy. By using airports like Islip they are able to secure gate space and employees at a cheaper rate than in primary airports like LGA and JFK. Not to mention all the taxi time they save which increases utilization. The 80% fuel hedging factors in as well.

Plunging into PHL has got to hurt efficiency and raise overall CASM.

My pet peeve is comparing CASM in an unfair light.

Jet Blue 5.9 cents on 1348 mile stage lengths

Southwest 8.09 on 571 mile stage lengths

Yet if both airlines compete on a 500 mile route, LUV has a lower CASM.

Have fun,

 

[exphojump]

The graph only went to 1000 miles.



AAI Q1 8.26 CASM 627 mile stage length

1000 miles ~ 6.16 CASM

800 miles ~ 7.27 CASM

600 miles ~ 8.38 CASM

400 miles ~ 11.15 CASM

200 miles ~ 18.48 CASM



Jet Blue is a guess of about 6.5 cents for 1000 mile CASM.

1000 miles ~ 6.5 CASM

800 miles ~ 7.67 CASM

600 miles ~ 8.84 CASM

400 miles ~ 11.77 CASM

200 miles ~ 19.50 CASM


You wouldn't happen to have the average stage length for ATAH would you?

 

[MLBWINGBORN]

I think that what you will see in the next Section 6 at SWA will be a QOL and written lanquage cleanup..

The folks that I speak with, for the most part, say the pay is fine..Even more so when they consider the state of the industry..

I would post some of the discussions from the union,but i dont think its a good idea in an open forum..

In general,except for the few extreams,its about certain QOL issues such as scheduling,reserve rules,senority, and in some cases insurance benefits..

While some of these issues may cost more in a round about way..Many more of these issues may in many cases save money..
Often the cost to the company is a slight change in flexibility..Or lack of..

There are always pilots that will scream for more money..I for one feel they are a very small minority at SWA.

Most of us want more than anything to close many of the loopholes left open due to the lanquage of the contract..
Wording that many times has several different outcomes depending on how its interpreted by the company/scheduling..

A Section 6 will provide a means to clean up issues within the contract..Viewing the current industry trends and conditions,there may very well not be any increase in pay that isnt tied to an increase in either productivity or profitibilty..Maybe even both..

But..As in the past..If its truly needed for the pilots to help insure the health and future of SWA..I see no reason for history not to repeat itself..

SWAPA and SWA have always had a working relationship that has kept an eye on our health and profitibilty..This isnt going to change due to a Section 6.

So..I wonder why so many are so quick to suggest the sky is falling in Dallas?

Why are they trying so hard to make news out of something we have been doing for over thirty years.

Fighting hard for every seat,every market,and keeping every cost as low as possible..

Nothing new here folks..

Mike

 

[lowecur]

Those ratios were for the LCCs.

My guess is LUV's cost advantage over the other LCCs is in its secondary market strategy. By using airports like Islip they are able to secure gate space and employees at a cheaper rate than in primary airports like LGA and JFK. Not to mention all the taxi time they save which increases utilization. The 80% fuel hedging factors in as well. Certainly that is true with both AAI and JBLU. AirTrans CASM costs are increased due to the difficult utilization of hubbing through ATL, and JBLU chooses to deal on high volume low yield long routes to major focus cities. There are trade-offs in each business plan. As both AAI and JBLU grow, they will undoubtably branch out in opposite directions. AAI with the addition of the 737NG will stretch their average stage length, and JBLU will shrink theirs with the 190. The long routes will decrease CASM/RASM and yields at AAI, and the short routes will increase CASM/RASM and yields at JBLU. AAI and LUV both started with short stage lengths and are building out. JBLU is going in the opposite direction. Is this a mistake? For some carriers it would be, but for JBLU the free marketing they have received by taking on New York City has been priceless. This free advertising has given them a tremendously popular name brand prior to entering these smaller markets that they never would have had.

Plunging into PHL has got to hurt efficiency and raise overall CASM. They have this problem to some extent at LAX, BWI, DTW, MDW, PHX, and LAS. The key for them is pricing power. WN's pricing power as noted by their RASM is significant. They are seen as the LCC in a market (whether they are or not), and many people buy their tickets without shopping around. The same thing has happened to B6 on a more limited basis, but people choose to fly them based on either the perception they are the lowest, or the offer the best value.

My pet peeve is comparing CASM in an unfair light.

Jet Blue 5.9 cents on 1348 mile stage lengths

Southwest 8.09 on 571 mile stage lengths

Yet if both airlines compete on a 500 mile route, LUV has a lower CASM. It just depends which 500 mile route that is. As yet, B6 doesn't have the 500 mile route to the smaller cities where gate space, landing fees, and other costs are lower. As they add these routes with the 190, you will see the twain shall meet. You already know who I have my money on.

Have fun,

.....

 

[exphojump]

I probably like AAI's strategy the best. Using the 717s as a hybrid RJ/NB in a network system and adding 737-700s for longhaul markets. They have a realitively slow growth rate, and sensible cost conscious management. IMO they take the best of the legacy network system and fuse it with the Southwest model. I could see them in the next five years leveraging the ATL network to feed Caribbean, Central and South America destinations with the 737-700s.

I see LUV being a strong player for the next 10 - 15 years at least. I don't think the pilot wages are sustainable as the LCCs start to compete with each other and the remaining legacies get lean. Their corporate culture will allow them to buckle down and take a hit in pay once they lose money over a few quarters. By continuing to add the 737-700s with 33inch seat pitch and possibly IFE with their cash hoard they have alot of flexibilty to change as necessary in the future while providing good customer service.

Jet Blue is the highest risk of the three IMO. Three things make me question their success.

1. Explosive growth in a very competitive marketplace with over capacity. 69 aircraft Q4 2004 to 130+ aircraft Q4 2006. That is a hell of lot of routes to cherry pick in a short amount of time. BELF has been going up as load factor has diminished over the last few quarters, they can't afford to pick bad city pairs.

2. Only 10% connecting traffic. As they add so many routes in two years they have little or no feed from the existing network. A few markets like ATL and they might stumble a bit.

3. Being the launch customer for a new aircraft, unproven aircraft. Even if the EMB190 proves to be the premier 70 - 110 seat aircraft in the next five years, Jet Blue will be the guinea pig. It might piss off enough customers 2005 and 6 to make a difference.

I wish Jet Blue the best and have no ill will towards the employees, I just think AAI and LUV are less risky bets.

The landscape will be radically different in 5 years.

JMO

 

[mdf]

I have been on reserve, or holding a blank line for a while. I see at least 4-6 different Cpt's every month. While this may be a small sampling, I have never heard me, me, me from any of them. I have learned from them all about conserving fuel, aircraft wear, and providing great service for our customers. Unbelievable group of people. I know every group has thier % of whack jobs, but you just don't see many here. I wouldn't lose sleep over the Section 6 Lowey. I would take up a more productive hobby though.

 

[lowlycfi]

Originally Posted by lowecur
So give me some information that will refute that 40% of the FA's will not be making $60K.



First of all, the contract hasn't even been ratifed yet. We'll find that out tomorrow. Here's your information...

We have approximately 7000 active flight attendants. My seniority group, 10 years, will be the most junior to top out on this contract. My group and everyone senior to me, who will all top out under this contract, constitute about 2100 flight attendants. That's about 30 percent of us. We would have to fly 100 plus trips per month to make exactly 60k. Not all 2100 of us do that, so now you are looking at less than 30 percent. I have to agree with N1atEcon, that this figure sounds about as acurate at a USA Today article.

 

[TexaSWA]

And Low,

Im still wondering who all of these employees that are telling you "me me me" are?

And if we decide we all need a haircut, why in gods name would we feel the need to consult you?

 

[lowecur]

Originally Posted by lowecur
So give me some information that will refute that 40% of the FA's will not be making $60K.



First of all, the contract hasn't even been ratifed yet. We'll find that out tomorrow. Here's your information...

We have approximately 7000 active flight attendants. My seniority group, 10 years, will be the most junior to top out on this contract. My group and everyone senior to me, who will all top out under this contract, constitute about 2100 flight attendants. That's about 30 percent of us. We would have to fly 100 plus trips per month to make exactly 60k. Not all 2100 of us do that, so now you are looking at less than 30 percent. I have to agree with N1atEcon, that this figure sounds about as acurate at a USA Today article.

Thank you. I stand corrected.

 

[lowecur]

And Low,

Im still wondering who all of these employees that are telling you "me me me" are? Are you warming up your voice to sing?

And if we decide we all need a haircut, why in gods name would we feel the need to consult you? Well at least you were able to say the word haircut. Now that's a start.

.....

 

[jmsana]

Fax number

SW guys. Someone can help me and give me the fax # of Lindsy Lane. Thank you.

 

[lowecur]

But..As in the past..If its truly needed for the pilots to help insure the health and future of SWA..I see no reason for history not to repeat itself..

SWAPA and SWA have always had a working relationship that has kept an eye on our health and profitibilty..This isnt going to change due to a Section 6.

Mike

Thanks Mike. I really hope that's the case.