SWA Gets More Cautious For '08

[Esprit]

Yeah, we're a perfect example of that.

ESPRIT

 

[HalinTexas]

Be very careful about pushing a company to expand. FO to furlough is also a move that's possible.

Quick upgrade does NOT necessarily mean growth that pilots want. There have been many airlines that grew quickly only to furlough and/or liquidate. ATA was guilty of that and look where we are now?

You want smart honest growth with stability. Market share gains always have caveats. Yes, there is the belief that an airline should grow or die. I share that view about any business over the long term, but there are times when it's exactly the wrong thing to do.

SWA (and ATA) needs to find new sources of revenue with only incremental cost increases. I think a real business class with high-speed internet as part of the deal is more the future than TV's in coach. Just wait till they start breaking and pax start demanding refunds.

 

[firstthird]

I personally don't understand why SWAPA tied growth with a codeshare agreement. I would have made an agreement that was tied to how profitable the codeshare agreement was and allowed the pilots to participate with those earnings above and beyond profit sharing. If the codeshare over a particular route was so profitable that SWA was paying out too much to the pilots and SWA could operate the route then start flying it under your colors.

by atafan

I'm surprised that ATA guys can't understand why SWA pilots are spooked by codeshares in general and ATA's in particular. ATA mainly because it is the only one we are doing, so it is the one to worry about. I'd be much happier if all the marketing/codeshare between the companies stopped soon and both went on their separate ways.

In general, codeshare means non-SWA pilots are flying passengers that bought tickets on the SWA website which is advertised using SWA dollars, etc. Also, a passenger may go from LA to Hawaii back to LA and never see an SWA employee although they have an SWA ticket.

For a company that prides itself on 'culture' and the customer experience, that is a real problem. We are outsourcing the big thing we have to offer, the SWA experience.

And for what, some incremental revenue.

You mention tying the codeshare to profitsharing. Profitsharing has been somewhere around 6-8% in the last few years, 6-8% of 35 million (the last year I heard management break out ATA revenue, not profit, but revenue) times our 5% Net income margin divided by 33,000 employees is jack. compared to upgrades and more flying for SWA pilots.

I'm not any happier about how the whole ATA codeshare started than anyone else. It was my impression that it was either Airtran's offer (which would have shut ATA down) or ours, it seems it worked out okay but more than one pilot around here quote's Gary Kelly's memo "all i want for xmas is some gates at MDW" which is basically how he said, don't worry, nothing here beyond getting some gates. and here we are 4? years later, expanding codeshare to beat the band.

I don't blame ATA guys if they are pissed because we took their gates etc, just understand that this SWA pilot at least, is ready for each company to go their own way and sink or swim.

Bottom line is that if SWA can't make money flying our customers on our planes with our pilots and FAs then we have some adjustments to make and codeshares just muddy the water.

We're not hub-and-spoke, we don't need feed and if Gary Kelly wants to go international, I suspect we can do it pretty darned quick w/o outsourcing it.

That is one SWA pilot's opinion. nothing more.

I offer it not to be combative or to be disparaging about ATA, they seem like a great company with great employees, but to explain to the ATA pilots who keep asking why SWA pilots don't like the codeshare. This is why I don't like it.

 

[whalepilot747]

ATA mainly because it is the only one we are doing, so it is the one to worry about. I'd be much happier if all the marketing/codeshare between the companies stopped soon and both went on their separate ways.

I would not be so worried about the ATA codeshare. My concern is a RJ codeshare. Say with , I dunno, Skywest. Now that scares me and IMHO is what we really should be worried about. SWA is a looonng way from etops and anything of that nature......

 

[firstthird]

I agree that any more codeshares are scary and that ATA is probably less so than possible future agreements.

I'm not sure why everyone thinks ETOPS is such a hurdle. There are many airlines that do it and our 700s are another battery and a couple of HFs away from having the correct equipment from what I can tell from my admittedly limited experience.

ETOPS is not impossible, there are regulatory hoops to jump through but with the desire and money, we could do it.

 

[Esprit]

We are outsourcing the big thing we have to offer, the SWA experience.

And for what, some incremental revenue.

the SWA experience, are you refering to the lame FA jokes, the offkey singing, the one bag of peanuts, or the twenty stops before you reach Los Angeles? People fly Cathay Pacific for the experience. People choose SWA for the fares.

$50 million a year is hardly incremental revenue, even for big almighty Southwest.

ESPRIT

 

[Esprit]

firstthird,

Throw in liferafts, extra emergency equip., an HMG (or run the APU the entire flight). The 737 is limited to pretty much the west coast. And forget about cargo. Someone feel free to correct me if I am wrong, but the 737 is not the ideal aircraft for this type of flying.

ESPRIT

 

[firstthird]

Revenue for SWA for 2006 was 9.1 billion. so, if the chief pilots were correct in their language and didn't in fact mean profit, then I stand by my contention that 50 million is peanuts. 50 million is a half of a percent of our total revenue. And actually the number I remember was 35 million in additional revenue.

You are correct I forgot liferafts and we would have to run the APU. I suspect that Boeing would sell us some rafts along with the ceiling storage compartments.

No, the 737-700 isn't ideal for Hawaii but it can fly it. And I am pretty sure it is better than an 800 (bigger gross weight, same fuel capacity unless majors are putting aux fuel tanks in which I doubt as it would reduce the cargo area, means more empty seats on big headwind days).

 

[atafan]

firstthird,

Most ATA pilots do understand why SWA pilots are spooked about codeshare agreements. Many ATA pilots are from other dinosaur legacy airlines, PAA, EAL, Braniff and TWA just to name a few, we helped craft scope clauses into contracts that you and others are using today.

My question was regarding the way SWA was tackling the scope issue with growth, just a four beer discussion, no more. This codeshare might prove good for everyone down the road but who knows. I've never been a fan of the SWA experience but it works so what do I know.

You mention ETOPS. Of course SWA could go out and be ETOPS in a year or two but look at the costs and change to your business plan. Maybe GK is just experimenting with this International service to decide what will be the most cost effective way to go international , buy ATA or start from ground zero on your own. Either way SWA will eventually be international, time will tell.

Our industry is about to make another major change and I'm about ready to jettison this business and watch it from the sidelines.

Maybe I can sell SWA life rafts.

Take care amigo!

 

[Falcon Jet 1]

Atafan,
you stile my idea about the liferafts

 

[HalinTexas]

I'm not any happier about how the whole ATA codeshare started than anyone else. It was my impression that it was either Airtran's offer (which would have shut ATA down) or ours, it seems it worked out okay but more than one pilot around here quote's Gary Kelly's memo "all i want for xmas is some gates at MDW" which is basically how he said, don't worry, nothing here beyond getting some gates. and here we are 4? years later, expanding codeshare to beat the band.

Fact check:

AWA made an offer and it was accepted before SWA's offer. Financing fell through, the SWA came in. AWA suddenly found the financing to buy USA. Hmmmm.

There would have been about 350-400 pilots left if the Airtran deal came through, only to shrink further to only military flying.

I've heard of no firm exapansions of the codeshare. What "band" are you listening to?

It took Alaska 22 months to get there ETOPS going. I would expect a similar amount of time for SWA. The -800 is better than the -700 in my opinion, but neither is very good for this kind of ETOPS. The 757 is great! But Boeing doesn't want to make anymore even if they're in high demand. International flying will take a change in how SWA does business. Assigned seats and customs/immigration procedures. No 20 minute turns there!

 

[mach zero]

Revenue for SWA for 2006 was 9.1 billion. so, if the chief pilots were correct in their language and didn't in fact mean profit, then I stand by my contention that 50 million is peanuts. 50 million is a half of a percent of our total revenue. And actually the number I remember was 35 million in additional revenue.

You are correct I forgot liferafts and we would have to run the APU. I suspect that Boeing would sell us some rafts along with the ceiling storage compartments.

No, the 737-700 isn't ideal for Hawaii but it can fly it. And I am pretty sure it is better than an 800 (bigger gross weight, same fuel capacity unless majors are putting aux fuel tanks in which I doubt as it would reduce the cargo area, means more empty seats on big headwind days).

Face it...the 737 is NOT an international airliner. Yes, it has the legs but is severely lacking in cargo space (which is where alot of overwater revenue comes from). You know those Gary Kelly posters saying he likes cargo "alot." Well he is really going to like cargo "alot more" if we go international. If I was to guess how this whole thing will play out, I would bet we pressure Boeing to make a "sized down" version of the 787 (797 maybe) with a common type aka 757-767. This would give us the big bird to haul cargo and bodies int'l and the small 737 replacement to bounce around N. America. If we were serious about replacing ATA to Hawaii with our 737's we would have needed to start ETOPS certification yesterday.

 

[firstthird]

My question was regarding the way SWA was tackling the scope issue with growth, just a four beer discussion, no more.

atafan

I guess I'm just saying that the pilots of SWA value growth more than incremental profit sharing revenue. an extra 1% in a profit sharing account will never make up for a delayed Captain upgrade. We've traditionally been a growth airline and for all the good things that come with growth, there are mirror bad things that come with stagnation or shrinkage. codeshare isn't growth.

I've heard of no firm exapansions of the codeshare. What "band" are you listening to?

HalinTexas

I'll defer to your knowledge of the origins of the ATA/SWA codeshare. I was not aware of the AWA offer; however if you are implying that SWA had a hand in denying AWA financing or something, I doubt that. A little too black helicopter for my taste, as in unlikely that AWA would scuttle the deal for SWA's sake.

About the codeshares though, the person I've been listening to is Gary Kelly, our CEO, who doesn't pass up an opportunity to tell analysts how excited he is for future codeshare agreements. SWA pilots are a little fired up because after he agrees to them, it seems to be too late to go back and undo them. Again, it really isn't the ATA codeshare expanding as much as my innate distrust of codeshares in general reference our business model (old business model?)

Face it...the 737 is NOT an international airliner.

mach zero

I won't disagree with that. We could easily do Mexico and Canada and that is about it. Just ferrying a 737 across the atlantic w/o many pax can be tough going westbound. I do think the 700 is better than the 800 in that the fuel is the same but the cargo/pax space is more tailored to allow the Hawaii hop w/o blocking seats. But, that being said, the 700 is not ideal for translant or transpac.

If I was to guess how this whole thing will play out, I would bet we pressure Boeing to make a "sized down" version of the 787 (797 maybe) with a common type aka 757-767.

mach zero

I hope it plays out like that also. Boeing just seems to be pulling a typical Boeing though, they know they have the market cornered on the 787 so they'll take their own sweet time announcing a 737 replacement. It took a lot of years of Airbus getting better and Boeing staying static (73, 74, 75-76) before Boeing finally decided that they had to make a new plane. Looks like they got it right with the 787, lets just hope they don't wait too long to replace the 737.

My point about doing int'l now with the 700 is that once Gary has a bunch of codeshares in place, he might not feel the need or desire to eventually replace that flying with SWA crews on 787s. Then we're a really big feeder for someone else's international flying.

 

[Quiet Flight]

Throw in liferafts, extra emergency equip., an HMG (or run the APU the entire flight).

HMG?? Run the APU the entire flight? I know zip about ETOPS. Can someone explain these two to me. Thanks.

 

[whalepilot747]

I'll defer to your knowledge of the origins of the ATA/SWA codeshare. I was not aware of the AWA offer; however if you are implying that SWA had a hand in denying AWA financing or something, I doubt that.

Actually, we had alot to do with it.