SWA plan for 15% ROIC

[Phlintstone]

But....we would ALL be SWA pilots at that point. That could be interpreted either way...

Phred

 

[slaquer5]

I believe all furloughs will be FAT until one year after full integration... AAI gave up one- for-one protection btw SL9 and SL10...blame ur MEC and the blowhards on this forum...

There will be no furloughs .


On a sidebar, FAR 117 starts 2014

 

[GhettoBeechjet]

There will be no furloughs .


On a sidebar, FAR 117 starts 2014

Slaquer I would love to share your optimism. To avoid fuloughs we need more airframes and to get more airframes we need more flying for those airframes to do than we have now. Expalin where either come from and I'll be on board. I have asked SWAPA and management and right now no one has given me an answer.

 

[humveedriver]

Slaquer I would love to share your optimism. To avoid fuloughs we need more airframes and to get more airframes we need more flying for those airframes to do than we have now. Expalin where either come from and I'll be on board. I have asked SWAPA and management and right now no one has given me an answer.

I'm right there with you. Here is what I know. SWA really has alot of pride in not furloughing and is on record for not furloughing during this integration short of a war with Iran or whatever. So i ask myself; Why would SWA buy a competitior and then dump most of their planes? I mean they created this. It isn't like they are trying to react to a sudden grounding of the fleet. It could be insanely poor management. That is possible. They have a better track record than that so, I will give them the benefit of the doubt until proven otherwise. I'm on the otherside of this problem. As an AT pilot we all said WTH when they said the 717 was going away. Now you guys are saying WTH, because you realize the numbers aren't adding up and it's not just about capturing seats (per the SWAPA letter,which was shortsighted). My brain just won't accept that SWA management said let's keep the classics, dump the 717's and plan on furloughing hundreds of pilots right about time the integration is complete. I see SWA management getting tougher, but not quite ready to go full on burn SWA to the ground yet!

 

[slaquer5]

Slaquer I would love to share your optimism. To avoid fuloughs we need more airframes and to get more airframes we need more flying for those airframes to do than we have now. Expalin where either come from and I'll be on board. I have asked SWAPA and management and right now no one has given me an answer.

Trust me, No way.


JMO

Gary and Co. Are setting themselfs up for a lot of contract negotiations .
AT flys to some small cities , w/ just a few flights a day. SWA would like to do the same. It is hard to justify a full staff of SWA employees for a handfull of flights.
I will not even get into the F/A s and what they want.

I am sure he will want the pilots to play ball also.( Not in pay cuts , but in other ways)

Yes, I am optimistic . I think once Gary gets his ducks in a row,this place will be like it was back in the early 90s.

 

[Phlintstone]

s5, I hope so too.

Phred

 

[humveedriver]

So I guess the only remaining question is will it be Alaska or JetBlue?

 

[maxblast72]

Last month, Gary Kelly and crew conducted an Investor Day. The transcript and slide presentation associated with their presentation is available at southwest.com. At that presenation, Gary Kelly and Tammy Romo walked investors how they get to 15% ROIC in 2013.

First, Tammy walked through Southwest's expected 2013 unit revenue performance. Historically, Southwest has been able to produce unit revenue increases approximately 2-3 times what the United States experiences in GDP growth. For 2013, Southwest is expecting unit revenue growth of 4-5%.

Second, you must know capacity and fuel consumption. Tammy stated that Southwest intends to grow 2013 capacity by 2%. Gary stated that unit fuel consumption is getting better in 2013. This due to 2 reasons, the addition of 6 seats in all 737-700s and some 737-300s and the continued addition of 175 seat 737-800s. So even though capacity will grow by 2% in 2013, Gary is not expecting total fuel consumption to grow by 2%.

Third, you must make a fuel price assumption and non-fuel cost performance assumption. Gary Kelly is expecting 2013 all in fuel prices to be about the same as 2012 ($3.25-3.30/gallon). Tammy stated that Southwest expects non-fuel unit costs to increase by 1% (again the increased seats per departure helps ease the unit cost pressures associated with rising labor, maintenance, and airport costs).

So using the above information you can get to the following numbers:

2012 Capacity: 128 billion ASMs
2013 Capacity: 131 billion ASMs (up 2%)

2012 All in Fuel Price: $3.28/gallon
2013 All in Fuel Price: $3.28/gallon (flat)

2012 Fuel Consumption: 1.85 billion gallons
2013 Fuel Consumption: 1.87 billion gallons (up 1%)

2012 Non fuel CASM: 7.93 cents/ASM
2013 Non fuel CASM: 8.01 cents/ASM (up 1%)

2012 RASM: 13.34 cents/ASM
2013 RASM: 13.94 cents/ASM (up 4.5%)

Putting these numbers together:

2013 Total Revenue: $18.3 billion
2013 Non Fuel Costs: $10.5 billion
2013 Fuel Costs: $6.1 billion

2013 Operating Profit: $1.7 billion
2013 Interest Expense/Taxes: $700 billion

2013 Net profit: $1.0 billion (excluding special items)
2013 Net profit per share: $1.35/share
2013 ROIC: 14-15% range

As you can see, Gary Kelly laid out a road map to over $1/share profits for 2013 back on December 14, 2012 at the Investor Day presentation. Over the last 30 days, 6 analysts have upped their LUV earnings estimates while 1 analyst has lowered their estimate (out of 18 total analysts).

What will affect the results we see published 1 year from today? Every 10 cents per gallon change in Jet A affects the operating profit by approximately $185 million. Every 1% RASM change affects the operating profit by approximately $180 million. Every 1% change in non fuel CASM affects the operating profit by approximately $105 million.

With respect to furloughs, remember Paragraph C to the LOA to the AirTran CBA included with SIA #2 prevents furloughs unless there are "prohibitive conditions outside the company's control" or "extreme economic conditions". Given the current profitability and forecasting for 2013 done by Gary Kelly at last month's Investor Day presentation, I am sure JM would love to unleash DK if Gary Kelly decided to try and furlough on this side of the partition.

 

[scoreboardII]

Slaquer I would love to share your optimism. To avoid fuloughs we need more airframes and to get more airframes we need more flying for those airframes to do than we have now. Expalin where either come from and I'll be on board. I have asked SWAPA and management and right now no one has given me an answer.

No furloughs.

To furlough would be a nail in the coffin of all that SWA has advertised these last four decades. SWA will only furlough if some industry stressor occurs like energy, war, or terrorism: if that happens, other will furlough long before SWA.

Second, furloughing 400, then hiring them back and retraining inside of a year or two/three is more costly than paying min guarantee to every pilot over two years.

Third, my bet is a significant number of young age wise (younger than 45) FO's see the writing on the wall and jump to other airlines which are hiring. Solving the problem well before 2015.

 

[Ace McCoy]

No furloughs.

To furlough would be a nail in the coffin of all that SWA has advertised these last four decades. SWA will only furlough if some industry stressor occurs like energy, war, or terrorism: if that happens, other will furlough long before SWA.

Second, furloughing 400, then hiring them back and retraining inside of a year or two/three is more costly than paying min guarantee to every pilot over two years.

Third, my bet is a significant number of young age wise (younger than 45) FO's see the writing on the wall and jump to other airlines which are hiring. Solving the problem well before 2015.

Fourth, how STUPID would SWA look furloughing pilots when DAL/NWA and CAL/UAL both merged with no furloughs?


Fifth, how can they justify "extreme economic hardship" while pulling down major profits?


I agree, No furloughs.