jetflier
Well-known member
- Joined
- Dec 22, 2003
- Posts
- 718
This is a in interesting letter from a NWA pilot closely watching the CH process ..
Because NWA is in bankruptcy, they are required to file Monthly Operating Statements with the bankruptcy court they filed Chapter 11 in. In this case that would be the United States Bankruptcy Court, Southern District of New York. This is the same Court where Judge Gropper has heard the evidence, encouraged negotiations and consensual agreements and issued his opinions. A company which is not in bankruptcy does not have to file monthly reports and it can be more difficult or impossible for investors and other interested parties to track or interpret company trends using only quarterly statements and corporate news releases. The financial data for the whole quarter is typically issued, a month or so after the quarter ends. This means that information from the first or second month of the quarter is already three or four months old, before it is publicly released and it does not have to be broken down by individual months.
The interested parties watching the NWA bankruptcy process have had access to publicly released information that is only about one month old when it becomes available. NWA ALPA has a confidentiality agreement with the company that allows them access to the financial numbers, several weeks before they are released publicly; or almost in real time.
The February Monthly Operating Statement was released on March 29, it was clear to me at the time that something amazing was starting to happen at NWA. A massive financial turnaround, fueled primarily by the November 15, 2005 employee wage cuts and renegotiated aircraft lease rates, was underway. The first quarter results (which NWA ALPA had access to, well before the TA balloting closed) added further strong evidence that this turnaround was picking up strength and was for real. In a traditional weak quarter for airlines, NWA had their best operational first quarter of the past six years and came within a few millions dollars of having the best first quarter of the past eight years. This is an amazing financial performance for an airline in Chapter 11 and it has only gotten better since the first quarter.
The second quarter results were released on August 9 and showed an operational profit of $295 million for the quarter with an overall quarterly (loss) of ($285) million, when the $464 million in mostly non-cash reorganization expenses were factored in. While looking at the second quarter results, a couple of things jumped out at me. Overall operating revenues, year over year were up $96 million and operating expenses decreased by $389 million. That is almost a $500 million shift. Even though fuel costs increased by $86 million, this was more than countered by a reduction in salaries, wages and benefits of $294 million and an $81 million reduction in aircraft rentals. Besides fuel costs and in the interest of full disclosure, the aircraft maintenance material and repairs entry did increase by $26 million, which can be attributed to the outsourcing of almost all but line maintenance. The biggest surprise to me were the regional carrier revenues and expenses. For the first time in any quarter that I am aware of, revenue exceeded costs by a wide margin. A year ago regional carrier revenues were $344 million and expenses were $392 million, a ($48) million shortfall. Contrast that to this year�s revenue of $396 million and expenses of only $366 million, for an operational regional profit of $30 million.
This brings us to the month of June. While I was looking at the second quarter results, I didn�t go back and compare operating profits and revenues and expenses with April and May. Had I done so, I would have been able to extrapolate June�s data on a stand alone basis. On August 10, the June Monthly Operating Statement was released, but I didn�t access it until this past weekend. A combination of record loads, lowered costs, increased ticket prices, and only $35 million in mostly paper loss reorganization expenses, resulted in a net profit for the month of $98 million. I am not talking operational profit here, which was $170 million; I am talking a monthly net profit of $98 million. This is simply an astounding performance for a major airline in Chapter 11, which I can confidently say no other legacy airline has even come close to achieving. Nine months after declaring bankruptcy, NWA, operating with fuel costs of $2.10 a gallon for the quarter, shows a large monthly profit that cannot be explained away by any apologists in the TA YES vote camp. Remember that this monthly net profit was achieved without any of the employee TAs being implemented. The full effect of all employee group TAs will not show up on the bottom line until October at the earliest.
I have posted this before, but the following statement from the April 21, Across The Table pretty much sums up my feelings as to how poorly the pilot membership was served by the former MEC Chairman and soon to depart Negotiating Committee Chairman:
�As ALPA�s experts have pointed out since April 2003, NWA�s worsening financial condition is real. Restructuring of its non-labor and labor costs were, and continue to be, required.�
This totally false statement and many others like it were allowed to be printed in officially sanctioned NWA ALPA publications and mailings with dues money that ALPA members paid to an organization which claims the following expertise:
Representation: Over the decades, ALPA pilot groups have negotiated scores of contracts with hundreds of airlines. Today, ALPA staff offers its members the finest financial analysis available, in-depth knowledge of the Railway Labor Act (the legislation that governs airline pilot contracts), and the legal experience to defend pilot contracts. By leveraging the combined resources of all union members, ALPA is able to bring unmatched expertise to bear on matters affecting its members' salary, benefits, and working conditions.
So the question is; where are we today? I agree with the sentiments of the new MEC Chairman and those in the membership who say that we have to look beyond what has recently transpired and try to figure out a way to shift out of reverse and at least put this vehicle in first gear. The damage that has been done will linger for many years, but I think that we can at least mitigate it somewhat by drawing a final line in the sand and defending it vigorously. I have outlined several steps that I think could help in this process.
1. Forget that NWA is in bankruptcy. Airlines cranking out consistent monthly operating profits are not on their deathbeds. In the last four months, the Company has posted $375 million in operating profits. NWA does not need anymore financial help from the pilot group.
2. Don�t worry about the quarterly reported losses, which are generated because of bankruptcy related reorganization costs. These are primarily paper losses related to aircraft lease restructuring and write-offs. They are future claims against the Company, which will be settled for some value on the dollar after NWA emerges from bankruptcy. In all likelihood, these claims will be paid by the issuance of new Company stock at minimal cost to NWA. Absent these costs in the second quarter, the Company would have posted a net profit of about $160 million.
3. Draw up your own list of hot button items and let your Reps know what they are. For example, the April 24, Across The Table assigns the following annual credit values to some of these more heated provisions of the new TA: 50% deadhead - 100% credit ($7.4 million), zero open time ($5.5 million), 100% -75% sick time ($4.0 million). Guess what folks; these three items only add up to $16.9 million a year in alleged savings to the company. That is less than $1.5 million a month. To put it another way, NWA is a $12.5 billion a year revenue corporation. One percent of that revenue is $120 million a year. At $16.9 million, we aren�t even talking about a rounding error. The increase in monthly block hours is shown as only a $9 million a year in savings, with a pilot headcount reduction of 359. Adding up all four of these items comes to just over $25 million a year or about $2.1 a month. The Company wouldn�t even notice the difference, but the quality of life for pilots living under this TA would improve measurably. The consequences of flying �old� narrow body guys 85 to 90 hours a month have yet to be felt, but they will start to show up. That kind of flying, month after month is a young man�s game.
4. When NWA comes back to the MEC for any kind of relief, a firm NFW should suffice until they are ready to start giving something back. While some have advocated new contract openers, my personal feeling is that won�t work because of egos and a perceived show of weakness. On the other hand, by quietly giving something tangible back to the membership, they could always claim they did it because they found it was more efficient to the airline to do so.
I will be sending this post to my Reps and I would urge all of you to think about what I have said and come up with your own list of hot button items and don�t be shy about sharing them with your Reps. We have been on the defensive for this entire TA process, even when the rapidly improving financial numbers showed that the company was overreaching by a wide margin. Personally, I am tired of being kicked around and it is time to start kicking back. I grew up in Michigan and my Dad was a member of a white collar union at Chrysler. Over the years I witnessed many AFL-CIO Union contract battles at GM, Ford, and Chrysler and I never saw one settled with the dollar value of the Company�s initial opener.
As I see it, we have a choice, we can sit around and complain endlessly about an absolutely terrible contract, or we can start to do something about it.
Because NWA is in bankruptcy, they are required to file Monthly Operating Statements with the bankruptcy court they filed Chapter 11 in. In this case that would be the United States Bankruptcy Court, Southern District of New York. This is the same Court where Judge Gropper has heard the evidence, encouraged negotiations and consensual agreements and issued his opinions. A company which is not in bankruptcy does not have to file monthly reports and it can be more difficult or impossible for investors and other interested parties to track or interpret company trends using only quarterly statements and corporate news releases. The financial data for the whole quarter is typically issued, a month or so after the quarter ends. This means that information from the first or second month of the quarter is already three or four months old, before it is publicly released and it does not have to be broken down by individual months.
The interested parties watching the NWA bankruptcy process have had access to publicly released information that is only about one month old when it becomes available. NWA ALPA has a confidentiality agreement with the company that allows them access to the financial numbers, several weeks before they are released publicly; or almost in real time.
The February Monthly Operating Statement was released on March 29, it was clear to me at the time that something amazing was starting to happen at NWA. A massive financial turnaround, fueled primarily by the November 15, 2005 employee wage cuts and renegotiated aircraft lease rates, was underway. The first quarter results (which NWA ALPA had access to, well before the TA balloting closed) added further strong evidence that this turnaround was picking up strength and was for real. In a traditional weak quarter for airlines, NWA had their best operational first quarter of the past six years and came within a few millions dollars of having the best first quarter of the past eight years. This is an amazing financial performance for an airline in Chapter 11 and it has only gotten better since the first quarter.
The second quarter results were released on August 9 and showed an operational profit of $295 million for the quarter with an overall quarterly (loss) of ($285) million, when the $464 million in mostly non-cash reorganization expenses were factored in. While looking at the second quarter results, a couple of things jumped out at me. Overall operating revenues, year over year were up $96 million and operating expenses decreased by $389 million. That is almost a $500 million shift. Even though fuel costs increased by $86 million, this was more than countered by a reduction in salaries, wages and benefits of $294 million and an $81 million reduction in aircraft rentals. Besides fuel costs and in the interest of full disclosure, the aircraft maintenance material and repairs entry did increase by $26 million, which can be attributed to the outsourcing of almost all but line maintenance. The biggest surprise to me were the regional carrier revenues and expenses. For the first time in any quarter that I am aware of, revenue exceeded costs by a wide margin. A year ago regional carrier revenues were $344 million and expenses were $392 million, a ($48) million shortfall. Contrast that to this year�s revenue of $396 million and expenses of only $366 million, for an operational regional profit of $30 million.
This brings us to the month of June. While I was looking at the second quarter results, I didn�t go back and compare operating profits and revenues and expenses with April and May. Had I done so, I would have been able to extrapolate June�s data on a stand alone basis. On August 10, the June Monthly Operating Statement was released, but I didn�t access it until this past weekend. A combination of record loads, lowered costs, increased ticket prices, and only $35 million in mostly paper loss reorganization expenses, resulted in a net profit for the month of $98 million. I am not talking operational profit here, which was $170 million; I am talking a monthly net profit of $98 million. This is simply an astounding performance for a major airline in Chapter 11, which I can confidently say no other legacy airline has even come close to achieving. Nine months after declaring bankruptcy, NWA, operating with fuel costs of $2.10 a gallon for the quarter, shows a large monthly profit that cannot be explained away by any apologists in the TA YES vote camp. Remember that this monthly net profit was achieved without any of the employee TAs being implemented. The full effect of all employee group TAs will not show up on the bottom line until October at the earliest.
I have posted this before, but the following statement from the April 21, Across The Table pretty much sums up my feelings as to how poorly the pilot membership was served by the former MEC Chairman and soon to depart Negotiating Committee Chairman:
�As ALPA�s experts have pointed out since April 2003, NWA�s worsening financial condition is real. Restructuring of its non-labor and labor costs were, and continue to be, required.�
This totally false statement and many others like it were allowed to be printed in officially sanctioned NWA ALPA publications and mailings with dues money that ALPA members paid to an organization which claims the following expertise:
Representation: Over the decades, ALPA pilot groups have negotiated scores of contracts with hundreds of airlines. Today, ALPA staff offers its members the finest financial analysis available, in-depth knowledge of the Railway Labor Act (the legislation that governs airline pilot contracts), and the legal experience to defend pilot contracts. By leveraging the combined resources of all union members, ALPA is able to bring unmatched expertise to bear on matters affecting its members' salary, benefits, and working conditions.
So the question is; where are we today? I agree with the sentiments of the new MEC Chairman and those in the membership who say that we have to look beyond what has recently transpired and try to figure out a way to shift out of reverse and at least put this vehicle in first gear. The damage that has been done will linger for many years, but I think that we can at least mitigate it somewhat by drawing a final line in the sand and defending it vigorously. I have outlined several steps that I think could help in this process.
1. Forget that NWA is in bankruptcy. Airlines cranking out consistent monthly operating profits are not on their deathbeds. In the last four months, the Company has posted $375 million in operating profits. NWA does not need anymore financial help from the pilot group.
2. Don�t worry about the quarterly reported losses, which are generated because of bankruptcy related reorganization costs. These are primarily paper losses related to aircraft lease restructuring and write-offs. They are future claims against the Company, which will be settled for some value on the dollar after NWA emerges from bankruptcy. In all likelihood, these claims will be paid by the issuance of new Company stock at minimal cost to NWA. Absent these costs in the second quarter, the Company would have posted a net profit of about $160 million.
3. Draw up your own list of hot button items and let your Reps know what they are. For example, the April 24, Across The Table assigns the following annual credit values to some of these more heated provisions of the new TA: 50% deadhead - 100% credit ($7.4 million), zero open time ($5.5 million), 100% -75% sick time ($4.0 million). Guess what folks; these three items only add up to $16.9 million a year in alleged savings to the company. That is less than $1.5 million a month. To put it another way, NWA is a $12.5 billion a year revenue corporation. One percent of that revenue is $120 million a year. At $16.9 million, we aren�t even talking about a rounding error. The increase in monthly block hours is shown as only a $9 million a year in savings, with a pilot headcount reduction of 359. Adding up all four of these items comes to just over $25 million a year or about $2.1 a month. The Company wouldn�t even notice the difference, but the quality of life for pilots living under this TA would improve measurably. The consequences of flying �old� narrow body guys 85 to 90 hours a month have yet to be felt, but they will start to show up. That kind of flying, month after month is a young man�s game.
4. When NWA comes back to the MEC for any kind of relief, a firm NFW should suffice until they are ready to start giving something back. While some have advocated new contract openers, my personal feeling is that won�t work because of egos and a perceived show of weakness. On the other hand, by quietly giving something tangible back to the membership, they could always claim they did it because they found it was more efficient to the airline to do so.
I will be sending this post to my Reps and I would urge all of you to think about what I have said and come up with your own list of hot button items and don�t be shy about sharing them with your Reps. We have been on the defensive for this entire TA process, even when the rapidly improving financial numbers showed that the company was overreaching by a wide margin. Personally, I am tired of being kicked around and it is time to start kicking back. I grew up in Michigan and my Dad was a member of a white collar union at Chrysler. Over the years I witnessed many AFL-CIO Union contract battles at GM, Ford, and Chrysler and I never saw one settled with the dollar value of the Company�s initial opener.
As I see it, we have a choice, we can sit around and complain endlessly about an absolutely terrible contract, or we can start to do something about it.
