Trouble ahead for Low Cost Carriers???

[T-Bags]

here's the case FOR expensing:
When you give options, the shareholders of the company see their ownership position dilluted.

Lets say company X decided that they want pay it's pilots more. they don't want to touch their current cash though. they come up with a scheme. They decide they will sell more stock in a new offering. They plan to sell the shares for 60 bucks each. Out of that 60 bucks, they plan to keep 15 in cash and give you 45 as increased compensation. Golly Dude, how would that be accounted for? Hmm, 60 bucks as paid in capital and 45 as WAGES. Now explain again how thats diff than stock options? the net effect is YOU ARE PAID MORE (arguably based on your increased productivity as measured by increased market cap). Simple accounting rules would seem to suggest that the books accurately reflect your compensation. The largest issue seems to be with reconciling the amortization of what is essentially a moving target. The article I linked goes into detail on ways to overcome those impediments. If it happens, it WILL affect the margins. I agree that cash flow will go up, but if you went to "TY'S GED school of accounting" you'd totally disregard cash flow.... In defense of the option granters, I had a long discussion with an analyst friend (I'm for, he's against expensing), and he thinks if it happens many analyst will make "pro-forma" adjustments to the books to mitigate the option expenses. In any case, the affect will be interesting and the markets can be "irrational" Just look at the hit stocks took for announcing only 13% margins......

 

[General Lee]

I have created a MONSTER.

"She's Alive!!!"---Weird Science--the movie


Bye Bye--General Lee


Seriously, I am not looking at this again

 

[T-Bags]

I've grown tired of you...good luck to you...go ahead...you get the last word....which must be what you need.

Come on DUDE, you finally give an EXCELLENT fact based response supporting your point (although I disagree), and you take your ball and go home... Wouldn't SWA want to pay less taxes? Do they choose to pay more just because they are patriotic? If expensing options wouldn't hurt the bottom line, investor confidense, and worker moral (from a possibly lower stock price/ lower compensation), then it seems to me they'd be falling all over themselves to lower the tax burdon. I must've missed something......

 

[FLB717]

Two points.

1) FDJ, I must admit I agree with you, I know scared me too.

2) TBag, I know why you dont mention your company
1. Not a Pilot
2. Not proud/secure in your company, my humble opinion of course (looking for flame bait).

 

[T-Bags]

FLB,

2)
1. Dang it how stupid could I have been!! I must be the only "non-pilot" that supported you family during your "strike". I feel cheated!!!
2. I already said I have not, will not, never wanted to work for VJ/AT. Who else would embarrass me?

 

[Ligeirinho]

General,
I'd like to say before anything I admire you a lot and most of your replies are absolutely right, but this time you messing if LCC for no reason. Or you maybe jealous because they are hiring and DELTA still on hold, Anyway I don't know what's wrong with you this time and the fact is DELTA is the only company who hire desk pilots or pilot with no hours but a Bachelor degree you chief pilot look at my resume with 3550 hours in big jets 2850 in MD11 plus more than 7k total and said that was a nice resume but where is your BS degree? I said oh man only here in america to fly jets you need to spend 4 years to learn how the government helped airlines like DELTA get them subsidised through the USPS system.
So now as you see I am working on my BS degree but DELTA is the last place I gonna send my resume to, no offense but this rule is just ridiculous because if you want good pilots let's go to the sim and cut all 3 engines of an MD11 or other heavy and see how the guy flies but not give a try to someone because a BS degree that's it's to much.
JETBLUE guys don't worry stock market is good for investors pax are good for airplanes and you guys have them keep above the break even and all will be fine.
Stock market !!! ew. Than they say that gambling is ilegal in some states, is the stock market like to play on roulette or I am mistaken all.?!?!?!?!?
GOD bless you General and DELTA will be fine don't worry you are protected by the grandfather act.

 

[Ty Webb]

Originally posted by Les Paul

Jetblue and Valujet/Airtran have no such history. Will they succeed, maybe... maybe not.

First of all, anyone who refers to AirTran as anything other than AirTran obviously doesn't have a clue about the company today.

You don't refer to Delta as Delta-Western or Northwest as Northwest-Republic, do you?

Many of you from Jetblue and Airtran need to tone down the "we're the real deal" rhetoric. You have proven nothing yet. If you are around 20 years from now, then I'll listen to your rants.


Oh, really? And what makes you think that any of the major carriers will be around then?

As for what we should or should not do-

pretty strong words from a guy who doesn't even have the testicular fortitude to say who he works for . . . or doesn't.

 

[Joe Peeoznotz]

Les

Well spoken. AirTran has to use guaranteed "hold up" money to even enter a new market. Shows you how much faith they have in their marketing research ability. Jetblue is now being hit by yield problems on their West Coast routes due to ever increasing competition.

Incidently, I think Mary Ford was the talent that made you a legend. Selling all those how to strum a guitar books also helped. Incidently, I bought one and still can't play a lic.

 

[FLB717]

Ty
Is right on. Who knows if AirTran, Jetblue, Northwest-Republic, or Delta-Western-Northeast-PanAm, USAir-Piedmont-PSA(?)-Allleganey, American-Reno-PanAm will be around in 20 years. The only one I feel is darn near a sure thing to be here is Southwest-Morris Air. Hey this add the names is fun, thank s Les Paul Ill be like you and do it all the time now.

 

[FlyBoeingJets]

General,

Please don't get angry, I did not mean to offend.

I will concede the MD-11 international thing. But all my other criticisms have not been adequately addressed. Regardless of how "illegal" your furloughs were, they are still expensive. Just like all the folks who sit on displacement bids until training.

"It's still cheaper to grow an airline and train new hires vs. bringing back furloughs." That said I wasn't talking about how ATA would fair in this environment. I think the question is how will SWA, JetBlue, and Airtran fair? ATA has big challenges ahead. The biggest may be American at ORD. They seem to be ready for the fight.

Will Delta's debt load be balanced by the First Class sections and International revenue? I believe somewhat but not as much as you think. Song will either save your domestic operation or fail trying.