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.

 

[General Lee]

Flyboeingjets,

I am not angry. Delta is trying to get back on their feet, and there are a lot of positive signs leading that way, especially contract negotiations, which isn't great news for me. That's ok, it will all turn out for the best. The first class service and section does better in a better economy, so it won't hurt. Song seems to be doing well, and probably will expand. We will see if that will help or hurt us, but so far it is promising. Take care.


Bye Bye--General Lee

 

[SWAdude]

There is little doubt that the legacy carriers are/will be recovering. Historically this is the deepest airline depression...but not the first one by far.

SWAdude

 

[General Lee]

I like this nicer tone. I think we can all be friends............We should all have a beer on a layover---except SWADude will be buying.....


Bye Bye---General Lee

 

[SWAdude]

But, of course, hopefully the last.

SWAdude

Except General I will be buying you a shot!

 

[DrunkIrishman]

real intellectual!!! You saying HD employees are somehow below the stature of you Valudeath boys? Last I heard, they hadn't killed a bunch of thier customers through negligence.....

FWIW, HD actually has killed some of its customers due to negligence. Lowe's, on the other hand, has not to my knowledge.

 

[FLB717]

Les
Ill type real slow so you can follow what Im saying. Most of your post have a combination of AirTran+Valujet = AirTran/ValuJet. Why because I think you like to poke fingers at the merger/accident or maybe you thought the "Critter" on the aircraft was stupid. It realy doesnt matter the reason, you hate us and thats ok. The point was that many airlines have merged and/or been bought out. Ive noticed that you use only AT/VJ in that manor, so I used many of the others in the same light. Will Airtran or Delta be here in 20 years...I dont know, see ya in 20 and well know.

 

[FlyBoeingJets]

The fare war I see coming is going to be brutal. Will it start this next spring/summer??

We have big orders at the LCCs and airplanes coming out of the desert. Lots of capacity to fight for the business and leisure traveler.

Those that continue, or start, to post losses for '04 will have serious problems ahead.

 

[Andy]

The fare war I see coming is going to be brutal. Will it start this next spring/summer??

We have big orders at the LCCs and airplanes coming out of the desert. Lots of capacity to fight for the business and leisure traveler.

Those that continue, or start, to post losses for '04 will have serious problems ahead.

I'm betting on spring '04. The legacy carriers are starting to be cash flow positive. I expect the legacy carriers to get increasingly cash flow positve into the spring.
The legacy carriers will then emerge from their 'hunker down' posture and we'll start to see some bloody fare wars on selected routes.
The legacy carriers won't take on every LCC, but I do see them dogpiling on JBLU and any other LCC flying transcons.
In the end, I expect JBLU to fold its tent. The epitaph will read (as it has for most other LCCs that are morts) that JBLU overexpanded. It isn't overexpansion that will kill JBLU; it's the competition in those markets. JBLU is in two markets where they face competition from multiple carriers; it'll just turn into a huge fare war.

This is the standard airline playbook from recessions and recoveries of the past; just the names have changed.

 

[General Lee]

There's only so many one time charges a CFO can pull out of the hat. With a better economy, I think the legacy carriers will start to do a lot better. Also, most of them have taken huge cuts and gotten leaner since 2001. That will have to show somewhere---and being leaner during better economic times will show results.

Bye Bye--General Lee

 

[Ty Webb]

Re: Les

Hey, Guys, it's a new week, and you know what that means- time to appoint a new Village Idiot. So far, it looks like Joe Peeoznotz is going to be hard to beat, what with gems like this one:

News flash for Joe-

Being able to require "up front money" is a sign of strength, not weakness. . . .

Now, repeat after me, "Better to be silent and be thought a fool, than open your mouth and remove all doubt".

 

[Joe Peeoznotz]

Ty your own shoes

Oh, horsefeathers!

Don't hold your breath too long on this continued addition to your bottom line. By the way, since you are such a 10K fan, why don't you point out where they break out the "hold up" money in the 10K? I guess stockholders for the company don't have a right to know. Next time you see Joe, tell him I luv the transparency.

Maybe you're really not making money at all on operations.

"Those that remain silent can only follow."

When you wake up, be sure and wipe of the druel.

 

[Ty Webb]

Well, you have certainly opened your mouth and removed all doubt.

When a community comes to us and asks us to begin service (as PNS did, and BMI, and ICT, and many others) we ask the business community to guarantee a certain amount of revenue. If ridership is not high enough to be profitable, the difference comes from the travel bank. So, regardless of ridership, the service will be profitable.

It's actually very smart . . . . too bad that you feel so threatened by it. It must be a very big and scary world to someone with such limited mental development.

I really doubt that SWA hired an idiot like yourself, but if they did, I would keep my mouth shut and hope they don;t ever discover their mistake.

squawk, squawk.

 

[Joe Peeoznotz]

Oh Ty

You're such a kidder!

No Ty, it's bad public relations. This industry has had two big black eyes for a long time because of these kind of business practices. It's too bad FL is the only LCC stooping so low. I hope some of these cities have a long memory when they consider future gate assignments.

Now Ty, would you care to answer my question of the 10K? I didn't think so. Dribble, dribble.

 

[Ty Webb]

There is nothing special to report on a 10K or a 10Q. It is revenue, pure and simple . . . .

You seem to think that it is some sort of evil practice.

It is not.

Let me tell you how it came about. When we began service to MOB, walk-up tickets to ATL, which is approx 303 nm, were $600. When we started service for $149. (or $129. or whatever it was) Delta responded by adding flights and matching these fares, at a substantial and unsustainable loss.

The local populace did not seem to understand DAL's newfound benevolence . . . and eagerly snapped up the cheap tickets on DAL, while pocketing the FF miles, and were amazed at their newfound fortune.

Eventually, AirTran dropped the city, stating that the locals were not patronizing the service.

The very next day, DAL raised the fares right back to $600. for a walk-up, and the locals were wandering around in a daze, saying, "What happened"?

When the next small-market city approached us, we are a little more savvy . . . . so we now say, "It costs us at least half a million dollars in initial losses to open your city, and possibly a few more million in losses when the legacy carrier that has held you hostage all this time decides suddenly to suddenly match our fares . . . . so if you want us to come in, you are going to have to show us that you are making a commitment to this process, as we are . . . and put together some sort of guarantee that you are in this for the long haul".

It makes perfect sense to me, and I don't hear any one crying about it but you, and you don;t even have a dog in this fight, do you?

 

[T-Bags]

"Let me tell you how it came about. When we began service to MOB, walk-up tickets to ATL, which is approx 303 nm, were $600. When we started service for $149. (or $129. or whatever it was) Delta responded by adding flights and matching these fares, at a substantial and unsustainable loss."

So what you are saying is that for the same price, most people prefer DAL (despite the old Mad dogs). Superior product huh? I wonder if SWA would have tucked tail and run... Maybe cities who have never enjoyed the "valujet experience" think they are getting another SWA, but when you guys show up with some of the worst operational statistics in the industry, and @sshole employees like "TY" (you should wear your hat TY, it covers the foreskin...), they decide they don't want to fly you at any price. Now this "vote for us" joke of a marketing campaign REALLY makes me laugh. You guys have probably got the speed dial in all the trailer parks changed from the Bail Bondsman to good old AT...

 

[Joe Peeoznotz]

Ty me down will ya

If I wanted to listen to the History Channel, I could just tune in.

If it's revenue then break it out. Inquiring minds want to know. Wichita has paid you guys a fortune, and it ain't coming from a travel bank, it's coming from the tax payers. This has been a quiet money maker for FL for quite a while. I would bet that if WN or B6 began this practice, it would be in front of Congress.

Could you imagine if every airline began using this practice? It's an outrage, and your company should be ashamed.

 

[Ty Webb]

Bird-Brain:

You know, I remember you now. You jumpseat on us sometimes, from ICT to MDW!

Wow. It takes a real jackass to shake your hand, requesting a jumpseat and then turn around and badmouth you and your company on a public forum.

As for your insinuation that there is something wrong with the local business community putting up a travel bank- you aren;t just a jackass, you're an idiot, to boot!

Here's a quarter- call Ralph Nader, tell him I said, "Hi!".

 

[Ty Webb]

Well, that was about five years ago. Amazing how things change.

Our oldest 717 is newer than Delta's newest plane. Have you seen some of those Delta planes taxiing around? What a fine looking fleet. When you can see past the dirt, there are three separate paint schemes out there, not to mention all the mismatched radomes, rudders and tailcones!

Our F/A's aren't ancient galley hags with a 20 year pin, a sense of entitlement and a crossword puzzle book- and we have full service on a 42 minute leg, which you will not get on Delta, I guarantee it.

T-Bags, you crack me up. You are so pathetic.

Here, man, just relax, sit sit back and have yourself a nice big can of Shut the F#ck Up!

 

[Joe Peeoznotz]

Ty one on will ya

Did that quarter come from a travel bank? I'm sorry, but I can't accept it.

 

[T-Bags]

"So what you are saying is that for the same price, most people prefer DAL (despite the old Mad dogs). Superior product huh?

Well, that was about five years ago. Amazing how things change.

Our oldest 717 is newer than Delta's newest plane. Have you seen some of those Delta planes taxiing around? What a fine looking fleet. When you can see past the dirt, there are three separate paint schemes out there, not to mention all the mismatched radomes, rudders and tailcones!"

And they STILL prefer DAL. Must be the @assholes up front who can't seem to ever be on time.

"Our F/A's aren't ancient galley hags with a 20 year pin, a sense of entitlement and a crossword puzzle book- and we have full service on a 42 minute leg, which you will not get on Delta, I guarantee it."

Nah, just skank ho's who couldn't get hired by a major. BTW TY, 6 YEARS?! You've been trying to get a real job for 6 YEARS and the best you could do was Valujet? LOL!! If you'd like, we can send you copies of our interview and hire letters from your dream airlines. You can black out the names, put yours in, and finally have a letter from DAL, UAL, SWA, or AMR that doesn't say "sorry, we don't hire child molesters, try Airtran..." Are those grapes REALLY THAT SOUR? If I'm ever part of a picket line, I'm sure I'll finally get to meet you.... as you are crossing it...