UAL Files CH 11

[goldentrout]

PCL_128

If you're worth so much more as an airline pilot...how come you're only making $10/hr or whatever paultry salary you're making now?

If that's the best job you can get...then guess what, the market is telling you how much you're currently worth. You may be the next Chuck Yeager...but you're worth whatever you're currently getting paid.

Otherwise, you'd be somewhere else making more, wouldn't you?

As far as deregulation, you must be either

a. ignorant of how market economics work
b. a socialist who thinks the tax payers of America should subsidize airlines, and therefore pilot salaries.

You're 100% correct deregulation did cause the 11 major airline bankruptcies...because when the American taxpayer stopped subsidizing the $300,000/yr Pan Am 747 Capt salary, the airlines were forced to compete on the profitability of their business...just like every other business in America.

"Thank God for ALPA"??????

Non-ALPA carrier SWA

1. Turned a profit evey year of their existence
2. No lay offs post 9/11
3. Hiring post 9/11
4. Buying planes post 9/11

ALPA carrier UAL

1. Lost 1.5 billion in 2001...on a record pace to break 2 billion in 2002
2. Has laid off close to 1200 pilots post 9/11, with anywhere from 500-1000 more on their way out the door
3. No prospect of hiring for many years to come
4. Parking planes, cutting route structure and deferring plane orders.

And let's not forget the 1500 guys on furlough at US Air...the 700 or so at NWA...the 1000 or so at DAL (with more to come)

Your socialist/union economic theory is on it's way out...it's just a matter of time.

The whole system is collapsing around you...thousands of pilots/mechanics/FAs on furlough...bankruptices...big planes being parked and orders deferred...RJs being bought as fast as they can be made...RJ carriers hiring and growing more and more every day...low cost carriers gaining more and more market share every year.

How can you stare all these facts in the face and say "yea ALPA...thanks for all you've done for us"?????

We can debate this all we want on this message board...but time and current events are and will tell which one of us is right...based on what I see happening, my money's on the free market.

 

[de727ups]

Goldentrout...

You are making a case for unions with your SWA comment. SWA is a very highly unionized company. UPS is another highly unionized company that is doing quite well. As just another line grunt, I gotta say thank God for my union. Unions aren't perfect but life without them would be much worse than life with them.

I'm kinda curious why you have a 707 type and yet are an RJ F/O? Whasup with that???

 

[Wiggums]

Maybe he flew KC-135s in the military.

 

[PCL_128]

PCL_128

If you're worth so much more as an airline pilot...how come you're only making $10/hr or whatever paultry salary you're making now?

If that's the best job you can get...then guess what, the market is telling you how much you're currently worth. You may be the next Chuck Yeager...but you're worth whatever you're currently getting paid.

Otherwise, you'd be somewhere else making more, wouldn't you?

That's some very strange logic, but I'll try to explain to you. I'm only in my 3rd year of my career. I don't expect to making a six figure income now, and I never said anything to that affect. I was referring to major pilots that deserve these salaries. I'm making $20 an hours now which is pretty much average for a first year RJ FO. That is what ALPA negotiated for us. The market didn't determine anything. As i've said here many times, Pinnacle would be paying me minimum wage if it weren't for ALPA. ALPA negotiated for our contract, the market did not determine our salaries in the slightest. And as for the Chuck Yeager comment, I never implied that I thought I was some great pilot such as Mr. Yeager. All I said was that I deserve a decent wage for my work just like any other worker.

As far as deregulation, you must be either

a. ignorant of how market economics work
b. a socialist who thinks the tax payers of America should subsidize airlines, and therefore pilot salaries.

You're 100% correct deregulation did cause the 11 major airline bankruptcies...because when the American taxpayer stopped subsidizing the $300,000/yr Pan Am 747 Capt salary, the airlines were forced to compete on the profitability of their business...just like every other business in America.

Actually, I've studies economics very in depth for your information and I'm nothing even close to a socialist. I'm a supply side conservative. However, there are some things that just should not be left to market forces. For instance, we should not contract out ATC to the lowest bidder because that is what the market will bear. Some things need to be regulated. When the safety of the travelling public is a concern, regulation should be looked at. There are unbelievable numbers of airlines out there that skimp on maintenance to turn a profit in this deregulated environment. I know, I've worked for one. They got away with it by doctoring AMLs and paying off the POI who was subsequently promoted within the FSDO so that the FAA could keep it quiet. That is what deregulation has created.

"Thank God for ALPA"??????

Non-ALPA carrier SWA

1. Turned a profit evey year of their existence
2. No lay offs post 9/11
3. Hiring post 9/11
4. Buying planes post 9/11

ALPA carrier UAL

1. Lost 1.5 billion in 2001...on a record pace to break 2 billion in 2002
2. Has laid off close to 1200 pilots post 9/11, with anywhere from 500-1000 more on their way out the door
3. No prospect of hiring for many years to come
4. Parking planes, cutting route structure and deferring plane orders.

And let's not forget the 1500 guys on furlough at US Air...the 700 or so at NWA...the 1000 or so at DAL (with more to come)

For starter, SWA is a UNION career. It isn't ALPA, but it is nonetheless a union. SWAPA negotiates for their payrates and work rules just like ALPA does. The difference isn't the union, it's the business model. That's what I've been saying all this time. The unions are not the problem. The management is. The SWA mgmt came up with a viable business model, so they turn a profit. The SWA mgmt treats their employees fairly, so they turn a profit. The SWA mgmt doesn't take an adversarial attitude towards labor, so they turn a profit. Are you starting to see this? The unions at the majors are not causing these problems. Bad mgmt and bad business models are. Labor could take concessions until they're blue in the face, but until mgmt wakes up to reality it will do no good.

 

[goldentrout]

de727ups/PCL-128

Management certainly has some blame to take. I blame them for agreeing to compensation contracts that could only be sustained with unrealistically optimistic revenue projections.

But when the UAL union asked for a 22-29% pay raise, at a time when the airline industry was starting a downturn, that was just plain stupid.

If I'm so wrong about employees having to take concessions, them how come the Wall Street Journal, and every major bank, and the ATSB, and every aviation business journal/analyst agree with me?

UAL contract signed 10/2002. UAL lost money for the first time isince 1995 in the last quarter of 2000, Oct-Dec, to the tune of 124,000,000...and they've been down hill ever since...not to mention the 17% mechancis raise.

I must admit that SWA is unionized. Unions have and can serve a function.

Maybe my point is better stated.

All unions are not necessarily socialist in nature.

For whatever reason, the SWA has not...yet...demanded unsustainable compensation.

There's nothing wrong with a group of professionals organizing themselves to unify their voice.

But when a union gets to the point that monetary interests and power interests of a few at the top overtake the general interests of the group as a whole, that union is no longer performing it's primary function.

The pay rates of almost every ALPA carrier are holdovers from the airline regulation era, when, as in a socialist system, the government was subsidizing the airlines...and the pilot salaries.

ALPA's, and the IMA's, and the AFL/CIO's refusal to try and align compensation with sustainable revenue has significantly contributed to the state of the industry, and to 11 airline bankruptcies in the last 20 years.

This is not just my opinion. It's pretty much in line with the opinion of the Wall Street Journal, and every aviation business analyst.

A good union would be working with management and all the other employee groups to come up with a revenue/compensation model that would be sustainable through good times and bad, and would put some money away for a rainy day.

ALPA's strategy over the years seems to have been, "max pay to the last day...and to hell with the company and all the other employees."

A UAL pilot even admitted to me the other day, "we were pissed at management for wasting tons of money in the US Air merger deal...so we intentionally did a work slow down, and we socked it to them with our contract demands. All the work slow down did was drive away loyal passengers, and the 22-29% pay increase financially crippled the company."

ALPA has done good things as far as safety, work conditions, medical, and has some good insurance benefits.

Part as far as their compensation strategies, they're socialist:

1. They refuse to align they compensation demands with the revenue of the company based on market economics.
2. They somehow think money will magically appear, either from government loans (taxpayers) or from a "hidden" management account, to pay for their compensation demands.
3. When things don't go their way (like now), instead of looking at the realities of the market, they blame the government (Bush admin), or management...standard socialist tactics.

So I stand corrected, and I'll re-phrase my point.

Not all unions are inherently socialist, but ALPA's compensation strategies are inherently socialist, and are/will significantly contribute to the decline of the airline pilot profession if they don't change to be in line with the realities of the market.

I see some parallels between the demise of the socialist systems of eastern Europe and what's happening in the airline industry today.

The leaders of those countries tried to preserve the staus quo until it was too late, and then they lost control of the situation and were overcome by events.

ALPA is trying to preserve the status quo with all they've got. Meanwhile, the system is crumbling around them. They've pretty much lost all their bargaining leverage, and therefore control, of the situation...they just keep on giving the same party line, while things get worse and worse every day.


As far as the 707 thing...KC-135 driver...didn't have the time when I got out to be competitive at the majors...which worked out in my favor because I'd be on furlough if I'd gone that route.

 

[cocknbull]

Regulation is bad

Infact did you know that in states like Washington with government controlled bus service a third year bus driver or bus cleaner will make 50,000 dollars a year plus get 8 weeks a year off. A bus cleaner may only need to clean two buses a day and then get to leave. Think about how many 25 cent bus rides need to be taken just to pay for this. Regulation won't force companies to become competative and efficient. It will just cause them to waste many llike any other burocracy. This is a gross misuse of taxpayer money. The unions were able to negotiate this because the local government could not afford the repercusions a strike would have on the economy and re elections. Government regulation would only put the birden of the industry on the taxpayer. This is the last thing we need since most family's have both parents working full time just to make enough to live happy. Anytime you go from a regulatory environment to a private market there will be growing pains. However when the dust settles the industry will be much better off.

As for unions. I don't think its fair to blame much of the industry stink on them. Yes some of the contracts are outrageous and in some way hinder the profitablity of the airline. I think the strong smell comes form the management. After all the management agrees to the "worth" of employees and is in charge of running the company. The upper management has failed to bring the airlines business model into the 21 centry. They seem to have no ideas on how to improve their product and make their companies evolve into solid big business. They seem to love conflict and they think that the best way to run a airline is to force labor into suppoting the weight of the company rather then going after consumers to earn more money. Middle manangement isn't even needed in present day "major" airlines. Supervisors are more like sheep farmers then costomer service agents. In my opinion the airlines should be ran by airline guys who want to cooperate with labor and bring new and exciting ideas to the company. I think the next ceo of United should be a well educated conservative ex 777 or 747 captain. Hell the stock can't go any lower see if he can bring his 40 years of service and expirience to the ball game.

 

[Marko Ramius]

Actually Goldentrout....

de727ups/PCL-128

Management certainly has some blame to take. I blame them for agreeing to compensation contracts that could only be sustained with unrealistically optimistic revenue projections.

But when the UAL union asked for a 22-29% pay raise, at a time when the airline industry was starting a downturn, that was just plain stupid.

One of the more interesting things about UA's pilot pay was how the actual raise came to be. The amount of money Dubinsky asked for was less than the 22-29% pay increase ALPA ultimately recieved. When Goodwin elected to go forward with announcing the merger before closing his labor contracts, Dubinsky told him that it would be trouble and would likely raise the compensation bar. The IAM said nothing which had to do more with their desire to keep AMFA off the property versus the truth. Goodwin didn't think it was going to be a big deal and pressed on. We all know what occurred that following summer. The way it ended was Goodwin finally relented and went in with what HIS final compensation offer, not ALPA's. In fact it was more than ALPA's, but they took it as would any other pilot group(yes including SWA's or JetBlue's).

ALPA got what the market(Goodwin) was willing to bear. Not all that hard to believe when you look at Goodwin's $60 a share offer for UsAirways with a willingness to go to $70. ALPA's financial advisor said the offer should have been in the $40 range with a $52 ceiling. AMR said that they were willing to pay between high $30 to about $48, I think. Were Goodwin's projections optimistic? Obviously they were, it's easy to say that now. In the summer of 2000 though, there were no signs of anything slowing down. Every airline on the planet was hiring (how often does that happen?), and even with the summer of 2000 problems, I believe UA still eeked out a profit for the year 2000. How you can say that ALPA basically should have been able to predict the worst downturn so far in this industry, is like asking a Wall Street guy to predict that they mid-late nineties was going to be so wildly profitable.

 

[PCL_128]

Regulation is bad

Infact did you know that in states like Washington with government controlled bus service a third year bus driver or bus cleaner will make 50,000 dollars a year plus get 8 weeks a year off. A bus cleaner may only need to clean two buses a day and then get to leave. Think about how many 25 cent bus rides need to be taken just to pay for this. Regulation won't force companies to become competative and efficient. It will just cause them to waste many llike any other burocracy. This is a gross misuse of taxpayer money. The unions were able to negotiate this because the local government could not afford the repercusions a strike would have on the economy and re elections. Government regulation would only put the birden of the industry on the taxpayer. This is the last thing we need since most family's have both parents working full time just to make enough to live happy. Anytime you go from a regulatory environment to a private market there will be growing pains. However when the dust settles the industry will be much better off.

The fact is, even under regulation there was no mass taxpayer subsidizing of the airlines. The system didn't work that way. If an airline was having trouble turning a profit, the CAB would authorize an increase in fares on those routes. Since the airline didn't have to compete with lower fares from other carriers, only the pax were bearing the burden, not all taxpayers. When the airline returned to profitability, the fares on those routes would be lowered usually. That's smart business. If you can't turn a profit at current prices, then you must raise the prices of tickets to make up for it. It worked great under regulation, but without the protection of regulation it's virtually impossible to raise fares. There is just too much competition out there. As a supply sider, I never thought I would say such a thing, but at some point you have to realize that the price wars are not working. Can you imagine the difference it would make if just 50 dollars was added to the price of every ticket? The difference in revenue would be unbelievable. But the airlines can't do it because SWA will just drop their fares another 10 dollars and advertize that they are dropping fares while everyone else is raising them. It's an endless cycle using the current system.

 

[TXCAP4228]

Good question

I have a question. Can a company file for chapter 11 just because they feel that they are at a competitive disadvantage. I thought, as in United case, that there had to be dire straits. As in 875 million worth of lease payments that are due with no money to pay. It seems that all of the other Majors have cash on hand and are making their payments etc.. I don't think that they can file just to give them a competitive edge or to save money. Maybe one of the lawyer/pilots can comment on ch 11 requirements

Hey dogg, good question. I will try to stay out of the rest of this but I may be able to shed some light. This will be a little simplistic.

The problem United has is with "Current Portion of Long Term Debt". They have insufficient cash and equivalents on hand to meet their contractual obligations in the short term (specifically the payment that recently became due - like a week ago). The bankruptcy court will not let you file just because you want to - you really have to be ubale to meet your obligations. United is not able.

When you say that other majors are cash strapped but are meeting their obligations - at least for now they haven't come to the end of their rope yet.

 

[goldentrout]

PCL128

You say

"If an airline was having trouble turning a profit, the CAB would authorize an increase in fares on those routes. Since the airline didn't have to compete with lower fares from other carriers, only the pax were bearing the burden, not all taxpayers. When the airline returned to profitability, the fares on those routes would be lowered usually. That's smart business. If you can't turn a profit at current prices, then you must raise the prices of tickets to make up for it. It worked great under regulation, but without the protection of regulation it's virtually impossible to raise fares. There is just too much competition out there. "

Now...before I critic this statement...let me say that my next post will be admitting that some of what you've said before about the responsiblility of management is sinking in, and I'll explain in my next post.

However...how can you call yourself a conservative/supply sider with you above statement?

The paraphrase of your statement is essentially

"The government should limit the amount of airlines that are allowed to fly and how much flying they can do, so that fares can be raised, and we can all go back to the good ole days of luxury sport cars, beach houses, and Rolex watches."

What is really bizarre is "the pax were bearing the burden...There is just too much competition out there."

So the consumer is supposed to pay higher prices to subsidize your and my bloated salary, that is artifically kept high by government regulation and government price control?

That's exactly the definition of socialist economics!!!!!!!!!!!

That is the total, 100%, absolute anti-thesis of what our free market system is about.

SWA is providing safe, efficient, reliable air travel at a price usually about 50% less than it's competitors... that's somehow bad for America???

You think the millions upon millions of airline ticket buyers should be forced, by government regulation, to pay higher prices...just so you and I can have the salary we think we "deserve."

Never, ever, ever will I ask the hard working consumers of this country to pay artificially inflated prices just because I think I "deserve" to make more money.

Shame on you for calling yourself a conservative!