What makes SWA great?

[backflip]

Besides SWA being one of two majors hiring this year, why do so many people want to work for them? My understanding of SWA is that flying 1000 hard hours a year is not uncommon, their pilots are under paid, pay for training requirement (737 type required prior to hire) and no retirement fund. Granted, they are very stable, are making money, and will be around for the long run. But if you compare them to say FedEx, who is also hiring, you will fly half as much, make significantly more money, no pay for training, and a fantastic retirement, I’m having a difficult time seeing what all the hype about SWA is. Southwest people seem to love it, but everyone that I know that flies for another major can’t believe that I’m even considering SWA. At times I get the Southwest bug and think it’s time to get a 73 type in hopes of getting an interview and hopefully be hired. Maybe by doing that I will begin to feel more of that Southwest love. At other times I think that I’m crazy and just jumping on the SWA bandwagon because they are hiring. I’m not trying to put down SWA, just trying to find out why others like it so much when it appears that SWA pilots are underpaid and overworked. Maybe that way I can figure out what I need to do.

 

[Badda BING]

My reason

Financial Strength
Job Security
SWA morale (fellow employees)
Profit Sharing

I believe you just stated your reasons. You need to weigh these factors into your career expectations and you'll find the answer.
Read the book "NUTS" and see if you're a match with the SWA culture. Buy the book at AMAZON.com or Waldenbooks. I tried Barnes and Noble but no luck!
If you're still asking why, it's probably not for you!
Check out the polls.

Tony

 

[chase]

Reply to backflip

badda-bing said it well. It is a unique company. I tell folks who are interested in SWA or any airline, write down the 5 things you most want out of your next airline in order of priority, i.e. pay, security, retirement, benefits, quality of life, willingness to work, work atmospher, etc.

Then honestly look at the airline that matches those desires & go for it. Most airlines have the same business model except for SWA. Because of that priorities in the company are different & therefore their priorities in how they operate is radically different. Coming in & whining about the business model or saying we're not being paid enough is counterproductive until it comes time for the negotiations.

They are nearing & our folks are gathering some rather convincing info to offer to the company that justifies raises.

I believe things can & will change within our next contract & not impact the business model though. I'm optimistic SWA can still be a juggernaut & pay more to their pilots along with improved benefits, not just to us but to all employees. I believe logic & reason will displayed by both parties in the negotiations & a reasonable solution will be found. I feel strongly about this because even if SWA had been paying its pilots industry average pay last year, SWA still would've made money for the year!! An even stronger case that SWA will be able to afford a pay raise for its pilots (and other groups) & expand at a reasonable level!! That last part is the key, "STILL EXPAND AT A REASONABLE LEVEL".

I don't want to go too deep into this but for folks who think things will remain the same for pilots pay wise, after '04 I'm confident things will improve dramatically. Your friends will still find fault with SWA somehow but that's OK. We'll still be doing OK! cheers

 

[dhampton]

What makes SWA great?

The people.

 

[Mr. Irrelevant]

Although I am very green by piloting standards I know a thing or two about retirement plans. I'm not specifically pointing a finger at backflip or anyone specifically for that matter however I'm always surprised when I hear someone say "Southwest has no retirement plan"! I am not an employee there but it is my understanding from trolling the board for the last couple/few years that there is a very generous 401k. If I'm correct and that may be a very big if, the 401k match by SWA is 100% up to the first 8% of salary. Someone here will probably let me/us know if that is correct or incorrect.

By my rough estimate, and I mean rough, assuming a 9% annual return and upgrade after 5 years with assumptions as to salary in each year(starting at 130k as 6th year Captain and growing 5k per year), an 8% allocation by the pilot would leave close to $1.2 million after 25 years. I haven't even assumed any rates of return on the profit sharing. Again, I believe without going into details that I was very conservative with the salary and the return to an extent. Although possibly this isn't what a lump sum payout from another airlines pension plan might be it seems ok to me. Plus as an added risk management measure, once vested this is an employee's cash. I don't believe that is always the case with pension plans.

If anyone can shed a little more light on the SWA 401k plan maybe it will be of benefit to many here. Thanks for listening (reading)!


Mr. Irrelevant

 

[chase]

Retirement Info

Here goes:

1. Profit sharing: No guarantee but here are some useful numbers for planning:

24 YEAR AVERAGE 10.35%
TRAILING 10 YEAR AVG. 10.48%
PRESENT CONTRACT
YRS. 1994 - 2004 11.93%

Percentage of your w-2 statement, all wages, salaries is distributed to EVERY person in the company. You work more, you get more.

this year just announced 11.7%; last year 16.6
Money can be placed all in company stock, distributed into about 8-10 different mutual funds representing a variety of investment philosophies. One is vested (keep all the money or transfer it if you go somewhere else) after 5 years. Leave earlier, money goes back into the pool for re-distribution. Can't touch money until 59 1/2 without penalty. Money is not taxable as long as it stays in the ProfitSharing account. Money can be rolled over into a retirement account at that time with no tax implications (I believe). Money is not taxable as long as it stays in the ProfitSharing account. You must have worked an entire calendar year (1Jan-31Dec) to get any money. Hired 30 Dec, good, hired 2 Jan, bad, gotta wait an nearly 2 years to get money in your account. Money is already set aside, will not loose it if SWA goes under. No prohibitions on keeping money in company stock with this money.

2. 401K - Company doesn't put money into fund unless you do. It will match up to 7.3% of whatever you put in. Max for anyone is 15% of salary up to $11,500 this year I think. SWAPA picked funds for pilots to choose from. One from all the major food groups. 25% of money can be put into a separate Schwab account to play the market if you'd like. You can not buy SWA stock with this money except through one's Schwab account. Recent article in Forbes or Kiplinger highlighting the bennies of our 401K SWAPA program. Highlighted a FO with us I think. good articles, more details. While we're not Enron-proof (Schwab accounts can have SWA stock) it is a good cross section of funds but many folks wish we had more. SWAPA 401K committee reviews & picks the funds for all of the pilots to choose from.

3. Stock options - forget those for those who aren't here yet. They were meant as part of our salary & not retirement. For those who have 'em, they're great, for newer folks like me, not much value in them now, maybe later, hopefully

When you retire at whatever age you walk away with your 401K and profit sharing, nothing else. If you haven't participated in 401K then you're going to be a little short. Long career, things will go well for those guys/gals (20 years or so), if you have less than 20 years then things get a little dicey in terms of other retirements in the industry.

hope that helps, cheers

 

[chase]

Pay scale for those wondering what it is & planning for retirement. Hopefully a new contract will be in place sometime in '04!! This is not an hourly rate but a "trip rate". Multiply the dollar figure by 1.189 to compare hourly rates.

Service
9/1/2001 9/1/2002 9/1/2003 9/1/2004
Capt Pay

Yr 1$109.68 $112.97 $116.36 $122.17
Yr 2 $111.02 $114.35 $117.78 $123.67
Yr 3 $112.37 $115.74 $119.21 $125.17
Yr 4 $113.71 $117.12 $120.63 $126.67
Yr 5 $114.97 $118.41 $121.97 $128.07 Usually earliest upgrade point, some a little before 5, most around 5
Yr 6 $116.41 $119.90 $123.50 $129.67
Yr 7 $117.74 $121.27 $124.91 $131.16
Yr 8 $119.09 $122.66 $126.34 $132.65
Yr 9 $120.44 $124.05 $127.78 $134.16
Yr 10$121.77 $125.43 $129.19 $135.65
Yr 11$123.12 $126.81 $130.62 $137.15
Yr 12$124.46 $128.20 $132.04 $138.64

F/O Pay

Yr 1 $32.90 $33.89 $34.91 $36.65
Yr 2 $55.51 $57.18 $58.89 $61.84
Yr 3 $61.80 $63.65 $65.56 $68.84
Yr 4 $68.23 $70.27 $72.38 $76.00
Yr 5 $74.73 $76.97 $79.28 $83.24
Yr 6 $76.83 $79.13 $81.51 $85.58
Yr 7 $77.71 $80.04 $82.44 $86.56
Yr 8 $78.60 $80.95 $83.38 $87.55
Yr 9 $79.49 $81.88 $84.33 $88.55
Yr 10$80.37 $82.78 $85.27 $89.53
Yr 11$81.26 $83.70 $86.21 $90.52
Yr 12$82.14 $84.61 $87.15 $91.50

 

[StarrBuck]

Chase,

Firstly, I want to thank you for all that you do for this board, it is really nice to have someone "inside" who can answer our questions!! Its nice to see folks who don't forget about those behind them.. I have a question for you about the 401K.. A friend of mine a month ago or so (SWA FO) was explaining that the 401K was matched at a rate of 100percent up to 7.3 percent of your income for the year? Sounds like you are under the impression that they put in 7.3% of what you put in.. Am I reading this correctly?

Thanks,

S.B>

 

[bigred]

StarrBuck,
As an example, if you make $10,000 and contribute 7.3% you put in $730. Southwest will also put in $730. If you contribute 15% you put in $1500 and Southwest will contribute $730. They match your pay up to a 7.3% contribution.

Backflip,
If Southwest sucks so much, DON'T APPLY. No one is holding a gun to your head making you come here. You don't have to get a type rating, you don't have to interview, and you don't have to fly 12 legs a day between Tulsa and Little Rock for five dollars a day. Just put your app in for Delta, United, American, or even Fed Ex for that matter and I'm sure they'll get right back to you.

 

[Daysoff]

Disclaimer: I do not work for SWA and I am not a financial expert.

This is how I believe the 401K works there (as most places)

The 401k match is a percentage of your pay. Imagine you make $2000 a month (gross pay) and are paid twice a month. Each check is therefore $1,000 (gross). If you contribute 7.3% to your 401K that would be $73 taken out of your check. Now the company will match 100% of that ($73) to give you a grand total for the pay period of $146. Now, if you want you can contribute up to 15% ($150 using the same example above) of your pay to the 401K plan but the most the company would contribute would still be the 7.3% or $73. Also, if you only put in 5% ($50) the company will match you 100% of your 5% (ie: $50).

You should always put in at least as much as the company will match.

Once again, I am no finacial expert but this is how I believe these programs work.

Question for Chase:

How is the profit sharing money tax free? Is it that it grows tax free until you take it out (like in a 401k) or is it taxed prior to going into the account. Either way, I assume it has to get taxed one way or the other as there are no free lunches. Just curious and happy for you that you are working.