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WHy don't the unions ask the judge to suspend management payroll?

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pilotyip said:
Is not that when the UAL pilot group got the industry leading contract that was going to take UAL pilots to nirvana land of the $350K to $400K/yr pay scale. Are you saying that he was wrong to approve the contract?

I think our MEC would have settled for less had the USAir acquistion not been a factor.

Let's look at some other fun stuff going on while Big Jim was at the helm:

1. Avolar
2. USAir acquisition
3. Investing in internet companies
4. Changing the strategy of the Shuttle

I'm sure there are other money losing schemes that were hatched up by UAL management during this time. Maybe someone else could post some more examples.

Why is it that Northwest and Continental (both so called "legacy" carriers) are not in the dire straits that UAL seems to be in now?

GP
 
Guppy ref NWA and CAL

The pilots at NWA and CAL made a lot less money in hourly compensation and flew a greater number of hours than the UAL contract stipulated. That made the pilots at NWA and CAL much more productive and that may be a key to their relative strength as the present time. As for why the CEO pursued all of the things you listed, a thought is he was desperate to find a source of revenue to pay for the contract he saw as backbreaking.

 
pilotyip said:
The pilots at NWA and CAL made a lot less money in hourly compensation and flew a greater number of hours than the UAL contract stipulated. That made the pilots at NWA and CAL much more productive and that may be a key to their relative strength as the present time. As for why the CEO pursued all of the things you listed, a thought is he was desperate to find a source of revenue to pay for the contract he saw as backbreaking.

I think most of the items I listed were started prior to Contract 2000, which was signed in the fall of year 2000.

Why do you blame pilot pay for the downfall of UAL? Their pay was just a piece of the bankruptcy pie. The pilots could have worked for free and the company still would have been losing money! It's strange how pilot pay has come back down to pre-Contract 2000 rates and productivity is way up, yet the company continues to lose money.

Oh, I forgot to add another money loser...the stun guns and all the training costs associated with qualifying nearly 10,000 pilots on how to use them when the company was never approved for them.

GP
 
Pilotyip,

Sorry, I took it as an absolute statement. I would agree with your description that it aproximates a perfectly eleastic demand curve in that the change in %quanity is greater than the change in %price. This does make it difficult. It is only compounded by the fact that most airlines are now price takers, with the lowest cost provider setting the price(perfectly competitive). Not a good situation considering the high invesment(capital costs) involved.

pilotyip said:
In the mid range where airline tickets are now, it is close to a classic price/demand elastic curve. Price goes up, demand goes down, and price goes down demand goes up. No airline can raise it prices on a route where competition has a lower price and expect to maintain its load factor. The marketplace dictates how much money and profit an airline can generate, management has very few options is this environment.


 
pilotyip said:
With tremendous, payrolls, overhead burdens, and extremely low margins, there is no tried and true path to success. Most have tried to increase market share, but this has lead to low price and ridiculous load factors in 90% range. AA tried to take seats out of the airplanes, to attract people with more room, did not work. UAL USA have used BK in an attempt to start with a clean slate, it is probably not going to work. ATA tried getting a fleet of new fuel-efficient airplanes, which did not work. What is management supposed to do?

Pilotyip,

What is management supposed to do, you ask??? The answer is so simple, yet very difficult to do. Ask yourself what do Herb, David, and the guy from Skywest have in common, and you will find the answer.

I'll give you a hint, has nothing to do with extra legroom, fancy fleet of planes, BK, market share, advertising, or any of the other things that "legacy" airlines focus on.

No, the answer lies in PEOPLE. Specifically, it means treating employees like humans and not a cost center. It means a more egalitarian workforce that takes care of each other, starting at the very top. It means not chasing the big dollars, starting at the very top (David and Herb work because they want to, not because they want money). It means setting an example in word and deed, starting at the very top.

That is what the big dollar CEO's just can't grasp. Airlines are companies made of people, not planes and gates. Just like the people we carry are "customers" not "passengers". The key is to remember that the "golden rule" is just a starting point. Unfortunately, the "typical" airline CEO will never grasp even the basics.

Skirt
 
For instance as "labor", I would make it a crime for the executives of a corporation to allow their pension plans to become "underfunded" by billions because they made bad investments or spent the "contributions" on other things. What are the chances of that ever happening? Zero.
Poor management of pension assets has been a problem for airlines as well as companies in other markets. Companies often use a unreasonably high rate of return on pension assets as they get to claim the acuarial returns as income, which makes the old income statement look better while not really generating any cash flow. However I would also offer that one of the primary drivers of the underfunding is the currently depressed discount rate used to determin the present value of their future obligations. If you raise the discount rate(risk free interest rate) the present value of the future obligations moves closer to actual assets and underfunding is decreased. No more money is added only the assumptions are changed. It is basicly the same as a DCF excercise for a stock or company. It is important to note that it is only a mathmatical model and is very sensitive to growth rate and discount rate assumptions, garbage in-garbage out. I'm not sure what rate pensions use(if anybody knows please post) but the 10/30 year Treasury Bond is a good proxy for stocks(care should be exercised when rates are very low or dropping).
 
Publishers said:
Surplus1 should move to a non capitalist country seeing he is so versed inthier lingo.
Why is it that you never defend what the capitalist do to workers but only suggest that the workers leave if they don't like it? Could it be that you have no real defense for the greed and exploitation?

Unbridled Capitalism is no less onerous than Communism or Socialism. Uncontrolled they all take advantage of the multitude for the benefit of the few. Only the methods are different, the outcomes are essentially the same. A robber baron is a robber baron, regardless of the "flag" of politics that he flies.

What "lingo" are you versed in Publisher?
 
Wow, for once I completely agree with Surplus1! This is amazing, I'm calling mother.

PS: For an amusing example of what Surplus is talking about read "Jennifer Goverment" by Max Berry. Basically it is "1984" turned 180 degrees.
 
CMRdrv another voice of reality

Another voice of reality in a sea of "management did it to me on purpose". In the pension mismanagement business the airlines are not the only one with problems. State and local gov'ts got caught in the same mess. The go-go markets of the late 90's made it very easy for finance guys to come up with the formula to cover pensions. They could show that with a reduced contribution from the company they could still cover their pensions, more money to the bottom line and the stockholders.

 
pilotyip said:
Another voice of reality in a sea of "management did it to me on purpose". In the pension mismanagement business the airlines are not the only one with problems. State and local gov'ts got caught in the same mess. The go-go markets of the late 90's made it very easy for finance guys to come up with the formula to cover pensions. They could show that with a reduced contribution from the company they could still cover their pensions, more money to the bottom line and the stockholders.

Sounds like you're saying that the mismanagement of pension funds is somehow justified by "more money to the bottom line and the stockholders".

There's a fiduciary responsibility involved that has been intentionally violated. The fact that other businesses or government organizations violated their fiduciary responsibilities as well as airlines is hardly an excuse.

I'll bet if a brokerage or investment manager did the same thing to the money that belongs to the people responsible for the destruction of pension funds, those people would be screaming fraud, pressing criminal charges and filing lawsuits. Those that have destroyed pension funds should be held accountable and bankruptcy judges that premit a company to cancel a pension plan and leave a long term worker with little or no retirement should have their own featherbedding pensions canceled in turn and the executives creating the problem should be stripped of their severance packages and their own retirement. If those were the rules I'll bet ya they'd figure out how to protect those moneys and make good investments..

What's sauce for the goose should be sauce for the gander.
 
surplus1 said:
Sounds like you're saying that the mismanagement of pension funds is somehow justified by "more money to the bottom line and the stockholders".

There's a fiduciary responsibility involved that has been intentionally violated. The fact that other businesses or government organizations violated their fiduciary responsibilities as well as airlines is hardly an excuse.

I'll bet if a brokerage or investment manager did the same thing to the money that belongs to the people responsible for the destruction of pension funds, those people would be screaming fraud, pressing criminal charges and filing lawsuits. Those that have destroyed pension funds should be held accountable and bankruptcy judges that premit a company to cancel a pension plan and leave a long term worker with little or no retirement should have their own featherbedding pensions canceled in turn and the executives creating the problem should be stripped of their severance packages and their own retirement. If those were the rules I'll bet ya they'd figure out how to protect those moneys and make good investments..

What's sauce for the goose should be sauce for the gander.
Don't get me wrong, I'm not defending what has happened just looking at some of the factors involved. Fiduciary responsibility may have been violated but good luck proving intent. The financial slight of hand being played is not against the law or GAAP. What is going on now was going on in the 90's only you didn't hear anybody complaining then, much like IPO's or mutual fund fees. I guess when things "look" good its ok to look the other way. I don't believe managements at companies make investment decisions for pensions, that is done by professional money managers. Where was ALPA on this before? Also it would probably not go to trial but to an arbitor and its very difficult to prove negligence or criminal intent. I agree with your position I just don't think going after these managements is practical or very useful at this time. That time would be better spent understanding what is going on(without all the drumbeating and hype) and positioning ourselves to look after our own best interests. By the way, I have no idea how to do this. If your rules were established I would bet you would be right, I just don't see it happening. This is nothing new, sad but true. Also shareholders have been getting just as much a screw job as the emloyees as they have to watch "their" money being pissed away on featherbedding and poor imvestment(company not pension) decisions by managements.
 
In a free country, capitalists do only to employees what employees allow. The argument that capitalist are by nature greedy and exploitive is not one that I agree with although there are always going to be bad apples in every group.

The fact is that most of the creative capitalist I know do not even look at things from the same perspective that you do. They value the productivity and service of those that seek to join them on the quest to fill whatever market need they see.

To think that management sets out on a course to screw the workers of America is ludicrous. While many on these boards seem to think that management spends its days figuring out how to shaft the pilots, it does not happen that way.

The first two chairman's I worked for definitely had the attitude that if you were tied to incentives, they wanted you to make as much as you could because that would mean they had successful businesses. They made it a point to see that all non-union personnel got the same benefits and pay that the union did.
 
CMRdvr - I agree with most of what you said in your last. I know we can't change what the powers that be have ordained, but it gives me something to whine about.


Publishers said:
In a free country, capitalists do only to employees what employees allow. The argument that capitalist are by nature greedy and exploitive is not one that I agree with although there are always going to be bad apples in every group.
Yes, I suppose you're right and employees are more interested in their religious mythology than their economic welfare. How convenient for the pure capitalists. It's interesting that while we rush to the polls to protect the world from the horror of a possible "gay marriage" or from having all of life itself doomed by stem-cell research, we become the work units of those who champion our "values", while they steal our money and dupe us into selling our souls to the "company store"; all the while exporting our jobs to foreign lands where they can exploit even more. Yes, my friend Capitalism is indeed a greedy system and works well at making the rich, richer and the poor, poorer.

Were it not for the regulation imposed by former governments it would long since have imploded on itself, just as Communism did and we would be living much as they do in Bangladesh.

The fact is that most of the creative capitalist I know do not even look at things from the same perspective that you do. They value the productivity and service of those that seek to join them on the quest to fill whatever market need they see.
Your inference that creativity is somehow dependent on capitalism defies history. Creative minds, in most cases, only became capitalist AFTER they had been creative and many of them lost their creativity once they became embroiled in the pursuit of money, the root of most evil. Even the clerics have been caught up in the thrill of big business and are far more interested in the level of "donations" than the welfare of the flocks.

You are right that they and I do not see things from the same perspective. The true capitalist does not find and fill a market need, he creates a market need where none exists, mostly by the use of subterfuge and falsehood. A typical example is the pharmaceutical industry most of whose pills for imagined ailments create far more illness than they cure. As for their value of productivity, it has nothing to do with the welfare of those who seek to join them. but is focused on the creation of more wealth for themselves. Slave owners were not seeking to make fellow capitalists of their slaves as they lashed their backs with whips to improve their productivity. Modern capitalists would have no objection to the reinstution of slavery as long as their additional earnings were not taxed by their political bretheren.

To think that management sets out on a course to screw the workers of America is ludicrous. While many on these boards seem to think that management spends its days figuring out how to shaft the pilots, it does not happen that way.
I don't think that management sets out to screw workers, nor does management spend time figuring out how to shaft pilots. Management doesn't consider or give a da_n what happens to either one as long as it itself is not impaired in its pursuit of personal gain. As for the idea that it does what it does for the benefit of the shareholders, that's an even bigger myth than the idea you advance. The shareholders are just another nevessary evil, like the workers. As long as they don't get in the way of the thieves, they are mostly ignored. The stock market is a much bigger roulette wheel than all those in Vegas combined.

The first two chairman's I worked for definitely had the attitude that if you were tied to incentives, they wanted you to make as much as you could because that would mean they had successful businesses. They made it a point to see that all non-union personnel got the same benefits and pay that the union did.
Incentives are bribes much like I give my children to get them to mow the lawn, for nothing. Neither unions or incentives would be necessary if people were treated fairly and paid a fair wage for their labor. If the payment of a fair wage for labor were anywhere in the capitalist scheme, we would not need minimum wage laws, limits on the work week, payment of overtime or rules against child labor in sweat shops. All of those are tools used to control the limitless effort of the true Capitalist to exploit his fellow man. If a truly capitalist system existed in the United States, which it does not, you would have an opportunity to see how it really works. We've neutered it with laws, which are the only thing that have prevented it from destroying us. A few more of those laws in the right places would be helpful as there is still much room for improvement.

It's much like the concept of a "free market". In reality there is no such thing and if there were, our system would collapse on itself. A free market doesn't work and neither does a totally regulated market. The problem is to impose a balanced market. A true free-for-all would simply create anarchy.

However, if you want to believe all the myths about capitalism and free markets and the evils of organized labor, I reall don't have a problem with it. We all need a placebo of our own making, self included.
 
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