Ty, since you brought it up I thought I would address your comments with the words of your MEC VC, Mr. PLC.
"The $140 million number is low. Remember, it's over $50 million in just the first year, and it's a five year deal. Also, AirTran won't make nearly $160 million this year in net profit."
The first year of the contract had $17 million in bonuses, which equates to around $20 million after retirement, FICA, etc., so back that out and you have $150 mil package, with $130 million of that in annual pay increases, divided over 5 years, or an annual increase of $26 million. Chump change.
So, the silly question of whether AirTran could afford the lousy $26 million increase per year our Contract cost is pretty much moot.
LoneStar, I'm assuming that you understand the difference between an Operating Profit and Net Profit. Many of the items that make up the difference are discretionary, ie choosing to retire debt early, investing in infrastructure outside of that required by current agreements, hedges, etc.
It's very easy to decide to make the net high or low, depending upon the desired outcome. Want to cry poor to a labor group in negotiations? Easy. Don't upgrade the tug fleet in 2012, do it now, and pay for it at once, instead of financing it or leasing. There goes $20 million (necessary, and look, we saved $1 million in interest, too!). Need to upgrade the computer terminals in 2011? Let's do it now, and pay cash. Oh, there went another $11 million. Sorry, guys, we don't have the money. Look at our Net Profit!
And since you brought up our contract, it will cost north of $100 million per year to bring your pilots to our SWAPA rates. AT mgmt would be insane to throw nearly 2/3 of your best year's profit at your group.
The problem AirTran isn't cost, it's revenue. Obviously, your CEO has run the numbers of what he can do with our airline with the projected synergies, and it vastly exceeds the costs of bringing ALL of AirTran to SWA pay rates.
While we're talking about this, I want to point out (again) that paying AirTran Pilots your current contract rates is not a "windfall" as the term is used in McCaskill/Bond and Allegheny/Piedmont merger law. A "windfall" in that context is "taking from one pilot group and giving it to another". This would not describe paying us your current rates, but it sure would describe taking our Captain seats and distributing them to your FO's.
Flame on, ladies.
