Why Delta's in bankruptcy.

[Rex Kickass]

http://money.cnn.com/2006/02/22/news/compa...dex.htm?cnn=yes

 

Apparently Delta needs to offer its managers a 6 to 12 month severance package to stem attrition while asking the airline pilots to take a 15% pay cut this year after having them take a 33% pay cut last year.

 

Pilots are pissed. They might strike.

[kevin57]

The airline industry in this country is in terrible shape, save for a couple of the "mavericks."

[BigSqwert]

The airline industry in this country is in terrible shape, save for a couple of the "mavericks."

Read in today's USA Today that Jet Blue posted a loss for the first time.

[kapkomet]

http://money.cnn.com/2006/02/22/news/compa...dex.htm?cnn=yes

 

Apparently Delta needs to offer its managers a 6 to 12 month severance package to stem attrition while asking the airline pilots to take a 15% pay cut this year after having them take a 33% pay cut last year.

 

Pilots are pissed. They might strike.

 

Yea. That's what happens to pilots who were paid by far the highest in the industry. Their salary scale is just now coming back in line AFTER the cuts that are on the table.

 

As far as offering retention packages to management, companies need talent to get through bankruptcy. If that talent leaves, they won't emerge. It's that simple.

 

The incentives should not be paid unless they emerge, IMO.

[NUKE_CLEVELAND]

Yea.  That's what happens to pilots who were paid by far the highest in the industry.  Their salary scale is just now coming back in line AFTER the cuts that are on the table.

 

As far as offering retention packages to management, companies need talent to get through bankruptcy.  If that talent leaves, they won't emerge.  It's that simple.

 

The incentives should not be paid unless they emerge, IMO.

 

 

CNBC had a lengthy talk about this issue this morning. Yeah it seems unfair they pay the execs more cash but if they dont pay up for top talent they wont retain it. Kind of a catch 22 for all involved except those getting the cash.

[Rex Kickass]

Yea.  That's what happens to pilots who were paid by far the highest in the industry.  Their salary scale is just now coming back in line AFTER the cuts that are on the table.

 

As far as offering retention packages to management, companies need talent to get through bankruptcy.  If that talent leaves, they won't emerge.  It's that simple.

 

The incentives should not be paid unless they emerge, IMO.

 

Yeah, not really true.

 

http://www.salon.com/tech/col/smith/2006/0...askthepilot174/

 

The average pilot starts at a salary of 16-22K.

[mr_genius]

The average pilot starts at a salary of 16-22K.

 

 

that has to be bs

 

maybe 16-22k during training or something

[Rex Kickass]

Nope. The first few years as a commercial pilot, you get virtually nothing.

[mr_genius]

Nope. The first few years as a commercial pilot, you get virtually nothing.

 

just checked and you're right

 

but they do make some decent loot after a couple years. 12 year vets can get like 300 an hour

[Balta1701]

CNBC had a lengthy talk about this issue this morning.  Yeah  it seems unfair they pay the execs more cash but if they dont pay up for top talent they wont retain it.  Kind of a catch 22 for all involved except those getting the cash.

"Top talent"? Are there seriously that few people in this country who are capable of performing these sorts of decision making tasks that companies have to compete for those workers, and not t'other way around? I still find that unbelievable.

[Rex Kickass]

This is the same top talent that put these airlines where they are today.

[kapkomet]

Partially true. I'm trying to not brag, but I consider myself one of the reasons we got out of bankruptcy. Of course, I got no retention bonus, but every single person I worked for did (I was a direct report to both the CFO and the COO - the only analyst at the company to do that), and a lot of stock options in the 'new' company. Imagine that.

 

The pilots that are "just starting" is not the point. A 20% cut on $20,000 is a lot less then 20% on $400,000. The guys with seniority are who they are targeting. And if enough of them get pissed off, they'll retire, which plays even more into the hands of the company.

 

And as far as your comment about 'the same top talent that got the airlines where they are today' is not exactly true either. The landscape of airlines in 1999-2000 is SIGNIFICANTLY different then it is today. Decisions were made then that simply will not or cannot fly in today's business environment. To oversimplify, what got the airlines in serious trouble was dirt cheap oil, and the huge new orders for new planes.

[samclemens]

Yeah, not really true.

 

http://www.salon.com/tech/col/smith/2006/0...askthepilot174/

 

The average pilot starts at a salary of 16-22K.

 

thats total b.s. commerical pilots get paid rather well.

 

http://swz.salary.com/salarywizard/layouth...TR20000008.html

[NUKE_CLEVELAND]

This is the same top talent that put these airlines where they are today.

 

 

No Rex. What put the airlines where they are is the brutal combo of terrorism, sky-high fuel prices and a bloated cost structure which was created to appease union agitators when times were better.

[NorthSideSox72]

No Rex.  What put the airlines where they are is the brutal combo of terrorism, sky-high fuel prices and a bloated cost structure which was created to appease union agitators when times were better.

 

A cost structure allowed by said talent.

[kapkomet]

A cost structure allowed by said talent.

Holy s***. Some of you amaze me. You don't have a damn clue, so quit pretending like you do. This is one topic I know my stuff about, and you all don't get it. I apologize for coming off like a pompous ass on this, but it irratates the crap out of me to sit here and see some folks ripping apart different things that you don't know what you're talking about.

Edited February 23, 2006 by kapkomet

[NorthSideSox72]

Holy s***.  You people amaze me.  You don't have a damn clue, so quit pretending like you do.

What do I not have a clue about? Last time we had this argument about airlines, you tried to tell me that only a few airlines had armored their doors, which I then showed you was incorrect (they are all updated).

 

Now, tell me what part of what I said is wrong? I'm not saying that every individual airline professional is responsible for the industry downfall. But I am saying, using simple logic, that the management of these airlines SIGNED these agreements that put them into this position. How am I clueless on that?

[kapkomet]

What do I not have a clue about?  Last time we had this argument about airlines, you tried to tell me that only a few airlines had armored their doors, which I then showed you was incorrect (they are all updated).

 

Now, tell me what part of what I said is wrong?  I'm not saying that every individual airline professional is responsible for the industry downfall.  But I am saying, using simple logic, that the management of these airlines SIGNED these agreements that put them into this position.  How am I clueless on that?

You were wrong about that too, because the article was wrong. Well, only partially correct. They only modified the larger planes, which is about 15% of the fleet. And, the modifications were only very slight in nature, and that article only said "modified"... which doesn't necessarily mean anything. They put a friggin' lock on the door, put some composite on the back side of the doors, and said 'modified'.

 

Yes, management did some things that in retrospect wasn't a good idea. Having said that, again, the climate is a whole lot different then it was even 6 years ago.

 

There's a right way and a wrong way to run a business. The airlines got suckered, but to sit here and say that they are not talented at what they do is not right, either.

Edited February 23, 2006 by kapkomet

[kapkomet]

Dude, give me a chance to re-read what I post.

[NorthSideSox72]

You were wrong about that too, because the article was wrong.  Well, only partially correct.  They only modified the larger planes, which is about 15% of the fleet.

 

Yes, management did some things that in retrospect wasn't a good idea.  Having said that, again, the climate is a whole lot different then it was even 6 years ago.

 

There's a right way and a wrong way to run a business.  The airlines got suckered, but to sit here and say that they are not talented at what they do is not right, either.

The article said nothing of large planes. But whatever.

 

And I am NOT saying there are not a lot of talented people at the airlines - I am sure there are, just like all industries. What I said, succinctly, is that the airlines as a whole did indeed sign those agreements. They can look in the mirror, good and bad, on that subject. Fuel prices and terror, on the other hand, were mostly beyond their control (except for fuel hedging).

[NorthSideSox72]

Dude, give me a chance to re-read what I post. 

Sorry, having a jumpy day.

[kapkomet]

The article said nothing of large planes.  But whatever.

 

And I am NOT saying there are not a lot of talented people at the airlines - I am sure there are, just like all industries.  What I said, succinctly, is that the airlines as a whole did indeed sign those agreements.  They can look in the mirror, good and bad, on that subject.  Fuel prices and terror, on the other hand, were mostly beyond their control (except for fuel hedging).

I agree with that. The problem with the airlines wasn't a lack of talent, it was the short-sightedness.

[Chisoxfn]

thats total b.s. commerical pilots get paid rather well.

 

http://swz.salary.com/salarywizard/layouth...TR20000008.html

I know a few pilots and they make very very good money so I don't know whats up with that list Rex. I think this one is far more accurate based on what my friends have told me.

[Chisoxfn]

Holy s***.  Some of you amaze me.  You don't have a damn clue, so quit pretending like you do.  This is one topic I know my stuff about, and you all don't get it.  I apologize for coming off like a pompous ass on this, but it irratates the crap out of me to sit here and see some folks ripping apart different things that you don't know what you're talking about.

I alwasy think the main problems were the huge effects of 9/11 mixed with them ordering too many new planes and well obviously far higher fuel costs.

 

Southwest was the one airline that semi put itself in a good position for this because they hedged there fuel well and have very affordable contracts till 2009, but following 2009 I anticipate that Southwest (the bench mark for all airlines in terms of profitability) may also face some problems cause the oil situation won't get better.

 

The only time it will be better is when all cars are far more fuel efficient (and we are on the way to getting there, but its going to take more time before hybrid technology is in a high percentage of all cars on the road) and than of course when we finally replace oil with alternative choices.

[kapkomet]

I alwasy think the main problems were the huge effects of 9/11 mixed with them ordering too many new planes and well obviously far higher fuel costs.

 

Southwest was the one airline that semi put itself in a good position for this because they hedged there fuel well and have very affordable contracts till 2009, but following 2009 I anticipate that Southwest (the bench mark for all airlines in terms of profitability) may also face some problems cause the oil situation won't get better. 

 

The only time it will be better is when all cars are far more fuel efficient (and we are on the way to getting there, but its going to take more time before hybrid technology is in a high percentage of all cars on the road) and than of course when we finally replace oil with alternative choices.

Southwest is the ideal model. Having said that, the pricing model for airlines has to change. They need to create artificial demand by reducing the master schedules. When they have higher demand, prices go up. It's pretty basic. If they do things the right way, they all could be profitable in 1-2 years, even with the high fuel costs. It *IS* a fine line... you don't want to reduce schedules too much, but you do want to do it in such a way so that the overall ceiling goes up about $15 per lane segment. That would just about do it.