Current Status of Strike

[PlayTheOdds]

You guys really do need to quit complaining about the cost of hotels, transportation and security. It was a one-time upfront investment, one that appears to be paying off for Northwest. Give it a rest already, it is a non-contender in the grand scheme of things. I think you guys are madder that Northwest pulled this off basically without a hitch. Do keep in mind that it was the lowly worthless wrench gypsy Scabs that did it. Northwest did not pull this off by themselves, they just gave us the opportunity to strut our stuff for the almighty unionized AMT's.

Northwest was in an unwinable financial situation. It was being sucked dry by over inflated union contracts and escalating fuel prices. I am sure this was a huge gamble for Northwest but the writing was on the wall for certain self-destruction if they let things continue as they were. I for one think they have set themselves up to be a profitable airline. I hope that they take this opportunity to do just that. If they can't after all of this, then it is indeed the management that is inept. The next eighteen to twenty-four months will tell that tale.

 

[finman]

++++++++++++++++++++++++++++++++++++++++++++++++++++++++

finman, VERY INTERESTING POST !!!

If your correct(and you'll NEVER KNOW how much I hope you are), than if the "TEMP" 19% pay cut becomes Permanant, then there will be NO NEED for NW(WITH THE IAM"S HELP) to shut down smaller stations that REMAIN above 6 mainline flts. a day ! (I realize that some WILL fall BELOW 6 ML flts., than in which case the CURENT contract is set up to address that issue)

There will be NO NEED for NW (with the IAM's HELP) to pay an ESE in say BOS, LESS per hour than a ESE in DTW/MSP !!
finman, do you see where I'm coming from ???
NH/BB's

I was just relaying information that's been in the newspapers over the last month, so I don't think there's any new information here. As to your question, no, I'm not sure I see where you're coming from. I was just giving the macro targets by work group. I'm not familiar with the details of the IAM contract and how it handles pay in different bases. If you're referring to the fact that the pay reduction may mitigate the incentive to outsource spoke ground operations, you may be right. Again, I'm not privvy to the details of the IAM negotiations.

 

[robbedagain]

You guys really do need to quit complaining about the cost of hotels, transportation and security. It was a one-time upfront investment, one that appears to be paying off for Northwest. Give it a rest already, it is a non-contender in the grand scheme of things. I think you guys are madder that Northwest pulled this off basically without a hitch. Do keep in mind that it was the lowly worthless wrench gypsy Scabs that did it. Northwest did not pull this off by themselves, they just gave us the opportunity to strut our stuff for the almighty unionized AMT's.

Northwest was in an unwinable financial situation. It was being sucked dry by over inflated union contracts and escalating fuel prices. I am sure this was a huge gamble for Northwest but the writing was on the wall for certain self-destruction if they let things continue as they were. I for one think they have set themselves up to be a profitable airline. I hope that they take this opportunity to do just that. If they can't after all of this, then it is indeed the management that is inept. The next eighteen to twenty-four months will tell that tale.

NWA didnt have to be in that position had they actually gone along with other airlines in raising airfares. Their INEPT MGMT FAILED THE AIRLINE. It will be very interesting if NWA can actually pull it off but I do have my doubts.

 

[finman]

NWA didnt have to be in that position had they actually gone along with other airlines in raising airfares. Their INEPT MGMT FAILED THE AIRLINE. It will be very interesting if NWA can actually pull it off but I do have my doubts.

I thought we already had the discussion on air fares, and how NW couldn't go along with SOME of the other majors and raise fares, because low cost carriers were not raising their fares.

I realize it sounds like an easy solution, but like I've posted in the past, we have a team of poeple that analyze fares on a an amazingly complex level to get the most out of every passenger that we can to maximize revenue. We don't publish every fare increase we do on every route, because that is bad PR. We currently have a fare premium compared to the other majors, which suggests that we have an ability to price our product higher than our competitors.

Please stop making this tired claim that only if NWA had "gone along with the others" and raised fares, NWA would be profitable. It is very misguided talking point that I wish people would take a couple minutes to actually think about and analyze before throwing it out there. Those that make these claims are wholly ignorant of how airfare pricing actually works and what has gone on behind the scenes over the last several years. I don't pretend to know how to fix airplanes, so I'm not sure why some on this board with no background in airline finance pretend to know the the correct way to price tickets.

 

[ramblingray]

I have to agree with the airfare thing. The true problem is that low-cost airlines that do not have the high labor costs and put more demands on their employees are killing the bigger airlines. They are much leaner and more profitable. This is why you see the big airlines cutting to be more like the low-cost airlines.

1) Low-cost airlines employees seem to work more hours for less pay. Advantage Low Cost Airlines.

2) Low-cost airlines tend to only use one type of airplane which tremendously lowers part inventory costs and mechanics costs as well. They are more versatile because they only have to be trained on one aircraft. This was a huge mistake as I see it on the managements part. Advantage Low Cost Airlines.

3) The biggest one of all is this. The management of the low cost airlines had enough foresight to hedge futures on fuel costs which capped them throughout all of 2005. Gigantice advantage Low Cost Airlines.

However........ What happens when the fuel hedge runs out? Futures were not purchased to mirror 2005's prices. Will this mean an increase in prices for the Low-Cost Airlines in 2006? You bet. This I predict will increase airfares throughout the country, thus lowering some of the losses they are experiencing. I think, and this is only my opinion so dont jump all over me, that United will be in the best position because financing will be in place for the exit of Chapter 11 and the cost cutting measures will be in place when they increase fares. This should bode well for them. I still see NWA struggling a bit in 2006 but with an increase in fares, a lowering of costs and the elimination of leases, I see them emerging from Bankruptcy about 4th quarter of 2007 or 1st quarter of 2008.

In another subject, President Bush gave me the glimmer of hope that maybe congress is about to do something about the companies that promise high retirements then run the companies down only to dump the pensions, is about to act on something. The American people should not have to bear the brunt of mismanagement.

 

[aafsc]

I have to agree with the airfare thing. The true problem is that low-cost airlines that do not have the high labor costs and put more demands on their employees are killing the bigger airlines. They are much leaner and more profitable. This is why you see the big airlines cutting to be more like the low-cost airlines.

1) Low-cost airlines employees seem to work more hours for less pay. Advantage Low Cost Airlines.

2) Low-cost airlines tend to only use one type of airplane which tremendously lowers part inventory costs and mechanics costs as well. They are more versatile because they only have to be trained on one aircraft. This was a huge mistake as I see it on the managements part. Advantage Low Cost Airlines.

3) The biggest one of all is this. The management of the low cost airlines had enough foresight to hedge futures on fuel costs which capped them throughout all of 2005. Gigantice advantage Low Cost Airlines.

However........ What happens when the fuel hedge runs out? Futures were not purchased to mirror 2005's prices. Will this mean an increase in prices for the Low-Cost Airlines in 2006? You bet. This I predict will increase airfares throughout the country, thus lowering some of the losses they are experiencing. I think, and this is only my opinion so dont jump all over me, that United will be in the best position because financing will be in place for the exit of Chapter 11 and the cost cutting measures will be in place when they increase fares. This should bode well for them. I still see NWA struggling a bit in 2006 but with an increase in fares, a lowering of costs and the elimination of leases, I see them emerging from Bankruptcy about 4th quarter of 2007 or 1st quarter of 2008.

In another subject, President Bush gave me the glimmer of hope that maybe congress is about to do something about the companies that promise high retirements then run the companies down only to dump the pensions, is about to act on something. The American people should not have to bear the brunt of mismanagement.

The American people have had to bear the brunt of the current administration's mismangement of the country. As far as pensions, if the PBGC goes bust, then what happens? Will millions and millions of honest hardworking Americans who paid taxes for 35-40 years find themselves with no pension at all because the federal government won't fund the PBGC? Why should the guy at the bottom live his final years in poverty because those much vaunted harvard educated individuals mismanaged the funds. If they were able to fund the S and L crimes with taxpayer money, they can do the same with the PBGC.

 

[finman]

2) Low-cost airlines tend to only use one type of airplane which tremendously lowers part inventory costs and mechanics costs as well. They are more versatile because they only have to be trained on one aircraft. This was a huge mistake as I see it on the managements part. Advantage Low Cost Airlines.

3) The biggest one of all is this. The management of the low cost airlines had enough foresight to hedge futures on fuel costs which capped them throughout all of 2005. Gigantice advantage Low Cost Airlines.

Good post. Here's my two cents on two of your points.

2) Major carriers really can't just use one type of aircraft due to the high variation of route-lengths and market sizes that they serve. LCC carriers target mid to large sized domestic markets, and thus can use just one type of aircraft and gain the economies of scale as it relates to training and repairs. A portion of the competitive advantage gained by LLCs in this are is thus somewhat unavoidable if the majors intend to keep being majors (flying international and domestic). If NW was only a domestic carrier and we had 7 different aircraft types, then yes, I'd call it a "huge mistake".

3) Every airline would have hedged fuel had they had the ability to. In order to enter a hedge contract you need a considerable amount of unencumbered cash, otherwise nobody will sell you a hedge contract. As such, it wasn't so much foresight that allowed SW and others to hedge, but the profitable years leading up to now where they were able to establish a hefty cash position and investment grade bond rating.

 

[aafsc]

You guys really do need to quit complaining about the cost of hotels, transportation and security. It was a one-time upfront investment, one that appears to be paying off for Northwest. Give it a rest already, it is a non-contender in the grand scheme of things. I think you guys are madder that Northwest pulled this off basically without a hitch. Do keep in mind that it was the lowly worthless wrench gypsy Scabs that did it. Northwest did not pull this off by themselves, they just gave us the opportunity to strut our stuff for the almighty unionized AMT's.

Northwest was in an unwinable financial situation. It was being sucked dry by over inflated union contracts and escalating fuel prices. I am sure this was a huge gamble for Northwest but the writing was on the wall for certain self-destruction if they let things continue as they were. I for one think they have set themselves up to be a profitable airline. I hope that they take this opportunity to do just that. If they can't after all of this, then it is indeed the management that is inept. The next eighteen to twenty-four months will tell that tale.

If you are so good, then why is NW consistantly rated dead last in the DOT rankings? NW did not pull this off "without a hitch". Yes, they were able to keep flying but their on-time performance is an embarassment. I knew that they would defeat AMFA but if any of the others walk then it's lights out. And if they were "sucked dry by overinflated union contracts" as you say then why have their loses substantially increased after you scabs started "strutting your stuff"? Answer that. The fact is that NW has the worst performance and this cost them money when they have to put passengers in hotels and give them vouchers.

 

[ramblingray]

Maybe you misinterpreted what I was trying to say.

I meant to say that there could be a glimmer of hope from Congress meaning, maybe they will force companies to outside fund the retirments so basically saying that even if they mismanage the company, an outside company will have the money in seperate accounts thus making sure it is there and not pillaged to help fund the mismanagement.

I do believe in protecting our future.

But why should it be done on tax payers backs for companies that take money out of the retirment funds because of actions that they have done?

The other comment about the current administration.... Everything has two sides to it. Lets take for instance, high fuel costs. Everyone says why does Pres. Bush allow oil to go so high. First of all, you can thank certain nations that I wont comment about, but really it is two pronged. While it kills certain industries, it helps others. This is a no win situation. HIGH oil kills the airlines, but helps Manufacturing and building trades. My company is hiring and handing out pay increases never seen before. Why? becuase when oil prices are high, it costs more money to boat the stuff from China, truck it across the USA to our customers. It is cheaper for us to make it here in the USA. So I truly think that any admin. will bear the brunt of scrutiny from someone. Take for instance when Pres. Clinton was in office. Interest rates spiked near the end of his term and oil prices dropped. Result, my company went from 60 employees to 14. Sales dropped 80 percent. We were getting killed by foriegn competition. But that is enough about politics. That'll never get us anywere.




Finman,

Thanks for the clarification on that. Not being from the Airline industry I did not know that about Hedging the fuel, but I see you are correct in that. About the 7 aircraft, do you think it is nec. to have that many models? If for instance only 737's were purchased for Domestic. Both the 800 version for long runs and the other versions for short hops, and then only like 777 or whatever for international, dont you think that that could of cut down on the internal costs of the airline?

I guess the main question is this. Does the same mechanic who works on 737's also work on 777's? or is it a whole new set of people? and a whole new set of Parts inventories?

 

[robbedagain]

I would say that the 737-800 would need their mechanics and the 777 would need theirs. I think the difference is is that the 777 is probably much more technological advanced than the 737-800.

Southwest now is one of the highest labor costs in the airline industry. I think that their troubles may be brewing if the fuel prices continue to rise.

Finman, I dont recall discussing the airfare thing. All im saying is is that had they gone along with the rising of airfares which in turn would have helped a little bit with the rising fuel, I dont believe that they would have been in CH11 as quickly as they were. I also find it interesting that they would file ch11 in the same NY courtroom awith DAL and on the same day that DAL files as well. I think that the new USAIRWAYS may be starting to hurt NWA a bit

 

[PlayTheOdds]

If you are so good, then why is NW consistantly rated dead last in the DOT rankings? NW did not pull this off "without a hitch". Yes, they were able to keep flying but their on-time performance is an embarassment. I knew that they would defeat AMFA but if any of the others walk then it's lights out. And if they were "sucked dry by overinflated union contracts" as you say then why have their loses substantially increased after you scabs started "strutting your stuff"? Answer that. The fact is that NW has the worst performance and this cost them money when they have to put passengers in hotels and give them vouchers.

I really do wish that I could see a chart as to where all the delays are coming from. I am sure maintenance has its share but you guys want to pin all the delays on maintenance. Also there are a lot of delays unjustly pinned on maintenance. A few examples are:

A ramper calls in that he can't shut the external power door. A mechanic is then called out there and he simply closes the door.

A ramper tells the pilot at pushback that his number two tire looks low, of course we have to go check it. I cannot nor have I met anyone that could look at a tire and be able to say that it looks low on air.

An F/A writes up all lavs will not flush. You check the waste quantity and discover the waste tank full. You put in a call for lav service then it takes them thirty minutes to show up. End result, delayed aircraft.

My favorite is dealing with these situations or any other write-ups when the aircraft only has a forty or fifty minute ground time and the rampers leave it sitting out on the tarmac for fifteen or twenty minutes before marshalling it in.

How can you possibly pin these delays on maintenance? Please keep in mind that NWA has labor issues in all workgroups and each and every one of these are fully capable of causing delays.

 

[PlayTheOdds]

Good post. Here's my two cents on two of your points.

2) Major carriers really can't just use one type of aircraft due to the high variation of route-lengths and market sizes that they serve. LCC carriers target mid to large sized domestic markets, and thus can use just one type of aircraft and gain the economies of scale as it relates to training and repairs. A portion of the competitive advantage gained by LLCs in this are is thus somewhat unavoidable if the majors intend to keep being majors (flying international and domestic). If NW was only a domestic carrier and we had 7 different aircraft types, then yes, I'd call it a "huge mistake".

finman, I agree with you that NWA must have more than one type of aircraft to compete as a Legacy but there is still a lot of room here to streamline the fleet. The biggest issue being the A-330 and the B-757 fleets. This makes no sense at all. Both aircraft are performing the same jobs and have the same capabilities. Though I do like the Airbus I do think that a US carrier should stick with a US built aircraft. Also a huge issue with maintenance is the different models of seats. The whole fleet should be outfitted with the same model seats. It is very frustrating when you have a hydro lock for every seat but the one you need. That goes for seat cushions, seat covers, ashtrays/covers, reading lights and tray tables.

Once NWA's labor issues are resolved I would look really hard at streamlining the fleet and also pay close attention to the interiors. Have you guys ever considered simply removing the galleys from the domestic aircraft?

 

[robbedagain]

I really do wish that I could see a chart as to where all the delays are coming from. I am sure maintenance has its share but you guys want to pin all the delays on maintenance. Also there are a lot of delays unjustly pinned on maintenance. A few examples are:

A ramper calls in that he can't shut the external power door. A mechanic is then called out there and he simply closes the door.

A ramper tells the pilot at pushback that his number two tire looks low, of course we have to go check it. I cannot nor have I met anyone that could look at a tire and be able to say that it looks low on air.

An F/A writes up all lavs will not flush. You check the waste quantity and discover the waste tank full. You put in a call for lav service then it takes them thirty minutes to show up. End result, delayed aircraft.

My favorite is dealing with these situations or any other write-ups when the aircraft only has a forty or fifty minute ground time and the rampers leave it sitting out on the tarmac for fifteen or twenty minutes before marshalling it in.

How can you possibly pin these delays on maintenance? Please keep in mind that NWA has labor issues in all workgroups and each and every one of these are fully capable of causing delays.

yeah the NWA mgmt and the other unions will have a lot more problems when MGMT says we need more money out of you in order to survive, but we wont take any more out of our pockets. If the plane does have any write ups, it should be checked to be sure that it is safe to fly. that is why mtr is one of the biggest reasons. of course if you had ever seen any of the USAIR's new EMB-170s when it first came out, everyday, they go out to the runway only to do a 180 and come back in and cancel or severe delays.

 

[Borescope]

We currently have a fare premium compared to the other majors, which suggests that we have an ability to price our product higher than our competitors.

I've heard both AA and CO in their quartly conference calls state that they have a "fare premium" to their competion. So, who is the premium above? Jetblue? Southwest? Frontier? or just all the other bankrupt airlines? We all know that NW was trying to put the squeeze on UA and it backfired. The premium is gone now.

 

[Borescope]

If the plane does have any write ups, it should be checked to be sure that it is safe to fly.

Any aircraft with an "open" write up can't go unless there is some kind of special ferry permit from the feds. PTO was refering to non written up issues, such as the biffy truck, which aren't maintaince related.