1st Q Numbers look great!

[WNMECH]

.and, no, I did not say that WN's success was due to hot pants.

 
 
WorldTraveler
 
Posted 02 July 2014 - 03:52 PM
 
yes, and the only thing that keeps WN from having been in the same place is because they weren't around 80 years ago when the industry was regulated.
 
Instead, they came along and took advantage of deregulation to pay their employees pay less than what legacy carriers were paying at the time.
 
and then they dressed them up in very short pants... I mean how totally UN LEGACY can you get.
 
Even WN's employees today would never stoop to those lows in order to help the company succeed.

 

[WorldTraveler]

I see this is a touchy subject for you.... just because the employees wore very short pants hardly means it was a reason for the company's success, even if that is what they wanted.

really, though. IS WN's success or not in the least related to the clothes the employees wear or not?

WN succeeded for the first 20 years of deregulation because WN had costs that were well below the legacy carriers.

you wanna know the year in which UA and WN's average salary lines crossed and WN employees became more expensive than UA's?

2004

but it wasn't because UA's employees endured cuts because of BK. that came the following year.

No, WN's average salary surpassed UA's SOLELY on the basis of WN's own increased salaries.

between 2003 and 2004, WN's salaries went up by $8,000 per year which stood as the largest increase in WN employees' average compensation in its history - until 2013 when it went up by $10K per year.

the difference between 2004 and 2014 is that in 2004 WN was able to aggressively grow because of its fuel hedges - which it used to increase employee salaries.

Now, WN's revenue growth is smaller than either AA or DL's in the most recent quarter on a percentage basis.



WN's success was driven by lower wages than its legacy peers that were extended because of the fuel hedge advantages.

The same source (the US government) gave WN the ability to grow quickly because of lower costs and the ability to expand due to deregulation also allowed legacy carriers to cut their costs in BK.

WN had years of rapid salary growth to placate its employees; it wasn't hard to get those employees on WN's side.

Now that those pay raises will be far longer in coming and will come in far smaller amounts, WN's success will have to come from its ability o generate stronger revenues in the marketplace instead of from highly paid employees who are just waiting for their next pay raise.

hot pants won't help WN succeed or not - even if they ever did years ago.

 

[WNMECH]

Now, WN is in the position where its labor costs are well below the legacy carriers - a complete reverse of what existed even before 9/11 - less than 15 years ago and before any of the existing network carriers entered BK - and WN cannot continue to cough up the pay raises that you once gained.

WN can move into the int'l market to try to gain revenue but the pay raises that WN employees once got aren't going to come anymore.

 

 
 
wanna bet?

 

[WorldTraveler]

and I certainly will slight you nothing if WN can do it, but I doubt very seriously that you will see pay increases like you received in the past.


just curious, how much are you willing to bet and what kind of pay raise are you willing to bet you can get in one year?

 

[WNMECH]

and I certainly will slight you nothing if WN can do it, but I doubt very seriously that you will see pay increases like you received in the past.


just curious, how much are you willing to bet and what kind of pay raise are you willing to bet you can get in one year?

 
These are the raises to our top out base rates :
1996- 2%
1997- 2%
1998- 2%
1999- 2%
2000- 3%
2001- 10.25%
2002- 9%
2003- 3.3%
2004- 3.3%
2005- 3%
2006- 3%
2007- 3%
2008- 0%
2009- 3%
2010- 3%
2011- 3%
2012- 1%
 
We made advances in other areas a few years, such as license premiums, stock options, profitability bonuses and productivity bonuses, but only the license increase is still here.
 
So with the exception of the raises in 2001 and 2002, (which were due to the NWA AMFA contract), we have just stayed ahead of the cost of living.
 
http://www.aboutinflation.com/inflation-rate-historical/us-inflation-rate-historical-chart
 
How about you tell me what you think we will get next since you "doubt very seriously that you will see pay increases like you received in the past" ?

 

[swamt]

Ok. Here we go.  WT has simply proven my point.  Every time someone post something positive about SWA, he has to come in and post the most negativity he can to try and make his airline look better.  It worked WT and you fell for it hook, line, and sinker.  
Second-  WN proved WT wrong and he tries to change the subject, typical WT.
Third-  Darn it WN, you beat me to the post of "wanna bet",  we all know they would, what little know WT has.
Fourth-  I will take you up on that bet WT.  It will be the average of the years posted, rounded up to whole % over a 5 year term, and excluding the yrs 01 and 02, as these were not the norm and directly tied to the great mechanics at NWA and AMFA for bringing the "NEW" industry leading pay rates to the mechanics in the airline industry.  Thank you to all the mechanics of NWA and AMFA for that.  And BTW, answer this WT, has any union out there ever nego a 19.25% raise for their mechanics at any airline, in just 2 years, EVER???  No they have not.  And yes it was tied directly to the NWA mechanics and AMFA, PERIOD.
 
Look WT, we are not asking for the world here at SWA.  We just want to share the wealth that SWA is currently having and will continue to have for some time in the future.  Our exects took some very large increases in their salaries and huge bonuses as well as perks.  Our members have a hard stance against concessions.  We have gave over the past couple of contracts since 9-11. Were done with giving and giving.  The only thing we have been able to barely keep up with is cost of living, and actually we have fallen short of it.  We, the employees of SWA have helped made what SWA is today, as well as have all the employees of SWA from top to bottom.  Record profits, record CASM, record PRASM, record load factors, and expansion on the horizon that will almost guarentee new record profits for some time in the future.  Trust me, the members will not accept a pay freeze for 5 years--not gonna happen, hell, we are still looking for the savings we have givin the company in past contracts.  This was the first suggestion by the company as far as economics are concerned.  Don't you worry your little self about us little ole SWA folks, we will be just fine.  You better worry your little self about the up coming vote over who will end up representing the combined AA and US mechanics.   Have a great day sir, and stop worring about little ole SWA, were just a little start up airline still trying to fly "unrestricted"...

 

[Kev3188]

 

Look WT, we are not asking for the world here at SWA.  We just want to share the wealth that SWA is currently having and will continue to have for some time in the future.  Our exects took some very large increases in their salaries and huge bonuses as well as perks.  Our members have a hard stance against concessions.  We have gave over the past couple of contracts since 9-11. Were done with giving and giving.  The only thing we have been able to barely keep up with is cost of living, and actually we have fallen short of it.  We, the employees of SWA have helped made what SWA is today, as well as have all the employees of SWA from top to bottom.  Record profits, record CASM, record PRASM, record load factors, and expansion on the horizon that will almost guarentee new record profits for some time in the future.  Trust me, the members will not accept a pay freeze for 5 years--not gonna happen, hell, we are still looking for the savings we have givin the company in past contracts.  This was the first suggestion by the company as far as economics are concerned.

All totally reasonable; especially given that it's the employees that facilitate all that revenue generation.

As for a suggestion of a pay freeze, of course they'd say that! It's all about managing expectations...

 

[WorldTraveler]

first, I specifically spoke to WN's average compensation for ALL employees - not specifically for maintenance employees.

but as you know, WN mechanics are the highest paid in their category as well.

whatever the reason, the pay raises that came in 2001 and 2002 directly translated into the level of overall increases in compensation that were seen at the legacy carriers - esp. among the pilots - that were a major reason that they ended up in BK in order to cut costs.

WN is NOT headed for BK but they CANNOT support those level of pay raises again. not for mechanics and not for any category


second, I have never said that WN cannot generate revenues comparable with the industry or better. But WN's COSTS for its employees is well above average. You can believe that WN will continue to provide pay raises but they simply will not of the kind of level that WN received before.

third, the 2004 spike in compensation was directly tied to WN's ability to push salaries thru because of pattern bargaining in the industry - and they paid for it with the fuel hedge gains and significant revenue growth because the legacy carriers were shrinking.

you didn't address why WN's average salaries grew so rapidly in 2013. I can tell you why and it is because WN quit growing. Rapid growth is the formula that low cost carriers have used to keep costs down. Without growth, pay raises push salaries up without few people coming in at the bottom of the salary scales.
WN might have a lot of network growth potential in Latin America - but they will be doing it at costs that are much closer to the legacy carriers than WN's costs have ever been - which means they cannot stimulate the market like they have in the past. and legacy carriers will be able to fight back better.

and finally, a big reason why WN's revenue performance has been so strong is because of the strong industry-wide pricing environment, due to the FL acquisition which eliminated a major low price competitor and this year the same thing with US.
Perhaps a few years down the road, Spirit and Allegiant will be acquired in order to eliminate low fare competition but WN is now in the same boat as the legacies - too large for the Justice Dept. to turn a blind eye to any acquisitions which clearly would be intended to eliminate competition.

WN is now just like the legacies in many respects. The legacies are showing record financial performance - but they are doing it with labor costs that are far lower and productivity that isn't that much worse than WN's who now is competing in long haul markets where WN's labor efficiency doesn't matter as much.

no one is throwing cold water on WN's good news. There is enormous expectation among WN employees - and it is apparent here - that WN will continue to increase pay as it has in the past. They simply cannot do that because their cost advantage is much lower while they are competing in markets where legacy carriers can fight back. The fact that the company is pushing back as hard as they are on negotiations at all of the labor groups should be proof that the gravy days are over and WN is doing everything they can to slowly let you down without you trying to burn down the house and so many legacy employees groups have done when they couldn't get the pay raises they wanted.

as for the amount of pay raises, you might well get them but you'll find that they come with the same tradeoffs that legacy carrier unions have had to make for years - pay raises that come at the expense of other factors - such as more productivity, more outsourcing, or cuts in benefits elsewhere.

 

[WNMECH]

WN is NOT headed for BK but they CANNOT support those level of pay raises again. not for mechanics and not for any category.

as for the amount of pay raises, you might well get them but you'll find that they come with the same tradeoffs that legacy carrier unions have had to make for years - pay raises that come at the expense of other factors - such as more productivity, more outsourcing, or cuts in benefits elsewhere.

We have always compromised with the company in exchange for raises.
You point to 2001-2002 and say we won't receive raises like that anymore.

No kidding Sherlock.
No more 19% raises in two years.
You are really going out on a limb with that prediction Nostradamus.

But that contract only brought us up to the industry standard set by AMFS's lead at NWA.
But in that contract we gave the company the apprentice program. That allowed them to hire mechanics internally at "B" scale wage rates and keep them at lower wages longer.

We have given the company trade offs every contract and I can list them.
All contract work groups have made productivity trade offs for wages, this is not new.


My point is, that we will get raises just as we have in the past despite your claims to the contrary.

Even though you "doubt very seriously that you will see pay increases like you received in the past", I predict we will again stay ahead of inflation and any give and take will still be like we received in the past.

 

[swamt]

We have always compromised with the company in exchange for raises.
You point to 2001-2002 and say we won't receive raises like that anymore.

No kidding Sherlock.
No more 19% raises in two years.
You are really going out on a limb with that prediction Nostradamus.

But that contract only brought us up to the industry standard set by AMFS's lead at NWA.
But in that contract we gave the company the apprentice program. That allowed them to hire mechanics internally at "B" scale wage rates and keep them at lower wages longer.

We have given the company trade offs every contract and I can list them.
All contract work groups have made productivity trade offs for wages, this is not new.


My point is, that we will get raises just as we have in the past despite your claims to the contrary.

Even though you "doubt very seriously that you will see pay increases like you received in the past", I predict we will again stay ahead of inflation and any give and take will still be like we received in the past.

Agree.  BTW, my numbers were minimums not the final result.  Also every single person I talk to says retro or no contract.  We have to stop the co from dragging things out every time contracts come due.  I know it's for the RIOC goals, but were gonna kill those by at least 2-4%.  Matter fact this Q will make up and then some for 1Q RIOC short fall of goal.  Depending on fuel we will be close to 18-20%.
 
Some good numbers coming from Ha and Delta for 2Q.  Although Hawaiian air killed estimates Delta only met the estimates;
 
Why Hawaiian Holdings (HA) Stock Is Surging Today
 
[video] Delta Air Lines Posts Higher Profit on More International Flyers

 

[WNMECH]

Agree.  BTW, my numbers were minimums not the final result.

I understood that.

I also know we have accepted stock options and gimmick bonuses on past contracts to offset full retro and in lieu of other base pay increases. I hope we hold out for full retro so not to reward the company for all this stupid stalling.
Two or three days a month negotiating is blatant time wasting.
We are not taken advantage at all by this pace as long as full retro is paid.
If not, then we gave the company a free pay freeze and we will see an even slower pace next time.

 

[700UW]

Fleet update may fuel strong Southwest earnings
With the addition of higher-capacity Boeing 737-800s and lower fuel costs, Southwest Airlines may be poised to release robust second-quarter earnings, say some analysts. In addition, the airline saw a 2.4% annual rise in second-quarter traffic and higher unit revenues. Southwest releases earnings on Thursday.
 
Forbes/Great Speculations blog (7/22)

 

[WorldTraveler]

Agree.  BTW, my numbers were minimums not the final result.  Also every single person I talk to says retro or no contract.  We have to stop the co from dragging things out every time contracts come due.  I know it's for the RIOC goals, but were gonna kill those by at least 2-4%.  Matter fact this Q will make up and then some for 1Q RIOC short fall of goal.  Depending on fuel we will be close to 18-20%.
 
Some good numbers coming from Ha and Delta for 2Q.  Although Hawaiian air killed estimates Delta only met the estimates;
 
Why Hawaiian Holdings (HA) Stock Is Surging Today
 
[video] Delta Air Lines Posts Higher Profit on More International Flyers

DL set reasonable estimates; when you are honest with Wall Street, there aren't surprises up or down with what you report.

You continue to think that because WN will report strong earnings, the employees of WN are entitled to pay raises; given that WN employees are the highest paid in the industry, you will find that the company is in the process of breaking those expectations. And they will drag out the process as long as it takes for them to reset expectations about the kinds of pay levels that WN employees will get in light of the competitive environment.

WN employees simply CANNOT remain as highly paid as they are today when they are competing in many of the same markets, using the same aircraft, and generating similar levels of productivity as their peers elsewhere.

As for retro, that is precisely where I can assure you that unions have repeatedly shot themselves in the foot.

Shoot for it but don't be surprised if the company puts you in a waiting game to make their point that they will do things on their terms.

 

[WNMECH]

DL set reasonable estimates; when you are honest with Wall Street, there aren't surprises up or down with what you report.You continue to think that because WN will report strong earnings, the employees of WN are entitled to pay raises; given that WN employees are the highest paid in the industry, you will find that the company is in the process of breaking those expectations. And they will drag out the process as long as it takes for them to reset expectations about the kinds of pay levels that WN employees will get in light of the competitive environment.WN employees simply CANNOT remain as highly paid as they are today when they are competing in many of the same markets, using the same aircraft, and generating similar levels of productivity as their peers elsewhere.As for retro, that is precisely where I can assure you that unions have repeatedly shot themselves in the foot.Shoot for it but don't be surprised if the company puts you in a waiting game to make their point that they will do things on their terms.

If "WN employees simply CANNOT remain as highly paid as they are today ", then you believe pay cuts are coming for all WN employees.

You are a fool if you bet on that one and you don't understand WN's financial situation and culture.

Stick to trying to understand Delta and how you didn't forecast their bankruptcy. You are still in denial over that one.

 

[WorldTraveler]

Nope, I don't think there will be pay cuts coming... but WN's unions had best realign their expectations with the reality of the industry which is that WN employees are extraordinarily high paid compared to their peers and WN is not generating the growth to bring in new employees at lower wage rates.

The fact that they cannot remain as highly paid as they are today does not mean that things will get fixed tomorrow... but there will be a rebalancing of labor costs compared to the market.

That may mean that WN will continue to drag out negotiations because they have no intention of giving out pay raises. As pay raises come at other airlines, WN's current wage rates will become inline with the industry again.

in the meantime, the profit sharing checks should be very large. enjoy them.