20 days, before a concession becomes a giveback !!

bagsmasher-

The 39% figure for Southwest is wrong. Southwest's full-year 2002 labor costs came in at 36.1% of revenues (their Q4 number was 37.1%, with seasonally lower revenues and slightly higher pay rates). American's full-year 2002 labor costs represented 48.5% of revenue (49.3% for Q4). In better years, WN's labor cost was closer to 30% of revenues; while pay rates have gone up a bit, much weaker revenues are the primary reason their labor cost is now a higher percentage of revenues.
 
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The federal loan guarantee has been approved on the condition that it slash labor costs.
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I don't get it, why should the federal government be demanding that this airline drive it's employees closer to poverty before it will guarantee a loan?

This just reeks of rich congressional republicans up to no good.
 
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On 2/11/2003 3:50:54 PM WingNaPrayer wrote:

I don't get it, why should the federal government be demanding that this airline drive it's employees closer to poverty before it will guarantee a loan?
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[/blockquote]
I'll take a wild guess... Because they want their loan paid back?
 
They aren't making the loan, they are only guaranteeing it. These employees are being forced to subsidize an airline's recovery with their wages, the employees, in essence, are being forced to pay the bills.
 
Not the same thing buck. You implied the IAM was confused but it was just the IAM having another vote because they found confusion among the membership and wanted them to make an informed decision. I'm sure AMFA would want it's members to make informed decisions.
Now can we move on?
 
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On 2/8/2003 6:54:36 PM DFWFSC wrote:


not somebody worried about the orange cones being in the right spot.
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You're not seeing the big picture!! It's a proven fact, that after numerous committees, focus groups, and millions spent on consulting firms, that the entire industry would grind to a halt without those orange cones. You need to get past your management bias, and deal with the harsh realities of that situation. Look, yes labor is and will bend over for the next decade, without the benefit of any petroleum based aids, but that doesn't mean we can just start putting orange cones where ever we wish. That would lead to chaos! hmph friggin unions..........
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[blockquote]
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On 2/11/2003 8:09:35 PM WingNaPrayer wrote:

They aren't making the loan, they are only guaranteeing it. These employees are being forced to subsidize an airline's recovery with their wages, the employees, in essence, are being forced to pay the bills.
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[/blockquote]

The government may only be "guaranteeing" the loan, but guess who's on the hook for the money if the airline doesn't pay the loan back. It's not the banks who made the loan, but the government. Consequently, it's in the government's interest to see that the airline has a business plan with a realistic chance of repaying the loan. Just as if you were to co-sign your kid's mortgage and he/she were unable to make payments -- the bank would come after you for the money.

Note that the government didn't require America West to cut employee salaries as a condition of granting a loan guarantee; they did require them to keep labor costs under control, though. It wasn't required at Frontier, either.

I think the airlines could hypothetically meet the requirements for a loan guarantee however they liked. But, when labor is 45% of revenues, fuel is another 15%, planes are 10-20%, rents are 10%, etc., it's hard to make the numbers work without cutting labor costs. Planes, fuel, and gates/slots don't come free.
 

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