Concessions Never Saved An Airline?

[mweiss]

FlyingHippie and others have said many, many times that concessions never saved an airline. I figured it's about time we look at this question seriously and examine more closely the facts behind the statement.

Let's start by looking at the airlines that have gotten concessions from their employees. These are the ones I know of off the top of my head. Others please feel free to add to the list.
EA
CO
TW
AA
UA
US

Of the airlines on the list, EA and TW are no longer around. The others are. What makes the difference between the ones that survived and the ones that didn't?

My hypothesis is that concessions buy time. They don't fix an airline. Thus, airlines such as CO who ultimately used the bought time to revamp the airline have succeeded. Without those concessions, they would have run out of time before the airline got fixed.

On the other hand, airlines like EA treated concessions as a fix, not a means of buying time to fix the airline. So they bought the time, which was fine, but ultimately the very same problems that existed before the concessions persisted after.

This hypothesis doesn't bode well for US. Thus far, the concessions have been treated as the end, not the means to the end.

So, what do the rest of you think?

 

[Light Years]

mweiss, if you dont mind me asking, how old are you?

 

[mweiss]

ygm

 

[USA320Pilot]

MWeiss:

I agree with your analysis. This industry is changing at a rapid rate and pick your poison: September 11, rising war risk insurance, new security costs, rising taxes, and skyrocketing fuel prices have all increased costs. Equally important are the stunning loss of revenue due the sluggish economy, Acela, LCCs, and Internet booking.

Even with billions of dollars in government assistance, the industry has lost roughly $25 billion since the beginning of 2001 and every legacy carrier is still losing money despite gradually rising passenger traffic.

US Airways "Transformation Plan" envisions pay and benefits plans similar in scope to the LCCs, the only part of the sector for major airlines that is profitable.

These cuts are expected to be about 50% of the projected total CASM cut with the other 50% obtained from dramatically changing the route structure, rationalizing fares, lowering distribution expense, and key IT improvements, which should stimulate traffic to JetBlue load factors.

The plan will increase aircraft utilization by 15%, permit 75% point-to-point flying, increase Charlotte hub flying where the passenger processing fee is less than $2 (Pittsburgh is 5 times higher at about $10 per passenger), enable more transatlantic high yield destinations from Philadelphia, and more Caribbean flying from Charlotte.

In addition, Philadelphia is beginning to see improvements with rolling the hub, better runway utilization, and ATC coordination.

The GoCaribbean, United, and Star alliance gives the coming market expansion and more revenue. RJs will add feed and MidAtlantic Airways (with the cost cuts placed on the backs of employees) will offer mainline service with a 50% break even load factor. The EMB-170 aircraft can be used as a weapon.

However, the plan will not work without a competitive cost structure and most importantly better productivity of employees, facilities, and aircraft that approach LCC levels.

US Airways new business plan will permit the company to be the first legacy carrier to truly adapt to the new and harsh economic reality, however, without employee participation the company will fail.

Therefore, I agree that employee contract changes alone will not save the company and the way the airline flies must change too, but without employee contract changes it's clear the employees can kill it (the airline).

Do I like the cuts be sustained by long time dedicated employees? Heck no, but I truly believe this business plan has vision. In fact, it's a vision that finally can make the company be a strong, independent stand-alone airline, which has not been a feeling felt by employees since 1989.

There is no question these potential changes are distasteful, but what would it be like to finally have a competitive cost structure? What would it be worth to have an employee stress level comparative to our colleagues at Southwest Airlines? What would it be like to know you can work for this company and retire? How would this effect our health and outlook if the company could grow, add aircraft, and have a strong route network?

The company believes the new US Airways will offer significant rewards, which include:

 Ability to grow again.
 Resources to invest in the company.
 Plan offensively, not only defensively.
 Add international destinations.
 Be the first legacy carrier to truly adapt to the new market reality.
 Share in the upside with both equity and profit sharing.
 Re-establish the leadership, confidence, and pace-setter position on the east.

Therefore, I ask you, what is peace of mind worth?

For those who are angry and would rather see the company “burn to the groundâ€￾ instead of accepting an America West type of contract, I believe Siegel made a valid point during his webcast. He went so far as to encourage employees to leave the company if new work contracts aren't agreeable, rather than to fight the change. "If it doesn't work, I'd encourage you to support the change, and then go on and find something else," he said. "It's better to have a job when you're trying to find another job."

From this observer’s perch, Siegel’s comments in the paragraph above are valid. It’s better to have a job while you are seeking another job than to have just unemployment.

Finally, in my opinion, there is continued reason to believe that if US Airways is successful in restructuring the company into a viable stand-alone company, which evolves into the first legacy network carrier/LCC hybrid, the airline will enter into a corporate transaction and be the surviving business enterprise. Furthermore, US Airways’ brash moves could throw the other network carriers, especially United Airlines and Delta Air Lines, into turmoil where US Airways and its employees could be beneficiaries at the expense of the other airlines who will also be forced to restructure towards the profitable LCC business model.

Respectfully,

USA320Pilot

 

[Hope777]

Chip, in all due respect, we have been hearing about growth for years. The only growth going on is in Managements Pockets. Sorry Capt., this is nothing more then a MISMANAGED COMPANY! ! ! ! ! !

 

[Winglet]

And once again, with feeling this time.

Why didn't management institute the reforms starting last year? Is everybody brain-dead gullible here? 7.5 cent CASM. YGBSM. That's going to take a LOT less than HP compensation for the remaining workers in addition to outsourcing virtually all IAM functions, plus a lot of others. You're suppose to mix a little water with that kool-aid, ya know.

 

[USA320Pilot]

Hope777:

I believe Bruce Lakefield is an honest man and when the man speaks, he tells the truth. I understand your disgust and we all feel it, but I believe when Lakefield speaks he tells the truth. Thus, if says there will be growth, I believe there will be growth.

The new business plan calls for 320 mainline jets, more long haul flying, 5 new European destinations, more West Coast cities, and more Caribbean/Latin American service.

Will it occur? I believe so, however, the only chance we have is to work with Lakefield, otherwise there will be no growth and likely no company.

Respectfully,

USA320Pilot

 

[USA320Pilot]

Winglet:

Winglet asked: “Why didn't management institute the reforms starting last year? Is everybody brain-dead here?â€￾

USA320Pilot comments: Good question. The pilot I flew with today and I asked the same question. I believe we all would have liked to see this plan last year, but we did not. In the end, it does not matter why because there is nothing we can do about the past. The good news? We now have a “realâ€￾ plan that I and ALPA believe will work.

Is it going to be painful? Absolutely, but I believe for all of us, even if a person gets furloughed out of the deal, we all will be better off with a company instead of no company.

Respectfully,

USA320Pilot

 

[mweiss]

Why didn't management institute the reforms starting last year?

That's a huge tragedy. If they had, the concessions might have actually succeeded in saving the airline.

 

[Rob]

Your concessions are the fix vs. concessions buy time to implement a fix argument seems like semantic hair splitting. It's true; but you could as easily say the one airline thought employee cost was its only problem and the other thought employee cost was one problem among others.

The "no airline every shrank to profitability" line is equally a canard. Only the defunct lines shrank and died; almost all the rest of them at some time or other pulled down capacity and survived to grow it back.

 

[morepower]

Winglet:

Let's go over this again. What's different than last year?

Fuel is way, way up ...and it's going to stay that way.
Southwest took on a major carrier in it's own hub...and in a major airport. They had never done this in the history of WN operations.
Jet Blue decided to enter RJ flying and they're going to do it in a big way.
A "freindly" United commuter decides to spin off, buy big, new, airplanes and park in our back yard at IAD.


I don't know how they didn't see it coming............

I agree with your wage opinion though. Because our operations are concentrated in the highest operating cost areas of the country, we don't have a rationalized fleet and we have several competitors chewing at our margins, our wages will have to be below the LCC's in order to make up for our own inherited inefficiencies. Would you want to run the place?????????????

 

[ClueByFour]

USA320Pilot comments: Good question. The pilot I flew with today and I asked the same question. I believe we all would have liked to see this plan last year, but we did not. In the end, it does not matter why because there is nothing we can do about the past. The good news? We now have a “realâ€￾ plan that I and ALPA believe will work.

This begs the question, how many times can one fool a sucker?

Lo those few months ago when "MDA was going to be the killer competitive response" and U would fill the sky with an armada of "large small-jets" to fuel hub growth and thus allowing mainline to grow.

Lo those many years ago when the company flew point to point (BOS-MCO, ALB-MCO, BWI-LAX/SFO) etc.

Remember the Florida shuttle? Or LAX-SFO? I do.

I guess what I'm getting at here is that U management has never quite gotten it at the right place and time. Why is now any different, especially in light of the fact that with the exception of Lakefield (and absent Cohen), it's the same crew in CCY (for all intents and purposes), many of whom date back far enough to be behind some of the brilliant moves discussed above?

Forget that--let's go back to the sucker thing for a moment, and consider that many of the very few things that actually have been implemented thus far could have been started during or immediately after Chapter 11. It did not happen.

So, the premise is that the same group is now worthy of yet another bloodbath?

If US had done things like fix the website, roll PHL, etc right after Chapter 11, I'd probably be saying something different. However, it's clear from this observers perch that the folks in the Palace are only adept at grasping at straws (reading the Tea Leaves, alas, is a skill sorely lacking at CCY).

Back to the sucker thing again: ALPA also thought it would get away from the first and second round of concessions intact, and lost the pension. But they liked the plan until that little nugget came to light. I've read, but not confirmed, that HP does not have a DC nor a DB pension, merely a 401k. I wonder how such a proposal would float with the top end of the ALPA list?

Is it going to be painful? Absolutely, but I believe for all of us, even if a person gets furloughed out of the deal, we all will be better off with a company instead of no company.

As I've been saying for months, the truth would eventually come out. In this case (as I've said for months), the motivation from the top 1/2 to 2/3rds of the ALPA list is clear.

However, since the "plan" will probably impact a far greater number of folks in other labor groups on the property both in terms of money (since it's a helluva lot harder to take a 25% cut of $45k than of $145k) and raw numbers (since it stands to reason that the CWA, IAM, and AFA are going to take much larger numerical cuts than ALPA). Ergo, the support will probably not be nearly as strong among the other groups.

 

[EyeInTheSky]

Hope777:

I believe Bruce Lakefield is an honest man and when the man speaks, he tells the truth. I understand your disgust and we all feel it, but I believe when Lakefield speaks he tells the truth. Thus, if says there will be growth, I believe there will be growth.

The new business plan calls for 320 mainline jets, more long haul flying, 5 new European destinations, more West Coast cities, and more Caribbean/Latin American service.

Will it occur? I believe so, however, the only chance we have is to work with Lakefield, otherwise there will be no growth and likely no company.

Respectfully,

USA320Pilot

USA320pilot you said the EXACT same thing about Dave Siegel. The players may have changed but its the "Same bat station, same bat channel." The unions must not lose focus because as you say "Lakefield is a nice guy."

 

[cavalier]

From this observer’s perch, Siegel’s comments in the paragraph above are valid. It’s better to have a job while you are seeking another job than to have just unemployment.

You are like the everyready battery aren't you!


You should read Dale Carnegies' "How to Win Friends and Influence People"


I think you read the wrong book where it said INFLAME people.


You're constantly pointing to Dave Siegel’s fatal comment. I understand Doctor Bronner didn't like that comment at all and why Dave is history, yet you keep pounding away at it.


I must refer back to AOG-N-IT comment in a post to you where he flatly states how you made him feel, I agree with those sentiments 100 percent, 100 % indeed.

 

[delldude]

I believe Bruce Lakefield is an honest man and when the man speaks, he tells the truth. I understand your disgust and we all feel it, but I believe when Lakefield speaks he tells the truth. Thus, if says there will be growth, I believe there will be growth.

i believe if you look back in the archives,you were swooning over davey a year or so ago in the same fashion.
funny how those who don't heed from the past are doomed to repeat it....