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From: "The Baumert Report" <[email protected]>
To: [email protected]
Subject: The Baumert Report
Date: Thu, 02 Nov 2006 09:00:10 -0500
The Baumert Report November 1, 2006
LUV the Spendthrift
Contrary to what some may believe, Southwest Airlines spends a substantially higher percentage of their operating expenses on wages, salaries and benefits for their workers than American Airlines.
According to both companies’ third quarter SEC filings, for the nine months ending September 30, Southwest Airlines’ wages, salaries and benefits comprised 37.6% of their expenses, while at American Airlines it made up only 28.3% of expenses.
Even neutralizing Southwest’s vast fuel hedging advantage won’t narrow the difference over the nine months. In fact, it widens it. After factoring out fuel for both airlines, the cost of wages, salaries and benefits are 50.9% of Southwest’s expenses and only 38.9% of American’s.
Despite spending such a high percentage of their operating costs on their workers, Southwest somehow manages to turn annual profit after annual profit. In fact, one could say the very reason they turn annual profit after annual profit is because they spend such a high percentage of their costs on their workers.
Perhaps that’s something for AMR and the APFA, TWU and APA to consider in future contract negotiations.
By the Way: In the month of October, three AMR senior executives, perennial seller Dan Garton, Robert Reding and Gary Kennedy, exercised and sold a combined total of 72,240 options - netting them hundreds of thousands of dollars in pretax profits.
Sources: American Airlines 10Q; Southwest Airlines 10Q; AMR Form 4 filings
Steven Baumert
To receive The Baumert Report email [email protected].
To: [email protected]
Subject: The Baumert Report
Date: Thu, 02 Nov 2006 09:00:10 -0500
The Baumert Report November 1, 2006
LUV the Spendthrift
Contrary to what some may believe, Southwest Airlines spends a substantially higher percentage of their operating expenses on wages, salaries and benefits for their workers than American Airlines.
According to both companies’ third quarter SEC filings, for the nine months ending September 30, Southwest Airlines’ wages, salaries and benefits comprised 37.6% of their expenses, while at American Airlines it made up only 28.3% of expenses.
Even neutralizing Southwest’s vast fuel hedging advantage won’t narrow the difference over the nine months. In fact, it widens it. After factoring out fuel for both airlines, the cost of wages, salaries and benefits are 50.9% of Southwest’s expenses and only 38.9% of American’s.
Despite spending such a high percentage of their operating costs on their workers, Southwest somehow manages to turn annual profit after annual profit. In fact, one could say the very reason they turn annual profit after annual profit is because they spend such a high percentage of their costs on their workers.
Perhaps that’s something for AMR and the APFA, TWU and APA to consider in future contract negotiations.
By the Way: In the month of October, three AMR senior executives, perennial seller Dan Garton, Robert Reding and Gary Kennedy, exercised and sold a combined total of 72,240 options - netting them hundreds of thousands of dollars in pretax profits.
Sources: American Airlines 10Q; Southwest Airlines 10Q; AMR Form 4 filings
Steven Baumert
To receive The Baumert Report email [email protected].
