Neither lower wages nor excessive wages alone form a viable business plan. You can pay wages as high as you like if you can make the revenue number keep coming out higher than the total cost number. That's what has happened in pro sports -- increased ticket prices and TV revenue have allowed player salaries to simply skyrocket, though the economics only work well for large-market teams.
The reality in the airline industry is that prospective passengers are only willing to pay up to a certain amount for transportation. The challenge for an airline's revenue management team is to maximize the total revenue coming in for the seats they make available for sale through whatever pricing strategy they may choose to employ. The problem for airlines, of course, is that their costs are nowhere near as variable as the demand for air travel can be. In the current market (and the one in the short to medium term) for air travel, United's cost structure, including its wage levels, won't permit it to make a profit. The possible solutions (aside from renegotiating agreements with lessors/vendors) include: improve productivity (cut jobs), lower wages, outsource work to lower-cost vendors (cut jobs), or cut back flying on unprofitable routes (cut jobs).
I couldn't understand for the life of me the insistence of United's mechanics on large retroactive pay increases at a time when the airline was losing nine figures a month! Yes, I know they'd been working under a concessionary contract for the better part of a decade, but the bare facts are that the airline couldn't afford it. A short-term extension of the old contract (one to two years), coupled with an appropriate increase tied to operating profits and/or unit revenue targets seems like it would have been a more sensible path. If I know that my employer is falling on hard times, I'd rather give up some pay in the short term in exchange for knowing that my job is more secure. If the attitude is that senior management is and always will be the enemy, then you might as well just close the doors, because things will never get fixed.
The reality in the airline industry is that prospective passengers are only willing to pay up to a certain amount for transportation. The challenge for an airline's revenue management team is to maximize the total revenue coming in for the seats they make available for sale through whatever pricing strategy they may choose to employ. The problem for airlines, of course, is that their costs are nowhere near as variable as the demand for air travel can be. In the current market (and the one in the short to medium term) for air travel, United's cost structure, including its wage levels, won't permit it to make a profit. The possible solutions (aside from renegotiating agreements with lessors/vendors) include: improve productivity (cut jobs), lower wages, outsource work to lower-cost vendors (cut jobs), or cut back flying on unprofitable routes (cut jobs).
I couldn't understand for the life of me the insistence of United's mechanics on large retroactive pay increases at a time when the airline was losing nine figures a month! Yes, I know they'd been working under a concessionary contract for the better part of a decade, but the bare facts are that the airline couldn't afford it. A short-term extension of the old contract (one to two years), coupled with an appropriate increase tied to operating profits and/or unit revenue targets seems like it would have been a more sensible path. If I know that my employer is falling on hard times, I'd rather give up some pay in the short term in exchange for knowing that my job is more secure. If the attitude is that senior management is and always will be the enemy, then you might as well just close the doors, because things will never get fixed.
29 PM sfb wrote: 
30 AM La Treal wrote: 
