Swa Pay Cuts A Coming?

[javaboy]

From an upcoming aritcle


Southwest Airlines Article

>>>>>>>>Kelly gave a 15-minute speech, recapping the airline's financial performance and its plan for the rest of the year. Toward the end he told the crowd, "The Southwest brand is under attack. These next years are going to be some of the hardest the airline has ever had. Be prepared for some sacrifices." The crowd fell still. In the silence, a woman wearing a bright-blue T-shirt with I'M SWA on the back leaned toward the man next to her and whispered: "I'm going to need a drink after that speech." >>>>>>>>

 

[avek00]

Unlike the legacies, WN has the ability to keep its unit costs manageable by growing its operation. Also, notice how WN's route network increasingly includes large, higher-yield markets (such as PHL).

 

[Bear96]

That's nice (though rather vapid) ...

But avek, are you going on record here as saying WN employees will not be asked for pay cuts or any other "sacrifices" over the next several years?

 

[tug_slug]

But avek, are you going on record here as saying WN employees will not be asked for pay cuts or any other "sacrifices" over the next several years?

[post="266358"][/post]​

How many consecutive years did United lose money before their employees took paycuts?

Bear if I were you I'd worry about whats going on at UAL rather than concern myself with what the employees at WN are doing.

 

[Red Tail Bear]

How many consecutive years did United lose money before their employees took paycuts?

Bear if I were you I'd worry about whats going on at UAL rather than concern myself with what the employees at WN are doing.

[post="266361"][/post]​

Why don't you just answer the question?

 

[Capecod]

[/QUOTE]Unlike the legacies, WN has the ability to keep its unit costs manageable by growing its operation.

But for how long?

Also, notice how WN's route network increasingly includes large, higher-yield markets (such as PHL).

And getting further and further away from what made them what they are. With those large yield markets comes higher gate fees, landing fees and most of all delays. Aircraft utilization will start to plumit and soon they will start to see costs increase. -Cape

 

[KCFlyer]

Also, notice how WN's route network increasingly includes large, higher-yield markets (such as PHL).[QUOTE]

And getting further and further away from what made them what they are. With those large yield markets comes higher gate fees, landing fees and most of all delays. Aircraft utilization will start to plumit and soon they will start to see costs increase. -Cape

[post="266369"][/post]​

Don't worry...they can always "level the playing field" by declaring bankruptcy. In their letter to shareholders, they cited "airlines operating in bankruptcy" and receiving subsidies from private parties (GE) as being a big reason that the airline industry is in the crapper. Seems those bankrupt carriers are selling a lot of 'fire sales' to move tickets - and other, healthier, airlines have to keep their fares below cost to compete. That's just a summation...the actual verbage in the letter was more blunt.

 

[SWAFA30]

Never in my life have I heard such gloom and doom surrounding a company that is thus far...profitable. Just under the surface it's not hard to detect a macbre longing for Southwest to fail or at least stumble and her employees to suffer. I guess misery really does love company.

As for paycuts, my guess is that as long as the company remains in the black the unions would ever so politely tell management to go pound sand.

 

[ClueByFour]

Unlike the legacies, WN has the ability to keep its unit costs manageable by growing its operation. Also, notice how WN's route network increasingly includes large, higher-yield markets (such as PHL).

[post="266356"][/post]​

What exactly is a "higher-yield" market? LUV's pricing does not work in the way you are alluding to.

Now, revenue will be high--PHL was overpriced and underserved. But that's been the M.O for years. BWI--overpriced and underserved. The BOS burbs (at the time)--overpriced and underserved. RDU--overpriced and underserved. MDW/CHI--overpriced and unORDserved. And so forth. BNA--ditto. PIT--ditto.

The question with PHL is whether or not the enourmous O&D numbers overcome the operational constraints.

 

[hobbes]

Never in my life have I heard such gloom and doom surrounding a company that is thus far...profitable. Just under the surface it's not hard to detect a macbre longing for Southwest to fail or at least stumble and her employees to suffer. I guess misery really does love company.

As for paycuts, my guess is that as long as the company remains in the black the unions would ever so politely tell management to go pound sand.

[post="266377"][/post]​

Gotta agree with you, SWAFA, about those who would love to see us suffer. But as long as the company remains profitable, I don't think you'd ever see Southwest asking for paycuts.

Gary Kelly is a realist. And the reality is that, with all the other airlines declaring bankruptsy and getting paycuts from their employees, the "legacies" are able to lower their costs. Obviously, this means that Southwest has to stay competitive, and that means watching out for our own costs.

Gary's message is strong, and so it should be. Take a look around you at the airline industry. He's not being an alarmist. Over the next few years, some airlines are going to live, and some are going to die. A big factor in who's going to go the way of the dinosaur is costs. If your costs are too high in this industry, you're doomed because you can't compete. When this is all said and done, I think you're going to see a handful of legacies, and a lot more low fare carriers. This means that Southwest needs to watch our costs and make sure that we don't get too fat and sassy.

Strangely enough, the legacies are cutting their costs left and right and getting concessions, and they still can't manage to post a profit.

I sat at a speech with Gary Kelly, and when he talked about lowering costs, he said that he was NOT interested in doing that through pay concessions. Southwest values their relationship with their Employees enough to know that asking for paycuts had darn well better be the absolute last option to save ourselves.

It's funny that everyone is interested in speculating about Southwest Employees taking paycuts. I'm actually more interested in what's going to happen to some of these legacy carriers once they start posting a profit. It seems to me that there's going to be hell to pay at that point, as the unions will come knocking at their door demanding everything they had prior to concessions and then some. :blink:

 

[Bear96]

How many consecutive years did United lose money before their employees took paycuts?

Bear if I were you I'd worry about whats going on at UAL rather than concern myself with what the employees at WN are doing.

[post="266361"][/post]​

My, my, touchy aren't we.

BTW what happens at UA no longer worries me since I no longer earn a living from a UA paycheck. They could shut the doors tomorrow and though I would be sad for friends that are still there, it wouldn't affect me in the slightest. (But thanks for your concern.)

And I am not worried about what the WN employees are doing. I am simply trying to make sense of avek's comments. The thread title and the comments in the OP indicate a discussion about possible pay cuts at WN. Avek posted in response. I am just curious as to what his thoughts are about the thread topic. Otherwise I am wondering why he bothered to post what he did.

FWIW, I have no opinion on whether WN employees will take pay cuts. I see it going either way at this point. But since avek is the all-knowing, I was just wondering what he is trying to say.

 

[WNrforlife]

Gotta agree with you, SWAFA, about those who would love to see us suffer. But as long as the company remains profitable, I don't think you'd ever see Southwest asking for paycuts.

Gary Kelly is a realist. And the reality is that, with all the other airlines declaring bankruptsy and getting paycuts from their employees, the "legacies" are able to lower their costs. Obviously, this means that Southwest has to stay competitive, and that means watching out for our own costs.

Gary's message is strong, and so it should be. Take a look around you at the airline industry. He's not being an alarmist. Over the next few years, some airlines are going to live, and some are going to die. A big factor in who's going to go the way of the dinosaur is costs. If your costs are too high in this industry, you're doomed because you can't compete. When this is all said and done, I think you're going to see a handful of legacies, and a lot more low fare carriers. This means that Southwest needs to watch our costs and make sure that we don't get too fat and sassy.

Strangely enough, the legacies are cutting their costs left and right and getting concessions, and they still can't manage to post a profit.

I sat at a speech with Gary Kelly, and when he talked about lowering costs, he said that he was NOT interested in doing that through pay concessions. Southwest values their relationship with their Employees enough to know that asking for paycuts had darn well better be the absolute last option to save ourselves.

It's funny that everyone is interested in speculating about Southwest Employees taking paycuts. I'm actually more interested in what's going to happen to some of these legacy carriers once they start posting a profit. It seems to me that there's going to be hell to pay at that point, as the unions will come knocking at their door demanding everything they had prior to concessions and then some. :blink:

[post="266410"][/post]​

The legacies won't be around long enough to see a profit. They are going down faster than the Titanic!!!!!! 😛 😛 😛 😛 😛


Only low cost carriers will survive..

 

[KCFlyer]

The legacies won't be around long enough to see a profit. They are going down faster than the Titanic!!!!!! 😛 😛 😛 😛 😛
Only low cost carriers will survive..

[post="266433"][/post]​

REad your shareholders letter Wnr...I believe that your company is saying something different. The legacies aren't going down like the titanic....they might hit the iceberg, but the safe harbour of bankruptcy court is just off the bow. They enter that harbor, they continue to operate (in some cases for years), and the impact that this has on your company is negative. Your company has so far successfully competed against a bankrupt carrier in PHX, they have competed against a bankrupt carrier in California and Chicago, and they are have competed with a bankrupt carrier in the Northeast. The fact that these carriers all get "breaks" by filing bankruptcy puts a burden on your airline, and the other legacies who haven't made that trip to bankruptcy court.

 

[Red Tail Bear]

The legacies won't be around long enough to see a profit. They are going down faster than the Titanic!!!!!! 😛 😛 😛 😛 😛
Only low cost carriers will survive..

[post="266433"][/post]​

WNrforlife WAKE UP WAKE UP your alarm clock is going off. It's time to wake up and face reality.The Legacy's have been around a lot longer than WN and will be around for a long time to come, But hey, it's nice to be a dreamer!

 

[TheDog2004]

I know that layoffs are being considered at SWA. Paycuts wouldn't surprise me.

The issue for Southwest isn't that they are profitable now, but how they will remain profitable down the road. The good news is that Southwest is looking ahead and thinking about this, rather than waiting for the two by four to hit them right between the eyes like the 'legacies' did.

Southwest may have won the war, but now they have the best paid staff in the industry. Add to that a string of copycats who are using the same business model - but with lower labor costs - and suddenly life isn't so easy anymore. Southwest is now the hunted. It doesn't mean they won't continue to thrive (I expect them to), but Southwest's role in the business has changed.