Originally Posted by
Bucking Bar
The "in depth" study did not include investment losses, cap ex write offs, crashes, additional managerial expenses or the cost borne by mainline (ie redundant management structure). The study also did not include DIP financing, the cost of litigation (Skywest & Mesa) and the cost of walking business to our competitors.
While I understand methodology which excludes "unexpected" costs, these are real costs of outsourcing none the less.
The political choice we make is to NOT rub management's nose in these "unexpected costs." Instead our political slant is to justify outsourcing.
Delta's outsourcing looks good on paper from a short term perspective. The longer view would reveal it has been a disaster for both labor and Delta, Inc.
That puts the sweet spot of the bat on it right there. I'd also add that the same myopic thinking is responsibile for endless shrinkage (capacity dicipline) which only funds the endless growth mode of the ULCCs that we will have to deal with later on anyway when they are bigger and stronger than they are now. Typical B school thinkin in the era of quarterly bonus mongering management.