View Single Post
Old 01-19-2013 | 04:13 PM
  #5  
FlyJSH's Avatar
FlyJSH
Day puke
 
Joined: Feb 2006
Posts: 3,865
Likes: 0
From: Out.
Default

With the profit sharing included in the TA, that difference decreases as the company becomes profitable.

For example (these are huge WAGs, but it gives some idea)...

Using your difference of $864,000 per 12 aircraft, and going with the 81 promised 900s, the actual difference is $5.8m.

Assuming total revenue of $500m (a little less than half of 2011 revenue) and a 5% profit (equal to 2009 and roughly equal to Delta's 2012), net income would be $25m.

Of that $25m, $2.1m gets paid to the pilots through profit sharing* offsetting a little over a third of the cost difference. It costs money to shift flying. Is $3.7m enough to justify moving another 80 planes? Who knows. Especially considering economy of scale yields a higher profit margin, and higher margins increase the profit sharing rate.




*Profit sharing calculations:
Profit pool = 10% of the first 4% earnings + 15% of next 4% earnings = 20m * 0.10 + 5m * 0.15 = 2.75m
Pilot portion = 76% of pool = 2.75 * 0.767 = 2.1m
Reply