View Single Post
Old 01-13-2017 | 05:26 AM
  #47  
A320's Avatar
A320
Line Holder
 
Joined: Dec 2010
Posts: 650
Likes: 5
From: 787 Capt.
Default

Originally Posted by Sunvox
Funny enough I think they are both right.

1) If you cut the number of pilots in half you do not automatically get double the amount.

2) If there are fewer pilots then you might get more.

BUT . . .

crazy enough you might get more even if there are more pilots


Here's an attempt at an explanation . . .

First lets just say for the sake of this discussion that no matter how many pilots we have, the profit sharing pool is constant, which wouldn't be the case in real life since if there were a dramatic change in pilots that would imply a dramatic change in revenue, but anyways the question is about a few extra pilots on the margin and what impact they have so let's just assume a constant pool.

So the profit sharing pool is $1,000.

In the first example lets say there are 20 pilots. 10 pilots earned $100 and 10 pilots earned $10 in W2 wages. The total W2 pool is 10 * $100 + 10 * $10 = $1100. Each pilot that earned $100 gets $100/$1100 of the pool or 9.09% or $90.90 in profit sharing. Each pilot that earned $10 gets $10/$1100 or .909% or $9.09 each.

10 * $90.90 = $909.00
10* $09.09 = $090.90


Now imagine we add 3 new pilots and retire 2 pilots and the profit sharing pool remains the same at $1000, but this time we have more pilots. Do senior guys get less money because there are more pilots?

Well . . .

First now we have 8 pilots earning $100 and 13 pilots earning $10. The total W2 pool is now 8 * $100 + 13 * $10 = $930. So the senior guys now get $100/$930 or 10.75% or $107.52 and the junior guys get $10/$930 or 1.075% or $10.75.

Magically we have more pilots but everybody got more money!!! How you ask, because the 2 pilots that left were getting about $200 in combined profit sharing and the new guys are only getting about $30 combined so there's $170 more to spread around.

I won't bore you with the details, but if we were to add more high paying pilots the opposite would happen.

Does adding more pilots lower your personal take? It depends, but probably not much if at all.


"It was my understanding that there would be no math" when I joined this forum.
Reply