Originally Posted by
waterskisabersw
I agree it's a red herring, for the most part. There is a shortage of pilots, but pilots are not born pilots, nor are they forged in supernovas billions of years ago. They are trained. It's a simple calculus to pay enough to balance out the cost benefit equation that young potential pilots, and balance it well enough to keep the pipeline of new pilots mostly full.
….
So if we're losing 200 pilots a year (2% attrition, so very low), the total cost of that is actually much higher than what one might expect because we don't know when they're going to quit. So it's the cost of training/acquiring 200 pilots plus the cost of caring 200 pilots of overstaffing in preparation for 200 pilots to quit unexpectedly.
So yes, not as significant as some might want to attribute to pure shortage reasons, but still around the tune of tens of millions of dollars per year per percentage of attrition. I did the rough math of $150k in cost to carry a pilot and 100 training events at $75k each for a wag, at it works out to around $22m per percentage of attrition, and that's overstaffing matching attrition perfectly.
It would be interesting to know precisely how much the cost of new hire training is and then how much the “carrying cost” of whatever number of additional pilots they decided to “carry” as a result of increased attrition would be.
But as far as the value of the leverage that could be generated by being able to pose the credible threat of a strike goes: in 2019, SWA generated operating revenues of $22.428 billion. If we divide that figure by 365 to determine an average daily operating revenue, we get $61.4 million (which is remarkably similar to American’s inflation-adjusted number from 1997). 2019 is probably the most recent financially similar year to 2022 for SWA due to the interruption of covid.
If your number of $22 million per percent of pilot attrition is accurate, that means each day of a strike equals nearly three percent of pilot attrition. And if your number is on the high side, each day of a strike equals something even more than ~3% per day of attrition.
In one month, a strike could directly cost SWA $1.84 billion in lost revenue if current operating revenues are on a par with 2019. That doesn’t include the value of lost revenue due to the “book-away phenomena” that would occur in the 30-90 days of status quo (cooling off and possible PEB) that must be maintained before a strike and after a release from mediation.
The $61 million loss per day ($1.84 billion per month) of operating revenues also doesn’t include the cost of the loss of intangible goodwill that SWA would suffer in the form of a tarnishing of its one big happy family public image and in a further deterioration of employee relations if a strike occurred.
For reference, there have been three mainline passenger airline (most similar to us) pilot strikes since 1997: Spirit’s lasted four days, NWA’s lasted 14 days, and American’s lasted 24 minutes.
Do you seriously think SWA would let a pilot dispute go to a strike before they moved significantly toward meeting our demands? And if, in the wild world where a strike might happen, do you think it would last more than a couple of weeks at the very, very longest?