Originally Posted by
BStill
I'm just now re-familiarizing myself with the industry after a 20-year hiatus, so no expert by any means. In their history (admittedly short relative to the Legacies, but well beyond a start-up at this point) they've never furloughed. It's just an interesting data point. I certainly didn't infer that fact to be primarily/solely the result of management's good will toward employees, but I assume it's an indication of a solid and stable business model that is well-managed. Perhaps a little too conservative? but stable. But this Spirit merger/acquisition might be a big change.... establishing a new baseline... ?
I think it has more to do with the age of the company. It’s always been a growth company that underpaid pilots and had a much lower cost structure than legacies did, and their growth has been managed slow and steady for the most part. The growth to a mature size company with no retirements will make it a lot harder for them to mitigate issues when/if there is a big downturn. Before, they could pump the brakes on hiring as they did in the 07-09 downturn. As pilots have made more and become larger cost units, and there are more of them, it’ll be tougher in the future. They threw out 1500/4000 for furlough numbers during covid as part of their attempt to pass covid relief LOAs. No one ended up getting furloughed or getting warn letters, but it was definitely discussed.
But yeah, spending 3.8bn plus 1-1.5bn on integration costs with rising interest rates and growing the combined pilot group to 9,000+ with only 100-200 retirements a year absolutely opens up the possibility if there’s a hiccup in the economy in the mid to late 2020s. I doubt it’ll happen, but it’s not impossible. And I don’t think their proud history of never furloughing will mean much when it comes down to a numbers thing. Same thing happened at southwest. They had never furloughed. And then they sent warn notices during covid. I doubt anyone is ever safe from furlough at any company. So when I hear management use that as a talking point about why someone should go somewhere, I always keep that in mind, and when guys tell me they feel safer at jetblue for a furlough than a legacy because JetBlues never furloughed, I just lay out the math. Retirements at legacies can help cushion the blow. JetBlue doesn’t really have that cushion. Their attrition is off the bottom, and if jetblue is furloughing because of a downturn, I doubt anyone else is hiring much either, so attrition would stop, and it’d be a tough spot for the company. But, who knows how things will turn out in 5-10 years from the merger. Hopefully it won’t ever come to that. Hopefully they can continue their no furlough history for at least a few more decades.