Originally Posted by
fcoolaiddrinker
So now the cost of a new agreement is a couple million annually? And we’re at proposed rates? Come back to reality please.
No, that was meant as an example.
F9 knows a pay increase will be necessary (as to how much is yet TBD). But, they know it's coming. Their take is to save as much as possible in the interim and delay as long as possible. Assuming that the average difference in pay/hr is about $100, some real basic math would be 2100 pilots x 75 hrs/month x $100 = $15,750,000 per month or $189,000,000 per year.
Let's assume there won't be a new contract for 3 years from Jan 1, 2024. It is difficult to compare this company "savings" to what we COULD do every year w/ more pilots but I would offer that much of that $189M would be MORE THAN OFFSET by the growth of the pilot force that would far exceed existing accession and retention rate. How much more growth is reasonable? Instead of growing by 15 pilots / month (for the next 3 years), let's say we grow at 45 / month. Or 60. Or 85. How much revenu then. In essence, we need to know what is the revenue gained PER PILOT.
Well, this is kinda hard to figure out. Simple way would be dividing gross revenue by pilot or 3.5B / 2100 = 1.7M. That doesn't seem right. There could be a air seat mile exercise that would be crude at best. Let's look at that. According to the 10-K for 2023, air seat miles were 37,822,000,000. That's 37.822B miles or 18,010,476 asm / crew (or 2 pilots) or 9,005,020 / pilot. Current RASM is 9.49 (that's 9.5 cents). Yearly revenue per pilot per ASM is $171,095. But not really - way too many other moving parts.
Actually, there's a much simpler way. CASM vs RASM comparison. CASM (excluding fuel) is 6.51. RASM is 9.49. What is the CASM currently vs. the increase in CASM at the higher pay rate. Current pilot pay percentage of total cost is about 20%. I surmise that increasing by $100/hr increases CASM by about a full cent (maybe). The corresponding increase in needed revenue per passenger would be about 1/4 of that.
So, to raise pay for all pilots, they would need to increase ticket sales by maybe a few dollars. Instead of $85 fares, they charge $89.
When you're dealing w/ 3.6 B in revenue generated from moving 30+ B in passengers being moved, a simple $100 / hr increase for 2200 pilots is not all that much.