Originally Posted by
SnowmanKiller
Yeah spirit contract was ok. But we have to keep that contract in the perspective of Spirit's future liquidation. Unless the bankruptcy immediately spirals into chapter 7, they will try to take concessions. You can't concede anything - Spirit will liquidate and we can't have concessions dragging down the industry standard at career destinations. Full pay last day.
I disagree with this. Spirit pilots taking paycuts isn't going to drag down the industry. If there was a credible case to be made that a short term paycut could lead to a better future, it would be worth the risk for those pilots that aren't interested in leaving. The issue is that Spirit's profit margin is negative 13% and even if pilots flew for free it would still be negative. Pilot wages are probably only 8% of Spirit's total costs, So even at a 50% paycut you'd only save 4% and the company would still be losing 9%, all other things held equal.
The real issue is that Spirit is in a liquidity crisis, and that lack of liquidity is putting Spirit in default of it lease covenants, which is making them in default of its leased planes. Just because Spirit hasn't "missed any payments" to Aercap, doesn't mean they are in compliance with their lease agreement.