Originally Posted by
iPilot
The way that deal was explained to me is that the new CAL CPA was a completely different payment model than what XJT was used to. Before it was a cost+10% payment plan which is now a flat hourly rate. The reason it was unprofitable is that the flat hourly rate doesn't make money if CAL gives us low block hours. With the recession CAL cut us back about as far as they could possibly go without getting rid of airframes. So in the end XJT paid the leases but didn't get much money from CAL as they flew the airplanes relatively little.
Now that UA is thrown into the mix the block hours of the entire fleet will bring them into profitability. Hypothetically, if things go the other way and the planes are pushed to their limits then XJT's profits would be at it's peak.
Yes, the CPA was the same CPA SKW had negotiated with CAL. Except that the CPA SKW had negotiated with CAL included cost savings from the synergies of getting rid of duplicate jobs, economies of scales, and 16% pay concessions (which included implementing PBS, getting rid of our B fund, and other work rule changes) from the pilots plus 700 furloughs. Thus the block hour rate is too low for the amount of block hours that CAL had forecast to begin with. This is why the CPA was later amended to include an a minimum block hour reimbursement. Not to mention other things such as that the charter would have been closed down, SKW pilots would have taken over the DAL CPA flying, and SKW would have used 25 XJT aircraft to fly for CAL under a separate CPA, and CAL would have the ability to put the 205 aircraft CPA up for bid in 12 months. All while giving up scope as well.