Oil prices and profit sharing
12-06-2018, 03:51 AM
#31
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Originally Posted by tunes
That’s not how it works.
12-06-2018, 04:09 AM
#32
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Originally Posted by TED74
Here's the calculation I'd like to know... for every penny drop in the price of fuel, how much does my profit sharing check go up?
Pilots console themselves with profit sharing..."yeah, our JVs are flying WB flying I wish we had on our metal, but at least I capture some of that revenue via profit sharing." Does anyone know how MUCH profit sharing is actually attributable to such a thing? If any given concession/productivity give/job loss can be priced by negotiators at the table, we (DALPA) should also be able to estimate the amount of profit sharing such gives would be traded for.
My hunch is that we get a pretty small slice of the pie for significant QOL gives. Would you delay an upgrade by 3 months for $39 more profit sharing? Would you cave to a bad AM JV deal for an extra $146?
Total contract value doesn't mean much, even though it's a large number folks like to tout for various reasons. I think it would be more helpful to hear "for every $100k earned per year, pilots will reap $XYZ individually, per year, on average."
Pilots console themselves with profit sharing..."yeah, our JVs are flying WB flying I wish we had on our metal, but at least I capture some of that revenue via profit sharing." Does anyone know how MUCH profit sharing is actually attributable to such a thing? If any given concession/productivity give/job loss can be priced by negotiators at the table, we (DALPA) should also be able to estimate the amount of profit sharing such gives would be traded for.
My hunch is that we get a pretty small slice of the pie for significant QOL gives. Would you delay an upgrade by 3 months for $39 more profit sharing? Would you cave to a bad AM JV deal for an extra $146?
Total contract value doesn't mean much, even though it's a large number folks like to tout for various reasons. I think it would be more helpful to hear "for every $100k earned per year, pilots will reap $XYZ individually, per year, on average."
Analysts get big bucks to predict earnings and rarely get it right. Pilots don’t have a chance.
What most overlook is the new breed of low cost long haul carrier was dying at 80 dollars a barrel oil. They were going under and most would have been gone next winter. They just got a stay of execution and will continue to suppress international fares. It also gives all the domestic ULCC’s a much bigger boost than Delta. Fuel is a much bigger percentage of their overall expenses. They can now grow even faster suppressing our yields down the road.
The point is that as Delta pilots we were probably better off long term with oil in the eighties range. Our business plan was built to sustain profits at that rate.
Last edited by sailingfun; 12-06-2018 at 04:28 AM.
12-06-2018, 04:26 AM
#33
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Originally Posted by notEnuf
13.25%
I’m hoping Q4 comes back above the guidance though. That could push it to 14%.
I’m hoping Q4 comes back above the guidance though. That could push it to 14%.
12-06-2018, 05:19 AM
#34
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Joined APC: Mar 2015
Position: stake holder ir.delta.com
Posts: 10,031
Check out the 10Q for the September quarter. The number you are looking for is Income before Income Taxes. Through 3 quarters $3.764B this year down from $4.457B last year. Fuel and compensation are up causing less profit. Also the increased income lowers the individual percentage for the same dollar amount. The profit is down 15% YTD. Q4 could be a boon because fuel and non fuel costs are tapering. Also pricing seems to be going up slightly for domestic, which is 2/3s of our revenue.
https://www.sec.gov/ix?doc=/Archives...930201810q.htm
I’m sticking with my 13.25% but hoping for 14%. I’ll lock in and take bets after Investor Day.
https://www.sec.gov/ix?doc=/Archives...930201810q.htm
I’m sticking with my 13.25% but hoping for 14%. I’ll lock in and take bets after Investor Day.
12-06-2018, 11:47 AM
#36
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Joined APC: Sep 2014
Posts: 4,909
Originally Posted by sailingfun
The formula for profit sharing is in the contract. Your question is basically impossible to answer because there are no absolutes. Fuel went up on a yearly rate about 2 billion dollars a year in 2018. We were able to raise fares and recoup 1 billion of that amount. Fuel is dropping back and that 2 billion cost is going away. What happens to airfares is a unknown however the trend now looks like it may be down as competitors launch sales. Non fuel costs will be up next year which will eat into the fuel bonus.
Analysts get big bucks to predict earnings and rarely get it right. Pilots don’t have a chance.
What most overlook is the new breed of low cost long haul carrier was dying at 80 dollars a barrel oil. They were going under and most would have been gone next winter. They just got a stay of execution and will continue to suppress international fares. It also gives all the domestic ULCC’s a much bigger boost than Delta. Fuel is a much bigger percentage of their overall expenses. They can now grow even faster suppressing our yields down the road.
The point is that as Delta pilots we were probably better off long term with oil in the eighties range. Our business plan was built to sustain profits at that rate.
Analysts get big bucks to predict earnings and rarely get it right. Pilots don’t have a chance.
What most overlook is the new breed of low cost long haul carrier was dying at 80 dollars a barrel oil. They were going under and most would have been gone next winter. They just got a stay of execution and will continue to suppress international fares. It also gives all the domestic ULCC’s a much bigger boost than Delta. Fuel is a much bigger percentage of their overall expenses. They can now grow even faster suppressing our yields down the road.
The point is that as Delta pilots we were probably better off long term with oil in the eighties range. Our business plan was built to sustain profits at that rate.
My realtor doesn't need to tell me what the final sales price of a house I'm interested in will be (they can't). However, they can guesstimate that a house will sell for between $10k and $20k and I'll already know I'm not interested. Sell for between $1.5M and $1.8M... still not interested. Sell for between $400k and $600k... that's worth a closer look and better understanding of the offering.
If pilots assume variable X could generate them $3,000 a year in additional PS... but it's really only going to generate $30 (or vice versa), that would be worth knowing. It's not hard math, but it's not math we hear discussed by ALPA (and I'd like it to be).
12-06-2018, 12:05 PM
#37
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Originally Posted by TED74
Not sure you understood my point. I'm not asking for a perfect guess at the future. I'm saying let's get our arms around how expenditures/gains/losses/efficiencies/QOL gives & takes affect our profit sharing checks. I think most of our check's value is "baked in" to the operation, and despite its impressive size, we as pilots don't really affect it all that much. Elements of our contract, negotiations and LOAs could affect it measurably, and we should estimate how much.
My realtor doesn't need to tell me what the final sales price of a house I'm interested in will be (they can't). However, they can guesstimate that a house will sell for between $10k and $20k and I'll already know I'm not interested. Sell for between $1.5M and $1.8M... still not interested. Sell for between $400k and $600k... that's worth a closer look and better understanding of the offering.
If pilots assume variable X could generate them $3,000 a year in additional PS... but it's really only going to generate $30 (or vice versa), that would be worth knowing. It's not hard math, but it's not math we hear discussed by ALPA (and I'd like it to be).
My realtor doesn't need to tell me what the final sales price of a house I'm interested in will be (they can't). However, they can guesstimate that a house will sell for between $10k and $20k and I'll already know I'm not interested. Sell for between $1.5M and $1.8M... still not interested. Sell for between $400k and $600k... that's worth a closer look and better understanding of the offering.
If pilots assume variable X could generate them $3,000 a year in additional PS... but it's really only going to generate $30 (or vice versa), that would be worth knowing. It's not hard math, but it's not math we hear discussed by ALPA (and I'd like it to be).
12-06-2018, 02:19 PM
#38
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Joined APC: Sep 2014
Posts: 4,909
Originally Posted by sailingfun
Every 1 billion change in profits increases or decreases the P.S. pool for pilots by 200 million. Using 14,500 pilots that 1 billion change in profits equals about 13,793.00 if that pilots income is exactly at the median. If you are above or below you would need to adjust for that. If profits fall below 2.5 billion the above would no longer be accurate.
So, the median pilot gets (loses) a buck every time the company generates (or loses) $72,500 in profit. High earners might see $2, and min-runners maybe 50 cents.
12-06-2018, 04:30 PM
#39
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Originally Posted by TED74
Thanks, that's what I was thinking of.
So, the median pilot gets (loses) a buck every time the company generates (or loses) $72,500 in profit. High earners might see $2, and min-runners maybe 50 cents.
So, the median pilot gets (loses) a buck every time the company generates (or loses) $72,500 in profit. High earners might see $2, and min-runners maybe 50 cents.
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