Tell him to withhold more taxes, that way the gov’t bonus will offset the reduction in PS.

 

It doesn’t work that way. Credit card interest is at its current level because that is what is required to make credit cards profitable. If interest is artificially capped at 10%, companies will stop offering credit card debt to people with credit scores that are no longer profitable with 10% interest (Perhaps anyone with less than a 700 or so credit score).

Yes, merchant fees make up ~50% of a credit card companies revenues, but those merchant fees also go way down when you can’t offer credit to a big number of your borrowers

It’s the old Soviet bread line concept.

Sounds like socialism…

 

Banks have a virtually limitless amount of capital through the Federal Reserve. The cost of capital is roughly 3.5-3.75% plus a small premium. If credit card interest is capped at 10% there is still plenty of room for profit. I concede that there is a subset of card holders with poor credit that due to the risk of collective defaults, will not have additional credit extended to them. But to the higher credit scores, many that would seek credit elsewhere (home equity, loans, 401k loans, BNPL etc), they no longer will have to shudder at 24.9%-30%APRs. The penalty for going deeper in debt is significantly cut and people will aggressively make purchases.

Generally speaking, America is dumb and financially irresponsible. A majority of Americans live paycheck to paycheck. Less than 50% could come up with $1000 in the event of an emergency. Inflation is out of control, Instagram convinces people to buy stuff they don’t want, to impress people they don’t even like, with money they don’t have. There are more than enough low default risk, mid to high income earners that would go into CC debt at 10% and still be profitable for Visa, Amex, and MC. As they go further into debt, or jump in for the first time (the “debt curious”), the banks make up their loss in interest rate though volume and higher volume in merchant fees.
And so what if an issuer bank defaults? Our federal reserve will rescue and bail them out in a heart beat. Exhibit A Great Recession, exhibit B Signature Bank of NY, exhibit C Silicon Valley Bank.

 

There was a bill in congress a couple years ago that would eliminate/restrict the CCard companies ability to offer rewards/miles and restrict merchant fees. All in the spirit of "fairness". If that bill made it to the light of day it would surely change the paradigm that the legacy airlines operate in.

 

I made sure to vote after the numbers came out so i was right. Chalk up another W

 

the bill didn’t restrict the companies’ ability to offer rewards/miles. the credit card competition act would have allowed competition between processing networks. that would have undoubtedly cut into revenue generated by the proprietary processing networks, but the banks who issue cards would have still been free to issue miles and rewards.

https://www.congress.gov/118/bills/s...118s1838is.pdf

 

Nicely done ✔️

 

Many of you may have, by now, read the 13JAN26 “Profit Sharing” article published today by management. Articles like this appear regularly in the run-up to the February profit-sharing payout. Typically, the message implies that Delta pays profit sharing purely out of goodwill. This year’s first letter is somewhat more restrained and does not state that directly, but once again there is no mention of the Delta Air Line Pilots Association’s role in securing employee profit sharing.

Now is a good time to remind the uninformed that the Delta Air Line Pilots Association—our union—negotiated the profit-sharing program in 2004 under LOA #46 (2004) (see Delta Pilot’s Contract History). This agreement coincided with the termination/freeze of our pensions and the first of two major pay cuts. That initial cut was 32.5%. Management told us these concessions were necessary to avoid bankruptcy, and the union approved the agreement on that basis. Ten months later, Delta filed for bankruptcy on 9/14/05—the same day as NWA. Coincidence?

The bankruptcy led to LOA #50 (2005) and LOA #51 (2006), along with the termination of our pilot pension and transfer to the PBGC. A second pay cut followed—an additional 14%. In exchange for these concessions, the pilot union negotiated profit sharing at 15% of pre-tax income, and 20% on pre-tax income over $1.5 billion. Delta and NWA announced their merger on 4/14/08.

Since then, Delta management has repeatedly sought—and in some cases succeeded—in reducing the profit-sharing formula. The first reduction occurred in 2008: profit sharing dropped to 10% of pre-tax income up to $2.5 billion, and the 20% threshold was raised from $1.5 billion to $2.5 billion.

Each year around profit-sharing season, management promotes a narrative that they deserve full credit for both creating and paying out profit sharing. That is simply false. The profit-sharing program exists because it was negotiated by the pilot union—period. Since its inception, management has worked to reduce its value, not expand it. I am merely setting expectations for the next profit-sharing letter.

PS. I post this every year. Because every year there is some management letter that tells us Delta gives us the PS payout out of the goodness of their hearts. If that were true why do they try to cut the payout scheme every chance they get?

 

Thank you for posting this. Every year, the non-cons rant and whine in their groups about how pilots take way too much of the profit sharing, making their checks smaller. They need this history lesson.

 

So 8.9% for the win. What was last year’s?