Profit sharing concessions
07-25-2016 | 05:43 AM
#31
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From: I got into this business so I wouldn't have to work.
Any 'trade' of profit sharing for pay rates is really a double hit for the pilots.
How?
Here's how: Let's say the company is going to make $8 Billion for the year (just spit balling here for the math).
Let's say we traded a 20% raise, for the same amount of profit sharing, 20%. Let's say that 20% in money is $1 Billion (again, just picking numbers for the math).
Ok, what just happened to the $8 Billion profit?
Well, now it's not going to be $8 Billion, only $7 Billion, because $1 Billion of it just went to fund our pay raise.
So now, we have cut our profit sharing, TWICE!
We traded away the 20% for the same amount in pay, but now any remaining profit sharing will be calculated on $1 Billion LESS in profits.
Just like when the company gave all the other employees a 14.5% raise, AND cut their profit sharing, those employees PS will actually take a double cut, less profits going forward, and they set the bar for receiving any additional profit sharing much higher.
OK, now step back and look at the big picture. Why does the company want to change/rescind our PS?
It's NOT because they think profits are going to be LESS, is it? Heck no, they know the fleet plan, they've done the math going forward, they have much better projections than anything the ALPA Economic and Financial Analysis guys can come up with.
They see where their emerging markets are, and they are not going to tell us what their long term plans are, but I can bet it's not to lose money, it's to outsource as much of our International flying to as many partially owned JV Partners as possible. The only way you and I will ever benefit from all the upcoming JV growth is through profit sharing. Once we trade that for a one time pay raise, we are screwed 3 years from now when we have to negotiate the next contract.
We keep trading away concessions for pay raises, pretty soon we'll have nothing left to trade!
Then what?
How?
Here's how: Let's say the company is going to make $8 Billion for the year (just spit balling here for the math).
Let's say we traded a 20% raise, for the same amount of profit sharing, 20%. Let's say that 20% in money is $1 Billion (again, just picking numbers for the math).
Ok, what just happened to the $8 Billion profit?
Well, now it's not going to be $8 Billion, only $7 Billion, because $1 Billion of it just went to fund our pay raise.
So now, we have cut our profit sharing, TWICE!
We traded away the 20% for the same amount in pay, but now any remaining profit sharing will be calculated on $1 Billion LESS in profits.
Just like when the company gave all the other employees a 14.5% raise, AND cut their profit sharing, those employees PS will actually take a double cut, less profits going forward, and they set the bar for receiving any additional profit sharing much higher.
OK, now step back and look at the big picture. Why does the company want to change/rescind our PS?
It's NOT because they think profits are going to be LESS, is it? Heck no, they know the fleet plan, they've done the math going forward, they have much better projections than anything the ALPA Economic and Financial Analysis guys can come up with.
They see where their emerging markets are, and they are not going to tell us what their long term plans are, but I can bet it's not to lose money, it's to outsource as much of our International flying to as many partially owned JV Partners as possible. The only way you and I will ever benefit from all the upcoming JV growth is through profit sharing. Once we trade that for a one time pay raise, we are screwed 3 years from now when we have to negotiate the next contract.
We keep trading away concessions for pay raises, pretty soon we'll have nothing left to trade!
Then what?
You just saved me from several hundred keystrokes, and even broke it down better than I would have.
Has anyone here seen the 2Q reports?
I will not trade PS for pay. Automatic NO vote.
Fire away, JamesBond...
07-25-2016 | 05:43 AM
#32
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If you believe we are better off have our current pay rates with LOWER LEVELS OF PROFIT SHARING, than having our current pay rates with HIGHER LEVELS OF PROFIT SHARING then you're right, we'll have to continue to disagree
07-25-2016 | 05:44 AM
#33
Gets Weekends Off
Joined: Sep 2015
Posts: 1,034
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From: I got into this business so I wouldn't have to work.
I have no idea what you're talking about or how it's even relevant. The point is, the profit sharing trade was a bad deal. We traded it for pay rates we would have had anyways due to 3B4.
If you believe we are better off have our current pay rates with LOWER LEVELS OF PROFIT SHARING, than having our current pay rates with HIGHER LEVELS OF PROFIT SHARING then you're right, we'll have to continue to disagree
If you believe we are better off have our current pay rates with LOWER LEVELS OF PROFIT SHARING, than having our current pay rates with HIGHER LEVELS OF PROFIT SHARING then you're right, we'll have to continue to disagree
07-25-2016 | 05:46 AM
#34
Gets Weekends Off
Joined: May 2015
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From: A350 Both
I am not saying we should trade it now. I have never said anything remotely like that. I am saying that if after the contract is done I consider it. Over and above. Way above.
07-25-2016 | 05:52 AM
#35
Gets Weekends Off
Joined: Sep 2015
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From: I got into this business so I wouldn't have to work.
My bad. You make it sound like you don't agree with the above arguments when you post things like this:
Granted, he did not give any details as to why, but you seem to understand fully. Were you just trying to see his thought process?
Granted, he did not give any details as to why, but you seem to understand fully. Were you just trying to see his thought process?
07-25-2016 | 06:22 AM
#36
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Joined: Dec 2009
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From: Going to hell in a bucket, but enjoying the ride .
And.... one more reason the company wants us to trade PS for pay, they are going to have to start paying income tax pretty soon. For the past 12(?) years they have not had to pay income tax, because of the billions lost after 9-11 and the bankruptcy.
They've used up all those tax credits, now they have to start paying tax on profits, which will be huge going forward, but they can kill 2 birds with one stone by reducing their profits (and associated taxes) by the amount they trade PS for pay raises.
$1 Billion in pay increases to the pilots = $1 Billon less in profits to pay income tax on.
It's Win Win! (for them)
They've used up all those tax credits, now they have to start paying tax on profits, which will be huge going forward, but they can kill 2 birds with one stone by reducing their profits (and associated taxes) by the amount they trade PS for pay raises.
$1 Billion in pay increases to the pilots = $1 Billon less in profits to pay income tax on.
It's Win Win! (for them)
07-25-2016 | 06:24 AM
#37
Runs with scissors
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From: Going to hell in a bucket, but enjoying the ride .
And that's why they want to eliminate 3B4 in their Section 3 Proposal.
We already gave away section 3B6 in an earlier contract (C2K?) which said we could refuse to fly any new fleet after 2 months if a pay rate had not been established. Look at the A321 and upcoming C100 negotiations.
We already gave away section 3B6 in an earlier contract (C2K?) which said we could refuse to fly any new fleet after 2 months if a pay rate had not been established. Look at the A321 and upcoming C100 negotiations.
07-25-2016 | 06:51 AM
#40
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Joined: Sep 2013
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From: Sitting SC at the Five Towns
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