The Legacies Make A Huge Comeback
07-31-2007, 09:43 AM
#1
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The Legacies Make A Huge Comeback
I gathered the second quarter earnings numbers for the legacy carriers and major low cost carriers. Remember that this represents only 1/4 of the entire year.
With the obvious exception of Southwest, there is a noticable trend here.
I have two points I wanted to make with this thread. One is that the legacy carriers are coming back. The post 9/11 recession is over, and the legacies are now performing.
The second point I wanted to make was with regards to contract negotiations. It kills me when I hear people talk about how wages will never come back to pre 9/11 levels. Why would you say that? The precident has already been set. That was the hard part. There seems to be this attitude floating around that if pilot wages rise, low cost carriers will further undercut their costs, drive away all their business, and throw the legacies into another recession. To that I say bull $hit! Get your wages up. Then these low cost carriers will agree to better contracts. Low cost carriers like Frontier will stop agreeing to crappy contracts like Frontier's recent one. And the cycle will continue (the upward one).
The airline industry is very connected amongst all the airlines.
If one airline raises their fares, other airlines raise their fares.
If one airline cuts their fares, others airlines cut their fares.
If one airline agrees to pay cuts, other airlines agree to paycuts.
If one airline agrees to a pay raise, ________________________.
Last thought. What do all those legacy airlines (with the exception of Delta) who made between $228 and $319 million dollars last quarter all have in common? They all pay a poverty level wage for their first year pilots (of about $30,000). It is time to take it back.
Code:
Legacy Carriers
American $319 million dollar profit
United $274 million dollar profit
Delta $274 million dollar profit
Continental $228 million dollar profit
Northwest $273 million dollar profit
US Air $261 million dollar profit.
Low Cost Carriers
Airtran $41.5 million dollar profit
Alaska $46.1 million dollar profit
Froniter $3.5 million dollar loss
Jetblue $21 million dollar profit
Midwest $4.9 million dollar profit
Southwest $278 million dollar profit
I have two points I wanted to make with this thread. One is that the legacy carriers are coming back. The post 9/11 recession is over, and the legacies are now performing.
The second point I wanted to make was with regards to contract negotiations. It kills me when I hear people talk about how wages will never come back to pre 9/11 levels. Why would you say that? The precident has already been set. That was the hard part. There seems to be this attitude floating around that if pilot wages rise, low cost carriers will further undercut their costs, drive away all their business, and throw the legacies into another recession. To that I say bull $hit! Get your wages up. Then these low cost carriers will agree to better contracts. Low cost carriers like Frontier will stop agreeing to crappy contracts like Frontier's recent one. And the cycle will continue (the upward one).
The airline industry is very connected amongst all the airlines.
If one airline raises their fares, other airlines raise their fares.
If one airline cuts their fares, others airlines cut their fares.
If one airline agrees to pay cuts, other airlines agree to paycuts.
If one airline agrees to a pay raise, ________________________.
Last thought. What do all those legacy airlines (with the exception of Delta) who made between $228 and $319 million dollars last quarter all have in common? They all pay a poverty level wage for their first year pilots (of about $30,000). It is time to take it back.
07-31-2007, 12:31 PM
#4
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Just posing a question, I'm not sure how I feel about it yet. If the majors get pack to pre 9-11 payscales/workrules, aren't they just asking to take concessions again at some point? Would a more moderate payraise that can be sustained be a better plan?
07-31-2007, 12:40 PM
#5
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US Air is not a legacy carrier. The old US Airways was bought by America West while in bankruptcy. The America West management chose to adopt the US Air name because it has better name recognition than America West. You would not list America West as a legacy, so why list the new US Air?
07-31-2007, 12:44 PM
#6
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BTW, UPS had quarterly profits of 1.1 BILLION. Approximately 40% comes via the airline side. So that would be around 410 million for the UPS airline, which is less than 3000 pilots. Not too shabby. Oh wait, it's a differnet industry--sorry.
07-31-2007, 12:50 PM
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Originally Posted by AV8ER
If the majors get pack to pre 9-11 payscales/workrules, aren't they just asking to take concessions again at some point? Would a more moderate payraise that can be sustained be a better plan?
Tom
07-31-2007, 12:55 PM
#9
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Originally Posted by L'il J.Seinfeld
BTW, UPS had quarterly profits of 1.1 BILLION. Approximately 40% comes via the airline side. So that would be around 410 million for the UPS airline, which is less than 3000 pilots. Not too shabby. Oh wait, it's a differnet industry--sorry.
Completely "differnet" industry all together. Without the big rigs, UPS and FDX would not be the power houses they are. It's a moot point to argue if UPS was just an "airline" if their profit would still be 410 million.
Tom
Last edited by NGINEWHOISWHAT; 07-31-2007 at 04:23 PM. Reason: typo ... seems to be going around.
07-31-2007, 01:46 PM
#10
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Originally Posted by NGINEWHOISWHAT
I think so. Pre 9/11 wages, IMO, will never happen again. I think, however, we will see substantial raises with bigger profit sharing checks. Profit sharing allows the company to pay when the company is doing well, and not pay when the company is in the red. Profit sharing is also a bigger incentive than just a blanket - across the board raise.
Tom
Tom
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