TYG, I know. If the economy goes the right direction, the hiring will be awesome. I love the numbers ppl are throwing around I just hope it happens.

 

I'm gonna be the unpopular contrarian...I hope it doesn't.

I've been through two boom and bust cycles, plus one smaller rapid expansion that hung on the edge of furlough for the bottom end of our list when the economy took a vicious swing. It's my view that the industry needs to see capacity discipline to maintain pricing power and repair balance sheets. If we grow like we've done in previous cycles it will feel good for a short time (4-6 years like previous waves). The backside of that will suck.

The US industry physically can't add too much capacity in 2011, as most airlines don't have easy, affordable access to aircraft they can add to their schedule in that short time horizon. It's 2012 through 2015 I'm worried about. In the past airline pricing been at the mercy of our dumbest competitor (which was sometimes US like SimpliFares). With the exception of LUV, no passenger airline has the balance sheet to weather another sustained downturn without serious furniture burning. An ill-advised industry capacity expansion will increase debt loads and can decrease pricing power if not done correctly. That puts us all at risk.

jmo, and Carl and Nosmo can tell me I'm wrong.

 

Slow;
All of that is correct. I do not see DAL adding a ton of capacity. I see them adding certain international routes. That will require a decent amount of bodies.

Many feel that DAL cannot hire nor expand at all until they get their debt below 10 billion. There is a lot of truth to that. Even with a 2% growth YOY DAL needs bodies. Given our scope 2-4% a year in block hr growth in the international arena means decent hiring of pilots. Add to it that retirements will start to kick in.

I agree though. I prefer to be at red line than have to furlough.

 

BTW slow hiring 600-1000 bodies over the next few years is not that much growth for an airline our size.

I also do not see anyone except Virgin America wanting to expand capacity. We need to see margins in the 10-15% range. If we cannot maintain discipline then all of these mergers were pointless.

 

I totally hope for the big numbers and totally see Slow's point, however, I hope as ACL says the 600-1000 bodies isn't necessarily a sign of a jump in capacity but rather just meeting the needs of a pilot group that has 10,600-ish pilots bidding the lines and near 12,000 on the SL. Aviation Week has a good article in the magazine this week about capacity discipline, I for one, think we will retain our discipline given that this economy ain't boomin and if anything is headed down. Its a good article, also shows that outside of AMR's loss, the #1 airline in Q2 net and operating profits is DAL, #4 and #5 in operasting and net profit and behind USAir is, well, thats for another thread.

How are the retirement numbers going? I figure its a bit more complicated to forecast now than it was before when you knew X% make it to 60, X% make it to 58, etc. Now, you don't have those historical averages to base your hiring needs on.

And does capacity discipline mean chances for an Alaska merger increase? Its a good way to expand by 112 aircraft overnight and then synergize (i.e. delete overlaps) and make a profit naturally from the cost savings without ever having to take on the risk that comes from traditional expansion. Not to mention what if AMR starts to pursue them?

 

600 bodies is abut 6%. Two years of 3% growth will do that FtB. These are not crazy numbers. Add in the retirements and that is very responsible.

Fact is this economy is sputtering, as many of us though it would do in later 2010 to 2011.

 

Retirements are not as fast as I expected. I knew many Delta pilots would stay however a lot more former NW are staying then most thought. Last year 66 percent of the former NW who turned 60 stayed. That includes the PRIP numbers. Without the PRIP its likely the numbers would have been closer to 80 percent. That may however lead to a flood of retirements in 2 or 3 years.

 

Slow, ACL, and ftb,

Want to hire more pilots? The best thing that we can do is get our wages up in the next contract. I am amazed at the number of Captains I fly with that fly 85 to 100 hours a month, to "make ends meet." I am not talking about green slips these are guys flying this amount using WS and the Swap Board.

In fact I flew with a Capt recently who was made because he could not get scheduled to the FAR limits each month because he needed that many hours.

With higher wages many (not all) guys would fly less hours thus creating a need for more bodies.

 

Wow ... worst case at DAL, a Captain earns $138 per hr (acording to the pay scales posted on this site). At 75 hours per month, that's $10,350 per month before taxes, not including per diem.

Some might say that if you can't make ends meet earning that much, then an additional $50K a year would quickly be absorbed by your lifestyle, requiring those same captains to still fly 100 hrs per month to support their lifestyles.

Not trying to be critical ... just sayin' that increases in salaries may not directly lead to a drop in average flying hours per pilot ...

But raises are still a good thing regardless.

 

When you a guy that never saved a penny for retirement because DAL was going to "Take care of them," three kids in college (State or better), trying to pay off that mortgage that you signed on Sept 10, 2001, etc you are darn right these guys cannot make it on 70-75 hrs a month.

DAL has many Capt's right where they want em. They are leveraged to the hilt and know they only have a few years to make it right. It is completely in their right to fly like this, but it is a difficult way to live.