Quote:
Originally Posted by FNG320
Meworry,
Most of what you say is good and realistic (no pun intended). However, on pay, you are 100% wrong. You seem to speak from the position of "I've got mine and its enough for me, I don't care about the other guy". However, no pay raise since the Fall 2001 if crap. SWA, AWA, and even AA have gotten raises. For a company to continue to make money and not give us employees a pay raise is crap, a failure of the CARING value in the first order! Yes, SWA's raise was excessive, so JB management should explain that they can't match SWA and give us at least a cost of living raise to offset inflation. I have run the numbers. It takes 1% of the margin to give a cost off living raise to every single employee at jetblue. So we make 8% vs 9% margin.
Just my opinion.....
FNG
I can't be wrong, I was already wrong once this year. But I do care about the other guy, because we don't get paid individually around here. Your pay and my pay are linked together, and sure, I'd like to make more, but I don't see it for a couple of years yet. So let me explain why I'm not wrong.
You mentioned margins of 9%. Unfortunately, that would be operating margin. Our net margins the last two quarters? Q1 2005 was 1.9%, and the quarter before was worse, .07%. Net margins are what determine earnings per share, and that is what investors care about. Ours is not good, except by comparison to most the other 121 carriers. An across the board 2.8% increase in pay (for everyone, not just pilots) pretty much wipes out profit. What about cash flow? Also not good. We have a positive operating cash flow in all quarters, but that is by far not where we get most of our cash, unfortunately. We get it from issuing securities, mostly in the form of debt. Last quarter we got about 70 million from operating cash flow, and over 340 million from issuing debt. You have to pay the interest in that debt. Our debt to equity ratio is off the page. We have the same debt as SWA, and they are five to six times our size. Most of the cash and short term securities on our balance sheet comes from financing, not operationg cash flow. That is a risky financial business model. We go a few quarters without profit, and we are in trouble. Raise ticket prices? Sure, if oil keeps rising, we can get away with that because everyone will want to raise prices. But just to finance a pay raise in a fiercely competitive and costly environment? I think not. Management's job is to create value for shareholders. Yes, they do have responsibility to employees, but they have to consider investors and wall street first. If our credit rating drops or stock falls out, we could face a real crisis. It will stay that way until we start hitting over $1.50 earnings per share or so, annually, which would justify our current stock price.
That is not to say your analysis of our buying power is not correct, though one could argue that our annual pay raises are cost of living raises, because they aren't enough to call them anything else. It's just the way it is now. Management did the right thing in Jan of 2002 with a retroactive pay raise. When the time is right, our pay will go up. For now, we need to be patient. We haven't made it yet, and a union will definitely not help us make it.
I note that like me, you have a military background, FNG. We always got our annual pay increased there. Good thing for us that DoD did not need to make a profit, wasn't it?