On Thursday's Q2 conference call, in reply to a question about pilot attrition, AW stated:
Sure, he could be posturing. But, in this case, I think he's telling the truth as he sees it. Why do I think that? Because it makes sense. Losing 180 pilots this year cost them $13 million in training costs, according to the 21 July NC email. That's virtually nothing for them in seven months when Q2 earnings were $683 million and operating revenue was $7 billion. BJ also said today on CNBC that by the end of Q3 they'd no longer be constrained by pilot supply.

Given the above, I don't think the level of attrition we're seeing right now is anywhere near enough to faze them. IMO, attrition would have to increase from 183 in the first seven months of this year to something more like 183 per day for them to be moved by it.

The point? We need to stop deluding ourselves into thinking that the attrition issue is leverage. They don't care. In fact, they might prefer higher attrition because it keeps longevity costs down and it keeps our ranks proportionately more full of 20-somethings who don't mind as much 12+ hour duty days and short overnights and are happier than most guys who've been around a while to simply be flying "big" jet airliners.

We need to live in reality, not pilot fantasy land. We want pilot attrition to matter to them. But they simply don't care.

Talking about pilot attrition as if it matters to them only distracts us from our goal of exerting maximum pressure on the company in order to achieve a truly industry-leading contract by causing us to direct attention and time toward something that doesn't move the needle. Only the credible threat of a legal strike is capable of moving the needle enough to obtain an industry-leading contract.

That is our leverage. It is extremely strong leverage. That is what we need to be focused on.

The loss of ~$78 million per day in operating revenue on top of the brand injury and operational impact that will naturally result from a legal work stoppage poses an existential threat to them. That matters to them. They do care about that.

When they finally look up from their stovepipes and spreadsheets into the metaphorical barrel of a pistol cocked and loaded with a legal strike about to fire off in a few hours, then stuff will get real for them. For the time being, though, they're doing exactly what FordHarrison is telling them to do: stall, delay, confuse, obfuscate, bob, weave, chaff, and flares.

And for us, it's our resolve to not fold before management has come to Jesus at the hands of the RLA in the midst of the most favorable negotiating environment for airline pilots in history that will deliver to us an industry-leading contract. We need to play the RLA long game. We may never again get a swing at a ball this primed to be batted out of the park.

 

That's what I've been saying all along. It doesn't matter to them, and chasing people away is doing disservice to this pilot group in many ways.

Instead, we want the best and we want them to know they're the best, and as such they need to demand and expect nothing short of the best.

 

I agree… but, just to be devil’s advocate for a second…

What did we expect AW to say? “Yeah… this is a real problem. We’ve lost over a months worth of new hires at $70,000 a pop. Not sure how we can recruit and retain them because we simply can’t offer things like Dreamliners, quick upgrades, or 36 hour overnights in Rome. We were really hoping we could offer to match Delta’s rates and SWAPA would send it out for a vote with no other changes, but now they’re being intransigent and we aren’t sure what to do.”

He had all those investors on the line. He had to downplay it.

That said, I agree with RJs… I don’t want pilots to come here because they have skeletons in the closet, low experience, or nothing more than a high school education. I have to fly with those guys! I want them to hire the best of the best that we can somehow convince to come here as opposed to the Big 3. If that means going to the mat and engaging in a legal strike in order to extract an industry leading quality of life in addition to great pay… if that new contract moves the needle even a little bit for prospective job seekers… then I agree that’s what we have to do.

I just hope the NLRB doesn’t make us wait another year or more to get to the next step in that process.

 

I think you meant “NMB,” instead of NLRB.

 

Your management has 0 incentive to bargain. It’s a lose/lose proposition for them in the current environment. They know that even if they beat the legacy pay rates by 10-15% it still wouldn’t mean they are all of a sudden able to attract a wave of new hires. Hard to argue with 1-2 year upgrades and new hires going to 777 and 787.

It will take the industry slowing down for some reason for you to gain any real leverage. And the U.S. airline industry has been capacity constrained since Covid. So fat chance on getting released anytime soon. Good luck. I foresee a long fight.

 

Can you go into more detail as to what you mean by "anytime soon"? Can you point to something specifically like a particular section of the RLA or a particular RLA case which makes you feel the way you do? I might agree with you if you mean weeks or months. But at some point, and guidance does exist on at what point this occurs, the NMB does not have carte blanche to simply keep a dispute in mediation forever.

 

The best periods of hiring for SWA are during recessions when everyone else stops. Maybe they’re counting on an upcoming recession.

Either way, SWA does it’s best hiring when there’s nothing else or as every pilot’s backup plan.

 

You are looking at hiring as the catalyst. WN wants and needs to change the incentive pay for coming to work and/or dragging the extra weight during the next meltdown. SWAPA Is not giving any more side letters like 2x pay for picking up along with POT for all that come to work . The last meltdown was almost 1.5 billion and that does not include the bad PR they are still carrying in the public view . Wall Street is now tuned into the pilot crisis.

 

The NMB operates under what they call “The zone of reasonableness”. If they view you are in that zone you can expect a release. If they view you are out of that zone they can in fact hold you virtually indefinitely. Informally that’s known as Icing. They generally define that zone by your standing amongst your peers.

 

It isn’t the only catalyst but the airline can’t grow or even Guard market share if it can’t attract applicants. And for the next year or 2 I don’t know if I see that changing dramatically.