Cost Neutral, not even breaking a sweat.
 

How is it Cost Neutral if they have to increase fares to absorb the cost? Or am I missing something? Im not being a D-ck Im just slightly confused. Long night watching my Beloved Pats lose, lol



"For 2018, Spirit Airlines would need mid-high single-digit unit revenue growth to keep its pre-tax margin flat in the face of rising fuel costs. That will be difficult to achieve, but it's not impossible. A relatively small (less than $10 one-way) increase in Spirit's average fare would do the trick. Airlines across the industry should be motivated to avoid fare wars this year, given the steep fuel cost increases they face."

Read that quote again. I’ve put the important text in bold.

And here is another:
“Furthermore, Spirit's effective tax rate will drop from 37% to 24% this year, due to tax reform. That should enable Spirit Airlines to grow its earnings per share in 2018, despite absorbing big increases in its fuel and labor costs.”

Dude, read the point right before your highlight. High single Digit REVENUE would be needed to offset. Its not neutral if you need to RAISE revenue which was the previous posters point. Its a see saw, we drop a fat weight on one side then they have to balance it out to get back to neutral, or atleast attempt to, raising REVENUE, hence its not cost neutral.

Any company is gonna try to offset any increase in costs, whatever it maybe.. They just gonna absorb any and all costs and just watch profits dwindle? Of course they wanna find ways to mitigate any dramatic increase in costs..The have a fiduciary responsibility to the owners (shareholders) to do so.

This is in reference the rising fuel costs and has nothing to do with the contract.

However, "Spirit Airlines previously estimated that nonfuel unit costs would decrease 3%-5% year over year in 2018, excluding the impact of any pilot deal, in line with the 4% decrease it expects to report for the final quarter of 2017.

In other words, Spirit Airlines should be able to offset the vast majority of this increase in pilot compensation through other savings during 2018. The net result is likely to be low single-digit nonfuel unit cost growth. This is a small price to pay for achieving better labor relations."

It doesn't say what 'other savings' is but I would guess it has to do with Section 1 and 25.

Their assumption of $700 million is off by about $256 million.... ($956 million was the number I was told)

I haven't done the math, I can't because I'm not in the accounting dept. But if you told me for a fact that this contract was cost neutral, I would absolutely believe it. There are so many concessions here it's mind boggling. Here are just a few off the top of my head:

PBS = Less pilots per Aircraft = Smaller payroll

Less vacation dropping with PBS = Ditto

Section 25 changes = Ditto

Transition conflict gone = Less open time = Ditto

No reserve drops = Ditto

18 hour short hotel = free hotel transportation instead of paid shuttle service (This is way more money than you might think.) (I'm of the opinion that the majority of our overnights will shrink to fit this)

Usually the worst part of my trips are waiting for the hotel shuttle on a short layover. No kidding

At least we are still confortable downtown to enjoy the new no pay 23:30 layover

Absolutely. No argument here.

The plus side is that when your outbound flight is delayed, you can simply take a later van. Transportation services are usually not as flexible.

There will be less delays now due to scheduling’s new powers over pilots.

24 hrs at IAH airport hotel! Can’t wait. Since we won’t be at doubletree or Sheraton, that holiday inn is still down the street, right? Miss those dinners at “Good Eats”


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Curious, why would the quality of hotel change?

It beats the 3 hour back and forth through traffic on a 15 hour overnight.

Fellow XJTr ehhhh?

Yes. Many beers guzzled at Good Eats


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Nice! Been a long time since Ive been there

True, but you won't be able to get away with that under the new TA. Outbound flight delayed? You very well may get rescheduled to work or deadhead on another leg, which is leaving as soon as you get to the gate.

Everyone who believes this TA is cost neutral is wrong. At the roadshow the union had ALPA lawyers and financial analysts, charts, graphs, and facts. Basically this TA will cost 49% more than the last one. Spirit profitability will go down 35%. These numbers come from ALPA, not the company.

I was on the fence until the roadshow. The fears I'm reading are way overblown. The gains here are substantial.

Really the main thing I was disappointed in was the fact that Reserves post PBS will be unable to drop. A definite negative since your schedule will be locked in when you get it, absent a MFV usage once every 12 months.

But as a whole there are so many more positives. Gains in scope, pay, LTD, a DC plan, and an industry standard 12 year scale are all significant.

Just go to a roadshow. That's the best advice I can give anyone, as you can ask any tough question and get it answered.

Voice of reason/logic ^ thank you

Cost Neutral, not even breaking a sweat.
 

Don’t sell yourself short on the pay. Still below where we should be in this TA. You honestly think they would say anything negative about this TA? Don’t drink all the Kool-Aid. When they repeatedly say “the company won’t do that” or “the company shouldn’t do that “ or recommend we call in fatigue if we don’t want to sit airport ready reserve; I can not vote yes for something I will have blind faith in, sorry. But I appreciate your write up and perspective on what they sold you on at the meeting.


To each their own. Myself, I know I deserve more than what the TA offers on the pay alone. You say industry standard? Show me!

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1) There is no such thing as a perfect contract.
2) There is no such thing as a perfect contract.
3) There is no such thing as a perfect contract.

Would you say it calmed down the guys with pitchforks? What was the feeling of the room, did it feel like the message boards or is everyone pretty open?


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We're giving away FAR more in 25 than what this pay scale warrants. Most are fine with the scale OR the rules, but NOT BOTH.

Form 8-k

“For the full year 2017, our team delivered an adjusted CASM ex-fuel of 5.51 cent s, up 1.1 percent year over year. This was an admirable performance considering the hurricanes and other disruptions this year,” said Ted Christie, Spirit’s President and Chief Financial Officer. “Should the tentative agreement with our pilots be ratified, we will gain tools that will allow us to further improve our operational reliability and drive efficiencies, which gives us confidence that we will be able to maintain or grow our relative cost advantage.”

What's does "maintain" mean?

Cost neutral?


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Thanks for the reminder. I thought there was! JK
But buying something on its first pass is risky. Just like tech, skip the first generation products, always full of bugs :)


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The key to that statement is the word relative. Legacy CASM is going up as well, ours would likely parallel that move going forward, albeit at a lower baseline. If the TA is voted down, our cost advantage would likely increase.

The first 2 hours were the presentation, so there were no questions. After a short break, the remainder of the time was questions. There were several guys who were definitely concerned with the rescheduling language, and made sure all of their questions were heard and answered. Certainly some pretty strong opinions, but still respectful, and it did change a lot of people's minds. It never got really heated. The MEC, NC and ALPA people were all very knowledgeable. Definitely worth it.

Again, everyone should go to a roadshow!

That's good to hear! Nothing is ever solved when people are yelling and screaming.

I look forward to the show.

Yeah, because after 3 years THIS is the first pass. GMAFB!

no, but there is such a thing as a cost neutral contract

First TA I’ve seen in 3yrs........ we must be at different companies


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If I wanted to give Blind Faith, I'd go to church. Then again, even God *******s people over royally. Whether in the Bible, (Book of Job) or in real life. (Just turn on your local news.)

I look forward to attending a roadshow in ORD next week. Should I fold up a literal tin-foil hat and wear it when I ask my questions?

Exactly. Our elected union officials have pass on many offers from management.

Supershuttle is worse. I've had them no-show me more than 25% of time.

the worst part of my layovers are LAX driving in traffic for 1 hour each way on a 13:30 hour layover. giving me barely 11 hours at hotel.
As long as the quality of hotels....marriott, sheraton, doubletree, hilton, don't change, I don't care where I stay. I'd rather be 10 minutes from airport than 45-1 hour. If I REALLY wanna go party downtown....I'll uber.

Also 18 hour layover doesn't include duty out and duty in. so minus 1.5 hours. 15:30 is actual layover. Most airlines do 16 hour layover (duty out-duty in) is long layover hotel