Downgrades
 

While Spirit hasn’t mentioned any Workforce reduction yet I was curious if a captain is to be downgraded what is the process to down grade and then the process once you eventually upgrade again. Is it a simple sim session in the right seat to get qualified in the right seat? Then when you up grade is it a whole PC check, then any OE? Fed ride again? Bogota route again?

The reason I’m asking, if Spirit thinks this workforce reduction may not be more than a couple months I wonder if it would be financially worth it not to downgrade anybody also not tie up any resources for the process just a downgrade and then upgrade somebody for a few months.

asking for a friend.

I don't see a point on furloughing unless they don't plan to need you for at least 6 months... and more like a year.

Given that a furlough will fall mainly on first and second year hires, and downgrades would fall mainly on those with 4-5 years on property, furloughing 500 pilots and downgrading 250 captains for 9 months until the summer Of 2021 would only save about $40 million in salaries. While you wouldn’t see the training churn you would in an airline with multiple fleet types, neither would it be negligible. Just lowering ALV to the guarantee would probably save almost that much money.

it’s very possible that management will decide - like the WN management apparently has - that this is an opportunity to seize market share from the Big Three while they are handicapped by the loss of their own international flying. If that were the case they well might just not furlough or downgrade at all and keep their cheapest labor on board, flying aircraft at less than break-even fares to gain markets and gates, then gradually ease up prices to where they are again generating profits as the recovery happens.

It all depends upon how they see the recovery playing out. Clearly, between the additional Fed loans available to them and the recent sale of stock, they have the liquidity to put the chips on the table if they want to place that sort of a bet.

I’m curious what the difference between furlough /downgrades vs longer duration VIL. 3,6,12 months. Since VIL goes more senior. You know many will take it during, November and December. With VIL there’s no displacement, training cost compared to furlough / downgrade and can be adjust month to month like we are doing now.

Without digging my iPad out and looking. If we have an approved re-qual training event, it’d be in there somewhere. They could also seek approval of such a program if they wanted to. With that said, I have bid down before and it was a simple PC and line check, different airline though. I’d say based on the email the MEC just sent out, furloughs imminent, downgrades likely. I’ve said it before, I’ll say it again, this is far from over

No reason to not offer long term VILS


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They didn’t get as many as they wanted for August. What makes you think they’ll have enough takers?

I have a feeling November and December, they’ll get more than they need.

They ended up getting more then they planned for august...


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I’d imagine there have been some guys(and gals) who have been waiting for a summer vacation or Christmas off for quite awhile...

They didn’t in DFW

Seems like if they’re going to offer furlough mitigation leave of more than 1 month, they’d need to offer them soon. That could at least save a few jobs!

Although i wish that that could save some jobs, I find a very big and simple fallacy. Extendend VILs bring ZERO saving when compared to short term (less than 12 months) furloughs. By letting you take a 3,6,12 months VIL or getting furloughed less than 12, the only EXTRA training NK would have to provide would be for landing currency. If they can choose to get you that landing currency sim after 6 months by paying you 50 hours or zero hours I am pretty sure they would take the latter...

bingo - single fleet type costs nothing to furlough.....key point

Except a furlough would be guys on first year pay. Where VIL you’d attract a lot of guys and gals on the higher pay rates. For example one captain taking a 50 hr VIL is the same savings (maybe more) as completely furloughing a first year guy.

It’s only a number to them.... Remember who we’re dealing with here; a management group who insisted during negotiations that they didn’t want to pay us to do nothing....

Thats a good point, but probably a very hard math for you and I to figure out. Even for them because they would not certainly know how many of the senior guys would take them, except based on the historical data of these last months.
anyways crossing fingers here

Two reasons:

1. The current VILs are month to month. It’s only enough time to take a break from work. SWA is offering up to five years I think. If a VIL of something longer than a couple months comes out it gets people to really think about long term life decisions like starting a business without going to zero income and healthcare, or going back to school, or living in an RV for a year and showing your kids the country’s natural wonders. Something that could completely change the the person they become.

2. For those happy with the month to month VIL they took some time off perhaps already and based on July the company had kind of telegraphed that things were coming back so by the time the deadline for August VILs happened they probably figured the break was enough and time to get back to work. Now that path seems a bit more rocky so those folks may be more likely to bid VIL again especially since fall is typically the slowest period of the year anyway. Not to mention school being in question in many states.

An ALV reduction is probably a little easier to calculate. Furloughing the bottom 500 on the list and downgrading 250 captains until summer 2021 would save the company about $40 million. Dropping the ALV to the minimum guarantee would save the company about the same amount without all the WARN requirements and training churn this coming Spring.

I don’t see the company offering any (or many) long term VIL lines. The only reason they are right now is because they took the Cares money so they can’t furlough. Once that restriction is lifted it’s more cost effective to furlough.

I think it's obvious that spirit is in a great place to get aggressive with the contraction of the legacies. Rona situation changes month over month, and then travel demand swings with it, directly into LCCs.

It's just going to come down to how many chips they are willing to push into the pot.

Furloughing is buying gold bars, not furloughing is buying Bitcoin. Both likely to pay off, but one safer than the other.

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I don't understand why everyone continues to comment on the "tone" of the MEC communications as furlough imminent. They've had the same tone the entire time.

Don't get me wrong, I'm preparing myself for the worst, not trying to spread false hope, but it's not over until it's over.

I’d agree. I see NK and F9 being in a better position to grab market share than even WN (what with the MAX issues) and it looks like WN intends to put their chips in the pot. Of course they do have more chips...

[QUOTE
it’s very possible that management will decide - like the WN management apparently has - that this is an opportunity to seize market share from the Big Three while they are handicapped by the loss of their own international flying. If that were the case they well might just not furlough or downgrade at all and keep their cheapest labor on board, flying aircraft at less than break-even fares to gain markets and gates, then gradually ease up prices to where they are again generating profits as the recovery happens.

It all depends upon how they see the recovery playing out. Clearly, between the additional Fed loans available to them and the recent sale of stock, they have the liquidity to put the chips on the table if they want to place that sort of a bet.[/QUOTE]

I keep hearing this on the line and in the forums. I don't think the big 3 are going to give up domestic market share without a fight. International is obviously their bread and butter, but with that market recessed and probably not coming back for quite sometime, whose to say they won't evaluate their market position and concentrate assets and resources toward the preservation of these markets. Yes, the big 3 are going to contract, but so could we. Also, what are the terms of these loans? Is there anything that would prevent us from entering into someone else's market? Yes we are smaller and nimble, and maybe we are able to add some additional routes, but I don't think this will be a huge windfall as some are thinking. SWA, JB, Frontier, and Allegiant will be competing for these routes as well.

This is what the company wants, to be aggressive and go after gates and routes that are left behind. They have mention this many times at the town hall. They can’t do that and keep our current routes, when they have hundreds of pilots on furlough. I keep hearing “it’s cheap to furlough” but how long will it take to bring those pilots back and get them current again. We have captains doing OE now who were awarded A captain spot 3-4 months ago. Of all the LCC / ULCC we are the only ones discussing furlough from what I can see.

They undoubtedly will TRY to do that, if for no other reason than it may be a couple of years before international and business travel comes back. But structurally they are at a disadvantage.

With as many as nine (9) different fleet types, and with the majority of their international flying being done by their most senior people, they have a real problem. All their furloughs are going to come from their Junior (and mostly domestic) flyers Who are flying their most junior aircraft. But before those people go someone else will have to be trained to replace them because those senior to them likely don’t have the same type ratings. Think about it - how many FOs with the seniority to avoid a furlough are going to have an A220 type? So you pay the junior people you are about to furlough to do the flying while you are paying the senior guy to learn the type. So OK, the FO you are going to downgrade to the A220 was flying the 737. You are going to have to downgrade somebody else - maybe flying the 757 - into his slot. Another type rating. The guy replacing him is An FO flying the A330. Another type rating. The guy replacing him is an FO flying the 777 or 787 whose last type rating before that was in the 727. And you go through the same thing with displaced captains. They’ll displace to the extent they can where it is monetarily or geographically best for them among the options available to them. If it happens to be most cost effective for management, that’s fine, but it’s unlikely to happen. You get a hellacious domino effect of expensive training events while you largely wind up with your most expensive equipment - equipment poorly suited for strictly domestic flying - sitting for lack of passengers and the cheapest part of your labor force furloughed, while simultaneously pi$$ing everybody off from the churn.

The /LCC ULCC starts with a less expensive labor force, can continue to utilize all their equipment, and other than the training cost of downgrading a Captain for every two or three FOs they furlough, really don’t incur a great deal of expense.

That doesn’t mean that the Big Three can’t or won’t compete, but it does mean that they are at an enormous CASM disadvantage when they do while simultaneously paying to park a whole lot of equipment poorly suited for domestic flying.

Worst case EVERYBODY loses money in a giant game of chicken, waiting for the other guy to raise seat prices first. Somebody - or even several somebodies - might go bankrupt before a winner emerges.

But it’s like the old Kipling story goes in Arithmetic on the Frontier:

I completely agree that the legacies are at a structural disadvantage, and they are going to take some serious knocks and losses along the way. But a wounded animal can still be a very dangerous one as well. They have all said they are going to emerge much smaller airlines. They are offering generous early out's for many near retirement, long term VIL's, shedding outdated fleets, and I wouldn't be surprised if one or two legacy carriers go to a two type fleet. One for domestic and one for international. I can also envision even more reliance on their code share and regional feed to maintain presence in markets that will no longer justify narrow body domestic service in order to keep the brand visible and keep competition at bay. Lastly, I can see the strategic use of bankruptcy to preserve the airline by renegotiated contracts, and protection from creditors. The last one is what I fear most when trying to compete.

I definitely think the LCC''s will have many opportunities to expand, but I think this will only happen if there are passengers to fly. If we continue to see the virus infections climb, and major destinations go back into lock down, or the dreaded 2nd wave emerging. Then only the strong are going to survive, and our industry will continue to contract, or never return to 2019 passenger levels. I just don't think market expansion will be that easily achieved by the LLC's.

you sent your call to action on The use of strategic bankruptcy to shed CBAs right?

Of course I think Spirit would like to get more gate space and capitalize on other airlines pulling back, but they fact is that won't happen right now because we are still losing money. It would be a bad financial decision to spend money chasing that when we (spirit) aren't even breaking even. Now if/when flying starts to pick up that would be a possibility, but right now I just don't see it.

Yeah, I’m not sure Spirit has the cash to gamble. At this point they’re still in survival mode.

On the town halls whenever someone brings up a scenario of us growing or gaining market share or taking advantage of the situation or anything of that nature, leadership guys sort of giggle like, “Oh, you pilots are so naive and cute” and reiterate that we are in survival mode and will be lucky to stop the hemorrhaging.

If only these cockpit CEOs could run the show, then we’d have nothing to worry about.

It’s entertaining thinking that a lot of us here think we are somehow different, immune or just wishful thinking to our position in this industry.
I’m sure this will trigger everyone again!

^^^^^^^^^This.

The old saying was when got hired at a major.....
First year, live like you were at a commuter
As an FO, live like you were an FE
As a captain, live like you were an FO and you would always be prepared for a furlough or downgrade.
Probably doesn’t work nowadays for the need to have it all now generation.

Well then, you've been around long enough to know that opinions are like assh*les, everbody has one.

To think any us have the answers to this unprecedented, day to day crisis is ludicrous. But by all means, you continue to tell those about to possibly hit the the street, you told them so.

Nope it still works, but in general I think you are correct if you are referring to the younger millennials or those outside of aviation. However, many of us came into this industry during the last big recession/age 65 debacle and we spent our 20s broke as a joke. I averaged less than 30k a year from finishing flight school at age 22 until I came off of first year pay at NK nearly 10 year later. That is what my dad made back in the 80s sans any adjustment for inflation.

I had a CA tell me I didn’t have a real aviation career until I was furloughed three times. So far been furloughed once (9/11) maybe downgrading here soon. I’m not so concerned about a furlough here as I am about the company going under, if I get furloughed it’s fine I have a place to come back to, the company going under is another issue entirely.

https://thepointsguy.com/news/spirit...tpg-interview/

The difference between what they are saying and what they are thinking. Surprisingly, WN management let the cat out of the bag.

That article was published before infection numbers started to increase and states began shutting down again.

Situations can always change. The INTENT to emerge relatively stronger than the competitors doesn’t.

It’s called free market Capitalism.