Furloughs and break even points
03-14-2020, 05:59 PM
#42
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Joined APC: Feb 2011
Posts: 3,866
Originally Posted by Guppers23
Just curious, could/ would the FAA ever take an opportunity like this to reduce the retirement age, down to 63 or younger? Seems like that would save the airlines loads of money as well as afford the opportunity to park old planes
03-14-2020, 06:41 PM
#43
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Joined APC: Feb 2020
Posts: 142
Originally Posted by Guppers23
Just curious, could/ would the FAA ever take an opportunity like this to reduce the retirement age, down to 63 or younger? Seems like that would save the airlines loads of money as well as afford the opportunity to park old planes
03-14-2020, 09:01 PM
#44
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Joined APC: Jul 2019
Posts: 185
Originally Posted by cadetdrivr
Actually high. And by the end of January my portfolio reflected it. I’ve found that observing Warren Buffett’s actions are more valuable than listening to politician’s words. YMMV.
03-14-2020, 09:11 PM
#45
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Joined APC: Jun 2019
Posts: 205
Originally Posted by Big John
For all of you who have been wondering how much it will cost United to furlough and retrain pilots, I encourage you to contact your reps and/or file a PDR.
And good luck with that. We all know you'll never get an answer. Big John is here to take care of you, though.
PAST FURLOUGH NUMBERS ASSUMING AN 18% REDUCTION
2003: 18% of 12000 pilots = 2160 furlongs
Actual number was 2172
2008: 18% of 8000 pilots = 1440 furloughs
Actual number was 1437
2020: 18% of 13500 pilots = 2430 furloughs
Actual number is N/A
SAVINGS FROM FURLOUGHS
The rule of thumb in 2003 was that for every six first officers that the corporation furloughed, it would save $1,000,000 per year.
Contract 2000 pay rates:
2002 B737 FO year one $50
2002 B737 FO year two $80
Contract 2012 pay rates:
2020 B737 FO year one $91
2020 B737 FO year two $140
Pay rates for these positions, where most of the furloughs will occur, are 75-80% higher than in 2002. The corporation now saves about $1.7M for every six FOs furloughed at present rates.
Projected furloughs = 2430
2430 / 6 = 405
405 X $1.7M = $688.5M annually
TRAINING COSTS
In 2008, the price tag for furloughing 1437 pilots and retraining the remainder of the pilot group was $100,000,000.
I don't know exactly how many pilots had to be retrained, but I heard the price tag was in the neighborhood of $60,000 per pilot.
8000 pilots- 1437 furlongees = 6563 remaining pilots
$100M / $60,000 = 1667
1667 / 6563 = 25% of remaining pilots who have to be retrained
Today's numbers:
13500 pilots - 2430 furloughees = 11070 remaining pilots
25% of 11070 remaining pilots have to be retrained = 2767 pilots
Let's just double training costs versus 2008 and call it $120,000 per pilot at current rates:
2767 pilots X $120,000 = $332M one time cost
$688.5M annual savings = $1,886,300 savings per day
$332,000,000 / $1,886,300 per day = 176 days to break even on furloughing 18% of United pilots.
Even if they have to retrain half of the remaining pilot group, their break even is still under a year at 352 days.
And good luck with that. We all know you'll never get an answer. Big John is here to take care of you, though.
PAST FURLOUGH NUMBERS ASSUMING AN 18% REDUCTION
2003: 18% of 12000 pilots = 2160 furlongs
Actual number was 2172
2008: 18% of 8000 pilots = 1440 furloughs
Actual number was 1437
2020: 18% of 13500 pilots = 2430 furloughs
Actual number is N/A
SAVINGS FROM FURLOUGHS
The rule of thumb in 2003 was that for every six first officers that the corporation furloughed, it would save $1,000,000 per year.
Contract 2000 pay rates:
2002 B737 FO year one $50
2002 B737 FO year two $80
Contract 2012 pay rates:
2020 B737 FO year one $91
2020 B737 FO year two $140
Pay rates for these positions, where most of the furloughs will occur, are 75-80% higher than in 2002. The corporation now saves about $1.7M for every six FOs furloughed at present rates.
Projected furloughs = 2430
2430 / 6 = 405
405 X $1.7M = $688.5M annually
TRAINING COSTS
In 2008, the price tag for furloughing 1437 pilots and retraining the remainder of the pilot group was $100,000,000.
I don't know exactly how many pilots had to be retrained, but I heard the price tag was in the neighborhood of $60,000 per pilot.
8000 pilots- 1437 furlongees = 6563 remaining pilots
$100M / $60,000 = 1667
1667 / 6563 = 25% of remaining pilots who have to be retrained
Today's numbers:
13500 pilots - 2430 furloughees = 11070 remaining pilots
25% of 11070 remaining pilots have to be retrained = 2767 pilots
Let's just double training costs versus 2008 and call it $120,000 per pilot at current rates:
2767 pilots X $120,000 = $332M one time cost
$688.5M annual savings = $1,886,300 savings per day
$332,000,000 / $1,886,300 per day = 176 days to break even on furloughing 18% of United pilots.
Even if they have to retrain half of the remaining pilot group, their break even is still under a year at 352 days.
03-15-2020, 08:04 AM
#47
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Joined APC: Apr 2015
Posts: 166
Originally Posted by fadec
If the company furloughs through some date in March 2016 there is a requirement to reconfigure 76 seat RJs as 70 seat RJs. I wonder what is the associated cost of this, all included.
03-30-2020, 03:31 AM
#49
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Joined APC: Feb 2006
Position: B737 CAPT IAH
Posts: 1,130
Originally Posted by UAL97
Hah! As if the company hasn't violated scope recently by having more RJ's flying than allowed and what ever happened to that Avianca grievance?
Was pushed to Feb then Nicolau died in early January. Not sure how far it’s going to be pushed given current events.
Lee
03-30-2020, 06:45 AM
#50
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Joined APC: Sep 2013
Posts: 916
Originally Posted by HuggyU2
Were Big John's numbers accurate?
For example, lets say you want to shrink the airline by 20% from the size it was in January 2020 and get there by the summer of 2021. First you would need to know how many retirements you have coming (fairly easy to get a good estimate of that, since most are mandatory) Then you would need to know which airplanes you are getting rid of by then, so you can know where the remaining 80% of pilots need to be. Then you have the joy of trying to model Pilot's behavior in predicting the results of bumps. Historically we barely even tried to do this, we just mostly bumped from the current excess, see where everybody goes, determine the new excess, bump that excess, see where everybody goes, determine the new excess.......
this is where the huge costs come into the process!!! So, this means that costs for a furlough go up exponentially as the size of the furlough you are attempting to get to is increased.
So, how much each furlough costs is entirely dependent on what the total number of furloughs is planned to be.
Where this is especially bad is in our current situation for those on the very low end of the seniority list. In our current situation with no furloughs before Oct 1, you can see that the bottom end of the list is in jeopardy. Taking pilots off the line to be trained between now and Oct 1 can be done for little change in costs since we will have pilots not being used for line flying and training capacity that is not being used. So, bumping excess 777/787/756 FOs off of their fleet and training even more pilots onto the 737/A320 FO seat could be done by Oct 1. This would then allow for a large number of excess pilots to furloughed on Oct 1. Most of those pilots would be do either 0 or 2 weeks of furlough pay, so this type of furlough could be done for the lowest cost per furloughed pilot. I am estimating based on current staffing numbers on the narrowbodies, that you could prob furlough 500ish pilots on Sept 30. That is a huge number and totally sucks!
Any subsequent furlough would be the result of additional bumps and training cycles and thus starts creating additional costs. The more of that training they can accomplish while we are in this massive pulldown the "cheaper" it is for the company. That has to be balanced against keeping your staffing at a level that can cover the optimistic end of your flying plans, so you can still cover flights if demand returns faster than you estimated. We should get an idea on what level the company is looking to shoot for very soon, as the size of any issued Displacements will help show their plan.
With the current limits discussed in the government money, it sounds as if even after Sept 30, we will be limited to no more than 10% furlough. Not exactly sure of the specific limitations/application of that requirement, but using 10% you come up with just over 1300 pilots. That would get us into pilots that would have completed over 2 years on the property, but not get us into the reconfigure the 76 seater to 70 seater range. If they are looking to get to that kind of number, then you are talking about significant bumps/BES closings coming soon. Sadly the dramatic pulldown of the schedule we currently have is providing financial motivation for the company to start the Bumping/Training process sooner!
