US Airways Dividend Miles (Pre-FlightFund Merger) - What would you do?

OK now that we heard what will happen, what would you do with the airline?

Stick around and hope someone else eventually picks up DCA as a minihub. Flights home to visit the parents in Tennessee just won't be the same stopping in ATL, CVG, ORD, CLE, etc. Gotta love the nonstops they have because of it. Whatever happens to US, I guess I'll be here with them until 1) the end or 2) I move.

<font face="Verdana, Arial, Helvetica, sans-serif" size="2">Originally posted by iflyPIT:
OK now that we heard what will happen, what would you do with the airline? </font>

Exactly what they are attempting to do. Get the unions in line with realistic benefits and workrules that will allow the airline to first break even and then grow. Anyone asking to see a copy of THE PLAN before all labor is on board is not going to get it. It's kind of hard to come up with a legit business plan when you don't know what your #1 fixed cost is going to be...

<font face="Verdana, Arial, Helvetica, sans-serif" size="2">Originally posted by geo1005:
Exactly what they are attempting to do. Get the unions in line with realistic benefits and workrules that will allow the airline to first break even and then grow. Anyone asking to see a copy of THE PLAN before all labor is on board is not going to get it. It's kind of hard to come up with a legit business plan when you don't know what your #1 fixed cost is going to be...</font>

I must call foul.

If every US employee worked for free, with a current CASM of 10-12 cents, they still would not get to LUV's cost level. Labor at US is a lower % of revnue than in is at Southwest.

The problem is no longer labor. It's the nonlabor costs that are killing US, and that's entirely due to the lack of management acumen.

They could have rolled the PHL hub 2 years ago. Redone the web site 2 years ago. Both, IIRC, were suggested here. As were additional adoption of kiosks and technology. And all of these other things.

I don't work for US, but I've now decided that I would literally not cross the street for Little Dave. I can't blame any US employee who (in this round) tells them to piss up a tree for another round of concessions. There is very little point in funding "The Education of Siegel as a CEO" while one looks for other employment.


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Don't feed the trolls.

<font face="Verdana, Arial, Helvetica, sans-serif" size="2">Originally posted by ClueByFour:
If every US employee worked for free, with a current CASM of 10-12 cents, they still would not get to LUV's cost level.
</font>

That is bull. If US didn't have labor costs, they would have the lowest overall costs in the industry. It is true that their other fixed costs are higher than their competitors, but not that high. If you need proof, look it up in last years anual reports.

[This message has been edited by fried (edited Mar 25, 2004).]

IMO, labor cost is not just the hourly pay rates. It includes every penny the airline spends on its employees including costs for some very inefficient work rules. This is where US's labor is more expensive than the LCCs.

I must agree with GEO and FRIED. I have 230 employees working for me. My real cost to employ them is not just their salary. It's the benefits, liabilty costs and work rules. Last year all of these area's added a whopping 42.4% more cost to staffing salaries.

Yes, other costs are out of line at US, but the biggest is still their people costs. And frankly, unions don't care and try to convince their "members" not to care.

Let's see here, how much more are the "members" paying in union dues compared to the LLC's? Hummm.

<font face="Verdana, Arial, Helvetica, sans-serif" size="2">Originally posted by fried:
It is true that their other fixed costs are higher than their competitors...</font>


Exactly. This is the vicious cycle that US management and US labor are stuck in and have been stuck in for years. Management says labor costs are too high (they are) and labor says management is not doing what's needed to run a more efficient airline (they are not). Each points the finger at the other. Both sides look for "blame" and it becomes antagonistic. Each side says the other needs to step up to the plate first. And round and round it goes. Meanwhile, the LCC's are moving in slowly and snagging market share and the downward spiral rate at US quickens. The reality is that BOTH sides of this system are broken and in need of radical change.

The (not so easy) solution is to get labor costs inline with the competition. This includes cuts in the current hourly rates as well as a re-writing of the wildly inefficient work rules. This (unfortunately) also means folks will be furloughed. Management needs to create non-labor efficiencies across the system. Roll the PHL hub. Get costs at PIT inline with the other hubs ($3 to connect per passenger at CLT vs. $8 at PIT... huh?). Management itself needs to become more efficient. Think of the redundancy at all of the wholly owned sub-groups at US. Fly the right planes on the right routes. Create incentives that will keep current passengers on US while also attracting new passengers to the airline. Easy? No. Impossible? No. Likely? I don't know.

<font face="Verdana, Arial, Helvetica, sans-serif" size="2">Originally posted by fried:
That is bull. If US didn't have labor costs, they would have the lowest overall costs in the industry. It is true that their other fixed costs are higher than their competitors, but not that high. If you need proof, look it up in last years anual reports.</font>

Labor represents about %36-38 of US CASM right now. It represents something like 38-40% at Southwest.

US has a CASM around 10 cents. LUV's is around 6 cents.

36% from 10 cents leaves you 6.4 cents or thereabouts, right around where Southwest is.

See where I'm headed with this?


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Don't feed the trolls.

What is this really going to mean in a practical sense to employees? Pay cuts? How much? What are some examples of work rule changes?

Also is there any hope that employees would embrace this? As an example, I have worked for a company where there have been management changes. There have not been pay cuts, but much more emphasis on standardizing procedures, chain of command, accounting for time, etc. It is now very common for employees to run around talking about how good it was in the past, and how bad it is now. In other words, people spend a good portion (maybe 5-10% of a day) either alone or with others lamenting on how great things were 3 years ago and how lousy things are now.

Is there any hope that you could cut peoples pay and make them work more, and have them be productive? Will people adpat to this, or like this company, will they just lament the past? I mean if you were making $100,000 ayear and now your making $32,000 that is quite a lifestyle shift.

I am not a psychologist or a sociologist, but I know largely people try like heck to avoid change, and don't like change.

Peple working in an LCC may have never had the better pay and perks. I mena if you always made $22,000 a year you don't really know how nice it could be say to live on $100,000 a year, so you don't miss as much making the $100,000, and I would submit perhaps you are less bitter than someone who once made $100,000 and now makes $22,000. These are way off examples, but they illustrate my point hopefully which is that I don't know if we can realistically think people are going to accept these changes enough to be productive and not so caught up in their misery about them that it impeeds productive work?

Southwest's pay scales have always been (drumroll) based on what the company could afford to pay.

In exchange, they supposedly (I say that because I don't work for them) offer a great working environment, job security, and (perhaps most importantly) profit sharing.

There are stories of ticket agents at Southwest who have never earned more than $20/hour during their entire careers, but are millionares due to profit sharing and stock options.

I don't think you would have a problem getting the US workforce to accept such a scenario, provided that you had both a good work environment, and the promise of seeing the pay cuts lead to something better. The current management team has not offered either, and that, my friends, is the crux of the problem.

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Don't feed the trolls.

I'm not trying to step on any toes here, but to be blunt, I get a little tired of this ad infinum bash management approach which is typical of many threads here. US is in a serious situation not because a CEO "doesn't get it" or because labor is greedy. It's a very real, dynamic, & unpredictable world that we all live in. And that makes it a pretty ****ed slippery pony to ride given both the economic situation and the individual and emotional factors involved.

As a pax who long ago commmitted to doing my flying with US, this situation concerns me a great deal -- both for my own personal implications and for the larger sense of a business with lots of employees who need jobs and customers hanging in the lurch on what happens as management tries to survive. It's not a nice situation for anyone to be in.

I hope that US management and labor have serious, earnest, and productive talks which take into account the real obstacles standing before the airline's well-being. To me, it's all beyond the hasty generalizations and slippery slope arguments that seem to be flying about in the press and elsewhere. It would be a shame if US management and labor are unable to consummate a serious dialogue at this moment in which so much is at stake.

I wish them all the best as I'd like to keep flying with US.

Barry

Well said, Barry. I too wish US the best and hope they can find a way to return the airline to profitability with as little pain and suffering as possible.

Unfortunately, I think we are all in agreement this will not be very pretty. It is both sad and unfortunate because US has, IMO, some of the best employees in the business.

I must call foul.

If every US employee worked for free, with a current CASM of 10-12 cents, they still would not get to LUV's cost level. Labor at US is a lower % of revnue than in is at Southwest.

The problem is no longer labor. It's the nonlabor costs that are killing US, and that's entirely due to the lack of management acumen.

tion of Siegel as a CEO" while one looks for other employment.


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Don't feed the trolls.

Thank you for raising this point! There is something structurally wrong with the no-labor costs; Someone should be able to figure out what. And on the "work rules" side, while them company keep mentioning unproductive work rules (and I have no doubt they do exist), one hears very little of specific work rule the company wants to change. Or why it has not chosen to take advantage of flexible work rules that are in place, but not utilized. (cross utilization of ramp and customer service in smaller stations, for example).