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Unions worry Southwest Airlines could reject bailout and trim workforce

Unions worry Southwest Airlines could reject bailout and trim workforce

Old Mar 27, 20, 8:37 am
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Unions worry Southwest Airlines could reject bailout and trim workforce

Link to Dallas Morning news article here.

Some speculation that if Southwest rejects government assistance, they can reduce their labor force. If the economic shock and lack of demand for travel from coronavirus lasts longer than a few months, they may end up a smaller carrier than before. Although this would be devastating to some employees (especially flight attendants and customer service, ops and ramp agents at the airport, who are well paid but might not have easily transferable skills to a $60k+ per year job in a different industry) rejecting the bailout and trying to renegotiate some of the generous union contracts might be a sensible strategy for Southwest to improve their cash flow.
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Old Mar 27, 20, 9:18 am
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From what I have read, some the restrictions, in taking the bailout may well be not worth it to many businesses.

Any business leaders have to look at the total picture.

Just like many hourly employees may not take a reduced pay vs layoff from their employer. They can earn more money by staying home.
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Old Mar 27, 20, 9:35 am
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I believe the 'stay at home order' is getting to me. Every time I read the title of this thread, I read it as unicorns, rather than unions. Several times now.
Unicorns worry Southwest Airlines could reject bailout and trim workforce.
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Old Mar 27, 20, 10:16 am
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Originally Posted by drooley View Post
I believe the 'stay at home order' is getting to me. Every time I read the title of this thread, I read it as unicorns, rather than unions. Several times now.
Unicorns worry Southwest Airlines could reject bailout and trim workforce.
Haha - some Southwest employees are indeed "unicorns" - I'm thinking of ramp agents at some of the smaller stations (CRP, HRL, etc.) who are paid more than $30 per hour to work only a few flights a day. Once an agent hits 11 years of seniority, they are at the top level of pay, and as Southwest has slowed the opening of new stations, more and more of their employees are topped out. The TWU 555 contract allows Southwest to outsource the ramp only at stations opened after 2009 that have less than 12 flights per day (mainly the legacy AirTran stations such as GRR & RIC).

I'm not saying this is right or wrong - certainly, if you pay your workers well, they're more likely to stay on the job for a long time and be satisfied with the company - but many of the lower-skilled workers at Southwest would have a hard time finding another job paying anywhere close to $30 per hour if Southwest were to ever file Chapter 11 and renegotiate the union contracts. Delta, United, and even American have far looser contracts when it comes to outsourcing.
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Old Mar 27, 20, 10:58 am
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The bailout restrictions and terms are likely not going be accepted by many companies that might be able to survive without them in the long term. Not going to be worth it from what has been released so far about terms of the deal.

When Unions live high off the hog in good times then fat is the first thing to get trimmed when it gets lean.
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Old Mar 27, 20, 1:04 pm
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Originally Posted by NoStressHere View Post
From what I have read, some the restrictions, in taking the bailout may well be not worth it to many businesses.

Any business leaders have to look at the total picture.

Just like many hourly employees may not take a reduced pay vs layoff from their employer. They can earn more money by staying home.
The Loews Hotel chain is owned by Loews (NYSC, symbol L). If I read right, should a firm take bailout money it cannot buy in stock until next year sometime. Not sure if this applies here, as Loews Hotels is a wholly-owned subsidiary of the parent. Part of this company's strategy is to buy in about 6% of its stock a year, which they have done for years. IMO they should be buying in like madmen all the time, as the stock is well below book value, but they don't listen to me. Management is second-generation and the old guys were smarter.

WN has also bought in a decent amount of stock.

An interesting consideration.
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Old Mar 27, 20, 1:31 pm
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It's pretty clear industry will be nowhere near previous levels by September and it will likely take years to attain those levels again. Mandating full employment through September in exchange for taking the aid is just ultimately delaying the inevitable. There are many other industries that are similarly taking huge hits and the layoffs are largely immediate as they won't be getting bailouts. Bailouts should only be sufficient for keeping the airlines afloat temporarily as critical infrastructure until some semblance of demand returns. There will be a lot of displacements and movements in the economy, but this is how dynamic economies work. Some of this has been going on for awhile and this will just accelerate it (movement from brick-and-mortar retail to online). Statism, where the government guarantees jobs in sectors where they are no longer needed, is not the answer.
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Old Mar 27, 20, 3:00 pm
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SOAP BOX HERE:

Way too many people think they should come out this with ZERO loss. Jobs intact. Income intact. Company intact.

Sorry folks - this is one rotten bowl of cherries.... we have to deal with it.
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Old Mar 27, 20, 5:20 pm
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No one presumes "zero loss."

In my view, any airline abandoning the notion of a balanced use of their cash runs the risk of nationalization. And junk fees - a major source of revenue for the airlines - should not be exempt from the 7% excise tax on airfares. Nickel-and-diming is inconsistent with tightening your belt.

I sense that SWA is positioned to emerge intact.

The term "intact" remains up for debate.
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Old Mar 27, 20, 8:23 pm
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Originally Posted by xliioper View Post
It's pretty clear industry will be nowhere near previous levels by September and it will likely take years to attain those levels again. Mandating full employment through September in exchange for taking the aid is just ultimately delaying the inevitable.
Intent is to lessen the impact on the economy, which is currently frozen. Airlines are not the only industry who must adjust to the new normal, this approach provides some time to revise plans, keep the consumer economy moving in the short term - not unlike what the Fed did with TARP 12 - 13 years ago. From what I have read, Boeing also appears to prefer to go it alone, even the more vulnerable US carriers are seeking other funding sources.

Not offering an opinion one way or another, simply trying to help provide some context. Buckle up everyone - we are in for a long, bumpy ride.
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Old Mar 27, 20, 8:40 pm
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IMHO, Zoom (and others) have successfully killed off a good bit of future travel. There were a few kinks, but really not that many and every major company will be pro at holding remote meetings by the end of next week. I don't think demand will ever fully return to justify pre-Conoravirus Southwest payroll. I've finally taken the tape off of my laptop's webcam. The airline unions need to prepare for layoffs. Normally I would cheer at protecting all the workers since the crisis is not their fault, but the post-Conoravirus world needs fewer pilots, flight attendants, and airport employees.
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Old Mar 27, 20, 11:33 pm
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Originally Posted by jmw View Post
I've finally taken the tape off of my laptop's webcam.

HA!...Same here for the first time!

This was a bit of a wakeup call when I realize how much time I spend just traveling all over the place for meetings vs actual productive income generating work.
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Old Mar 28, 20, 5:01 am
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Originally Posted by PAX62 View Post
HA!...Same here for the first time!

This was a bit of a wakeup call when I realize how much time I spend just traveling all over the place for meetings vs actual productive income generating work.
In some ways, there is some similarity to 9/11. And others have no comparison.

But - the big one that happened AFTER 9/11 was the realization that way too many folks traveled with minimal gain from that travel. Way more did conference calls and just plain old phone calls to get work done. Folks realized that worked. I really think we will not see business travel bounce back for some time. Vacation travel will do better - for those that can afford it.
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Old Mar 28, 20, 8:36 am
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Originally Posted by NoStressHere View Post
In some ways, there is some similarity to 9/11. And others have no comparison.

But - the big one that happened AFTER 9/11 was the realization that way too many folks traveled with minimal gain from that travel. Way more did conference calls and just plain old phone calls to get work done. Folks realized that worked. I really think we will not see business travel bounce back for some time. Vacation travel will do better - for those that can afford it.
The proliferation of email for routine business correspondence, sophisticated online automation tools reduced the need for in-person interaction. Corporations also saw it as an opportunity to not only reduce travel expenses, but make their people more productive by implementing policies to discourage / prevent meetings with suppliers. This wiped out huge numbers of salaried and independent sales people, many of those who interacted with them, replaced by lower skilled, paid administrators. The trade show industry also took a big hit.
There are some issues that simply cannot be resolved by email, Zoom calls - take it from someone who survived / thrived during earlier turbulence - particularly if sophisticated, worldwide supply chains continue.

As I suggested earlier: buckle up, we are in for a bumpy ride.
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