Continental Airs

Cleveland Saved?

2005-10-12T19:55:00.000-07:00

I was perusing the forums at Airliners.Net when I came across a topic referencing current pension reform legislation before congress and the fact that if the reform measure is passed, then our Cleveland hub will be saved.

Which begs the question if Cleveland was ever on the corporate chopping block as far as our company is concerned. We've been repeatedly told over the past two years that the company is commited to the future of the Cleveland operation, and that it remains a viable hub in our network.

But the following story onKRIS Tv seems to imply that if pension reform measures aren't passed in congres, then the 4,000 plus Continental employees in cleveland would cease to be employed, at least by us.

Minneapolis-based Northwest Airlines has a hub in Detroit and Atlanta-based Delta Airlines has a hub in Cincinnati. Continental officials say the geographic proximity of the three hubs makes Cleveland vulnerable: It would lose important connecting-flight traffic to the larger Northwest and Delta hubs if those airlines were able to save on pension contributions and then lower their fares.

"Our Cleveland hub is relatively small and is therefore highly susceptible to competitive pressure from other hubs in the region, like Northwest's large Detroit hub," said Continental spokesman David Messing. "That kind of competitive pressure could have become exceedingly threatening if the pension legislation had delivered unequal financial relief to one competitor over another."

It makes me wonder if management is playing it close so that the remaining solvent carriers are on the bankrupty precipice benefit from any airline legistionlation before congress. I've looked around for similar stories and talked briefly with contacts in the company but no luck in finding a backup source.

There are some notable discrepencies in the article though. It states that our pilots have frozen their pension, which from my understanding wasn't the case. It was that our workgroups in our company were part of the same pension plan, and that after the company asked for concessions, the pilots part of pension contributions and benefits was split off into a seperate plan. I'll have to look into that when i'm at work tomorrow.

I know there has been a lot of rumor and fear among the agent groups about the status of the Cleveland hub. While Cleveland has approximately 250 daily departures, the majority of them are regional flights operated by Express Jet. The big question behind that, is if the majority of those flights are operated by Express Jet, how long will it be before the station becomes an Express jet station in it's entirety instead of a Continental station.

Funding The Underfunded

2005-10-11T19:15:00.000-07:00

This week the company announced that they contributed $84 million to our defined-benefit pension plans, thereby meeting our minimum requirements for funding under federal law.. While it's welcome news, our pensions are still underfunded. The last I heard our pensions are underfunded by approximately 10% of their current value. Definately better than Delta's and Northwest's position of having to contribute close to $8 billion by next year, unless current legislation in congress is enacted allowing airlines to defer their current contributions over 14 years. I still have a nagging suspision that the latest two entrants into bankruptcy protection will eventually seek to dump their pension obligation on the federal government. If they do, I strongly suspect that both American and Continental will follow into bankruptcy to do the same.

I was talking with a gate agent the other day, and there is still a lot of rancor and bitterness concering the wage concession they were forced to take. There was a lot of talk about how upper management views the field services divison as a "cost center." The agent didn't seem to understand that, with the prevailing idea is that field services doesn't spend money. That the only time field services "cost" money is when agents damage an aircraft. I think their is some misinformation about what a cost center is. That is field services doesn't generate revenue. Field services is considered a cost center because the company has to pay those employees, without those employees generating revenue for the company. I find it ironic, especially when agents collect excess and overweight baggages fees, collect revenue from tickets purchased at the counter, and collect monies from change fees. While it may not equal the revenue generated by reservations, cargo, and continental.com, it is still revenue, not to mention the fees that employees have to pay to travel on stand-by.

The agent also went on to complain how local management does nothing but complain and criticizes agents for doing their job with the constraints placed upon them. The agent's perspective is that downtown yells at the airport director, who inturn yells at the assitant directors, who inturn yells at supervisors, who finally take it out on the agents. I tend to agree as I've seen it happen myself.

We're also looking at increased competition from jetBlue, who plans to add 52 additional flights from it's JFK hub to Boston, MA, Austin, TX, and Richmond, VA. jetBlue is our biggest low cost carrier competition in the new york area. It will be interesting to see how we handle the competition and think of ways to compete, or else if we will fall further into the "the fuel prices are too high & they off fares to cheap" mantra that seems to plague the majors.

One thing we are doing is adding new inflight entertainment on our Boeing 757-200 aircraft. The new IFE will feature audio and video on demand with touchscreen controls. Since the new AVOD equipment is smaller, we will be adding three more coach class seats where the old IFE equipment use to be.

Bethune Cares, Employees Don't

2005-10-06T20:27:00.000-07:00

This past week we won tentative approval to provide service from Houston To Buenes Ares. No word yet as when service will begin, but I heard yesterday that it the company is hoping that it will take place before christmas. Fairly quick time to open a new station in my opinion. Of course I learned of us being awarded the route before the company ever made an announcement. For a company that prouds itself on quick and open communication with it's employees, it seems that we're always hearing news of our company's plan long before the company ever mentions it to us. The first time I was ever laid off from this company, I learned about it from my local news station while on my lunch break.

Our company has an internal group called 'We Care.' It's a program that is funded by employee's and former employees, who's goal is to off aide and assistant to Continental employees in times of personal emergencies, tragedy, etc. There usually a number of activites through out the year to help raise monies, i.e., gold tournements, bake sales, burger burns, etc etc, as well as the option for employees to set a certain amount to be deducted from their paycheck each month to donate to the We Care fund. A fairly laudable program at our company. The only reason I'm mentioning it this week, is that our former CEO, Gordon Bethune made a contribution this week to the fund. When he made his donation to the fund, he stated that he still feels a connection to the employees of Continental and wanted to do something to help those affected by hurricanes Katrina & Rita. Now, having just retired less than a year from the company, with a retirement package in excess of $34 million dollars, one can only imagine the generosity of the man who still feels "connected" to his former employees. His contribution? a heartwarming $1,800 dollars. That's right. $1,800 US dollars. Apparently it's the amount Time Magazine paid him for his article he authored that i referenced earlier in the week. Quite impressive.

In other news Oppenheimer Funds now owns approximately 6.8 million shares of Continental stock, or 10% of the company. Joining the other institutional investers...

I was walking through the terminal the other day, and ended up talking with one of the ramp agents. He was not in the best of moods. He was trying to fly up to Denver, and the poorly ran bus system that ferries employees between the airport and the employee parking lot, took half an hour to get him to the terminal. (normally 10 minutes at tops) and he missed his flight. We talked at length about attitude among the employees, and he said most of the men and women in the T/ops work group just don't care anymore. I can see why they have that attitude. They don't see our company doing anything to return us back to profitability besides asking for pay cuts... or forcing pay cuts, since the ramp and gate agents aren't unionized. He said that most people do the bare minimum if that for their job, that there is no reason to go out of their way to do more, to make sure that bag gets on the right plane, to make sure that plane goes out on time, etc etc. He says the local mgmt team, supervisors, asst. directors, the directors are only looking out for themselves, don't back up their employees and only look for reasons to do a write up, or fire employees, that supervisors notice when the best employees make a mistake, but say nothing to the slackers, like having the mentality that "oh well that's the way they've always been and nothing will change with the slackers" mentality.

Part of that is having a seniority based system of reward. It's allows an employee to be rewarded for length of service regardless if it was years of bad service. There is no incentive for employees to perform better. Just show up to work ontime, and go home. About all that you need to get raises, vacation time, and all the other benefits of working for this company.

Outsourced Diversions

2005-10-04T00:28:00.000-07:00

Over the past year there have been numerous stories about outsourcing jobs in all industries, not just the airline industry. Though it has been a fairly comman practice among every airline to outsource some of their positions. Usually it's ramp services that airlines contract out. Those people who park the aircraft, load/unload freight, mail, and baggage. The ones who make sure the plane is connected to power and conditioned air while at the gate. In most outstations, it's not economical for airlines to keep a full time ground crew, when they may only operate 2 or 4 flights to that city on any given day.

There are plenty of companies that offer such services, Menzies, being the main one worldwide. Though airlines have been known to contract with other airlines to provide ground service. Airlines also contract out actual flying. Here in Houston we contract out our express flights Express Jet and to Colgan Air. Express Jet use to be a wholely owned subsiderary of Continental till it was spun off approximately a year ago. They provide most of our regional feeder service at all three of our hubs. Colgan Air provides feeder service to select small markets in Texas. Markets that Continental would be profitable if they were operated by Express Jet.

The thing is though, most of the ramp crew members I've talked to in Houston think it's a huge comical joke. Those flights are contracted out to Colgan Air. The ground handling, since it technically isn't a Continental flight, is handled by Delta Ground Services. There is another contractor who cleans the aircraft, and still one more who caters the flight. The Colgan Air flights are operated as a pad operation; meaning they don't have jetways to pull up to, but a spot they park at and passgeners are bussed from the plane to the terminal. That means, why yes, another contractor to do the bussing.

And while I think outsourcing can be nice on the financial side for a company, one should really pause to think about the consequences of what may or may not happen. A few months back, we had a Colgan Air flight leave full of passengers, but the ramp crew did not load a single bag on board. Apparently most of the planes passengers were transiting through customs, and they cleared customs sooner than their bags did. The ramp crew seemed to have their collective head up their ass thinking "wow, i make 6 bucks an hour, i can buy a 40 ounce beer and a pack of smokes," instead of questioning that they had no bags to load on this flight.

The one thing though, is that with as quickly as companies are outsourcing their labor, it's give fear to the actual company employees that are left. The other day i was walking through the terminal just listening into various employees talk, and one guy pointed out, that with the way things are going, every position will be contracted out. Ramp & gate agents to Wal-Mart rejects, reservation centers to india, and the pilots and flight attendants will become independant "contractors," and the A&P mechanics will be replaced by a grease monkey from your local Pick-A-Park. That an airline, will just be a name, some uppermanagement officals and that's it. Scarey thought.

In other news, the The New York Post ran an article critizing Continental for stranding passengers in Gander, Newfoundland, Canada. In the article they critize the airline for diverting flight 55 that was enroute from Newark, New Jersey to Paris, France due to an engine problem. The NY Post is usually considered one of the best papers for tabloid reporting and this article is no different. They interview one person who is quite irate for the stop at Gander, and the paper reports that the hundreds of other passengers that were stranded at Gander had experienced the flight from hell.

A couple clarifications. On that particular flight, Continental operates a Boeing 767-200 aircraft. The seating configuration for that particular aircraft does not even hold 200 people, so I'm wondering what flight these 'hundred of other passengers' came off. As far as it being the flight from hell, I can understand people being upset about not making it to their destination on time. The flight was delayed out of Newark for four hours due to maintenance, and then diverted due to an oil pressure light that came on during flight. I don't know about anyone else, but if i'm flying, and some warning light comes in regard so the engine, I want those pilots to get that aircraft on the ground as quickly and safely as possible. If I'm not mistaken there was a flight that crashed into the Atlantic Ocean mainly due to the pilots ignoring a low oil pressure light. Now that would have been a 'flight from hell' for me. We also just didn't strand them there. We offered to put them up in a hotel, give them compensation. It's not like the captain came across the p.a. and announced "ok folks, we're cruising over Gander Newfoundland, the flight attendants are coming through with parachutes and this is where everone gets off."

The article also doesn't interview anyone else on the flight. Only the one irate passenger. There isn't much more Continental could have done. We normally don't store spare aircraft in Gander, nor do we have an infinite amount of aircraft near any given airport we serve that could have been flown in as a replacement. I particularly got a chuckle that in the Post's report that the put "engine trouble" in quotes, as if the pilots made that up so they could make a stop in Gander to visit friends. They also have a picture of an aircraft in the story... the byline being "a boeing 767-200, just like the one pictured below" but, the picture below is of a boeing 757.

I think if anything, the aritcles shows the mindset of people who actually fly, then on how airlines actually function. The post never sent a reporter to Gander to investigate. The one passenger who they interviewed, called the Post herself to make her complaint. Though I doubt many people will realize it, and just chalk it up to big bad rich airline screws the little person again.

Stocks & Rants

2005-10-02T00:59:00.000-07:00

With the close of the markets this past friday, it's marks the end of the third quarter. Continental's (CAL) closed at $9.66 a share. This means our employee stock purchase plan this quarter will not allow us to buy shares. At last years annual shareholder meeting, they approved a new stock purchase plane for employees, that has a condition that we can't buy shares through it, if the price of the stock is below $10 on the opening or closing business day of the quarter. That means sometime this business week, the company will refund those monies that employees who are enrolled in the plan, contributed through out the quarter. We can still buy shares if we have a regular brokerage account with any brokerage firm.

While surfing around I found a blog titled Detrick On The Rocks written by a captian who flies international routes for Northwest Airlines. In this entry he lambasts upper management at Northwest. While his overall attitude regarding upper management strikes a resonating chord with me, I imagine that many people in the flying public are sympathetic to management. The general trend I've noticed on most aviation forums seems to entail the attitude "hey, a job at lower pay is better than no job."

I really don't understand that attitude. Maybe it's people who have never worked in the airline industry, or maybe people who hold entry level jobs at some Dollar General store, who would love an oppurtunity to hire on with an airline at half the wages that airlines pay now and far fewer benefits. Which the way things are going in this industry they might have that oppurtunity before long.

I think the general flying public, those people who may fly once every couple years, have the idea in their head, that to pilot an aircraft, to run a succesful operation, is as easy as catching their local mass transit bus. It's not. Pilots, maintenance & ramp workers all have duties that ensure each aircraft makes it to it's final destination. Maintenance workers make sure that aircraft is in safe working order. Ramp agents load those bags and freight in the cargo bins to carefuly prepared load reports, so that aircraft is balanced while in flight. I remember a story a few years ago of a cargo flight, where the ramp agents didn't load it correctly, and the freight shifted in the cargo bins which caused the center of gravity for the aircraft to shift. The aircraft ended up crashing and killing everyone on board. And the pilots...while much of actually the actual flying is automatic these days, anyone who recently watched the jetBlue debacle in Los Angeles the other week, knows that you need skilled pilots who can handle such a situation to get that plane safely on the ground.

It's definately not the same as driving a bus for Greyhound or your local transit system. I'm thinking one day we're going to have to have such a serious airliner incident where the FAA can trace it's route cause to lousy pilots or mechanics or ramp workers, who hired on for Wal-Mart wages before the public realizes that the cheapest thing out there, isnt' exactly the best thing.

Cancelling Flights

2005-10-01T01:00:00.000-07:00

In our daily newsletter yesterday, 30 September 2005, the company announced it is considering cancelling flights in select markets due to high fuel prices and the fact that the company hasn't been able to achieve wage reductions from all work groups, mainly the flight attendants. I find it difficult to believe that the still to be enacted wage reduction for that one workgroup is making the difference in us being profitable or not, since the company was only looking for approx. $78 million in concessions from them, far less than every other work group.

With jet fuel almost reaching $125 per barrel this week, CO is considering temporarily suspending some flights in select markets. The extremely high cost of fuel, together with the fact that CO has not been able to achieve its targeted wage and benefit reductions, means that the revenue from some flights doesn't even cover the cash costs of operating those flights.

The company went on to say that high fuel costs and the flight attendants not reaching an aggreement on concessions have combined to render revenue from certain flights to not cover the cash operating expenses.

Both American Airlines and Delta Airlines announced flight cancellations. American announced that they are cancelling 15 round trip flights out of it's Chicago and Dallas-Ft. Worth hubs and will re-evaluate at the end of the month their decision. Delta announced that they are 'proactively' cancelling 'some' flights in order to conserve fuel.

Now at the same time, we are having a system wide employee appreciation day, with free ice cream and free t-shirts for all the employees. Supposedly this appreciation day is being underwritten by General Electric since they are designing and building the GEnx engines that will power Continental's Boeing 787 aircraft.

While I'm sure the front line employees will eat up the ice cream and t-shirts, i would tend to think that it doesn't make up for the pay reductions and financial uncertainty that our company is careening towards at an ever-increasing speed.

Gordon's Solution.

2005-09-30T15:18:00.000-07:00

I was surfing aroud today and came across an article in Time written by Gordon Bethune, our former and elustrious chairmen of the board. The article is his take on the mess the airline industry is in, and the cure to fix it. Gordon lays the main part of the industry's problems at the government's feet. His solution is for the government and manufacturers (GE Capital) to stop bailing out weaker airlines, and letting the market decide who will survive and who will fail. And that reform in government laws would allow airlines to merge and offer better competition. Gordon also believes the airline industry is saddled with too many taxes, at current count airlines pay 14 seperate taxes to various governmental entities. Usually quite often, taxes the airlines can't pass on to consumers due to increased competition from low cost carriers. Gordon also wants the government to stop the 'pork' spending in bills and pour that money into our nations aviation infrastructure, i.e. upgraded ATC system, upgraded airports.

It's an interesting article. Gordon is known for "telling it like it is" instead of sugar coating his words. People either love him or hate him. I have mixed feelings for him, he came to Continental from Boeing when Continental was under dire financial hardship and many thought the airline would fail or be bought out, instead he turned it around to one of the most admired airlines in the United States. But, he left Continental in almost the same situation. While we're losing money, we're not losing as much as the rest of the industry. We are fully leveraged though, with approximately 21-22 billion dollars in debt. I'm sure our on corporate board is eying Delta & Northwest and the benefits that bankruptcy offers. The ability to discard labor contracts, the oppurtunity to dump an underfunded pension on the government and the possibility of returning our most unprofitable aircraft ( the boeing 737-500) to lessors.

So while I agree with his assement that the government needs some serious reform in it's laws and taxation of passenger airlines in the states, I don't think it's the full solution. It seems to me that these corporate boards of all the legacy carriers; United, Delta, American, Northwest, Continental, need to sit down and re-evaluate the whole business model. It seems that they are still hoping for a return of the business traveller, of lower oil prices, as the main means to profitability. I don't see this happening. Personally, I think we should all accept this reality, and work towards and develop a business model that accounts for this basic shift in flight travel and fare pricing that has occured in this industry, along with less government intervention (taxation, regulation, etc)

Though Gordon is right in one aspect, the airline industry is the most heavily regulated un-regulated industry.

Fares Raised, Airports Razed

2005-09-30T10:15:00.000-07:00

With record high prices for Jet A, the comany had decided to raise fares. $10 on one way tickets, and $20 on round trip tickets, for domestic flights in the continental 48 states, including Alaska and Hawaii. It remains to be seen if the rest of the industry matches the fare increases so that they will stick. I imagine Northwest will finally match a fare increase, since they are in bankruptcy as of now. Traditionally Northwest Airlines is the spoiler in the airline industry and does not match fare increases. Things may change with their bankruptcy.

We've also announced new service to Copenhagen Denmark begining in May 2006. While I love te expansion into new marketes and European cities. I still wonder if we're basing to much of our expectation on international markets. While international routes tend to be profitable. It just seems like we're abandoning the domestic market to low cost carriers. Quite often in international markets, the airline industry is nationalized and ran by the government. And people tend to partake in nationalistic pride and fly their national carriers.

If you listen to Larry Kellner, and the rest of the board, they continue to blame on fuel prices and a weak domestic fare enviroment, that we're taxed so highly... which is all true, but i'm tired of hearing what we can't do. We can't just complain and hope the price of fuel comes down, or that the government will lower/repeal taxes on the airline industry. I don't see it happening anytime soon.

I would rather see and talk about what we can do. Hedging out fuel supply would greatly help, though would be extrememly difficult for us to do now. Due to the economics of hedging. Hedging requires good credit, and right now our company's debt rating is at Junk status, along with the rest of the industry, with the exception of Southwest. Technically the only reason Southwest is profitable at the moment is that they have their fuel supply hedged over the next three years. It's the main reason they can continue to off low fares and set pricing for the entire domestic side of the industry. So how do we compete with that?

That's the big question, start hedging our fuel supply definately. Until the playing field is level we will continue to see distorted pricing by the low cost carriers vs. the legacy carriers. Maybe pressure the government into providing 'loan guarentees' so that the airlines can hedge their fuel supply? I don't know. There is only so much money the airlines can take from labor, before employees start leaving in massive droves, only to be replaces at low wage earners, a la Wal-Mart.

We still have no concrete update on the status of the Lake Charles & Beaumont airports. As it stands right now we've cancelled service to Lake Charles untill 8 October, and to Beaumont untill 16 October. Both airports suffered major damage due to hurricane Rita. Colgan Air our partner airline that operates our Continental Connection service out of Houston is working with those two airports along with Continental to determine the extent of damages, assist in repairs, and return service to both. The company says that conditions at both airports are very fluid and that dates of when service will start back up is subject to change at any time. Hopefully soon, are key feeder markets for the Houston operations.

My Fault, Your Fault, Our Fault

2005-09-29T01:15:00.000-07:00

There has been much said about who and what is to blame in the airline industry in regards to their financial woes. While surfing around, i came across this article on CnnMoney discussing who's at fault. The article tries not to assign blame to either management or labor, though it has a slight slant in favor of the idea that labor is the one to blame. Here is the story Airline Woes. The theory being that back in the days of regulation when the major's had no competition to speak of, the unions would clamor for higher rates of pay during the good times, which mgmt would give into, and accept paycuts during the bad times, and that it is this culture of rape the company for money for profits during the good times, that has lead to our current state, along with labor unwilling to concede to concessions since the downturn in the economy.

while i think it has some merit, i don't think it's the 'smoking gun' when it comes to an airlines financial stability. Take Southwest Airlines. Profitable since it's inception, it is also one of the most highly unionized airlines in the country.

If you compare my positon and my rate of pay with the current rate of pay for the same position at Southwest, you would discover that Southwest pays more, approximately $5 dollars an hour more. The same is true in respect to most other positions that airlines share in comman, with mgmt and pilots being the exception. Currently Southwest's compensation for it's board of directors totals approximately $3 Million dollars for all directors, while Continental's compensation for it's board of directors nears $18 million. That's right. $18 Million Dollars. That's per year. Every year. It says a lot in the disparity between the biggest "low cost carrier" in the United States, and one of the most respected legacy airlines. To be fair, most of Southwest's compensation for it's board is in the form of stock options, which aren't booked in it's accounting department for the time being, untill new SEC accounting rules go into effect.

As for the pilot group, the last time I checked, a topped out pilot at Southwest was earning approximately $160 per flight hour versus the $220 per flight hour Continental pilots were making before wage concessions. which averages out about about $16,000 a year difference in the two pay scales. a far cry from the disparity of the two corporate boards.

The thing is though, if all things were being equal. Continental would outperform Southwest in all areas, revenue, profits, and even in what they pay their employees. we were doing it before the current recession and before the events of 11 Septermber 2001, when we were paying our employees a higher rate.. the main difference between now and then, is that Southwest has hedged their fuel throughout the next three years, while Continental has chosen not too.

That means, Southwest is paying for fuel, the equivalent of oil being $29 bbl while continental is paying closer to market price, along with the rest of the majors, since those in bankruptcy have to pay spot price and are not allowed to buy on contract.

Fare Hikes or Fare Hype

2005-09-28T16:57:00.000-07:00

There has been erroneous information reported in the media that Continental raised their fares the week preceding the arrival of hurricane Rita that made landfall along the Texas-Louisiana coast. It is a blatant falsehood. There was a technical glitch on our company website that showed pro-rated fares for interline itineraries for flights that were cancelled. Flights that no one could book. In actuality, the company offered discounted fares for many people who were trying to evacuate the greater Houston area.
It may seem callous but I wish we had raised fares. Before people start screaming that I am advocating price gouging, the reality is if we had raised fares, then prices would have actually been in accord with what it costs for us to actually fly a given route. And besides, it’s capitalism at it’s best. Supply and demand will balance out pricing with what the consumers are willing to pay for a given supply. In this case the limited number of seats that were actually available to the number of consumers who actually did not have the need to evacuate.

Coach Fares paid for travel for five days preceding hurricane Rita from IAH to the 48 contiguous United States

Fares Paid Each Way	Number of Tickets	Percent of Tickets
Below $100	3,935	13.0%
$100-199	5.470	18.0%
$200-299	8,178	27.0%
$300-399	3,755	12.4%
$400-499	2,282	7.5%
$500-599	1,726	5.7%
$600+	245	0.8%
Number of Paid Tickets	25,591	84.4%
Number of Free Tickets	4,720	15.6%
Total Tickets	30,311	100%

In other news, the price of jet fuel rose to a record high at the close of trading Tuesday afternoon to $111.97 a barrel. The company keeps telling us that for every 1 dollar increase in the price of a barrel of jet fuel, our annualized costs increase approximately 40 million for a year. Hence our companies call for wage reductions in all work groups, instead of passing that cost along to consumers.

While the company has promised that they won’t seek further wage reductions from the various work groups, I can’t see how they can keep that promise following the after-effects of hurricanes Katrina & Rita. As things stand now, there are 16 refineries closed in Texas due to Rita. It will take approximately a week to bring them back online, and that’s not counting the ones that are underwater still in the Beaumont area. Nor does it include the platforms in the gulf that were shuttered due to both hurricanes. So I’m expecting the price of oil and the price of jet A to remain at record levels for the near short-term.
In other news, The Wall Street Journal reported that the merger of America West and US Airways is official, though it will take approximately two years for both airlines to become fully integrated. They are both going to continue operating separate frequent flyer programs along with separate website, though America West’s frequent flyer program will be discontinued in the spring.

Employees at all the major airlines in this country should pay close attention to this merger. I'm curious to see what will become of America West's pension plan, since US Airways dumped their on the federal government. And since both Northwest and Delta are both in bankruptcy, it will be interesting to see if either airline dumps their pensions as well, or if either airline merges with one another or merges with a different airlines.

The pension thing is the big question mark in the world of aviation. Most of the major airlines have employees who have been working for them for years. With everyone holding on to the hope that they will receive the benefits they were promised. And with every major airline that is not in bankruptcy hurting financially, i'm sure their corporate boards are all looking at the benefit that bankruptcy protection offers along with the oppurtunity to dump their own pension benefits.

Flight Attendants Cause Bankruptcy

2005-09-28T14:43:00.000-07:00

anonymous said...

Sounds like you are bitter and need to quit. There are plenty of people that would love your job. Failure to join all other employees that have already taken pay cuts will help push the company into bankruptcy. Sounds like you are bitter and need to quit.

i find this attitude among fellow employees quite discouraging. we're all at this company to not only earn a living, but to make the company profitable for the long term and thus ensuring out jobs and livelyhood. it reminds me very much of people who blindly take on faith what our government leaders tell us, no matter what the falsehood can be.

the flight attendants refusing to take pay cuts is not going to push this company into bankruptcy. poor planning and mismanagement is what is going to push this company into bankruptcy. right now the entire aviation industry is facing a weak fare enviroment, high fuel prices, large pension obligations (except for those airlines who in bankruptcy dumped their pensions on the taxpayer), excess ASM's throughout the entire industry, high lease costs associated with company fleets, flying unprofitable routes.

what it comes down to is that upper management expected oil to be below 35$ a barrel. that disount airlines such as jetBlue and AirTran Airways would be able to be priced out of business. in the normal course of a strong economy they would be able too, but with the price of Jet A being as high as it, the majors haven't been able to effectively compete with the discounters.

the question in my mind is why didn't my company hedge our fuel supplies 3 years ago when we had the money too, so that we would could compete fare-wise with the likes of the discount airlines. according to most of the company gossip i've heard, from those in upper management in downtown to those front line employees at the airport, that decision rested with Larry Kellner while he was CFO and Gordon was CEO. apparently Larry was under the belief that the price of oil would never reach current levels and that it would soon be back under 30$ a barrel, and that the approximately 150 million it would take to hedge our costs would be better spent.

unfortunately that is not what has happened. instead oil had climbed as high as 70$ a bbl, with trading right now around the 65-66 dollar range. our company also sold off one of our few profitable assets, i.e. Express Jet with a guarentee we would buy 110% of Express Jet's available seats regardless of whether we fill them & paying Express Jet's fuel cost above 68 cents a gallon of Jet A fuel.

combine that with the company's defined-benefit obligations, and the inability to push through fare increases that stick, the company has decided to turn a profit at the expense of labor.

in any other industry in this country it's completely opposite. if the cost of providing a service or product rises, it's passed on to the consumer. in the airline industry it's not. the prevailing mantra seems to be "match any fair by any discount airline, even if we turn a loss and loose market share."

as a shareholder i find it offensive, i want my company to be profitable so that i can attain a return on my investment. i would much rather have a smaller, more agile company that turns a profit, than to continue to buy aircraft that we can't really afford and operates new/more routes that don't turn a profit.

On-Going Pay Cuts.

2005-09-27T20:16:00.000-07:00

The latest discussion around the proverbial watercooler dealt with the ongoing wage reduction cuts that the company's flight attendants have yet to take. Currently the company and the flight attendants are in federal mediation to try and reach an amicable agreement that is fair to the company, to the flight attendants, and to the other work groups that have already taken pay cuts.

personally, i believe, that several high seniority flight attendants will either quit or retire once they are forced into taking the reduction. one of my co-workers asked me why i held such a belief, and i related how i have already had a few flight attendant friends who have quit already, due to the fact that the company even asked for pay reductions.

being a flight attendant is not as easy a job as most people tend to think. true, during the average course of a flight, the most they have to do is pass out drinks and stale sandwiches, but the hour to hour and a half they have to report to work and actually "work" they are unpaid. they also spend several days away from home, from friends and family. the question i ask myself, would i take a job where i'm away from my family for extended periods of time, in a position that if you have less than five years with the company i would make roughly 20,000 a year. it's not that appealing to me.

the few flight attendants i've talked with have given me various reasons for voting down the aggreement back in april.

the company has 1.5 billion dollars in the bank. there is no need.
i would rather our company be smaller and profitable, than larger and turning a loss
the company-union reps will see a 50% raise in salary while i take a cut
the company wants us to work an additional 10 flight hours a month (extra 3 days)

i understand their complaints and reasons for not taking the pay cuts, but it seems to me that with pay cuts coming there way as it is, you might as well take the best offer the company and union can agree too, or else look for an employer who will offer you the pay and benefits you want.

i noticed there was an aritcle in Business Week about airline/aviation stocks and how they've been outperforming the S&P 500 index these past 4 weeks. most of the information in it is old news. mainly saying that though the airline industry is still battling an uphill war to profitability that the majors have been able to push through some fare increases and make them stick. even with Delta Airlines and Northwest Airlines both entered into bankruptcy on the same day. though with both airlines in bankruptcy protection, i'm sure they will be furloughing thousands of employees, and forcing more pay cuts on their respective employees.

it appears that the 5 major airlines in this country are racing to the bottom to see who can offer the cheapest service and product, at the expense of the hard working employees who actually make these companies run. my biggest nightmare is that in the future all the employees will be making Wal-Mart wages, and the flying public will be the worse for it.