I am at heart an optimist- but then the joke goes that a pessimist is just an optimist with life experience. My views on the 'protections' on the base are coloured by my own personal union experiences with 'legal' protections in past union work.
Just because I don't think I will have a cargo fire or engine failure, doesn't mean I shouldn't be prepared for them. Hence my clarion call warning of relying on legal protection on bases - or anywhere for that matter. Anyway - enough of the pessimism.
My optimistic viewpoint.
Assumptions.
There are vaccines that work - they have not been approved. Maybe none will - but given the shear number of them, and the political and economic impetus to have them approved, we are likely to have them being administered by years end. I don't want to get into the nitty gritty on this - I just want to paint the landscape behind my predictions.
Training 4 SOs on the line is the same workload as upgrading one SO to FO, one FO to CN, or one DEFO. So I have factored the SO recruitment numbers by 4 to make the training load equivalent to upgrades.
We will have no problem recruiting pilots for the next 18months regardless of COS etc considerations.
With the vaccine assumption I assume we will be back to a significant percentage of flights by say December 2021.
For the sake of argument, let's assume we are back to 90% of schedule Dec 2021 (my personal view is closer to 100%).
Right now the 747 is about 25% of our pilots - the pax fleet is operating at say 5%-10% of normal - so overall we are probably doing say 30% of regular flying.
So August 2020 at 30% finishing this year at say, 35-40%, then increasing to say 90% by December 2021.
Now I have only done analysis of training for the last 10 years. The only year we ran at 100% training capacity was 2015. In that year our training rate was 13.6%. Two years later, thanks to moving some a/c over to KA, our training rate was 7.3% (Training captain numbers had fallen - by just over 10% I think - but training footprints had been rationalised, so I assume a theoretical max of around 12-13%).
(By Training rate I mean, in 2015, we can replace 13.6 out of every 100 pilots. This is via 4 SOs=1, or 1 DEFO, 1 SO-FO upgrade or 1 FO-CN upgrade) (The limiting factor being line training)
So if we need 90% of our workforce by end of 2021, we must have 77% of our workforce by 1/1/21 as it will take all year to train the 13.6/100.
Our training department is fully manned- in fact I was informed Dec last year it was actually over manned based on the pre covid training plan for 2020. Training Captain Numbers today are close to 2015 AFAICT (as far as I can tell).
Every 10% reduction of pilots saves, very roughly, $500m per year.
The opportunity cost for being undermanned by say 10% is in excess of 10Billion. And given we have the same number of total aircraft that we are paying leases on/depreciating etc, that 10B would roughly translate into 5B of (marginal)profitability. This might not sound like it makes sense - think of a taxi fleet of 10 cars and 30 drivers. When work is down, you fire 3 of them. Then work picks up - you cant drive them all, for all the time. So you miss out on revenue- yet maintenance, lease payments etc are based on 10 cars. The extra 3 drivers cost you salary, extra fuel/tolls but the revenue, from those last 3 drivers, is highly profitable.
Conclusions
First one - garbage in, garbage out. Like all the mathematical covid models - reality has turned out very different as Sweden is testament to. They should have lost 100,000s of people - they have lost around 7,000 (vs the other 70,000 that have died from all other causes in the last 6 months)
If we need 90% by end of 2021, we have to start the year with at least 77% (so a max of 23% can be laid off between now and years end. Given 3 months pay in lieu, that means we save one months salary this year(Dec) or very roughly $100m. We start with 77% and end up with 90% so we average 84% next year - so we save 16% for the year which is roughly $800m.
So, if we KNEW we would be at 90% end of 2021, we would save close to $1billion. If we were wrong and things ramped up by say 30June21 to 100%, then we would be out of pocket about 10B in revenue(less say 5B in fuel/route operating costs) in the first half and say $6.5B(less say $3.2B in fuel/op costs) in the second half. So we would have saved $1B on pilot costs, and lost 16.5B in revenue (or $8.2profit after marginal costs).
That's a big gamble to take - save a penny, lose a dime. the ratio is 8 to 1 in my previous example.
So my belief, based on this type of thinking, is they will keep the 'team' together - there will be some trimming but that can be done through ERS/more SLS and RORO. And maybe some culling of some dead wood while the opportunity is there. But I do not believe Damocles sword will lop off an arm or leg - just a haircut at worst.
Or as financial analysts like to say, the risk is to the upside. It is asymmetric risk - a little extra cost (keeping pilots) is an order of magnitude less than the loss to profitability of the most pessimistic outcomes are wrong.
BTW, I have no inside knowledge - I am no longer in the union - I am not in management - I am just doing observational analysis.
So, no job/base is safe, but that doesn't mean anything is likely to happen either. Assume the worst, hope for the best!
(Did I mention I am an optimist? I hope my optimism isn't misplaced!)
Last edited by Numero Crunchero; 13th Aug 2020 at 06:55.