Delta & Northwest file for Chapter 11
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This is not to bash anyone, but Lots of employees who end up working for/at airlines; majority of pilots, probably all mechanics, air waiters, & ground staff simply don't understand the economics involved in running and ensuring an airline stays profitable, and how to ensure that they have a pension plan when they retire.
Employers just promised jam tommorrow and paid peanuts for it, it was in no one's interest to examine things more closely - especially the execs as they expected to parachute out after 5 years.
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Economics and common sence
Ignition, I stand corrected, but Southwest's pilots union is not part of the national union, hence their pilots work slightly longer hours, are more productive, so they do deserve to be the best paid 37 pilots if that's what u say! Jet blue has no union for their pilots and their pilots get paid just fine, and I doubt they will be wanting to join the national pilots union seeing how the legends are falling on their faces and the low costs are being paid fish bait. Ur hub to hub and city to city model explanation is not the main reason why these airlines are having problems, it's cost, costs, costs and productivity. U can't control fuel costs (unless u pre-bought it),,,, u can control productivity and labor costs;;but guess who has the big say on whether u can or not,,,,?The very distinguished national Airline Pilots Association-_-_ for member airlines that is., I hope u can answer why,, SW Pilots must be so smart to stay away from it. Don't forget that during the early years, the current legends, now having all these problems worked so deparately to try and snuff out SW, Herb Kelleher had his employees giving 110 percent to keep those birds flying, and they continue to date.
I worked for cessna as a flight line mechanic and was part of the IAM union, which is a humongous union. I hated every part of it, a bunch of F*%kN morons run that organization. They encourage laziness, "take ur time doing something for job protection", blah blah, blah...and want the company to hire more than the necessary hands because they belive that creates strenght in numbers. Unions don't mean anything in the long term if u have idiots at the helm. After 9-11, when the airline manufactures started shelving employees, I neva saw one union leader come down to the hangers...Quite simply put, the unions run a Ceaseresque modus operandis, make ur followers happy, and u still have a job and power, but what about 2morrow?
Because of the National pilots union, pilots lose senioirty when they move to another airline that's part of the union, that means, u are enslaved to their outdated and dubious dinosaur statutes or whatever they are. One solution to this problem is encouraging pilots of the national union airlines to grow balls, detach, and look for real investors to hear their newly formed independent unions at their own airlines.
The day pilots will wake up and realize that they cannot control the price of fuel, cannot control stupid stuff like 9-11 happening, but they can control one variable in this equation, their pay and working hours---so far, their shackles to this Goliath Union means, pilots are in so little control of anything,,,,. It's only made worse because airwaiters, mechanics, trolley pushers, shoe shiners blah blah blah...at these airlines all have unions, ...Because of Frank Lorenzo and how he busted their a@@es, the unions thought becoming a megaladon would ensure no lorenzo ever screwed them again, and they were right!!
, Mr. Lorenzo where ever he is, is sitting in his cabin laughing himself to sleep. 
I worked for cessna as a flight line mechanic and was part of the IAM union, which is a humongous union. I hated every part of it, a bunch of F*%kN morons run that organization. They encourage laziness, "take ur time doing something for job protection", blah blah, blah...and want the company to hire more than the necessary hands because they belive that creates strenght in numbers. Unions don't mean anything in the long term if u have idiots at the helm. After 9-11, when the airline manufactures started shelving employees, I neva saw one union leader come down to the hangers...Quite simply put, the unions run a Ceaseresque modus operandis, make ur followers happy, and u still have a job and power, but what about 2morrow?
Because of the National pilots union, pilots lose senioirty when they move to another airline that's part of the union, that means, u are enslaved to their outdated and dubious dinosaur statutes or whatever they are. One solution to this problem is encouraging pilots of the national union airlines to grow balls, detach, and look for real investors to hear their newly formed independent unions at their own airlines.
The day pilots will wake up and realize that they cannot control the price of fuel, cannot control stupid stuff like 9-11 happening, but they can control one variable in this equation, their pay and working hours---so far, their shackles to this Goliath Union means, pilots are in so little control of anything,,,,. It's only made worse because airwaiters, mechanics, trolley pushers, shoe shiners blah blah blah...at these airlines all have unions, ...Because of Frank Lorenzo and how he busted their a@@es, the unions thought becoming a megaladon would ensure no lorenzo ever screwed them again, and they were right!!
, Mr. Lorenzo where ever he is, is sitting in his cabin laughing himself to sleep.
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Airline industry is poised for shakeout
The bankruptcies of Delta and Northwest are the latest signs of the steep challenges facing major carriers.
By Alexandra Marks | Staff writer of The Christian Science Monitor
NEW YORK – With Northwest and Delta airlines both in bankruptcy court this week, four of the nation's "Big 7" airlines are now in Chapter 11, which raises the question: Why don't they just raise their prices more, as other industries struggling with high fuel prices have done?
The answer is a complex mix of tight competition, not only with low-cost carriers, but with buses, trains, and automobiles as well.
There's also the already-battered state of the traditional carriers' balance sheets. They didn't have the cash to hedge cheap fuel, the way flush low-cost carriers like Southwest did. So the majors will just keep racking up losses, which could mean a very different aviation industry in years to come.
"In order to fund those losses, the industry has taken on a huge load of debt," says aviation economist Dave Swierenga of AeroEcon Consulting in Vienna, Va. "When you talk about taking the longer view, that debt load will have detrimental consequences for many years to come."
Indeed, with jet-fuel prices still astronomical compared to historical norms and competition from efficient low-cost carriers fiercer than ever, the future, in the words of James May, the airlines' top lobbyist, "is not bright."
Since 2001, the US aviation industry has lost $32 billion. If fuel prices stay about the same, as expected, it's on track to lose another $10 billion by the end of this year. The chief culprit is the rising cost of jet fuel, according to the airlines. It's jumped more than 240 percent in the past four years, from 56 cents a gallon in 2001 to $1.92 today.
"It is clear that if not for the prices we must pay, the airline industry would be profitable," Mr. May, president of the Air Transport Association, told Congress Wednesday as he pleaded for them to suspend the jet-fuel tax. "Indeed, we remain at the mercy of oil markets and the federal government."
But that's a much too simplistic reading of the problem, other analysts contend, and one that in the end could hurt consumers. They note that while most of the traditional carriers are struggling, low-cost carriers like Southwest and JetBlue are thriving - so the future isn't so grim for all the airlines after all.
They blame the majors' current woes on a history of poor management, overly generous labor contracts, and a sometimes irrational reluctance to change in the face of a clearly transformed marketplace. They do credit the big airlines for working the past few years to increase their efficiency and bring down labor costs, but for some it may be too little too late.
"It's not that airline travel is something whose time has come and gone, but rather that these are difficult competitive times with a lot of change," says Clint Oster, a transportation economist at Indiana University at Bloomington. "Some folks have positioned themselves better than others. So while we may see some weeding out, I think we'll see other folks coming in saying, 'We can do better on a different kind of business model.' "
When the airlines were deregulated back in 1978, an economic shakeout like the one currently under way was expected, but it never materialized. The major carriers quickly developed a powerful hub-and-spoke network system that left each one with effective monopoly control over certain airports and regions of the country. When small, discount carriers like People Express and Freddie Laker Airlines started up, the majors managed to drive them out of business. They did it by lowering their prices to match or even undercut the discount fares on competing routes - even if they lost money doing it - at the same they increased their capacity, a tactic called "dumping." Once the discount carriers were gone, the majors would simply raise the prices back up.
So despite deregulation's goal of spurring more competition, the major carriers continued to effectively control the nation's skies and the prices consumers paid. Then in the late 1990s, trouble appeared on the horizon in the form of Southwest Airlines' success. The low-cost carrier had managed to survive the majors' competitive wrath by, in the words of one analyst, "running between the legs of the giants." Instead of competing head-to-head on routes, which had already proved to be a losing proposition, Southwest had built a highly efficient and successful operation flying point to point - using second-tier airports near, as opposed to in, the nation's biggest cities.
Then the recession of 2001 set in, and the majors began having trouble competing with Southwest and its imitators' low prices and high efficiencies.
In the end, it took Southwest's creativity to make deregulation work as promised back in 1978, and only now is the economic shakeout under way.
Many analysts say the problem in this highly competitive market is that there are too many airline seats and not enough passengers to make flying profitable.
"We're about to hear the mantra of overcapacity over the winter, and the premise will be too much capacity. There's nothing to do but get the capacity out through consolidation," says Kevin Mitchell, president of the Business Travel Coalition in Radnor, Pa. "That will be the tune by analysts and consultants and airline managements, all of whom stand to make a lot of money from consolidation."
He adds, "But personally, I don't think that's the solution." Mr. Mitchell says the problem isn't too much capacity, but too much high-cost capacity. That's a legacy of the major carriers' gambit to maintain dominance and limit competition with their hub-and-spoke networks. As a result, some may end up going the way of other great but now defunct airlines like Pan Am and TWA.
And so the next six months could be crucial in determining just what the US aviation industry will end up looking like.
It will be interesting to watch, says Mr. Oster of Indiana University. "The only thing that gets tricky now is when you're planning to travel, you have to figure out which one to book on and how far out to plan the trip - and make sure you pay with a credit card."
The bankruptcies of Delta and Northwest are the latest signs of the steep challenges facing major carriers.
By Alexandra Marks | Staff writer of The Christian Science Monitor
NEW YORK – With Northwest and Delta airlines both in bankruptcy court this week, four of the nation's "Big 7" airlines are now in Chapter 11, which raises the question: Why don't they just raise their prices more, as other industries struggling with high fuel prices have done?
The answer is a complex mix of tight competition, not only with low-cost carriers, but with buses, trains, and automobiles as well.
There's also the already-battered state of the traditional carriers' balance sheets. They didn't have the cash to hedge cheap fuel, the way flush low-cost carriers like Southwest did. So the majors will just keep racking up losses, which could mean a very different aviation industry in years to come.
"In order to fund those losses, the industry has taken on a huge load of debt," says aviation economist Dave Swierenga of AeroEcon Consulting in Vienna, Va. "When you talk about taking the longer view, that debt load will have detrimental consequences for many years to come."
Indeed, with jet-fuel prices still astronomical compared to historical norms and competition from efficient low-cost carriers fiercer than ever, the future, in the words of James May, the airlines' top lobbyist, "is not bright."
Since 2001, the US aviation industry has lost $32 billion. If fuel prices stay about the same, as expected, it's on track to lose another $10 billion by the end of this year. The chief culprit is the rising cost of jet fuel, according to the airlines. It's jumped more than 240 percent in the past four years, from 56 cents a gallon in 2001 to $1.92 today.
"It is clear that if not for the prices we must pay, the airline industry would be profitable," Mr. May, president of the Air Transport Association, told Congress Wednesday as he pleaded for them to suspend the jet-fuel tax. "Indeed, we remain at the mercy of oil markets and the federal government."
But that's a much too simplistic reading of the problem, other analysts contend, and one that in the end could hurt consumers. They note that while most of the traditional carriers are struggling, low-cost carriers like Southwest and JetBlue are thriving - so the future isn't so grim for all the airlines after all.
They blame the majors' current woes on a history of poor management, overly generous labor contracts, and a sometimes irrational reluctance to change in the face of a clearly transformed marketplace. They do credit the big airlines for working the past few years to increase their efficiency and bring down labor costs, but for some it may be too little too late.
"It's not that airline travel is something whose time has come and gone, but rather that these are difficult competitive times with a lot of change," says Clint Oster, a transportation economist at Indiana University at Bloomington. "Some folks have positioned themselves better than others. So while we may see some weeding out, I think we'll see other folks coming in saying, 'We can do better on a different kind of business model.' "
When the airlines were deregulated back in 1978, an economic shakeout like the one currently under way was expected, but it never materialized. The major carriers quickly developed a powerful hub-and-spoke network system that left each one with effective monopoly control over certain airports and regions of the country. When small, discount carriers like People Express and Freddie Laker Airlines started up, the majors managed to drive them out of business. They did it by lowering their prices to match or even undercut the discount fares on competing routes - even if they lost money doing it - at the same they increased their capacity, a tactic called "dumping." Once the discount carriers were gone, the majors would simply raise the prices back up.
So despite deregulation's goal of spurring more competition, the major carriers continued to effectively control the nation's skies and the prices consumers paid. Then in the late 1990s, trouble appeared on the horizon in the form of Southwest Airlines' success. The low-cost carrier had managed to survive the majors' competitive wrath by, in the words of one analyst, "running between the legs of the giants." Instead of competing head-to-head on routes, which had already proved to be a losing proposition, Southwest had built a highly efficient and successful operation flying point to point - using second-tier airports near, as opposed to in, the nation's biggest cities.
Then the recession of 2001 set in, and the majors began having trouble competing with Southwest and its imitators' low prices and high efficiencies.
In the end, it took Southwest's creativity to make deregulation work as promised back in 1978, and only now is the economic shakeout under way.
Many analysts say the problem in this highly competitive market is that there are too many airline seats and not enough passengers to make flying profitable.
"We're about to hear the mantra of overcapacity over the winter, and the premise will be too much capacity. There's nothing to do but get the capacity out through consolidation," says Kevin Mitchell, president of the Business Travel Coalition in Radnor, Pa. "That will be the tune by analysts and consultants and airline managements, all of whom stand to make a lot of money from consolidation."
He adds, "But personally, I don't think that's the solution." Mr. Mitchell says the problem isn't too much capacity, but too much high-cost capacity. That's a legacy of the major carriers' gambit to maintain dominance and limit competition with their hub-and-spoke networks. As a result, some may end up going the way of other great but now defunct airlines like Pan Am and TWA.
And so the next six months could be crucial in determining just what the US aviation industry will end up looking like.
It will be interesting to watch, says Mr. Oster of Indiana University. "The only thing that gets tricky now is when you're planning to travel, you have to figure out which one to book on and how far out to plan the trip - and make sure you pay with a credit card."
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>>moral of the story for all future illlegal immigrants in america do not buy any dvd as to how to act as a airline pilot
This guy may just be an "enthusiast" but things like false documents and pilot uniforms are taken a lot more seriously after the 911 attacks. The UK has seen recently how sleeper cells can carry out an attack after months or years of planning.
Being in the country illegally is viewed almost as an entitlement by some groups.
For example, banks are changing rules to make it easier for "undocumented migrants" to own a home in America:
http://money.cnn.com/2005/08/08/news...al_immigrants/
The 911 terrorists used this lax attitude toward documentation to their advantage. Given this recent and painful history, security has been increased in areas including training and even pilot supplies and uniforms.
I hope, if otherwise innocent, this young man is able to resolve his legal difficulties and repay his debts to Sporty's.
>>I think that, with the present climate of fear in the States, it would not be likely that someone from the Middle East would be accepted at any of the many flight schools operating in the U.S.
Well, you do need TSA authorization for flight training but it is a good thing in my opinion. I have a Greek friend who was able to fly the line here in the U.S. for months without problem but was unable to do annual simulator training due to a TSA paperwork snag. Similarly though, if I travel to a country with an expired visa, I have a paperwork problem even though my purpose is completely legitimate.
Here's the DVD mentioned above, it features a captain from bankrupt Delta Air Lines giving career advice:
http://www.sportys.com/acb/showdetl....ID=7301&DID=19
This guy may just be an "enthusiast" but things like false documents and pilot uniforms are taken a lot more seriously after the 911 attacks. The UK has seen recently how sleeper cells can carry out an attack after months or years of planning.
Being in the country illegally is viewed almost as an entitlement by some groups.
For example, banks are changing rules to make it easier for "undocumented migrants" to own a home in America:
http://money.cnn.com/2005/08/08/news...al_immigrants/
The 911 terrorists used this lax attitude toward documentation to their advantage. Given this recent and painful history, security has been increased in areas including training and even pilot supplies and uniforms.
I hope, if otherwise innocent, this young man is able to resolve his legal difficulties and repay his debts to Sporty's.
>>I think that, with the present climate of fear in the States, it would not be likely that someone from the Middle East would be accepted at any of the many flight schools operating in the U.S.
Well, you do need TSA authorization for flight training but it is a good thing in my opinion. I have a Greek friend who was able to fly the line here in the U.S. for months without problem but was unable to do annual simulator training due to a TSA paperwork snag. Similarly though, if I travel to a country with an expired visa, I have a paperwork problem even though my purpose is completely legitimate.
Here's the DVD mentioned above, it features a captain from bankrupt Delta Air Lines giving career advice:
http://www.sportys.com/acb/showdetl....ID=7301&DID=19
Last edited by Airbubba; 17th Sep 2005 at 15:43.
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More analysis in the media:
United bankruptcy a model for rivals
Delta, NWA may use its blueprint
September 17, 2005
BY DAVE CARPENTER
ASSOCIATED PRESS
CHICAGO -- Costly, contentious and twice as long as expected, United Airlines' bankruptcy restructuring seems an unlikely role model for Delta Air Lines Inc. and Northwest Airlines Corp. as they begin their overhauls in Chapter 11.
United has run up $7.5 billion in losses in a 33-month bankruptcy process bloated by legal and consulting fees, for a staggering total of $12.5 billion lost since 2000. Its forecast for a profit in 2006 is dismissed by some as too rosy since it anticipates a sharp drop in oil prices to $50 a barrel, from around $63 a barrel now.
Nonetheless, the makeover of the nation's second-largest carrier serves as a likely blueprint for its two ailing rivals, which are expected to try to copy much of what United has done.
Analysts say they have little choice but to follow the bankruptcy leader to keep up -- and stay in business.
"I think they looked at United and saw how United was able to shed pension liabilities. . .and shed a lot of contracts that were burdening them and prohibiting them from making a profit," said George Novak, an airline consultant for the Metis Group in Washington, D.C. "United is showing that you can use bankruptcy in an intelligent manner to restructure."...
http://www.freep.com/money/business/...e_20050917.htm
________________________________________
For perspective, here is one contemporary analysis with dire predictions on the eve of UAL bankruptcy:
Bush administration drives United Airlines into bankruptcy
Government panel demands all-out attack on airline workers
By Kate Randall
7 December 2002
The decision of the Air Transportation Stabilization Board (ATSB) to reject United Airlines’ request for $1.8 billion in loan guarantees is the signal from the Bush administration for an unprecedented attack on the jobs, wages and working conditions of United Airlines employees and workers throughout the industry.
The three-member ATSB—with representatives appointed by the White House from the Federal Reserve, the Treasury Department and the Department of Transportation—rejected as inadequate United’s plan to impose $5.2 billion in concessions on its workforce. The board reportedly demanded that $9 billion be wrenched from United employees for the loan guarantees even to be considered.
The rejection of the loan package is expected to force United to file for protection from its creditors under Chapter 11 bankruptcy by the end of the weekend. This would be the eleventh airline bankruptcy since the industry was deregulated in 1978. It follows last August’s Chapter 11 filing by US Airways. That carrier had previously carried out massive cuts in wages, benefits and jobs and had obtained ATSB approval for $900 million in loan guarantees.
A United bankruptcy would be the largest in airline history. United is the second largest air carrier both in the US and globally, with 85,000 employees worldwide and service in more than 120 cities. The company lost close to $4 billion in the past two years and is now losing more than $7 million a day. It faces nearly $1 billion in deferred debt obligations in the next two weeks.
A Chapter 11 filing will allow United to petition bankruptcy judges to rip up existing labor agreements and impose sweeping concessions on its workforce, including changes in wages, scheduling and benefits for current employees, and cuts in health coverage and other benefits for retirees.
Competing airlines such as American, Continental and Delta lobbied the ATSB to deny the loan guarantees. They hope to capitalize on United’s bankruptcy by snatching up market share and taking over some of the airline’s choice routes, particularly its lucrative trans-Pacific flights. “At the end of the day, it’s good for our industry, and it’s good for the American people,” commented Gordon Bethune, chief executive of Continental Airlines.
The rival airlines will utilize the draconian concessions imposed on United workers via the bankruptcy court to push through similar attacks on their own workforces. Commentators are openly declaring that the new round of wage and benefits cuts and speedup measures at United will set the benchmark for the rest of the industry, and for the labor movement as a whole. The stage has been set for an assault on the working class similar to that inaugurated by the destruction in 1981 of the air traffic controllers’ union, PATCO, by the Reagan administration.
The airline industry is also expected to seize on the crisis at United to push for changes in federal law that would strengthen their hand in bargaining with their unionized workers...
http://www.wsws.org/articles/2002/dec2002/ua-d07.shtml
United bankruptcy a model for rivals
Delta, NWA may use its blueprint
September 17, 2005
BY DAVE CARPENTER
ASSOCIATED PRESS
CHICAGO -- Costly, contentious and twice as long as expected, United Airlines' bankruptcy restructuring seems an unlikely role model for Delta Air Lines Inc. and Northwest Airlines Corp. as they begin their overhauls in Chapter 11.
United has run up $7.5 billion in losses in a 33-month bankruptcy process bloated by legal and consulting fees, for a staggering total of $12.5 billion lost since 2000. Its forecast for a profit in 2006 is dismissed by some as too rosy since it anticipates a sharp drop in oil prices to $50 a barrel, from around $63 a barrel now.
Nonetheless, the makeover of the nation's second-largest carrier serves as a likely blueprint for its two ailing rivals, which are expected to try to copy much of what United has done.
Analysts say they have little choice but to follow the bankruptcy leader to keep up -- and stay in business.
"I think they looked at United and saw how United was able to shed pension liabilities. . .and shed a lot of contracts that were burdening them and prohibiting them from making a profit," said George Novak, an airline consultant for the Metis Group in Washington, D.C. "United is showing that you can use bankruptcy in an intelligent manner to restructure."...
http://www.freep.com/money/business/...e_20050917.htm
________________________________________
For perspective, here is one contemporary analysis with dire predictions on the eve of UAL bankruptcy:
Bush administration drives United Airlines into bankruptcy
Government panel demands all-out attack on airline workers
By Kate Randall
7 December 2002
The decision of the Air Transportation Stabilization Board (ATSB) to reject United Airlines’ request for $1.8 billion in loan guarantees is the signal from the Bush administration for an unprecedented attack on the jobs, wages and working conditions of United Airlines employees and workers throughout the industry.
The three-member ATSB—with representatives appointed by the White House from the Federal Reserve, the Treasury Department and the Department of Transportation—rejected as inadequate United’s plan to impose $5.2 billion in concessions on its workforce. The board reportedly demanded that $9 billion be wrenched from United employees for the loan guarantees even to be considered.
The rejection of the loan package is expected to force United to file for protection from its creditors under Chapter 11 bankruptcy by the end of the weekend. This would be the eleventh airline bankruptcy since the industry was deregulated in 1978. It follows last August’s Chapter 11 filing by US Airways. That carrier had previously carried out massive cuts in wages, benefits and jobs and had obtained ATSB approval for $900 million in loan guarantees.
A United bankruptcy would be the largest in airline history. United is the second largest air carrier both in the US and globally, with 85,000 employees worldwide and service in more than 120 cities. The company lost close to $4 billion in the past two years and is now losing more than $7 million a day. It faces nearly $1 billion in deferred debt obligations in the next two weeks.
A Chapter 11 filing will allow United to petition bankruptcy judges to rip up existing labor agreements and impose sweeping concessions on its workforce, including changes in wages, scheduling and benefits for current employees, and cuts in health coverage and other benefits for retirees.
Competing airlines such as American, Continental and Delta lobbied the ATSB to deny the loan guarantees. They hope to capitalize on United’s bankruptcy by snatching up market share and taking over some of the airline’s choice routes, particularly its lucrative trans-Pacific flights. “At the end of the day, it’s good for our industry, and it’s good for the American people,” commented Gordon Bethune, chief executive of Continental Airlines.
The rival airlines will utilize the draconian concessions imposed on United workers via the bankruptcy court to push through similar attacks on their own workforces. Commentators are openly declaring that the new round of wage and benefits cuts and speedup measures at United will set the benchmark for the rest of the industry, and for the labor movement as a whole. The stage has been set for an assault on the working class similar to that inaugurated by the destruction in 1981 of the air traffic controllers’ union, PATCO, by the Reagan administration.
The airline industry is also expected to seize on the crisis at United to push for changes in federal law that would strengthen their hand in bargaining with their unionized workers...
http://www.wsws.org/articles/2002/dec2002/ua-d07.shtml
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Careful Airbubba – think you’ll find Delta are NOT bankrupt and probably have a team of lawyers ready to sue anyone who says they are for every penny (cent) they can get – after all they need the money to help with their solvency problems.
"moral of the story for all future illlegal immigrants in america do not buy any dvd as to how to act as a airline pilot"
The moral of the story is to pay your bills when due.
The moral of the story is to pay your bills when due.
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>>Careful Airbubba – think you’ll find Delta are NOT bankrupt
Must take a little time for the news to get over there <g>.
See: http://www.pprune.org/forums/showthr...hreadid=189811
"GIULIANI FIRM TO GET $400K CONTRACT FROM BANKRUPT DELTA"
http://www.nypost.com/business/52759.htm
"Bankrupt Delta Air Lines CEO Gerald Grinstein is reassuring customers their travel plans and frequent flyer miles are safe..."
http://www.gwinnettdailypost.com/ind...ange_well_id=2
"Employees at newly bankrupt Delta Air Lines and Northwest Airlines have every reason to fear that any leverage they once had in contract negotiations has evaporated, analysts said on Thursday..."
http://today.reuters.com/investing/f...LINES-JOBS.XML
Shhh... don't tell anybody <g>.
Must take a little time for the news to get over there <g>.
See: http://www.pprune.org/forums/showthr...hreadid=189811
"GIULIANI FIRM TO GET $400K CONTRACT FROM BANKRUPT DELTA"
http://www.nypost.com/business/52759.htm
"Bankrupt Delta Air Lines CEO Gerald Grinstein is reassuring customers their travel plans and frequent flyer miles are safe..."
http://www.gwinnettdailypost.com/ind...ange_well_id=2
"Employees at newly bankrupt Delta Air Lines and Northwest Airlines have every reason to fear that any leverage they once had in contract negotiations has evaporated, analysts said on Thursday..."
http://today.reuters.com/investing/f...LINES-JOBS.XML
Shhh... don't tell anybody <g>.
Last edited by Airbubba; 17th Sep 2005 at 18:13.
Bushpilot: you expanded very well upon some points made in my remarks. They never claimed that Southwest belongs, or needs to belong to ALPA-it was not my intent. But Southwest has been nevertheless heavily unionized for many years, and this glaring (intentional) bit of forgetfulness by the press is so consistent that one wonders if the only information available to the press is first filtered by either Wall Street writers (who often have an anti-labor prejudice), or others who want to keep this prominent fact hidden from public view.
And another airline analyst quoted somewhere above, highlighted the dramatic operational efficiencies with Southwest's business model, in contrast to the normal hub-and-spoke structures. The hub-and-spoke model, although inherited as various CEOs go through the revolving upper mgmt. door (few, if any, having any genuine interest in aviation: very, very few ever worked "down there" on the operational side: I can think of only two-at American Trans Air and Continental, who were pilots), was not designed by labor-even though labor is always the scapegoat (Peitschjunge?). It was designed and perpetuated by decades of fortress-building mgmts. But why are upper managements never considered responsible, by media writers and others, for this antiquated, highly inefficient 'business model'?
Also, despite the many inherent contradictions and flaws within ALPA, it is quite different than the IAM or Teamsters (dropped by UPS pilots years ago, and recently dropped by NWA's Flight Attendants, after decades of having their heads up their *****).
And another airline analyst quoted somewhere above, highlighted the dramatic operational efficiencies with Southwest's business model, in contrast to the normal hub-and-spoke structures. The hub-and-spoke model, although inherited as various CEOs go through the revolving upper mgmt. door (few, if any, having any genuine interest in aviation: very, very few ever worked "down there" on the operational side: I can think of only two-at American Trans Air and Continental, who were pilots), was not designed by labor-even though labor is always the scapegoat (Peitschjunge?). It was designed and perpetuated by decades of fortress-building mgmts. But why are upper managements never considered responsible, by media writers and others, for this antiquated, highly inefficient 'business model'?
Also, despite the many inherent contradictions and flaws within ALPA, it is quite different than the IAM or Teamsters (dropped by UPS pilots years ago, and recently dropped by NWA's Flight Attendants, after decades of having their heads up their *****).
Last edited by Ignition Override; 18th Sep 2005 at 06:19.
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Bushpilot: major points you overlooked...
1. American's pilots are not ALPA represented.
Many of AA's pilots are up against the legal FAA maximum hours per year. How can they be more productive in the cockpit? (I know, like the McPapers of the world, you believe that the rules are outdated and pilots are overpaid busdrivers, and the sun shines out of Jet Blue's a$$....)
2. JetBlue's contract is anything but a goldmine. Many of the pilots that are friends of mine are extremely concerned about their long-term career package. A quick command is the only hope for decent NY living wages.
Many analysts are starting to be bearish about JBLU, by the way.
3. The entire US airline industry, including SWA, is fundamentally unprofitable. The 2nd Q results showed that, excluding fuel hedging, CAL and AA made better yields/asm than SWA.
The basic situation has been boiled down by Boyd Group as the airlines aren't so much competing against each other as against SWA's fuel hedging. And time is ticking on that....
It is just too simple-minded, and too Republican, to throw a blanket blame at labour.
The long term consequences of hammering labour incessantly are far more unpleasant for future residents of the US than you might realize. We're going to end up with a massive inequality in the distribution of wealth at this rate, and an enourmous retiree problem.
1. American's pilots are not ALPA represented.
Many of AA's pilots are up against the legal FAA maximum hours per year. How can they be more productive in the cockpit? (I know, like the McPapers of the world, you believe that the rules are outdated and pilots are overpaid busdrivers, and the sun shines out of Jet Blue's a$$....)
2. JetBlue's contract is anything but a goldmine. Many of the pilots that are friends of mine are extremely concerned about their long-term career package. A quick command is the only hope for decent NY living wages.
Many analysts are starting to be bearish about JBLU, by the way.
3. The entire US airline industry, including SWA, is fundamentally unprofitable. The 2nd Q results showed that, excluding fuel hedging, CAL and AA made better yields/asm than SWA.
The basic situation has been boiled down by Boyd Group as the airlines aren't so much competing against each other as against SWA's fuel hedging. And time is ticking on that....
It is just too simple-minded, and too Republican, to throw a blanket blame at labour.
The long term consequences of hammering labour incessantly are far more unpleasant for future residents of the US than you might realize. We're going to end up with a massive inequality in the distribution of wealth at this rate, and an enourmous retiree problem.
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Interesting – I always thought C11 protected you from Bankruptcy and you didn’t become actually bankrupt until you were under C7.
Will try and understand the difference one day – but guess that’s why lawyers get the big bucks
Maybe I should start a thread to find out the difference
Ah Ah
Seems C11 is a bit like “Administration” and C7 is “Liquidation”
Does seem to be a bit of a “get out of jail free card” – but not as much of a card as I thought – but am working from memory from some projects getting planes out of airlines under Administration (not C11) for the owners outside the US.
Always something new to learn
If interested I found Title 11 which contains C7 & C11 on http://www.law.cornell.edu/topics/bankruptcy.html.
PS
Most of us do now have electric and water – but news isn’t quick here - Delta and NWA made a 5sec slot on the news, at least the one I saw, (doubt if it even got mentioned on the Zulu or Xhosa ones) and MIGHT warrant a mention in the non tabloids on Sunday.
Will try and understand the difference one day – but guess that’s why lawyers get the big bucks
Maybe I should start a thread to find out the difference
Ah Ah
Seems C11 is a bit like “Administration” and C7 is “Liquidation”
Does seem to be a bit of a “get out of jail free card” – but not as much of a card as I thought – but am working from memory from some projects getting planes out of airlines under Administration (not C11) for the owners outside the US.
Always something new to learn
If interested I found Title 11 which contains C7 & C11 on http://www.law.cornell.edu/topics/bankruptcy.html.
PS
Most of us do now have electric and water – but news isn’t quick here - Delta and NWA made a 5sec slot on the news, at least the one I saw, (doubt if it even got mentioned on the Zulu or Xhosa ones) and MIGHT warrant a mention in the non tabloids on Sunday.
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Having just had a “chat” with Airbubba re are Delta and NWA actually bankrupt or not on another thread I found this link on http://www.law.cornell.edu/topics/bankruptcy.html. which is the US Bankruptcy law (Title 11) – there’s probably other links this is just the one I found.
OK – I probably should have read this thread before “chatting” to Airbubba – cause he was right and I was wrong – but I’ve been wrong before and will again – hopefully not about the same topic though.
Happy reading to anyone else sad enough to actually read through the link.
OK – I probably should have read this thread before “chatting” to Airbubba – cause he was right and I was wrong – but I’ve been wrong before and will again – hopefully not about the same topic though.
Happy reading to anyone else sad enough to actually read through the link.
RRAAMJET: you, sir, have the BIG picture of the US airline scene. Can you mail me a color copy? And RRAAMJET: don't forget, but many former military pilots (US citizens...), even after they work for years in an airline c0ckp1t, still can't accept the fact that they are only a labor commodity, and considered just a cost liability.
Even "Aviation Week, a while back, explained the competition between Valuejet...woops, I mean AirTran, JetBlue and Southwest. One of the top AirTran execs, confidentially (no names here), was forced out of another US major by a classified item in their ALPA contract, in the 90s. Something to do with a background as Lorenzo's waterboy. As for the low cost mantra, just why did Lorenzo's low cost airlines not succeed? All you need are low costs....the theory must be valid
.
According to the theory, they should have been highly successful, and modern Southwest, even without much fuel hedging, should not have been nearly so successful, based on staff/employee salaries.
Again, SW 737 pilots are probably the world's best-paid.
Even "Aviation Week, a while back, explained the competition between Valuejet...woops, I mean AirTran, JetBlue and Southwest. One of the top AirTran execs, confidentially (no names here), was forced out of another US major by a classified item in their ALPA contract, in the 90s. Something to do with a background as Lorenzo's waterboy. As for the low cost mantra, just why did Lorenzo's low cost airlines not succeed? All you need are low costs....the theory must be valid
.According to the theory, they should have been highly successful, and modern Southwest, even without much fuel hedging, should not have been nearly so successful, based on staff/employee salaries.
Again, SW 737 pilots are probably the world's best-paid.
Last edited by Ignition Override; 19th Sep 2005 at 04:25.
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From yesterdays on line edition:
http://www.timesonline.co.uk/article...785191,00.html
Starts to put a slightly different slant on things IMO.
http://www.timesonline.co.uk/article...785191,00.html
Starts to put a slightly different slant on things IMO.
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>>Having just had a “chat” with Airbubba re are Delta and NWA actually bankrupt or not
Believe me, I wish I knew a lot less about airline bankruptcy in the U.S. <g>. Unfortunately, most of what I know has been learned from personal experience as an "unsecured creditor".
Believe me, I wish I knew a lot less about airline bankruptcy in the U.S. <g>. Unfortunately, most of what I know has been learned from personal experience as an "unsecured creditor".
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Perhaps the airline pilot unions should run national ads ask passengers to write to DL/NW offering to donate their FF points to offset the savings from cutting loose the pensioners - it wouldn't solve the problem but it would give it a lot of prominence. Maybe get John Travolta or another pilot friendly celeb to be the first to do it?
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While it is mis-used the intent is good but the price is high. For a start the management loses control of the company to a creditors committee who oversee and approve everything-they are usually the nastier sort of bankers -the financial worlds equivalent of an organsied crime 'enforcer'.
It's a very rare event when a Committee runs a Chapter 11 case. Management doesn't 'lose control of the company', unless it's because management were all fired 30 minutes before the bankruptcy petitions were filed.
While a number of "official" committees may be appointed, the unsecured creditors committee is present in nearly every case. The Committee represents the interests of unsecured creditors, who are typically trade creditors, and not bankers. They are bankers only if someone has screwed up almightily (or been defrauded) and the banks have a large unsecured claim at the start of the case.
The Committee ensures that someone (theoretically) is looking out for the large body of unsecured creditors, who might otherwise lack effective representation because their claims are too small individually and of too low a priority (meaning, the order in which claims are paid) to make it worthwhile for them to actively participate in the case.
However, the Committee, like the federally-appointed "US Trustee", has a watchdog role rather than an administrative one: it is there to make sure that the bankruptcy petition gets scrutinized for good faith and, in theory, that troubled businesses can't cook up collusive deals with insiders or secured lenders that are unfair to other creditors.
Theoretically, chapter 11 provides for a debtor corporation to be administered by a "trustee". This is a trustee in bankruptcy and not the US Trustee. Although the code speaks of a "trustee", the debtor is permitted in a chapter 11 context to excercise the powers of a trustee, in which capacity it is known as a "debtor-in-possession", as in, in possession of its own estate. If the debtor truly lacks management (or honest management), a "true" chapter 11 trustee may be appointed who acts in a fashion broadly analogous to an administrator or receiver, although with responsiblities distinct from those of a chapter 7 (liquidating) trustee.
Note that businesses can and do liquidate within chapter 11. Chapter 7 is typically reserved for no-asset cases or where a debtor becomes administratively insolvent (basically, can't pay its debts as they come due after the petition date) during a chapter 11 proceeding. Companies can and do conduct an orderly liquidation via a chapter 11 plan.
Executory contracts: the prevailing definition of an executory contract subject to assumption or rejection is one where unperformed material obligations remain on both sides. When Acme industries ships NWA 2,000 patented bird-strike preventing widgets (with accessory spit-roaster) and sends them an invoice, a contractual obgliation exists, but not an executory contract. Acme owes NWA no further performance, and NWA simply owes Acme a monetary debt. NWA can't "reject" its debt, although it may well confirm a plan of reorganization in which Acme will receive little or nothing. In comparison, Delta's gate agreements with Fictional Airports Authority involve ongoing non-monetary obligations on both sides, and may be assumed or rejected. Ongoing leases, like executory contracts, are subject to assumption or rejection.
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I think idl has noted why C11 is sometimes “looked down upon” by us foreigners – in the non US ones I’ve been involved in there hasn’t been “debtor in possession” – once the airline has gone into Administration an Administrator is appointed, even if the management staid on they would be toothless as the Administrator is GOD, nothing happens without his permission and his job is to get as much money as possible be that by “restructuring”, selling as a going concern or selling as scrap.
That is at least the way I remember it from Australia and Belgium where the Administrators made our lives HELL – even though I represented “secured creditors” – got to admit one I did in Turkey was different, in that one the airline simply closed down one night, no one turned up for work the next day, no administrator, no one willing to even discuss the situation and it was upto the creditors to get what they could – after “persuading” airport security to let them in.
You may of course correct me – as long as no one ever tells me the Administrator is really looking after the interests of the creditors – the ones I’ve dealt with became VERY rich by making the creditors (at least the ones with planes) pay through the nose to get their property back.
Then again I’ll also admit that if I’d been one of the guys laid off I’d have wanted them to screw every penny they could get out of anyone, so that I could get my redundancy, holiday etc payouts – but I seem to remember the Administrators were on a percentage which was paid first and that I think is wrong – it should be a fixed fee payable based on performance.
That is at least the way I remember it from Australia and Belgium where the Administrators made our lives HELL – even though I represented “secured creditors” – got to admit one I did in Turkey was different, in that one the airline simply closed down one night, no one turned up for work the next day, no administrator, no one willing to even discuss the situation and it was upto the creditors to get what they could – after “persuading” airport security to let them in.
You may of course correct me – as long as no one ever tells me the Administrator is really looking after the interests of the creditors – the ones I’ve dealt with became VERY rich by making the creditors (at least the ones with planes) pay through the nose to get their property back.
Then again I’ll also admit that if I’d been one of the guys laid off I’d have wanted them to screw every penny they could get out of anyone, so that I could get my redundancy, holiday etc payouts – but I seem to remember the Administrators were on a percentage which was paid first and that I think is wrong – it should be a fixed fee payable based on performance.
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I wonder if the problems DL, NW etc face are more subtle. They are hub carriers with hugely complex networks. Fact is that I don't think they have a clue how much money (if any) they make from any part of their operation. So how can they run it ?
Yield management is a very complicated subject. What is a passenger worth on a sector when they are holding a multiple segment ticket ? How do you allocate costs vs revenue ? Probably on a set of very dodgy assumptions.
So I would submit these carriers problems are fundamental. They don't have a clue about their business on a per sector basis (other than costs) so how can they run them.. Revenue/Yield management experts please chip in and explain.....
Also aren't the real winners in the airline game people like GE Capital Finance (see radarvector's link to http://www.startribune.com/stories/535/5619768.html ) and companies like American Express, as long as they keep airlines afloat, they make money....
Yield management is a very complicated subject. What is a passenger worth on a sector when they are holding a multiple segment ticket ? How do you allocate costs vs revenue ? Probably on a set of very dodgy assumptions.
So I would submit these carriers problems are fundamental. They don't have a clue about their business on a per sector basis (other than costs) so how can they run them.. Revenue/Yield management experts please chip in and explain.....
Also aren't the real winners in the airline game people like GE Capital Finance (see radarvector's link to http://www.startribune.com/stories/535/5619768.html ) and companies like American Express, as long as they keep airlines afloat, they make money....