Delta and Northwest File Chapter 11

[moe.ron]

Link to the Article

Wow

[Honeykiss1974]

I just read an email at work about this. What the....

[Rudey]

Let's close the American airline industry down overnight and re-open it without all the unions. How about that?

-Rudey

[madmax]

Originally posted by Rudey
Let's close the American airline industry down overnight and re-open it without all the unions. How about that?

-Rudey

How are the unions the problem?
Baggage handlers make about $13 per hour. Mechanics $30 per hour. Is that overpaid? Should they work for free?


The airlines take a 50 million dollar jet, fill it with 100k worth of high test jet fuel. Then they sell tickets for $49 one way from NY to Orlando and fly with half the seats empty.


I think the airlines are setting their prices too low. Amtrak from NY to Phila is about $100.

Last night on the news an airline exec said "the only thing between the airlines and prifitability was fuel costs." It was only a few months ago that the same airline exec gave the same speech saying "the only thing between the airlines and prifitability was labor costs." Labor made the concessions and the first thing management did was lower their $79 tickets to $49.

How do you pay for a 50 million dollar jet when you are selling $49 tickets? It cost more to fly 30 years ago.

[Rudey]

Their pensions are the biggest problem.

And Amtrak is the worst comparison. That should have been eliminated 50 years ago but the Federal government has essentially kept that from happening through subsidies and looking away as the trains fall apart and kill people.

-Rudey

Originally posted by madmax
How are the unions the problem?
Baggage handlers make about $13 per hour. Mechanics $30 per hour. Is that overpaid? Should they work for free?


The airlines take a 50 million dollar jet, fill it with 100k worth of high test jet fuel. Then they sell tickets for $49 one way from NY to Orlando and fly with half the seats empty.


I think the airlines are setting their prices too low. Amtrak from NY to Phila is about $100.

Last night on the news an airline exec said "the only thing between the airlines and prifitability was fuel costs." It was only a few months ago that the same airline exec gave the same speech saying "the only thing between the airlines and prifitability was labor costs." Labor made the concessions and the first thing management did was lower their $79 tickets to $49.

How do you pay for a 50 million dollar jet when you are selling $49 tickets? It cost more to fly 30 years ago.

[madmax]

Originally posted by Rudey
Their pensions are the biggest problem.



-Rudey

Ok Bud Fox, lets say we do away with the unions. Non union labor will work for free. How do you pay for a billion dollar fleet of 50 millon planes that are filled up with 100k of jet fuel when tickets are being sold for $49.

[Rudey]

Originally posted by madmax
Ok, lets say we do away with the unions. Non union labor will work for free. How do you pay for a billion dollar fleet of planes that are filled up with 100k of jet fuel when tickets are being sold for $49.

Those $49 tickets are not everywhere. They're for very short flights on no-name airlines to places like Myrtle Beach. When I fly Southwest I pay at least 200 to go to Cali or NY from Chicago. A lot of times it's more and when I fly United, it's usually around 400 a ticket.

http://www.airlines.org/econ/d.aspx?nid=6207
Shows how many bankruptcies there have been in the industry.

Anyway here are the costs for airlines broken down:

http://www.airlines.org/econ/d.aspx?nid=1042

The largest component is labor. Fuel is 2nd largest and moves up and down as any commodity will but that labor cost isn't market priced.

Plus how can they charge more without losing passengers?

I have to think about it in terms of my own interests. I want cheap flights and I don't want an airline defaulting on its pension obligations like United did and leaving the government to take care of their mess. I'm sure the pilots all have to think about it in terms of how high a salary they can get with what benefits and the airlines in terms of how to get the most profits for themselves.

-Rudey

[Coramoor]

Unions are part of the problem, but like Rudey said the pensions are the biggest.

You have airlines paying a number of people (I can't begin to guess) penisons, healthcare, etc and these people are not making any money for the airline. It's an anchor that has drowned many companies in the past and is going to do so again.

Once they get re-organized and don't have to pay billions out to people that don't make the airlines any money they will be financially sound. There are already a few other examples of how well this works. I believe that Southwest is one such example.

GM is probably going to do the same thing relatively soon.

What the....? I actually agree with madmax?

I'm just wondering how this will affect United's anticipated exit out of bankruptcy early next year. With Delta and Northwest now in bankruptcy, I'm sure we'll be battling for capital.

But then again, it's no wonder how we're still in bankruptcy when I see this in our SkyNet NewsReal:

SmartMoney.com ran a piece saying, “With the airlines cutting frills left and right, we were a little surprised to learn of United Airlines' latest promotion: Book a ticket for $500 or more before the end of the year, and receive a free Treo 650 SmartPhone.”

Grrrreat.

[Rudey]

Originally posted by Coramoor
Unions are part of the problem, but like Rudey said the pensions are the biggest.

You have airlines paying a number of people (I can't begin to guess) penisons, healthcare, etc and these people are not making any money for the airline. It's an anchor that has drowned many companies in the past and is going to do so again.

Once they get re-organized and don't have to pay billions out to people that don't make the airlines any money they will be financially sound. There are already a few other examples of how well this works. I believe that Southwest is one such example.

GM is probably going to do the same thing relatively soon.

Pensions are negotiated by the unions from what I understand.

Southwest and JetBlue seem to have done pretty well with their costs. In fact, if the costs were all from fuel, the large airlines would not have created their own "discount" lines.

Because United decided to shift their pension obligations to the government, that means you and I and everyone else pays.

-Rudey

[madmax]

Originally posted by Coramoor
Unions are part of the problem, but like Rudey said the pensions are the biggest.

You have airlines paying a number of people (I can't begin to guess) penisons, healthcare, etc and these people are not making any money for the airline. It's an anchor that has drowned many companies in the past and is going to do so again.

Once they get re-organized and don't have to pay billions out to people that don't make the airlines any money they will be financially sound. There are already a few other examples of how well this works. I believe that Southwest is one such example.

GM is probably going to do the same thing relatively soon.

I think your company should do the same thing to you. Why should any company pay a pension to someone that is retired and no longer brings in revenue? After all it isn't management fault that they agreed to the pensions plans and compensation packages. It is labors fault for accepting those packages.

[Rudey]

Originally posted by madmax
I think your company should do the same thing to you. Why should any company pay a pension to someone that is retired and no longer brings in revenue? After all it isn't management fault that they agreed to the pensions plans and compensation packages. It is labors fault for accepting those packages.

Does someone work for an airline?

-Rudey

[madmax]

Originally posted by OTW
What the....? I actually agree with madmax?

.05 cent


You are very wise.

[madmax]

Originally posted by Rudey
Does someone work for an airline?

-Rudey

No.

[madmax]

Originally posted by Rudey
Those $49 tickets are not everywhere. They're for very short flights on no-name airlines to places like Myrtle Beach. When I fly Southwest I pay at least 200 to go to Cali or NY from Chicago. A lot of times it's more and when I fly United, it's usually around 400 a ticket.

http://www.airlines.org/econ/d.aspx?nid=6207
Shows how many bankruptcies there have been in the industry.

Anyway here are the costs for airlines broken down:

http://www.airlines.org/econ/d.aspx?nid=1042

The largest component is labor. Fuel is 2nd largest and moves up and down as any commodity will but that labor cost isn't market priced.

Plus how can they charge more without losing passengers?

I have to think about it in terms of my own interests. I want cheap flights and I don't want an airline defaulting on its pension obligations like United did and leaving the government to take care of their mess. I'm sure the pilots all have to think about it in terms of how high a salary they can get with what benefits and the airlines in terms of how to get the most profits for themselves.

-Rudey

1. Do you expect labor to work for free. Since you blamed union labor for the problems then the real issue is difference in cost of union labor vs. non union labor and does that difference make up for the billions that the airlines are losing.


2. I disagree with your point that low cost tickets are not everywhere. I just checked Travelosity and there are tons of low cost tickets from NY to Orlando.

3. The airlines used to charge more. That was back in the day when they used to turn a profit.