Uncle Sam Air,(airlines, chapter 11, bailout)

Wall Street Journal ^ | September 15, 2004 | Editorial

[OESY]

...It is taken for granted that every time the economy sours Washington will infuse the industry with enough cash to see it through the next boom-bust cycle. This bailout culture is so routine that nobody bothers discussing the fact that this hole-to-nowhere comes courtesy of lawmakers who won't tackle the regulatory and tax problems that hobble the industry.

...Last year Arizona Senator John McCain considered reintroducing his proposal to amend the Railway Labor Act to allow best-offer binding arbitration, which would encourage serious negotiation. But Republicans deemed it too politically difficult.

Congress missed a similar opportunity earlier this year with its so-called "pension reform." Pension obligations hugely burden older carriers, as (also bankrupt) United proved by skipping its scheduled contributions recently. With a little ingenuity, Congress could have used its legislation earlier this year to transform these legacy costs into more modern, workable retirement programs. Instead it allowed the airlines special relief by absolving them of certain accelerated pension-plan contributions for two years, compounding the long-term problem.

Meanwhile the airlines are still asked to collect high ticket taxes from passengers, and pay segment fees, security charges, facility charges, infrastructure fees and frequent flier taxes (for starters). Continental Airlines chief Gordon Bethune noted in testimony this summer that in a year when the industry will lose $3 billion, it will hand the federal government $14 billion in taxes....

There's the question of why airlines are nearly alone among U.S. companies in being forbidden from tapping foreign capital. How come the Department of Transportation takes such a hard line on airline alliances and code-sharing agreements that would also reduce costs? And when, if ever, will the government finish the job of airline deregulation begun under President Carter in 1978 -- relinquishing its role... in running the inefficient air traffic control system?....

[Mr. K]

I thought changing the name from USAir to USAirways was going to fix all that?

[eno_]

Last year Arizona Senator John McCain considered reintroducing his proposal to amend the Railway Labor Act to allow best-offer binding arbitration, which would encourage serious negotiation. But Republicans deemed it too politically difficult.

Well, that would be possibel if Republicans had a majority in the House. Oh? What? They do?

The Senate too? I knew that. But the President would veto... oh? Hmmm. So this is just pathetic, then?

[Voltage]

<-sarcasm> It's hard to imagine that they could be in financial stress when they can afford to pay senior pilots $250,000.00 for 26 weeks of work per year. </-sarcasm>

[safisoft]

It's hard to imagine that they could be in financial stress when they can afford to pay senior pilots $250,000.00 for 26 weeks of work per year.

There are airline pilots making that. Delta pilots. US Airways' pilots have had their wages cut nearly 40% in the past year, and if you count the loss of their pension it is more like 60%. The average US Airways pilot now makes less than the average Southwest Airlines pilot, and if management is successful in getting cuts in Ch 11 (hopefully they will), they will be making less than any pilots in the top 11 airlines. So-called 'Low Cost Carriers' have a competitive price advantage, but it is not the pilot pay that so many think is the problem.

As for '26 weeks of work', Delta may have some senior captains using sick and vacation to do that, but most airline pilots are now flying very close to the maximum the FAA will allow. Pilot pay and benefits certainly contributed to the problem in the past, but the problem is that legacy carriers are like ocean liners, turning them around takes time... and time is not something that passes slowly when you have billions of expenses per year.

An interesting, and largely unreported fact regarding US Airways: between 1998 and 2000, the previous management team took over a billion in profit, and added other cash and bought back nearly 2 billion in stock, to prop up the price for themselves. Sure would have been nice to have that 2 billion a mere two years later. They left with 30 million each, full pensions and benefits... leaving a wasteland in their wake. I suppose if you redefine the word 'pilot' to include some criminal CEOs, you are entirely correct.

[Voltage]

Your excellent reply has completely turned me around. I now think that every business should pay it's employees $250,000.00 per year. Of course most couldn't afford it, but that is where taxpayer subsidies come into play. By increasing the tax rate to 80% the money would be available for the gov't to make up the difference.

[Willie Green]

Maybe the GOP can help undermine the pilots' wages and benefits with H-1B visas and illegal immigrant pilots from Saudi Arabia.
Gotta get Jack Kemp and Spencer Abraham started on this right away.

[safisoft]

I now think that every business should pay it's employees $250,000.00 per year.

If the market can support it, then so be it. You do believe in free enterprise don't you? Or maybe only for yourself. Airlines cannot support $250k pilots, and if you will read my post to you few, if any do. Not even close.

[Voltage]

I do not include within the definition of 'free enterprise' any business which accepts taxpayer subsidies. I do not care to subsidize the earnings of any employee of such a company.

[safisoft]

I do not include within the definition of 'free enterprise' any business which accepts taxpayer subsidies. I do not care to subsidize the earnings of any employee of such a company.

So far this year, the airline industry has lost 3 billion. They have PAID 14 billion in ticket taxes and use taxes. You are confused about "taxpayer subsidies". No airline has gotten a red cent from the Federal Government. The terms for so-called ATSB loans post-September 11 are so bad that no one except the most desperate want anything to do with them.

Can you list ONE subsidized US carrier?

I thought not.

[Voltage]

Let them close down and sell off their equipment to those who can operate at a profit. At least the creditors might get something.

[norraad]

Another unreported fact:

All the jet fuel consumed.

You could see from space all jet fuel going up refinery flares a few days after 9/11.

With pipelines all backed up & storage full, burning was cheaper than shutting down.

On a positive note;

With less planes in the air fleet mpg on the ground would be allowed to rise to help balance refinery output.

Maybe we'd get vari-valve timing & high-pressure fuel injection developed in the last century.

[safisoft]

Let them close down and sell off their equipment to those who can operate at a profit. At least the creditors might get something.

I agree. You finally actually sound like you do believe in free enterprise. First time this thread.

[Chad]

I am so tired of this "overpaid pilots" tirade. At my company, the highest paid pilots are Boeing 777 international captains. They are paid less, to fly from the USA to Japan and back, than what a dentist charges to remove a diseased tooth from your mouth and replace it with a false tooth. Look at the differences in levels of responsibilty and accountability for life and capital.

Please don't misunderstand me, I am not picking on dentists. I could go on and on using comparative examples with other professions, too. In how many jobs could a sudden error in judgement result in such great loss of life? What about the billions in $ losses resulting from the inevitable lawsuits?

Let me assure you that it takes years of training, dozens of intense evaluations and decades of experience to reach one of these (few) $250k airline jobs. Probably only those in the medical profession are trained more. The road to your so-called "26 week job" is paved with, and still includes, many 12-16 hour days. The crew schedules which seem to gall you are largely dictated by Federal Aviation Regulations, and they are "written in blood". Would you prefer that the pilot landing your airplane, at night in the fog at your favorite mountainous resort airport, not have been home to rest for several weeks?

If this profession makes you so jealous, I invite you to build up the necessary qualifications to apply for a $2000/month entry level position at one of the major carriers. After you graduate from college, it will take you the better part of a decade to be elgible for even an interview, whether you gather your experience thru the military or a regional entity.

[Chad]

Voltage, see my reply above, #14. It was intended for you. My mistake; at least I didn't cause the deaths of 250 people riding in an airliner by pushing the wrong button like I did on this forum. Apologies to safisoft...

[safisoft]

If this profession makes you so jealous, I invite you to build up the necessary qualifications to apply for a $2000/month entry level position at one of the major carriers. After you graduate from college, it will take you the better part of a decade to be elgible for even an interview, whether you gather your experience thru the military or a regional entity.

Chad, you hit the nail on the head. Anytime "pilot pay" comes up, it is pure and simple jealousy. No question about it, I love my job, and in my view everyone would want it. That however is not the case, they are talk like they would want it, but few do it. Why? Because the odds of starting out in pilot training and ending up flying for a major airline are 10,000 to 1. All along the way, the ones that can't hack the LACK of pay, the LACK of benefits, and the LACK of a life bow out. Only the ones who have the aptitude and the endurance make it. That is why we are are so few...