Posted on 09/14/2005 2:27:17 PM PDT by Turbopilot
Would you hazard a wild guess as to what Jet Blue might be paying for fuel these days? In their last 10-Q, they predicted an operating margin of 5-7% if fuel was at $1.59. In the first quarter of 2005, their average cost was $0.97, and in the second quarter they paid an average of $1.50. In the second quarter their operating margin was 9.1%.
The sick sister airlines need to downsize or go out of business.
Speaking as one of 'they', we aint giving another dime.
Captains get more than that. (I'm a right-seater) But you got the work week right.
And Delta while thinking US Airways? Neither carrier here was involved in what you were thinking about; it was US Airways and America West. At least you posted this to three different threads.
"'The world owes Delta one bankruptcy filing,' he said. 'The company has paid its bills for more than 75 years. It's a conservative carrier and an industry leader that's the victim of circumstances beyond its control.'"
Could this be one way of leveling the playing field for Delta? Declare bankruptcy like other major carriers, have their debt forgiven by the courts, shift their pension payment responsibility, along with all the other economic benefits associated with bankruptcy. Almost seems like a well-planned strategic business move?
I watched Gerald Grinstein turn around Burlington Northern in the early 1990s, to the point where they were able to acquire the Santa Fe Railway, and BNI is now the most profitable railroad in the country. If Gerry couln't pull the rabbit out of the hat, nobody could.
According to Delta.com:
Your SkyMiles are secure – The award-winning SkyMiles program has not been affected, and you can continue to enjoy the program’s benefits—including Delta Crown Room Clubs®, double miles on qualifying purchases with the Delta SkyMiles Credit Card from American Express, and the opportunity to earn and redeem miles on the thousands of flights offered by SkyTeam and our vast network of global airline alliances.
Yep. Wait till GM pulls this off - that will cause an earthquake.
Just curious what you think of the Boeing machinists who are on strike, not because of an economic or benefit package, but because of perceived disrespect paid to them by management. How far can management push employees until they strike or are employees just expected to take abuse from management?
Dunno, never worked for a union shop. Outsside of MSU, I guess - and that was silly.
This might become a trend for big business. Declare bankruptcy, get your debt forgiven and shift pension responsibility. Who ends up paying for it? The debtors and the employees and then ultimately the taxpayer.
The key is "perceived disrespect." Boeing machinists are well paid, have an interesting job, and are using the "disrespect" claim as a cover for their real reason for striking. Now that Boeing has finally started recovering its market share, the union thought that they could strike when the iron was hot and extract salary concessions from Lazy B. It aint going to happen and since the strike is almost three weeks old, they will likely come out on the short end of the stick.
"might become" a trend? "Has Become" is more accurate.
But whenever they strike, they always lose $$$. They never get ahead economically. Why do you think they continue to go on strike each time?
The major turning point occurred when the head of the Miami local of the AMA, Charlie Bryan, tried to force Frank Borman's hand at Eastern. He succeeded in getting Borman to step aside, but then had to face Frank Lorenzo. The rest was history.
Contrary to legacy airline management belief, you cannot lose $100 per ticket sold and make it up in volume.
Right now, on Orbitz, a round trip ticket from Atlanta to D.C. is about $145. To rent a car for two days and drive there and back would cost about $230 ($50/day for the car, 30 mpg, and $3/gal for gas) and take sixteen additional hours (another $210 at the average salary after taxes). For a family of four going on vacation, an increase in airline ticket price would probably cause one to drive. But for the typical business customer, the ticket price could double and it would still be cheaper to fly.
It is better to have a smaller customer base and be profitable, than have a larger customer base and loose money. This is the secret of Southwest Airlines and other so-called low cost carriers.
For Delta, the world will not end if they have only 25 roundtrips per day between Atlanta and New York instead of 36 round trips. Unfortunately, as a result of Chapter 11, they will end up with fewer round trips than before, but at a lower average fare price than before, only making the situation worse.
The entire American airline industry is a house of cards, and somebody at the table is about to sneeze. Southwest is depending on fuel hedging which is always a temporary measure. Soon their fuel costs will double. JetBlue is financed by Airbus Industries deferred payments, which will come due soon. The legacy carriers will use bankruptcy to eliminate their pension obligations. They already have cut their labor costs below the low cost carriers (U.S. Airways has the lowest operating costs of any American carrier. Southwest airlines has the highest paid pilots of any U.S. passenger carrier).
In short, the playing field is about to be leveled. At that point, expect the next carriers facing problems to be Southwest and JetBlue.
The solution to airline problems will only come when they charge a fair price for their product based on the cost of the goods sold, and the value of the product given those costs. While that may result in a smaller traveling public, and a smaller airline industry, it will be a healthier airline industry, which is better for the traveling public.
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