Any NWA employees here?

[oboe]

Wondering what you are thinking about the latest news?   Sorry about the cut and paste but I wanted to relay the highlights of the story:

(from the Mpls Star/Tribune)

Northwest Airlines' board of directors has awarded $3.7 million in restricted stock to its top five executives...

The stock awards, disclosed in a Wednesday filing with the Securities and Exchange Commission, come as Northwest pilots finish voting on a two-year contract that reduces their pay by 15 percent and saves the company $265 million a year...

Implementation of the pilots' new contract also would trigger $35 million in annual cuts for salaried employees...

But Northwest executives who were awarded the restricted stock recently received salary increases to reflect their new responsibilities. Northwest declined to release the amounts of raises for top executives.

Northwest, which has lost more than $2 billion on its operations since early 2001, is attempting to cut its labor costs by $950 million a year.

What about the rest of you guys?   What do you think about NWA's management?

[JB73]

thought that band broke up, and one of them died.

[ra]

NWA is teh suck.

[Dago]

I is one of them NWA types.

Airline pilots are extremely overpaid at all the carriers, and the pension they get is so grossly inflated in the extreme as to be embarrassing.  Dealing with them as often as I have. I never cease to be amazed at the number of them that are so freaking arrogant and basically define the term "prima donna".  Not to say they are all like that, but too many.

Senior NWA management has positioned the airline pretty well in relation to the other major carriers, but the industry is in a difficult place right now.  Too many factors involved in our industry to go into, but I would say we have at least an equal chance of survival long term as any airline today.

That is senior management anyway.   I know and have talked to many employees at other airlines and they are all pretty much the same except for the livery.  Without the paint job, you couldn't tell most of them apart.

dago

[oboe]

I guess the point I'm trying to make is that senior management wrings salary concessions out of the pilots and promises them they will take a pay cut right alongside them, then right before the pay cut is voted in they give themselves fat raises and big stock awards.

I thought everyone at a company is supposed to be on the same team.   It looks to me like the pilots just got a nice sucker punch in the jaw.

And this at an airline that has lost $2 billion.   How the hell can you justify raises when the company's performance is that bad?

[Dago]

You are a little short on the facts.

The stock options are part of their compensation package.  The pilot group was informed prior to voting on the pay concessions about the upcoming stock issue, it wasn't a surprise or sucker punch.

The senior execs did not get a pay raise, just the opposite, they are taking a 15% pay cut with the pilots.  All of management will be taking that pay cut, they have been aware of that for a while, but they were not to get the pay cut until the first unionized labor group agreed to a cut.  That is what has just happened, and management will share in the pay cut.

I think if you compare the total compensation of the senior executives at NWA versus other comparable airlines, and especially other companies outside aviation, you will see that thier pay is no higher, and in fact lower than most others.  

Richard Anderson ex-CEO left recently to go to another company where the CEO pay is 10X that of NWA.

One thing I do feel though is that the pay for CEOs in this country is out of control, and the huge bonuses many are recieving while losing record amounts of money is moral indefensible, and should be criminal.

dago

[john9001]

southwest and jetblue will own you and all the other 1950's run airlines.

[Dago]

southwest and jetblue

They are changing the industry, but you might want to look at their recent financials.

JetBlues bill is coming due, and soon.

Southwest has done well, but they are just barely beyond the "regional" carrier size at this point.

dago

[Toad]

Recent Financials?

The air carrier Wednesday reported a net loss of $38 million, or 54 cents a share, compared with a year-earlier profit of $47 million, or 49 cents a share.

Revenue rose 13% to $3.05 billion from $2.69 billion a year earlier.

Southwest

Operating Results

Total operating revenues for third quarter 2004 increased 7.8 percent to $1.67 billion, compared to $1.55 billion for third quarter 2003. Operating income was $191 million, compared to $185 million in third quarter 2003.

Top 10 Airlines, ranked by January to July 2004 Domestic Enplanements

1 Southwest Airlines 47,466,094

2 Delta Airlines 46,883,939

3 American Airlines 42,928,542

4 United Airlines 34,963,033

5 Northwest Airlines 26,719,372

6 US Airways 22,183,855

7 Continental Airlines 18,493,610

8 America West Airlines 11,233,207

9 Alaska Airlines 8,176,271

10 American Eagle Airlines 8,072,099

The dinosaurs will eventually die out. It's real simple; there's Airline Management that understands the business and there's Airline Management that think the key to success is the type of china used in the First Class meal service.

The ones making  money.... don't even have a First Class section. Go figure.

[oboe]

I appreciate you straightening out the facts.   But the story in the Star Trib said the execs were given unspecified raises BEFORE the 15% pay cut is to take affect.     If that's true they may not get a pay cut at all.
http://www.startribune.com/stories/535/5069730.html

In fact, even after his 15% cut, Steenland will make $73,500 more this year than last year (in salary alone - not including bonuses or stock options).
http://www.startribune.com/stories/535/5071504.html

The concern you voice over out of control executive pay is really right on target IMO, and you put it better than I could.    I agree the problem is widespread, but in the case of an airline that has lost $2 billion (and taken government handouts after 9/11) it seems especially egregious.   Why there is not more moral outrage from shareholders and employees everywhere is a mystery to me.

[Toad]

Oh yeah... about CEO pay. Here's what my airline paid the guy who TOTALLY DESTROYED it to leave.

Thanks to the folks at the Wall Street Journal--who took a look at the latest Delta proxy--and let us get the goods on just how lucrative being an airline CEO can be. Even after you are asked to leave because you did such a poor job.

Case in point. Mr. Ronald Allen, former President, Chairman and CEO of Delta Air Lines.

According to the Delta document, Allen was paid a $4.5 million lump sum severance payment. However, this, dear readers, is just the beginning.

Delta also disclosed that it will provide supplemental pension benefits to Allen with a total retirement benefit of $765,000 a year. In addition, Delta agreed to provide Allen with retiree life and medical benefits, flight privileges, office space, secretarial services, election as a "lifetime advisory director" of Delta, an annual consulting fee of $500,000 for 7 years, subject to an extension of another 8, and oh, yes, Delta is also footing the bill to pay for Ron's attorney in connection with the preparation of the retirement agreement.

The joke in the ready room was "Wow... it sure cost a bunch to get rid of Allen.... but it was worth every penny".


As to airline pilot pay.... have you ever gotten the training and experience required, applied to the majors, competed with 30,000 other guys and got hired, done the job and lived the life for a few years? If so, I'll listen to you. Otherwise, I'll just tell you that you have no idea what you're talking about.

[Holden McGroin]

Originally posted by Toad
As to airline pilot pay.... have you ever gotten the training and experience required, applied to the majors, competed with 30,000 other guys and got hired...

(head scratch...) shouldn't the law of supply and demand keep the pay to be low if there are 30,000 others willing to do the job?

[oboe]

Good God thanks Toad I have a bruise in the middle of my forehead where it it the desk after reading about Allen.   Its an all-too-familiar occurrence, and that is an understatement.

I thought boards of directors were supposed to oversee the executive management, looking out for shareholder value.   I think the pubic corporation business model is seriously malfunctioning - and guess whose gonna get hurt -- the little guy, the employee, the small shareholder.   Certainly not big shots like Allen.    It should be criminal, but who to convince to make it so?

[Lazerus]

Unions are ruining America. The idea, at first, was great, and needed. Unions now are bloated and cost the American people more than they give.

A medium is needed to still support the worker without screwing the employer and the US's ability to compete on the global market.

Free market, by definition, denies the ability of employees to dictate above market wages for their work. Unions force this by laws that were needed at one point, but are archaic now.

Something needs to be done to level out the cost of labor without screwing the worker that has been getting union pay for years. I got no ideas here, but the global market is just starting to kick us in our collective prettythanges. It's not going to get any better.

[SunTracker]

Airline tickets are far too expensive.  Costs 400 bucks to fly from Kentucky to Florida on Delta.  Costs 120 to fly on Southwest.