Cut Price Airlines: How DO they do it?

[GRUNHERZ]

So you are saying the annual reports are lying for UAL, AA, and a few other airlines I checked out?

[Toad]

No, I gave you my source. That's what you asked for, isn't it?

MIT/Airline Business Magazine

Make your case that employee owned airlines did so much worse than the industry average or, better yet, did so much worse than airlines run by true professionals like Steve Wolf at US Air.



BTW, did you notice that nearly all the rest of the majors are threatening bankruptcy too? The ones run by the professional management teams?

[GRUNHERZ]

Here is what i have to say about your source.

If MIT cites a differing number I wouldn't be suprised. Statistics have a funny way of changing depending on who you ask.

[Toad]

Hey Grun... how about Southwest?

Employee Ownership in the Airlines

(Looks like it came from Kent State University)

Southwest Airlines, today's fastest-growing major airline, is partially employee-owned through stock options for pilots, and through a condition of company-wide profit-sharing that a quarter of the money go to buy company stock. There are millionaires and near-millionaires among rank-and-file employees of the highly unionized airline as a result, but no employee representatives on Southwest's board.

Gee........ Southwest....... employee participation in ownership.

[GRUNHERZ]

However since you insist:

Wholesome "employee controlled" company:

UAL expense per ASM 2001 (falsified) annual report: 12.0 cents

Evil capitalist pig companies:

AA expense per ASM 2001 (falsified) annual report: 10.58 cents

Southwest expense per 2001 (falsified) annual report: 7.54 cents

Anyway UAL is bankrupt.


As for your Southwest tidbit do the pilots have a 55% controling interest in Southwest?

You see by US law the majority owners of a companies voting stock have full control, anyone with less than 50% has no say
legaly whatsover. UAL is 55% owned by the employee Unions  according to (falsified) 2000 UAL annual report. They can fire and hire any managers they want, they can elect anyone to the board and do anything they want because they own the show. They are responsible for all good and bad.

BTW Employee 55% majority owned and controlled  UAL is still bankrupt and had substantially higher expenses per ASM than evil capitalist pig AA...

[Cobra]

Originally posted by Curval
Cobra just a few snippets from your previous post:

"I'm in management as well"

"It's the hacks in Management that do 100% of the time"

"again, it's the Management Hacks every damn time."

You seem to have a dim view of management and yet you are a management hack yourself.  

I find it strange that you glorify the unionised worker by saying:

"not INDIRECT Labor like you and me, but DIRECT labor, where rubber meets the road"

and then go on to claim that you are somehow making everything happen here : I'm in management, like I said. I do it on a Global level. I do it in Supply Chain and logistics at that level. I don't just audit someone doing it....I make it happen, bean-counter."

Which is it wonder boy?  You seem to be having some sort of identity crisis at a minimum.  

As I said earlier I do not audit anymore.

Ok, Office-Lackey....here goes...

You should probably use the whole quote, not just a snippet....because it read Who makes the Strategic and Tactical decisions.....you guessed it Management.

Where did I glorify the Union worker in that quote of Direct Labor....I didn't...man, I'm glad you got out of the auditing business, you can't even read what's there.  Hehe...if you can't do, count, would be your motto, eh?

I've worked in both environments as management.  Union and Non-Union.  

Trust me, I didn't glorify Unions there boot-licker.

I made a very true statement that it is Management's responsibility to make decisions and set the stage for the company to be successful.  To blame it on those big bad unions alone, means that Management is not stepping up to their role.

In my position, I'm responsible for Staff and Floor Guys.  I've seen way too many staff people who have never been on the floor, who don't have any idea of what it takes to get product moving, do things to make it harder where rubber meets the road.

They push it down the chain, what is ultimately their responsibility, which is to manage......get it, Manage!

I have a dim view of only that Management which does not pull it's weight, and tries to find scapegoats for its inability to step up to the bar.

I've worked with some Executives that were amazing.  They always put their people first, period.  They focused on what the company does to make money, in my case, manufacturing, and they made sure those areas where managed well, and took care of the direct work force.  The forced the onus onto management to take responsibility for managing their respective areas, period.

Get that simple concept, memo-boy?

I'm not sure your qualified to compliment me by calling me a management wonder....in fact, I know your not....but thanks anyway, coffee-fetcher  

Cobra

[Toad]

Let me see... you're using figures from UAL annual reports that you state are "falsified", from American that you state are "falsified" from Southwest that you state are "falisfied" but you don't accept the MIT figures?



Grun, you're almost as good as Boroda sometimes.

I'm sure you have the correct figures for us?

Have you found the annual profit figures for the majors over the '94 to 2000 period?

Or are those all "falsified" too?



Don't take this as a personal attack, but I don't think you've done your industry research well enough to announce that UAL's problems are all the fault of the Unions.

For example, a little research into how the buyout even happened might be illuminating. I think you'll find that Steve Wolf, the management wunderkind at the yoke, had UAL in DEEP trouble. Note that Wunderkind Wolf presided over the bankruptcy of US Air... the one just prior to UAL's recent filing.

[GRUNHERZ]

You insinuated that the annual reports are false, I was being ironic.

Anyway the truth of the matter is UAL is majority owned and controlled by it's unions. they could hire, or fire any executive or manager. In effect the managers were hired employees of the union, the union was the "management" and you said UAl was screwed by the management -  so actually you are right!

[Toad]

Every Number Tells a Story

Cost Per Available Seat Mile

Airline 9/30/1999 9/30/2000 % Change

US Airways 13.57 12.28 -9.5%

Southwest 7.55 7.70 2.0

TWA 9.41 9.72 3.3

Delta 8.61 9.14 6.2

Continental 8.83 9.65 9.3

Northwest 8.42 9.29 10.3

America West 7.57 8.42 11.2

American 9.21 10.31 11.9

Alaska 8.63 10.04 16.3

United 9.18 10.98 19.6
Source: Plane Business

Note the UAL CASM for '99: 9.18   The source for this stuff is DOT filings, btw. I guess they "lie" to the government too.. or does DOT "falsify" the data?

You might want to take a look at the "Yield" chart in that article too. Employee owned UAL yield is right in there with all those professionally managed companies.

Another good article there:

Comparing Airlines Nose to Nose Tells the Tale

Check the RASM/CASM comparison at the end of the article. Again UAL is right there with the rest of the majors.

[Toad]

C'mon Grun. You say the employees are the managers.

OK, post the annual profits for the majors from '94 up to 2000.

Let's see how your theory holds up when you compare the employee rookies against those other management pros.

You can't have it both ways.

Oh, yeah... post UAL profits for the pre-buyout years under that management wunderkind Wolf, too.

Or does that totally ruin your case?

[Toad]

Originally posted by GRUNHERZ
Anyway the truth of the matter is UAL is majority owned and controlled by it's unions.

That is true.

 

they could hire, or fire any executive or manager. In effect the managers were hired employees of the union,

That is totally incorrect. The pilots and mechanics did have veto power over the CEO selection I believe but not hire/fire authority over "any executive or manager".

 

the union was the "management" and you said UAl was screwed by the management -  so actually you are right!

The unions... and there are more than one involved and they very often don't agree amongst themselves (note that the pilots and machinists split over pay cuts just prior to bankruptcy)..... are not managing and marketing the airline.

They have "professional managers" to totally screw that up for them.

Come on now.. post the profit/loss stuff.

Tell us how great Wolf is at running airlines and what he did to UAL before he bolted to go screw up US Air.

[GRUNHERZ]

UAL is bankrupt now. I dont care what the profit figures were a few years ago.  I have not looked them up. Go ahead and post them yourself if you think it helps explain why the unions made UAL file for bankruptcy last week.

As 55% majority owners of company voting stock the Unions could do whatever they wanted. What part of that is not clear?

Even one of the sources you posted clearly says this...


"Today, the pilots and the Machinists each have seats on the board of directors of United's parent company, UAL Corp., as do salaried employees. Through supermajority voting provisions the two unions have veto authority over major transactions, their directors sit on the board's most important committees, and they effectively select the company's top executives."


Toad the point is UAL today has higher operating expenses than AA its chief rival, UAL is bankrupt, the UAL leadership are the unions.

And how exactly does it help your case that employee ownership and controll is better when you excuse their failiure by saying "they very often don't agree amongst themselves". What kind of leadershp is that?

[beet1e]

Mr. Toad  I don’t think Molly would even have to bend down for things to spring into action.  

I liked your reply. I thought I would be right about the airlines saving money by running only one type of aircraft, but I didn’t realise how true that was. I have another issue on which I would welcome your comment: Fly by wire.  I don’t know if you ever flew on the dark side - WB. There was a WB guy called socket who also flew in real life for US Airways on 757/767. (BTW those ratings are synonymous in the UK too) I remember socket saying that his next step would be to move up to the A330. But for the moment, that was waaaaaayy too senior. No sooner had he said that when he’d done it! I believe at that time, US Airways had a policy of going the fly-by-wire route, and wanted all their planes to be FBW eventually. (Not 100% sure of this) Do you think that converting to FBW is going to be the goal of the aviation industry as a whole, and that FBW will become the industry standard? Given the financial hammering that airlines have had since 9/11, is that a feasible objective? As someone outside of the airline industry, I would think that the transition would be very expensive, especially for carriers like easyJet and RyanAir who operate only one type of aircraft. The transitional phase would see them operating two types. The worst case scenario might be to run out of money during that transition, and be stuck with two types of aircraft – manual (if I may call them that) and FBW. Do you think that Boeing will ever choose to go the whole hog with FBW and stop making “manual” aircraft? So many questions – hehe – but I admit I am lacking in knowledge here and seek answers.

Yeah those big EFIS displays are an excellent idea. One assumes that if additional instruments became necessary, there would be no physical change to the instrument display, but the “new” instrument would be displayed once the EFIS software had been updated.

[Toad]

Grun, you are the one making the case that employee ownership/unions led directly to the current UAL bankruptcy.

You ignore the fact that PRIOR to the '94 buyout, Wolf was running the airline and his "professional" management had them on the brink of bankruptcy THEN. The "buyout" was the "solution" that "saved" them in '94.

You ignore the fact that SINCE the '94 buyout and up until 9/11, UAL's financials were pretty much "industry standard" for the majors. In fact, you can make the case that they were "above average" for the majors during that period. That's why you need to look at profit/loss for those years. Then you might be able to make an educated comment about the industry. As it is now, you admit you haven't even bothered to see what was really going on and you just rely on your anti-union personal bias to stand as unassailable fact. In short, you don't know what you're talking about.

You ignore the fact that Wolf, the "professional" manager, went on to US Air and drove them into bankruptcy. As a sidenote, remember that the year he denied the US Air F/A's any pay raise at all...... and they were WELL below industry standard on wages...... he and Ganghwal, his #2 "professional manager" split a $36 MILLION dollar BONUS... not wages, BONUS.

You also ignore the fact that UAL unions had almost no say in the daily running of the airline; the marketing and service end. They did have veto power over selection of the CEO, however. They COULD NOT hire/fire managers willy-nilly. The idea that the few Union seats on the board, members in committees and the ability to veto CEO selection and mergers and acquisitions equals "running the airline" is ludicrous. Those things are ancillary to the everyday job of moving people from A to B. THAT'S where UAL's "professional" managers fail to deliver..... and the unions have no say there. Not to bang UAL; the rest of the majors are in the same straits. The industry has changed and they have not. Only SW has a clear understanding of what passengers want, need and will pay to get it. Note again that SW pays their people competitively and that SW is now mostly unionized.

Now don't forget it was 2 of UAL's fleet that were primary in 9/11. You don't think that had an effect? Since 9/11, all bets are off in the airline industry, or hadn't you noticed that? UAL is bankrupt because of 9/11, IMO. They won't be the last either.

What will you say when DAL, AMR, CAL and NWA all file in the not too distant future? They're not run by unions and they have professional management.

[Toad]

I'm rated on the 757/767 as well. Nice aircraft. Not much of them FBW when compared to Airbus. IIRC, FBW technology is touted because it saves weight, is more precise than direct linkage and is "more reliable".

Well, FBW saves less than 300 pounds on a 757 if I remember that little Boeing tidbit correctly. Maybe one of the Boeing guys could comment. We carry way more canned pop that we never use than that.  

More precise? Than what? I've never had any problems flying direct linkage aircraft even down to CAT III minimums and hand-flying CAT II.

More reliable? Not buying that one. When FBW quits, it's a computer or wiring problem. We all have experience with how long it takes to sort those out and how haywire other things can get when it happens. Direct linkages either work or don't work and it's merely a matter of replacing a piece of hardware.... software doesn't enter into it. If they don't work, there is usually a "backup" and even a "backup to the backup" particularly on a Boeing, which is why I just love Boeings.

So, so far I'm a bit unimpressed with FBW. It seems like a solution in search of a problem.

As a side note, my brother is rated on the Airbus A-330. He's had some absoulutely hair-raising experiences with the EFIS computers on final approach in the weather. Let's just say it's better to be lucky than good.

All of the above aside, I think it's clear that FBW is here to stay and future aircraft will be increasingly and finally totally FBW. It's all the "buzz".

I'm just an old dinosaur who's career is ending before that happens..... and I'm happy about that!