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Airline Biz Crisis: Not Difficult To Predict



 
 
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  #1  
Old September 22nd, 2005, 04:59 PM
Robert Cohen
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Default Airline Biz Crisis: Not Difficult To Predict

In the mid-late 1990s, I saw in the local newspaper that some senior
Delta captains were being paid approximately up to $500,000 a year, and
that the Delta Board of Directors pays the new CEO Leo Mullin millions
(how many?) and the other top management gets pretty nice pay too, I
perceived that with the de-regulated discounting of a ValueJet,
Southwest, etal, that our Atlanta-based largest employer was actually
skating on thin market insecure ice. And this was when Delta was
supposedly considered solvent/profit-making, which I never believed
since I'm old enough to recall Eastern and the others. Plus I did not
enjoy/get them thar free/reduced passes & fares, and thus frankly
felt... why should I patronize them. Obviously, price trumps, and the
Walmart airlines thus have prevailed. We've actually "driven to
Birmingham & Greenville" airports so as not to have to pay that couple
of hundred bucks more. As it was predicted upon de-regulation circa
late 1970s, things chaotically became...what they are, though I won't
eliminate 9/11 & fuel prices as precipitating the decline of the
greatly respected brand name. C'est la vie, c'est la morte.

http://www.breitbart.com/news/2005/09/22/D8CPAVCG1.html

  #2  
Old September 22nd, 2005, 06:26 PM
Reef Fish
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Robert Cohen wrote:
In the mid-late 1990s, I saw in the local newspaper that some senior
Delta captains were being paid approximately up to $500,000 a year, and
that the Delta Board of Directors pays the new CEO Leo Mullin millions
(how many?) and the other top management gets pretty nice pay too,


But those are NOT the reasons for the problems in the airline industry!

CEOs of thriving (and some non-thriving) companies make tens of
Millions a year, plus bonus, plus stock options, etc., etc.
Stock Fund Managers make millions of bucks a year for doing
something that a monkey throwing darts can do BETTER -- the
mutual funds as a group ALWAYS do worse than the DOW and the
SP500, as a result of frivolous trading for window dressing
every Quarter, not to mention lining their own pockets.
Then you have professional Athletes demanding millions of
bucks a year just to play ball.

It's called the FREE MARKET.

Everyone is entitled to earn what the market will bear.
That's why Delta was NOT losing big bucks every quarter before
9/11, and that's NOT the reason other thrift airlines went out
of business.

It's mostly Management. That's why Walmart is thriving and
K-mart is going out of business.


I perceived that with the de-regulated discounting of a ValueJet,
Southwest, etal, that our Atlanta-based largest employer was actually
skating on thin market insecure ice. And this was when Delta was
supposedly considered solvent/profit-making, which I never believed
since I'm old enough to recall Eastern and the others.


Whether you believed it or not, Delta and other airlines WERE
making profits. Eastern went belly up for reasons of incompetent
Management!


Plus I did not
enjoy/get them thar free/reduced passes & fares, and thus frankly
felt... why should I patronize them.


Some of those are no different from their spending millions of
bucks on ADVERTISING! Just read the nesgroups and see while ADs
are not allowed, you have plenty of legit customer praises and
legit complaints (not those by Paul Tauger and other whiners)
about airlines. They are much more beneficial to the airlines
than paying big bucks on TV to "Fly the Friendly Skiies ..."
-- I am sure you remember those. It's the same damned sky ALL
airlines fly. :-) That's why you DON'T see those silly ads any
more.

Obviously, price trumps, and the
Walmart airlines thus have prevailed. We've actually "driven to
Birmingham & Greenville" airports so as not to have to pay that couple
of hundred bucks more.


From Atlanta?


I lived in your area for decades. I used to live 30 miles from
GSP (Greenville/Spartanburg SC), and about 120 miles from the
ATL airport. I don't recall many occasions in which I flew out
of GSP instead of ATL.

In fact, I live in a city about the size of Greenville that has
its own airport, which services AA, Delta, and several other
airlines, but almost without exception, I fly out of Atlanta
(and NOT flying Delta), but CO, which does not have a hub there.


As it was predicted upon de-regulation circa
late 1970s, things chaotically became...what they are,


That's because the "deregulation" is only "partial", and the
airlines are STILL a very much REGULATED industry, by Uncle Sam.
And THAT's part of the trouble. The airline companies are NOT
free to do what a truly FREE MARKET would allow them to do,
except some minor, fly-by-night airlines whose cost-saving
gimmicks soon ran out of the kind of paupers who would support
them.


though I won't
eliminate 9/11 & fuel prices as precipitating the decline of the
greatly respected brand name. C'est la vie, c'est la morte.

http://www.breitbart.com/news/2005/09/22/D8CPAVCG1.html


The 9/11 has proven the success of Bin Laden against the USA.
The twin towers were only the symbols they destroyed. They
devastated the airline industry, the cruise industry, and
many other industries from the fall out.

Worst of all, Bin Laden tricked Bush into trying to put the
blame on Saddam because to this day the Bush administration
has not had ANY success dealing with the ongoing terrorism
claimed by those Terrorists. Instead of Bush wasted BILLIONS
and BILLIONS of American dollars (and worse American LIVES)
on HIS unilateral declaration of war on Iraq, and more
Americans died there AFTER Bush declared that the war was
"won" than before. Bush has had his feet so deep in doo doo
there that it'll be YEARS before the Americans, and the USA,
will recover from the HUNDREDS of Billions of dollars Bush
pumped into the National Debt account.

Don't blame it on those things you blamed on Delta.

Blame it on the result of 9/11, and Bush;s MANAGEMENT of the
USA. The economy of the USA suffered as a result, which
brought ALL the airlines down to their collective knees.
They were just some of the victims of what the fishing
industry's unintended kills when the shrimp catch by dragnet
kills hundred pounds of unedible marine life for every 10
pounds of shrmpt caught.

The DOW and the NASDAQ composites are still only at a small
fraction of what they were before 9/11.

If we are going to blame the airline industry problems on
anyone, let's at least put things in their proper perspectives.

-- Bob.

  #3  
Old September 22nd, 2005, 08:00 PM
beavis
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In article .com,
Robert Cohen wrote:

In the mid-late 1990s, I saw in the local newspaper that some senior
Delta captains were being paid approximately up to $500,000 a year...


That newspaper was wrong. Delta pilots have NEVER made that kind of
money.
  #4  
Old September 22nd, 2005, 08:01 PM
Robert Cohen
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Airline of Greenville was AIR SOUTH (to/from NYC, I think) prior to
their going bye, bye, and I think they were S.C. State start-up
$upplemented, weren't they?

Airline of Birmingham is Southwest, which still goes to/from Seattle a
coupla bucks (how many, $200?) cheaper than Delta of
Hartsfield-Jackson

PLUS: When ya change a reservation on Southwest, they don't add-on a
fee, $25---$100, whatever it's now at Delta, which really is a damne
****ser in case nobody told them.

I cannot totally disagree with your pov, as I agree the marketplace is
much more efficient than regulation or fare maintenance--the public
policy rationale is purportedly so that the smaller cities could get
fairly good airline service too

Delta somehow/seemingly kept Southwest out of ATL, but couldn't
keep-out Air Tran, which has obtained new planes rather than those
strictly ole DC-9s, and I've flown on 'em both.

However, though I readily concede 9/11, and that the fuel price
finally broke their back, I perceive the senior management and senior
pilots of Delta got too g.d. greedy, and perhaps ****ed-off other
employees--hurting morale. Delta had relatively few labor problems
prior to the 1990s, though I'm subject to mis-apprehension & other
idiocy.

When Eastern had all its troubles, it was popularly thought that
Delta's employees liked their company too much to allow it to fail.
They literally chipped-in cash (?) for their company at one point.

The idea about Mullins is some of the gossip an outsider gathers from
local media.

  #5  
Old September 23rd, 2005, 03:17 PM
Reef Fish
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beavis wrote:
In article .com,
Robert Cohen wrote:

In the mid-late 1990s, I saw in the local newspaper that some senior
Delta captains were being paid approximately up to $500,000 a year...


That newspaper was wrong. Delta pilots have NEVER made that kind of
money.


He might have been thinking of Delta's CEO, Grinstein who has
just announced that he'll cut his own $450,000 annual salary by
25% while cutting 7000-9000 Delta jobs.

-- Bob.

  #6  
Old September 23rd, 2005, 04:41 PM
Robert Cohen
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some Delta captains' were supposedly making approx up to $500,000
per year

Since such a statement is not an opinion, but simply a question of
fact, then it's an inarguable as such.

I do not know what the pay is:

I recall reading the $500,000 figure in a newspaper, and I thought it
rather high, but it wasn't discussed (specifically/exactly) during
their pilot strike not long ago. I recall I also have read that some
starting-out airline pilots at Atlantic Southeast (?) are getting circa
$50,000 more or less.

  #7  
Old September 23rd, 2005, 05:41 PM
James Robinson
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"Reef Fish" wrote:


Eastern went belly up for reasons of incompetent Management!


There was more to the issue than simply the effectiveness or
ineffectiveness of management. Yes, there were many things the
management could have done better, but they were caught by a basic
change of rules (deregulation) and a legacy of high interest rates,
along with intransigent unions.

Eastern had purchased a large number of new aircraft when interest rates
were high, in anticipation of major expansion, and were therefore caught
with a high cost fleet when deregulation was dropped on them, along with
a the drop in interest rates which benefitted their competition.

There wasn't much Eastern's management could do to quickly bring their
costs in line with the low cost carriers that could lease low cost
aircraft at low interest rates, flown by pilots that accepted much lower
pay and fewer non-pay restrictions.

They had been flying along fat and happy, only to have the rules changed
out from under them at the same time as interest rates dropped. They
were trapped, with little chance of recovery, no matter how good their
management was.
  #8  
Old September 23rd, 2005, 06:23 PM
Reef Fish
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James Robinson wrote:
"Reef Fish" wrote:


Eastern went belly up for reasons of incompetent Management!


There was more to the issue than simply the effectiveness or
ineffectiveness of management. Yes, there were many things the
management could have done better, but they were caught by a basic
change of rules (deregulation) and a legacy of high interest rates,
along with intransigent unions.


That change affected all the OTHER airlines as well. It's not as
if someone was picking on Eastern.


Eastern had purchased a large number of new aircraft when interest rates
were high, in anticipation of major expansion, and were therefore caught
with a high cost fleet when deregulation was dropped on them, along with
a the drop in interest rates which benefitted their competition.


That was exactly a MANAGEMENT decision! All businesses are gambles.
When Eastern put down a stack of chips better to win, or the football
coach decides to go for broke (no pun intended), and it didn't work
out, the buck (the blame goes to) stops at the Management. If the
gamble turned out rosy, the Management gets the glory.

There wasn't much Eastern's management could do to quickly bring their
costs in line with the low cost carriers that could lease low cost
aircraft at low interest rates, flown by pilots that accepted much lower
pay and fewer non-pay restrictions.


That's exactly what the Management has to consider -- something like
a backup plan or worst case scenario. If it's unable to cope with
a decision that didn't freak other airlines, then it was nobody but
the Management to bleme.

The higher the EXPECTED return, the high the RISK. Econ and Finance
101 students know that.

They had been flying along fat and happy, only to have the rules changed
out from under them at the same time as interest rates dropped. They
were trapped, with little chance of recovery, no matter how good their
management was.


You got that part wrong. :-) The Management WASN'T good, which was
why they put themselves into that BAD position. If half the businesses
decisions are based on hindsight, the bankrupcy courts would be
sitting nearly idle.

The only loser would be the guy that lost on a bet in a game, and
bet and lost again on TV replay. :0)

-- Bob.

  #9  
Old September 23rd, 2005, 06:39 PM
Robert J Carpenter
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"Robert Cohen" wrote in message
oups.com...

I recall I also have read that some
starting-out airline pilots at Atlantic Southeast (?) are getting

circa
$50,000 more or less.


Lucky stiffs. I can't find the web site for a link I want, but
first-year First Officiers are more likely in the $35000 region. That
even applies to the Big Airlines. There's a big jump after the first
year on many lines.

The following site shows comparisons by plane type and a pilot's
experience - but it starts with 3rd year first officiers. The "hours"
is hours per month.

http://www.airlinepilotcentral.com/c...section/11/91/

These numbers are likely from before the recent pay concessions.

Southwest shows the highest pay among 737 operators, partly because
the high-seniority pilots on other airlines move to larger planes.
Southwest has no larger planes. In any case a top WN captain will be
maing in the visinity of $180000. While not shown, they also pay
better (less poorly) than many for first year copilots.


  #10  
Old September 23rd, 2005, 07:55 PM
Robert Cohen
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recent interesting article, hinting at $300,000 salary

http://www.theweekmagazine.com/article.asp?id=788

 




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