Airline Execs Say Recovery Under Way

TallFlyer said:
Those evil capitalists, trying to make a profit..... how dare they.
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It's not that they are trying to make a profit, it's that they are doing it in an unethical manner. Furloughing pilots, charging needless fees, and cutting corners all so that the corporate fat cats can line their enormous wallets. That is disgusting.
 
We wouldn't have airlines if it weren't for the pursuit of profits. Are you one of the pilots that works for free?
 
twotwowoo said:
It's not that they are trying to make a profit, it's that they are doing it in an unethical manner. Furloughing pilots, charging needless fees, and cutting corners all so that the corporate fat cats can line their enormous wallets. That is disgusting.
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Then drive or find a different job. How arrogant to say airlines that barely make any money owe you something not guaranteed by the constitution.
 
stesta5074 said:
Then drive or find a different job. How arrogant to say airlines that barely make any money owe you something not guaranteed by the constitution.
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I'm not a pilot, and I DO drive whenever possible. My point was that ethics and decency shouldn't be thrown out of the window in pursuit of profit.
 
Well, it's not like the airline industry is denied health coverage for folks with pre-existing conditions, following you around town when you've called in sick (wait, scratch that), or claiming something is Kosher when it's not!

Don't get me wrong, I'm not giving the industry a free pass by any chance, but Wall Street is such an easier target! ;)
 
twotwowoo said:
It's not that they are trying to make a profit, it's that they are doing it in an unethical manner.
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If you look at it honestly nothing that you've described is unethical.
Furloughing pilots,
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If you business changes such that you have a surplus of highly paid employees, guess who gets the axe? Yes, it affects people directly and I'm not diminishing that, but furloughing people so the larger organization can adapt and move back to profitability or stay profitable is hardly unethical.
charging needless fees,
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If you don't like it, take your business elsewhere. Inherent in the basic definition of a private enterprise is charging a fee for a service. Don't think the service is worth the cost? Why are you still frequenting that business?
and cutting corners all so that the corporate fat cats can line their enormous wallets.
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Very emotionally charged language and actually a bit hypocritical. In the same sentence you castigate a private enterprise for both charging you too much AND "cutting corners." One person's "cutting corners" is another's controlling costs. You can't sucessfully run a business without keeping your costs of goods sold under control.

As far as fat cats and their wallets, the basic job description of a major airline CEO is to successfully create increased shareholder value from an organization worth billions. Done successfully they're worth what they get paid.
 
I'm not against companies making profits. They SHOULD make profits. And if you've paid attention, I've been one of the people who says that the "obscene" profits of the oil companies and health insurance companies are anything but "obscene."

What I am against is how the employees who make those profits happen do not share in them. Airlines have returned to profitability in large part due to concessions on the part of their employees.

And yet, as they seek to increase their profits, there's no talk about sharing them with those who are responsible for creating those profits.

Companies who treat their employees well consistently generate returns that are higher than the S&P 500 as a whole. Why is that? Gee, maybe because employees who are treated well treat their customers well and that generates profits, which benefits the shareholders.

Giving the employees who have created the earnings that airlines are now reporting a profit sharing check or bonus would be a good way to pay them for their efforts.
 
Guess its not tough to have a reduction in labor to profitability action plan after all.

Thanks Wharton School of Business!

Nevertheless, these fools need profits in the first place. . .wait for it. . .wait. . .to actually have an increase.
 
For those who complain about the workers not getting their share of the profits.
1. Airlines are a very, very high capital business. Planes are not cheap. The workers are not cheap. Even that first year regional FO making $30K/year probably requires a great deal of training before he/she helps bring in revenue.
2. The money to run the airline comes from somewhere- normally borrowers. Especially if you are starting an airline or purchasing new equipment. Anyone price a 737 recently?
3. Airlines don't have good track records as far as investors are concerned. See Warren Buffett's quote on investing in airlines. Therefore if airlines want to borrow money they need to pay a premium. After all, why should I risk my money investing in an airline unless I am compensated for the higher risk? Especially when the tendency today is to say "To heck with the investor and US law, let's change the rules." I invest and it will take a large interest rate before I will ever invest in a corporate bond with a company that might even remotely be taken over by the government as they will change the chapter 11 rules in a heartbeat.
4. When times are tough airlines need cash. Lots of cash. When you think you know how much cash, add a few zeros to the end. I think it was the AAL CEO who had a great quote on how much cash airlines need to survive bad times. The 747-400 still needs to be paid for. Fuel still needs to be paid for. Salaries still need to be met. Landing fees... taxes... the cost of running an airline on a daily basis is staggering.
5. It is very hard for airlines to save money when times are good. Executives want bonuses. Employees want money to compensate for sacrifice. Everyone wants new toys... I mean new equipment. So the urge is to spend the cash that is coming in.
Airline leadership, both corporate and labor, must really look hard at the years since deregulation and some of the lessons learned. Look at the airlines that have succeeded, look at those that have failed.
 
tonyw said:
What I am against is how the employees who make those profits happen do not share in them. Airlines have returned to profitability in large part due to concessions on the part of their employees.
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I should hope the corporation's goal is to enrich shareholders, not employees.

Yes, employees that are responsible for making those profits certainly should be compensated. Smart employees will generally go where their hard work will be appreciated (in dollars). Smart employers compensate employees well enough to retain them.

In the case of airlines, they have drastically cut their labor costs in the last 20 years. It is about half what it was in the '80's (as a share of revenue).
 
drunkenbeagle said:
I should hope the corporation's goal is to enrich shareholders, not employees.

Yes, employees that are responsible for making those profits certainly should be compensated. Smart employees will generally go where their hard work will be appreciated (in dollars). Smart employers compensate employees well enough to retain them.

In the case of airlines, they have drastically cut their labor costs in the last 20 years. It is about half what it was in the '80's (as a share of revenue).
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Shareholders goals run in directly opposition to what a company should actually do build a strong company. Shareholders want big quarterly growth, but as anyone with any knowledge of business knows, continual large quarterly gains are unsustainable. This causes management to focus too much on short term goals rather than focusing on long term goals that would produce more sustainable growth and a large ROI long term.

Happy employees=happy customers=happy shareholders long term.
 
Matt13C said:
Happy employees=happy customers=happy shareholders long term.
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That's what the CEO of Johnson & Johnson said. He said that if you take care of the employees, they take care of the customers, and the shareholders benefit.

All you have to do is take a look at what kinds of returns have been delivered by Southwest, which has good employee relations, and the rest of the industry, which does not.
 
Well, it's certainly true that the market is not infallible, which is the central conceit of our economic system. That said, I'm not sure what you propose as an alternative. A planned economy has been tried a number of times with pretty much disastrous results. From a purely economic perspective, leaving aside little things like political and economic freedom, places like New Zealand seem to have gotten it Right...although much of this can be accounted for in demographics and resource-placement. Interestingly, Iceland is similarly constituted to have the potential for stable, sane government and growth...but has failed spectacularly. Regardless, these sorts of strategies simply cannot apply to a hegemonic superpower like the US. IMHO, the entire world is due for a major "realignment" vis a vis the politics of debt, and while everyone will suffer, we're at the top of the list. Not time to break out the champagne just yet.
 
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