PSA Street Captains?

Consolidation has essentially erased the profit loss swings for the big three. $4-5 billion yearly profit in the good times likely means only $1 billion or so profit in tough times.
 
Blackhawk said:
Profit loss swings are the nature of airlines. An American CEO was once asked by an investor frustrated at the amount of cash AAL had on hand how much cash was enough. His response was that for an airline there is no such thing as too much cash. When times are good they roll in cash. When times are bad empty 747s are expensive to operate.
It has historically been a problem. When people see the cash- workers, investors, etc- they want it. When the economy turns down there is not enough on hand.
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That's more true for passenger airlines. Look at profit consistency on the freight side.
 
Trip7 said:
Consolidation has essentially erased the profit loss swings for the big three. $4-5 billion yearly profit in the good times likely means only $1 billion or so profit in tough times.
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dasleben said:
That's more true for passenger airlines. Look at profit consistency on the freight side.
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Actually I was a CP for a 135 on the cargo side and it is very much a consideration. I knew there was a recession about 6 months before Wall Street. We went from flying auto parts 3-4 days a week to nothing. And I don't mean just a few flights, I mean nothing for over two months. It's expensive for an owner to pay pilots to do nothing and airplane payments for ramp weights.
While Big Brown and Purple may seem immune to this they are not.
 
Blackhawk said:
Actually I was a CP for a 135 on the cargo side and it is very much a consideration. I knew there was a recession about 6 months before Wall Street. We went from flying auto parts 3-4 days a week to nothing. And I don't mean just a few flights, I mean nothing for over two months. It's expensive for an owner to pay pilots to do nothing and airplane payments for ramp weights.
While Big Brown and Purple may seem immune to this they are not.
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I'm referring to Part 121 freight, not small 135 ad-hoc. FDX, UPS, AAWW, etc. Not immune, but I can tell you Atlas has posted profits in the last 43 out of 45 quarters. Consistency, not immunity from loss.
 
dasleben said:
I'm referring to Part 121 freight, not small 135 ad-hoc. FDX, UPS, AAWW, etc. Not immune, but I can tell you Atlas has posted profits in the last 43 out of 45 quarters.
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So you assume their airplanes will always be full? If so you remind me of the pre 9/11 United CEO. He made a statement to the effect that United could afford to lose money on domestic routes as their 747s would always be full on international routes. After all, people could not swim across the Pacific and Atlantic.
What he failed to consider was that people could chose to just not fly after the SARS outbreak and Pacific recession. Those 747s were expensive to operate empty and the rest is history.
Having seen many sure things in aviation fail over the years I've learned not to be so sure of "sure things".
 
Blackhawk said:
So you assume their airplanes will always be full? If so you remind me of the pre 9/11 United CEO. He made a statement to the effect that United could afford to lose money on domestic routes as their 747s would always be full on international routes. After all, people could not swim across the Pacific and Atlantic.
What he failed to consider was that people could chose to just not fly after the SARS outbreak and Pacific recession. Those 747s were expensive to operate empty and the rest is history.
Having seen many sure things in aviation fail over the years I've learned not to be so sure of "sure things".
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You've put a lot of words into my mouth... Again... Profit consistency, not immunity from loss. I've been flying all night and would rather relax while I wait for the train home. Please re-read what I've posted and understand what I'm saying. I'm not going to re-engage this thread, since it just makes my brain hurt.
 
dasleben said:
You've put a lot of words into my mouth... Again... Profit consistency, not immunity from loss. I've been flying all night and would rather relax while I wait for the train home. Please re-read what I've posted and understand what I'm saying. I'm not going to re-engage this thread, since it just makes my brain hurt.
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In the case of Big Brown you forget they were a business long before they had airplanes. Even FedEx airplanes are a part of it and neither is immune to competitive and economic forces. Heck, I remember USPS flying being a sure thing. This list of defunct cargo carriers- Kiity Hawk and Airborne Express come to mind- is long and distinguished.
 
Blackhawk said:
In the case of Big Brown you forget they were a business long before they had airplanes. Even FedEx airplanes are a part of it and neither is immune to competitive and economic forces. Heck, I remember USPS flying being a sure thing. This list of defunct cargo carriers- Kiity Hawk and Airborne Express come to mind- is long and distinguished.
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Breathe.

Step back from the computer.

Go outside. The sun is shining.

This is why my posts on JC have become much fewer and far-between: People end up extrapolating wild arguments from 1-2 sentence posts. It's frankly a waste of my time to convince you that what you're saying is nowhere near what I intended to convey. It's also a waste of your time. Take a break.
 
Wow, that was, ummm, "passive-aggressive" bro! :)

Think you're just going to prance into a 13-page 258-post roving topic make a statement and just drop the mic? :)
 
Blackhawk said:
Some meandering thoughts on the subject.
Too often in aviation (and many other endevours), people drive by looking in the rear view mirror. They make the assumption that they can learn from history. Not a bad idea, but often things change that can make historic precedence irrelevant.
Having seen numerous past pilot shortages this one is different. And yes, they were shortages in the past. A shortage is when available demand exceeds supply and costs shift until supply meets demand. If a hurricane hits part of the country there may be a localized shortage of certain goods even though goods are abundant in other parts of the country. Or you can have a supply but people are not willing to part with their goods (or services), at the market price.
Past pilot shortages existed, though they were relatively easy to fix. Pilots with 250 hours could be found in the gutter outside any flight school.
Now... not so much. It is much more difficult to get a 1500 hour pilot with several years experience to take first year regional FO wages than a 250 hour wonder pilot.
Add to this the age 65 rule kicking in- mandatory retirement for many pilots. I don't know the numbers off the top of my head, but the looming retirements are real.
Regionals are left in a conundrum, especially "bottom feeders". They need replacement pilots but they can't increase pilot pay and QOL as they made low bids on FFD contracts. So some resort to "poaching" FOs, promising quick upgrades for FOs at regionals with better contracts (and this lower turnover). For a while this worked as some regionals were left with unusual attrition numbers as they list more FOs than captains; which hurt these airlines as they were forced to try to attract new FOs but could not promise the fast upgrades. Some regionals that were low bidders on contracts have already lost flying and airplanes to higher cost competitors as the legacy carrier did not feel they could staff what they bid.
And that is where we are right now. I'm not sure how this will play out as regionals are put in a vice. On the one side is the demand by partners to contain costs, yet on the other side the cost of attracting new pilots, not to mention the cost of training these pilots with high turnover. Personally, knowing the number of sims available I'm not sure how these regionals will adequately train the numbers they talk about, especially if they do not own any sims. I think "adequately" will be the key and we will see the Colgan training mentality at work.

So it will be an interesting 10 years in the regional industry. I think some of the call signs today won't be around in a decade. How will legacy carriers react when their regional feeders have difficulty staffing? How will they react as these regional pilots leave for a competitor or an LLC? Will they return to the pre COMAIR strike model of owning the feeders in order to control the staffing? More flow throughs? Will one find that holy grail of regional pilots and go with a "one list" solution? You got me.
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Until regional airlines start paying <4 year FOs actual money to show up to work I contend that there is no shortage. If pay goes up significantly and they still can't find people to come out and fly then I will contend there is a shortage.
 
dasleben said:
Breathe.

Step back from the computer.

Go outside. The sun is shining.

This is why my posts on JC have become much fewer and far-between: People end up extrapolating wild arguments from 1-2 sentence posts. It's frankly a waste of my time to convince you that what you're saying is nowhere near what I intended to convey. It's also a waste of your time. Take a break.
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Good grief man. Grow up. I did not attack you personally. Heck, I did not even say your financial analysis of airlines was wrong. All I am saying is that while financial analysis is important when picking a company I've been around long enough to know it is only part of the picture. Heck, I know a very, very senior instructor at FedEx who was a "loser" because he was at FedEx and not a people mover airline. The loser never got off his rear end to finish his college degree so he was "stuck" at FedEx. He would hardly be where he is today if he listened to the financial analysis types way back when, finished his degree and moved on. Back then that was what the smart money said to do.
Things are changing very rapidly in this industry, especially at the regional level. All the accounting wonks in the world won't help, however, if a full E-175 leaves a smoking hole in the ground due to poor training.
 
Soku39 said:
Until regional airlines start paying <4 year FOs actual money to show up to work I contend that there is no shortage. If pay goes up significantly and they still can't find people to come out and fly then I will contend there is a shortage.
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Then you don't understand the definition of shortage. There may be an abundant supply of something but if the market price is too low there will be a "shortage" until price comes back into balance. For example, there was never a "shortage" of oil, just that the market price would not support the cost necessary to extract the supply of oil. Now that oil prices are falling we are seeing some of the more expensive oil fields shutting down.
The price paid for FOs was supporting the market of 250 hour wonder pilots. It is too low, however, to support the supply of 1500 hour ATPs. Regionals are having to find ways of attracting these FOs. In some cases through bonuses, though this is difficult as some are locked into low profit FFD agreements, plus union contracts must be modified, something that does not happen overnight.
 
Derg said:
Wow, that was, ummm, "passive-aggressive" bro! :)

Think you're just going to prance into a 13-page 258-post roving topic make a statement and just drop the mic? :)
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Dude, I've been up flying all night. I'm exhausted. I simply have no patience for having my posts spun into something they aren't.

So yes, everyone wins the Internet today. Good night.
 
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