Just last week this looked like a shoo in. Now its underwater and fading. David Field at Airline Business discusses this on a podcast.
DL/NW merger starts to fade
By IAG | February 27th, 2008 | Posted in Delta Air Lines, merger, northwest | No CommentsDL/NW merger starts to fade
By IAG | February 27th, 2008 | Posted in Delta Air Lines, merger, northwest | No CommentsPodcast – the fleet implications with DL/NW
By IAG | February 13th, 2008 | Posted in 737, 747-8, 757, 777, 787, a320, a380, airbus, boeing, Delta Air Lines, northwest | No CommentsToday's news
By IAG | February 13th, 2008 | Posted in a380, airbus, Aviation News, Delta Air Lines, france, korean, northwest | No CommentsSubscribe to analysis and opinion behind these headlines at Blackprogram
US airlines are heading for big trouble
By IAG | February 2nd, 2008 | Posted in American Airlines, labor, northwest, United Airlines | No CommentsThe type of pilot taking early retirement from the airline industry is not to be scoffed at. Typically this is a senior pilot with decades of experience. Meaning this person is hard to replace – they are grown very slowly into this skill level. It not only takes a long time, it also takes a lot of money.
As the story says – "Anticipating the retirements, the carrier last month canceled 28 flights that it had intended to operate in February, mostly on long-distance international routes that used American's newest and largest airplanes, the Boeing 777." This tells you these pilots are at the top of the tier. These people are leaving before they have to.
Does this mean they are leaving the industry? Absolutely not. I would bet they have all signed up with Emirates or another hungry Gulf airline to maximize their revenue for the next few years in a tax haven. Their skill levels and training make them very valuable. Since they have no kids at home, many will move to places like Dubai with a spouse and live very well offshore and then retire in the US when it suits them.
World demand for skilled pilots now is hot. In fact, many would suggest it has never been hotter. China and India are equally as voracious in their appetites for pilots. Just like oil, these economies are demanding all sorts of resources.
But back to pilots. American is not the only airline facing this issue. United and Northwest have fractious labor relations – worse than American. US Airways cannot get its two pilot unions to merge – the most skilled will do better to retire and go offshore.
These are dark days for US airline managers. High oil irritates but is increasingly offset with higher fares. Full planes are great – but they need crews to keep them flying. 2008 will see a big airline labor turnaround as airline mangers discover that they no longer have the bargaining power they had post 9/11. Airline labor is back in a big way – and a global market for their skills ensures they can walk away. Get another view on this here.
The best airline managers will be those who can co-opt people into a shared vision. This vision will include everyone on the upside. Not a select few who get stock options while the remainder of the team hurts.
Some US airline managers are poster boys for greed – you know who I mean. For them 2008 will be a real bad year; merger or no merger.
US airlines are heading for big trouble
By IAG | February 2nd, 2008 | Posted in American Airlines, labor, northwest, United Airlines | No CommentsThe type of pilot taking early retirement from the airline industry is not to be scoffed at. Typically this is a senior pilot with decades of experience. Meaning this person is hard to replace – they are grown very slowly into this skill level. It not only takes a long time, it also takes a lot of money.
As the story says – "Anticipating the retirements, the carrier last month canceled 28 flights that it had intended to operate in February, mostly on long-distance international routes that used American's newest and largest airplanes, the Boeing 777." This tells you these pilots are at the top of the tier. These people are leaving before they have to.
Does this mean they are leaving the industry? Absolutely not. I would bet they have all signed up with Emirates or another hungry Gulf airline to maximize their revenue for the next few years in a tax haven. Their skill levels and training make them very valuable. Since they have no kids at home, many will move to places like Dubai with a spouse and live very well offshore and then retire in the US when it suits them.
World demand for skilled pilots now is hot. In fact, many would suggest it has never been hotter. China and India are equally as voracious in their appetites for pilots. Just like oil, these economies are demanding all sorts of resources.
But back to pilots. American is not the only airline facing this issue. United and Northwest have fractious labor relations – worse than American. US Airways cannot get its two pilot unions to merge – the most skilled will do better to retire and go offshore.
These are dark days for US airline managers. High oil irritates but is increasingly offset with higher fares. Full planes are great – but they need crews to keep them flying. 2008 will see a big airline labor turnaround as airline mangers discover that they no longer have the bargaining power they had post 9/11. Airline labor is back in a big way – and a global market for their skills ensures they can walk away. Get another view on this here.
The best airline managers will be those who can co-opt people into a shared vision. This vision will include everyone on the upside. Not a select few who get stock options while the remainder of the team hurts.
Some US airline managers are poster boys for greed – you know who I mean. For them 2008 will be a real bad year; merger or no merger.
IATA raises 2007 forecast
By IAG | April 5th, 2007 | Posted in American Airlines, continental, Delta Air Lines, IATA, northwest, southwest, US Airways | No CommentsIts been a while since we came across such bullish sentiments. We have been mumbling this for a while – starting in the third quarter last year. But for the lunatic in Tehran, oil prices would be even lower and airlines would be rolling in dough.
ATW has a neat summary of the IATA update here. Essentially IATA thinks the industry will go from $2.5bn to $3.8bn in net profits this year and then to $7.8bn in 2008. If you have not bought shares in airlines for a while, you might be too late. You could, maybe, take a run at Boeing because a lot of those profits are going to get recycled for new planes. Especially 787s. Unfortunately Toulouse badly missed this cycle and right sized plane.
IATA correctly talks about shocks that could derail the better scenario. No kidding. One of those shocks that we cannot blame on unstable oil nations is labor costs. Airlines have squeezed nearly all life from their employees and certainly squeezed all service out of their, well, service. Lousy balance sheets are not the fault of labor. Shoddy financials are the work of management. We expect to see bolshie union actions as the money flows back into the airlines. Delta has done a very smart thing with its labor and kudos to Mr. Grinstein on taking none of it for himself. The same cannot be said of United, where the Gordon Gekko school of management still seems to be at work.
As we move deeper into a knowledge based economy you would think management realizes that flatter structures are better. People have to "buy in" to corporate plans. Coercion no longer works like it used to. Labor no longer fears anything – they have been eyeball to eyeball with the White Elephant. Knuckle draggers make poor managers because we see aviation people marketing their skills the world over. Pilots are in demand overseas and go for the work. In the US, airline managers are facing a very new world order. Be nice or get nowhere.
Kudos also go to the managers at Continental, where pensions are funded and people are happy to work. Same thing at Southwest. American is sort of there. Northwest is not. US Airways? Too early to tell.
IATA raises 2007 forecast
By IAG | April 5th, 2007 | Posted in American Airlines, continental, Delta Air Lines, IATA, northwest, southwest, US Airways | No CommentsIts been a while since we came across such bullish sentiments. We have been mumbling this for a while – starting in the third quarter last year. But for the lunatic in Tehran, oil prices would be even lower and airlines would be rolling in dough.
ATW has a neat summary of the IATA update here. Essentially IATA thinks the industry will go from $2.5bn to $3.8bn in net profits this year and then to $7.8bn in 2008. If you have not bought shares in airlines for a while, you might be too late. You could, maybe, take a run at Boeing because a lot of those profits are going to get recycled for new planes. Especially 787s. Unfortunately Toulouse badly missed this cycle and right sized plane.
IATA correctly talks about shocks that could derail the better scenario. No kidding. One of those shocks that we cannot blame on unstable oil nations is labor costs. Airlines have squeezed nearly all life from their employees and certainly squeezed all service out of their, well, service. Lousy balance sheets are not the fault of labor. Shoddy financials are the work of management. We expect to see bolshie union actions as the money flows back into the airlines. Delta has done a very smart thing with its labor and kudos to Mr. Grinstein on taking none of it for himself. The same cannot be said of United, where the Gordon Gekko school of management still seems to be at work.
As we move deeper into a knowledge based economy you would think management realizes that flatter structures are better. People have to "buy in" to corporate plans. Coercion no longer works like it used to. Labor no longer fears anything – they have been eyeball to eyeball with the White Elephant. Knuckle draggers make poor managers because we see aviation people marketing their skills the world over. Pilots are in demand overseas and go for the work. In the US, airline managers are facing a very new world order. Be nice or get nowhere.
Kudos also go to the managers at Continental, where pensions are funded and people are happy to work. Same thing at Southwest. American is sort of there. Northwest is not. US Airways? Too early to tell.
As Northwest exits Chaper 11
By IAG | March 27th, 2007 | Posted in Delta Air Lines, emirates, etihad, northwest | No CommentsNorthwest has secured the U.S. Bankruptcy judge’s approval to take its plan to creditors. The plan includes issue of $77.4 million in stock and cash to 4,000 salaried workers, excluding executives. The airline also plans to try get back pay to people from 1993. This seems generous and follows Delta's lead. But it is a chimera.
The plan is for the airline to exit Chapter 11 in the second quarter with a value of ~$7 billion. The disclosure statement drew more than a dozen objections from labor unions, government agencies and shareholders. And there lies the rub.
The airline is far from fixing its labor woes. The Association of Flight Attendants-CWA said the airline should provide more information about pay for executives and directors. The union for 9,000 flight attendants is fighting Northwest over wage and benefits cuts. The Air Line Pilots Association, representing 5,700 pilots, said Northwest didn't disclose enough about equity that managers would get under the plan. Unsecured creditors would receive from 66 percent to 83 percent of the value of their claims in new stock, and existing Northwest shares would be canceled. Northwest may exit Chapter 11, but its hands are back in the hot oil of unhappy flight crews. However, flight crews are now in a much stronger position than is generally thought.
Northwest has a long history of unhappy management/labor relations. No airline can withstand a combined and sustained fight with its two key flight crews. Northwest recently called back many of its laid off pilots, only to find a fraction accepted the call. Most will not come back – having either retired or moved overseas to the Gulf, where there are plenty jobs and plenty new planes.
The unpleasant surprise for all US airlines is that flight crews, particularly pilots, have discovered the true nature and value of their skills in globalization. Overseas, aviation has grown much faster than within the US. This rapid growth has created a huge demand for skilled pilots and this demand rose at the same time that US airlines were laying off thousands of pilots.
For example, Dubai’s Emirates Airways is taking delivery of a new 777-300ER every month. The airline is reportedly parking the planes for want of crews to fly them. Another Gulf carrier, Etihad, requires new 200 pilots and 800 flight attendants this year. Given that the planes being delivered to these airlines are for long haul flights, they require double the crews. Then there are the industry's two giant sucking sounds called India and China. Indonesia will soon be added to the list because of its poor local pilot skill pool; rather than lose operating licenses, the upstart airlines will hire foreign flight deck talent.
Northwest is therefore discovering firsthand what it is like to compete in the new world for crews in a global market. In the passenger side this is not news, but for staff it certainly is. Skilled workers can now make outsourcing work as well as corporations do. Being generous to employees is a new tactic at airlines; Delta has been just as generous to its people who have endured tough times. Continental and American are also taking care of their people better than before.
It is interesting to note that control of US airlines remains under federal protection. The Open Skies pact with Europe will still ensure that US airlines cannot have more than 25% control in “foreign” hands. Therefore poor performing airline executives have a protection not available to their people. And it is they who should take the most blame for their companies’ poor performance. They often do not deserve the protection. If skilled aviation labor now can outsource itself, protection of aviation executives is passé.
The goings on at Northwest is a harbinger of things to come. Let’s hope Congress sees this for what it is. But don’t bet on it. The airline executives control the upgrade policies for elected officials.
As Northwest exits Chaper 11
By IAG | March 27th, 2007 | Posted in Delta Air Lines, emirates, etihad, northwest | No CommentsNorthwest has secured the U.S. Bankruptcy judge’s approval to take its plan to creditors. The plan includes issue of $77.4 million in stock and cash to 4,000 salaried workers, excluding executives. The airline also plans to try get back pay to people from 1993. This seems generous and follows Delta's lead. But it is a chimera.
The plan is for the airline to exit Chapter 11 in the second quarter with a value of ~$7 billion. The disclosure statement drew more than a dozen objections from labor unions, government agencies and shareholders. And there lies the rub.
The airline is far from fixing its labor woes. The Association of Flight Attendants-CWA said the airline should provide more information about pay for executives and directors. The union for 9,000 flight attendants is fighting Northwest over wage and benefits cuts. The Air Line Pilots Association, representing 5,700 pilots, said Northwest didn't disclose enough about equity that managers would get under the plan. Unsecured creditors would receive from 66 percent to 83 percent of the value of their claims in new stock, and existing Northwest shares would be canceled. Northwest may exit Chapter 11, but its hands are back in the hot oil of unhappy flight crews. However, flight crews are now in a much stronger position than is generally thought.
Northwest has a long history of unhappy management/labor relations. No airline can withstand a combined and sustained fight with its two key flight crews. Northwest recently called back many of its laid off pilots, only to find a fraction accepted the call. Most will not come back – having either retired or moved overseas to the Gulf, where there are plenty jobs and plenty new planes.
The unpleasant surprise for all US airlines is that flight crews, particularly pilots, have discovered the true nature and value of their skills in globalization. Overseas, aviation has grown much faster than within the US. This rapid growth has created a huge demand for skilled pilots and this demand rose at the same time that US airlines were laying off thousands of pilots.
For example, Dubai’s Emirates Airways is taking delivery of a new 777-300ER every month. The airline is reportedly parking the planes for want of crews to fly them. Another Gulf carrier, Etihad, requires new 200 pilots and 800 flight attendants this year. Given that the planes being delivered to these airlines are for long haul flights, they require double the crews. Then there are the industry's two giant sucking sounds called India and China. Indonesia will soon be added to the list because of its poor local pilot skill pool; rather than lose operating licenses, the upstart airlines will hire foreign flight deck talent.
Northwest is therefore discovering firsthand what it is like to compete in the new world for crews in a global market. In the passenger side this is not news, but for staff it certainly is. Skilled workers can now make outsourcing work as well as corporations do. Being generous to employees is a new tactic at airlines; Delta has been just as generous to its people who have endured tough times. Continental and American are also taking care of their people better than before.
It is interesting to note that control of US airlines remains under federal protection. The Open Skies pact with Europe will still ensure that US airlines cannot have more than 25% control in “foreign” hands. Therefore poor performing airline executives have a protection not available to their people. And it is they who should take the most blame for their companies’ poor performance. They often do not deserve the protection. If skilled aviation labor now can outsource itself, protection of aviation executives is passé.
The goings on at Northwest is a harbinger of things to come. Let’s hope Congress sees this for what it is. But don’t bet on it. The airline executives control the upgrade policies for elected officials.
