Re: Dumb moves/airline bailout
My wife has been a fight attendant for 18 years with Delta, so this hits pretty close to home for us. She should be fine and is back doing a once a week Europe trip. Delta is reducing their work force by 13,000 out of their 86,000 employees.
My understanding of the “bailout” is that it was intended to help cover the loses for the days the FAA shut down the air space to all planes. It was not to “bailout” mismanagement problems many of the airlines already had. In Delta’s case, the company was in a very stable financial state prior to the tragedy, but with planes that were full, now at 1/3 capacity the company is now operating at a negative cash flow, to the tune of $30 mil per day, something has to change. Naturally a company can not last very long this way, so reduction in routes, service and employees are the only option.
The airlines have seen some ugly union contract negotiations in the past few years and these are the companies that are laying people off with out severance packages. Management feels the unions have put them in bad financial shape and the contracts say no severance if layoffs are due to acts of war. The President says we are at war so the companies are saying, read the contract. Bad situation for all.
Delta is a non-union shop (except pilots) and their approach has been to offer voluntary leaves of 1,3 and 5 years with insurance on the 1 yr leave, some employee benefits and return guarantees. Voluntary termination with a severance package based on years of service. An early retirement package for those over 52 years of age, with bonus years of service and health insurance. After employees have had a chance to act on these options, the remainder of reduction will be done with layoffs and severance packages.
Why keep the airlines flying? Well, if you think about it, much of our business infrastructure is dependent on the airlines for moving people and materials both domestically and internationally. If you reduce the number of airlines, which I believe will happen, we create a situation where two or three big carriers own the market. The only problem with that is they then get to set the prices and that means the cost of everything goes up. You can already see this if you live near a smaller city with only one major carrier serving the area. It can cost you more to take that one-hour flight than it does to travel to Europe. The other reason for the government to keep the airlines in the air is that they need them to move troops, if needed. Years ago, the military pretty much mothballed it transport fleet for troop movement. Most airlines fly planes that are designated as flag ships. These planes are under contract, with the government, to be pulled from service, reconfigured and used for troop movement. The system was used during Dessert Storm.
I know I am starting to sound like a lobbyist for the airline industry. It is more my intention to share what the airline crowd is saying about the situation. Of course our life style hinges on the end results so I can’t say we have an unbiased opinion.
I believe most all airline employees will tell you that flying today is safer than they have ever seen it. Security is tighter than it has ever been, flight crews are already being retrained for the unprecedented acts that happened and the planes are being checked by armed security personal before leaving the gates for the first time. Are there any guarantees that nothing will happen if you get on a plane? Of course not, but statistically it is safer than getting in your car and driving.
One last thought, if you are canceling the family vacation or your business trip because you have to get on an airplane, haven’t the terrorist won and you have lost some of your freedoms?
IMHO,
MarkV
