Aviation News       

These stories are part of the history of why the Legacy Airlines have been forced through the crucible of economic Reality.  Most of the links have expired, but how the labor unions drove most of the Legacy Airlines to bankruptcy, remains a part of the very important history which repeatedly demonstrates why common sense matters, if any business is to thrive for the benefit of all.  It also demonstrates why our un-Constitutional labors laws have not only trampled on our First Amendment rights, but have also caused enormous economic damage to companies, to jobs and to and our entire economy.

September 02, 2005:  Shares of SWA upgraded, while AMR downgraded.  SWA  said that "traffic rose 13.7 percent to 5.67 billion revenue passenger miles, capacity rose 12.2 percent to 7.45 billion available seat miles, and load factor improved 1 percent to 76.1 percent."  Jet Blue shares gained 34 cents.  Air Tran shares rose 14 cents.  In contrast, NWA shares fell 39 cents, DAL shares fell 3 more cents, UAL shares slid 2 cents.

August 30, 2005:  NWA losing $4 million per day; seeks more concessions from its unions. The idiotic strike by its mechanics union, is now in its second week. Meanwhile, LCCs are still making profits, creating new jobs, expanding their routes, gaining market share at the expense of the Millstone Legacy Carriers, and buying new planes.  Only a militant acolyte unionist cannot understand the "why?" of such a stark contrast.

August 09, 2005: DAL stock plunges after one analyst warns to sell Delta shares.  He fears DAL, the 3rd largest carrier, is close to filing bankruptcy.  "The company's market capitalization - the total value of the company's outstanding shares - fell to $286 million, less than one-third the amount of discount carrier AirTran Airways despite Delta being 15 times larger in terms of annual revenue."  DAL has almost $10 billion since January 2001.
    While high oil prices are now a very strong factor, there is no doubt that at least several of those wasted Billions, would not have been poured down the drain, had the unions immediately cooperated with management, to slash costs as much as possible, as soon as possible.  Persistent foot-dragging, by the unions, has been the biggest factor of all in management's failure to bring costs in line with actual revenues, since the end of 2000.  Unions don't create, protect and preserve jobs; they destroy them. 

August 08, 2005:  The Last Hurrah of NWA unions?  "Northwest's current actions are particularly egregious examples of the anti-union tactics used against our union brothers and sisters by the corporate world. It is only through solidarity that we can preserve the gains that unions have made, and preserve middle class America." So says Ted Ludwig, AMFA Local 33 President, at NWA.
    Seems I heard much the same kind of bilge, from militant unionists at Eastern Airlines, on their way down the bone yard road to the dinosaur tar pits.  Unions don't create, protect and preserve jobs; they destroy them.

August 07, 2005: "Struggling Delta Air Lines Inc. and Northwest Airlines Inc. are bankruptcy bound, he said, and he also believes Fort Worth-based AMR Corp. and Continental Airlines Inc. of Houston will eventually have no choice but to seek similar protection because they won't be able to shed debt and restructure contracts outside of Chapter 11. That inability to shed costs will leave them at an unworkable competitive disadvantage to competitors who have reorganized. The legacy carriers are unsustainable in the long run," said Mr. Cordle, whose dour outlook isn't embraced by all industry watchers, some of whom think the industry might be seeing light at the end of the tunnel. Mr. Cordle says that's more like the fading glow from an era's sunset." 

August 06, 2005:  NWA unions pledge to strike, management pledges to continue flying if they do. "The airline is seeking $1.1 billion worth of wage concessions from its workers. It got $300 million from pilots and salaried employees last year, but mechanics and flight attendants have resisted.  The company has proposed $176 million worth of cuts from mechanics, including a 25 percent pay cut. It also wants to lay off roughly 2,000 of AMFA's current 4,500 Northwest workers." 

August 01, 2005:  NWA lost at the rate of $4 million per day, during the first half of 2005.  Unions still preparing to strike.  Apparently, they seek the same kind of "union victory" for Northwest, that was the result of the intransigent unions striking Easter Airlines.  NWA CEO Doug Steenland, "...said that many of company's major competitors have significantly lowered their labor costs, both in and outside of bankruptcy, leaving Northwest with the highest labor costs in the industry."

July 25, 2005:  NWA unions prefer War to Survival.  NWA directors and other management types are getting rid of their own stock, indicating they suspect bankruptcy is inevitable.  FAs have filed a lawsuit to try and prevent the company from training replacement workers, in anticipation of a strike.  "Bankruptcy, which could come quickly in the event of a strike, almost certainly would lead to termination of employee pensions and even unilateral cuts in pay and other benefits. The result would almost surely be a smaller airline with fewer jobs. As of March 31, Northwest had $2.3 billion in cash and marketable securities, down from $3.1 billion a year ago. The company reported a net loss of $862 million last year."  Equity analyst, Ray Neidl says that this country needs only two or three Legacy carriers.  There are now six.  Unions ignore that kind of overcapacity at their own peril.  Down the bone yard road to the tar pits, filled with dinosaur airlines.........  Better to be dead out of a job, than admit union economic policies amount to total Luddite idiocy.

July 24, 2005:  Excerpt. "Several years ago I attended a party where the main topic of conversation was pensions and benefits. No, this was not some gathering of accounting geeks, but rather a social gathering of folks who all worked for United Airlines, a company currently on the brink of bankruptcy. The conversationalists were international flight attendants, and they made a point of letting me know that a) they were the cream of the flight attendant crop, and b) they’d never go back to humdrum workaday routines of domestic travel.

"Silently, I knew that the jobs they described, with seven-day work months paying $80-$90,000 a year with benefits, couldn’t last. They didn’t. Today, of the three ladies at that party, two took early retirement, while the third couldn’t afford to leave United. She now works four-day weeks as a domestic flight attendant and is thankful to have the job. 

"While the convenient excuse for the collapse at United (or any other airline) is to blame 9-11, the reality is that airline worker benefits and salaries were at unsustainable levels long before the terrorist attacks. The problem arises when the innovator fails to respond to the challenges of the upstart. That’s what happened in the airline sector: companies and their unions (especially at United) refused to recognize the competition Southwest and others brought to the market. 

July 23, 2005:  Read this to find out how politicians and unions conspire to hold down the airline consumer, while they pick his pockets.  American Airlines was able to show a slight profit this last quarter, not because it provides its customers with the best possible product at competitive market prices, but because it continues to lobby for the Wright Amendment, which prohibits airline customers from having Free-Market choice, when flying out of Dallas/Ft.Worth. The more the unions get their way, the more the customer must pay.

July 23, 2005:  NWA mechanics ready to strike.  Airline plans to continue operation and GWB will not intervene. "Since 2000, the company has cut some 4,400 mechanics and cleaners, who also are represented by AMFA. Much of this has been done through outsourcing. The union fears that the airline will farm out still more jobs in the months ahead. The management wants $176 million in concessions from AMFA, which has countered with a plan it says will save the airline $143 million. The airline puts the value of the union plan at $87 million, tops. Northwest warns that if it can't get these concessions plus givebacks from other unions for a grand total of $1.1 billion, it faces bankruptcy — an option that could deal its workers an even bigger financial blow."

July 19, 2005:  In their haste to drive Northwest Airlines into bankruptcy, the mechanics union at NWA has voted to strike.  NWA is forecast to lose "$3.29 a share, with a loss range of $3 to $3.80 among the nine analysts surveyed -- wider than last year's range of 90 cents a share."  Apparently, the union workers don't really need or want those jobs.  They would rather see the LLCs continued to expand their market share, while NWA continues down the bone-yard path to the bankruptcy Tar Pits.  Northwest plans to continue flying, if they strike.  They are outsourcing much of their maintenance, and hiring replacements for the strikers.

July 22, 2004:  Delta Pilots finally start to wake up to Reality (just a little bit, anyway.....).   DAL just posted its worst quarterly loss, since 1978 ($1.96 billion in the second quarter, causing Standard and Poor to lower DAL's debt rating for the 3rd time in 2004).  The odds of a bankruptcy are growing rapidly.  DAL-ALPA pilots now offering to take a 23% wage cut, after dragging their heals for many months, while the hemorrhage continued unabated.  DAL  requested  ALPA  to agree to a 30% cut last winter.  Since they are the highest paid in the industry (and probably also the least productive), that would seem to be a very reasonable request to rational minds.

July 22, 2004:  AMR ekes out a profit of $6 million for 2nd quarter.  That amounts to 3 cents per share.  Last year in the same quarter, AMR lost $75 million.  Continental lost $17 million in the 2nd quarter of 2004.  The pilots at AMR finally got real many months ago, barely averting bankruptcy at AMR.  That made all the difference in the world, when compared to the $1.96 BILLION loss at Delta.

July 22, 2004:  Northwest Airlines 2nd quarter loss was $182 million.  That amounts to $2.11 per share.  NWA has been seeking wage and other concessions from its unions for over a year, without success.  They hope to increase their daily load factor, to help offset higher fuel costs.  But, if passengers continue to flock to lower price airlines, NWA will keep trudging down the dinosaur path to the tar pits.  Only a sudden change in union mentality can change that scenario, but history indicates that is a rather remote possibility.

July 11, 2004:  Herbert D. Kelleher, the chairman of Southwest Airlines, describes the govt. airline loan guarantees as little more than life support for uncompetitive airlines.  Until the airlines restructure their business models to reflect what the consumers are demanding (low fares being the core of the model), they will just be throwing good money after bad.  It is obvious this has come down to a battle for the survival of the fittest.  The Union Dinosaurs of Eastern, Braniff and Pan American have already succumbed to the Free-Market tar pits.  Now, the test is to see if the remaining Union Dinosaurs have learned anything, while they witnessed the carnage.  If not, Delta, United, Northwest and US Airways are surely next on the tar pit list.  Free-Markets do not evaporate simply because the Roger Halls and Frederick Dubinskys of the world, assure their gullibles they do not exist.  ALPA's magic wand (in the shape of a baseball bat), like sugar candy in a hurricane, has melted away, leaving only empty rhetoric in its wake. 

July 11, 2004:  Will UAL be forced to dump its pension obligations on the PBGC?  If so, retired UAL Pilots could lose half or much more, than they are currently receiving.  UAL continues to lose money: "$2.8 billion last year on revenue of $13.7 billion. Industry projections have it losing more than $1 billion this year too."  The costs of bankruptcy itself are enormous.  Only the lawyers come out on top of that game.  Had United's unions worked with management when the alarm was first sounded, over two years before UAL was finally forced into bankruptcy, they might have had to take less of a hit, and the pensions would be less in jeopardy now.  But Dubinsky and other union leaders insisted upon digging in their heels, until billions were flushed down the sewer----billions that could have gone towards necessary restructuring outside of the bankruptcy route.  With such union millstones hung about the neck of United and other Legacy Airlines, is it any wonder they are going the way of the dinosaurs?

July 09, 2004:  Delta Pilots still dragging their heals while the airline hurtles towards bankruptcy.  They appear to have learned nothing from the experience at United, US Airways and AMR.  DAL pilots are only offering pay cuts of 13.5 percent and some work rule changes. DAL management insists it must reduce pilot costs by 45%, including pay cuts of 34.5%, plus productivity increases.  DAL-ALPA pilots remain among the highest paid in the industry.

July 02, 2004:  UAL Pension Plans on Shaky Grounds. 
     "Just a few weeks ago, United said in a bankruptcy court filing that it viewed its pension plans 'as untouchable unless there was no other choice.' But that was before the government denied loan guarantees to United. O. V. Delle-Femine, national director of the Aircraft Mechanics Fraternal Association, said he now feared the worst. 'You've got to gut the pension plans,' he said. 'I don't see any other way.'"

July 01, 2004:  UAL Labor Costs still too high to acquire loans to exit Bankruptcy.<>
     "UAL, the second-biggest US airline, must cut costs to attract investors and lenders that will replace the US$2 billion in funding that would have come with the guarantee. The three-member Air Transportation Stabilization Board voted unanimously to oppose the request for a US$1.1 billion guarantee, repeating its stance that UAL is capable of getting loans without taxpayer support.
    United's first-quarter cost to fly one seat one mile was 10.2 US cents while it was 9.5 US cents at American Airlines and 11.7 US cents at US Airways.
    Even after last year's worker concessions, United's costs were 40 per cent higher than the 6.1 cents at JetBlue Airways Corp, a New York-based low-fare carrier. Southwest, the biggest discounter and most profitable US airline, had a unit cost of 7.8 US cents. US Airways wants to get its cost down to between 7 cents and 8 cents, Mr Stephan said."

June 27, 2004:  DAL inches closer to Bankruptcy, as its pilots still refuse Reality.  They are among the very highest paid pilots in the industry, the $2 billion per year ALPA cost at DAL, being 50 % higher than any other airline.

Dec. 25, 2003:  A chartered UTA 727 crashed after striking a building, during takeoff at Benin Africa.

    The rear of the plane impacted the building and then crashed into the ocean, off the Cotonou Airport.  UTA, said 253 people were on board.   At least 24 people survived the crash, Transport Minister Ahmed Akobi (search) said.  Some suspect the plane was heavily overloaded. 

Dec. 23, 2003:  Will the high debt load still sink American Airlines?

    During the last three years, while AMR's unions refused to cut featherbedding costs until the verge of bankruptcy, the airline was busy racking up an additional $8 billion in debt.  That is in addition to AMR being liable for "$10.4 billion in pension payments, capital spending programs and debt that's due through 2006....Too many airlines are competing for too few passengers, experts say." 
    Some analysts doubt AMR will be able to survive, with the millstone of union-fostered debt hanging about its neck.

22, 2003:  ALPA blocked random alcohol testing for British pilots. 

    "The revelation comes after a Virgin Atlantic pilot was arrested in Washington on Friday, shortly before he was due to fly across the Atlantic, and charged with trying to fly a plane while under the influence of alcohol.
    The flight's 383 passengers returned to Britain yesterday, 26 hours late....Only a month ago, a BA pilot and a first officer resigned rather than face disciplinary action for allegedly drinking before take-off....in spite of protracted negotiations, the British Airline Pilots' Association (Balpa) has steadfastly rejected the idea of random testing. It argues that "peer pressure" - encouraging employees to report on each other - is a sufficient control. 
    Damian Green, the shadow Secretary of State for Transport, said he was "astonished" by Balpa's stance. 'It's vital that public confidence be maintained so that those who put their lives in the hands of the pilot know that safety is absolutely paramount.  BA has said it does not want to impose random testing against the wishes of employees. But critics argue that the airline is more concerned about the possibility of industrial action.'"

Dec. 18, 2003:  Fed Ex crashes at Memphis.

   "Preliminary information is that at approximately 12:30 p.m. Central Standard Time, the right main landing gear of the FedEx MD-10-10 (N364FE) collapsed on landing on runway 36R at the Memphis airport.  The aircraft, which was arriving after a flight from Oakland, California, came to rest and suffered extensive fire damage.  All seven crewmembers aboard the aircraft escaped without serious injury.  There were no reported hazardous materials on the plane." Curt Lewis, PE, CSP  WEB:  www.fsinfo.org

Dec. 18, 2003:  Winners do not rely on government.  Why do some companies fail?  Because they ignore the demands of the marketplace.

    "Mostly, they did not listen to their customers. Detroit, for example, produced family cars that consumers did not want. Airlines continued to think that their high-margin business customers would indefinitely pay five to 10 times their cheapest fares.  ...they stuck to inappropriate business models. Airlines persisted with a full-service model when the market was demanding a low-cost, no-frills model. Integrated steel companies failed to recognize the impact of "minimill" technology and carried on with a business model that was not competitive. 
    They also failed to meaningfully alter their cost structure. Like monopolists, they thought that they could pass uncontrolled labour costs to their customers. They acquiesced to the demands of unions and entered into contracts that now thwart their ability to rationalize their operations. Even in bankruptcy, these obligations become a hurdle to reorganization.  These industries relied on government to bail them out of their difficulties.
    The lessons are tragically simple. An industry that is highly reliant on government is doomed to be another financial basket case. Winners do not rely on government."

Dec. 17, 2003:  It's Final!  Boeing will build the 7E7 at the Everett facility. 

    Though it will mean a total of about 18,000 Boeing jobs in Everett, that is down from a high of 30,000 in 1997.  If Boeing had decided to move to another state, the Everett jobs would have declined significantly more.  Increased productivity, plus reduced state and local taxes, was crucial to keep production in Everett, if market share was not to be further eroded in favor of Airbus.  High productivity and low taxes are the key to prosperity for all.  Politicians and union leaders need to get that message....................

Dec. 17, 2003:  US Airways unions target management.

    Union leaders refuse any more concessions with the current management team.  They might be willing to try and compete with Southwest's cost structure, if new management comes in.  That way, the union leadership can continue to claim it is all management's fault, not their own resistance to productivity increases.
    "Airline analyst Bob Mann Jr. said the disadvantage to US Airways' relatively quick emergence from bankruptcy is that the concessions from labor didn't go far enough."

Dec. 17, 2003:  100 years today, but Wright Brothers Re-enactment falls short.

    A replica craft was unable to get off the ground and "sputtered into the mud."

Dec. 15, 2003:  Air Malta forced to bite the bullet----ridding itself of featherbedding rules.

    "This is another misconception which exists in this country. Some people believe that if you have a structure that was valid 10 years ago, then it has to be valid today. The airline industry has changed dramatically over the past years. We know that all major airlines are carrying out extensive restructuring tasks and we are no exception. The real problem at Air Malta, compounded by the investment in Azzurra Air, is that the core business on a recurrent basis has been running at a loss for several years.
    If Air Malta is to survive we have to change our method of operation and we cannot afford to have a higher cost base than that of our competitors. So the challenge for Air Malta is going back to profitability by changing the whole structure from top to bottom."

Hegel was right when he said that we learn from history that man can never learn anything from history.  [George Bernard Shaw]

 

Those who cannot remember the past are condemned to repeat it. [George Santayana]

Dec. 12, 2003:  US Airways threatened by efficient competition of Southwest Airlines. 

    Fares in a Metropolitan area typically fall by 30% when Southwest moves in.  Could that indicate the other union airlines still have too much featherbedding fat in their contracts?  If not, then they won't have any difficulty making a reasonable profit, with a 30% reduction in their fares, will they?

Dec. 12, 2003:  Ray Lahr takes the Govt. to court, alleging a coverup in the TWA 800 report.

    "On Monday, Dec. 15, retired United Airlines Capt. Ray Lahr takes his case against the National Transportation Safety Board to court, the last adversary this unlikely activist ever expected to face.

    Lahr has no illusion about the challenge he faces, but he is focusing his attack on the most vulnerable point of the NTSB's defense – what he calls "the zoom-climb scenario" – and he has marshaled some impressive forces to help breach it.

    The government first advanced this scenario six years earlier – Nov. 18, 1997, to be precise. That was the day that the FBI closed the criminal case on TWA Flight 800 and did so in a dramatic fashion. It was also the day that forever changed Lahr's life.

    To negate the stubborn testimony of some 270 FBI eyewitnesses who had sworn they saw a flaming, smoke-trailing, zigzagging object ascend, arc over and destroy TWA Flight 800 off the coast of Long Island, the FBI showed a video prepared by the CIA."

Dec. 12, 2003:  Guns in the Cockpit: How a bureaucracy can frustrate the intent of a law overwhelmingly supported by most Americans.

    Why so few pilots carry guns in the cockpit.  Because the bureaucrats think they know better how our lives should be lived, as usual.

Dec. 10, 2003:  Privatization of Airports, Air India and Indian Airlines,

is the key to low-cost transportation for the masses.  Unions are opposed, of course, for the usual reasons. "The high cost of air travel is currently a deterrent to an expansion of air traffic as compared to the popular ‘no frills airlines’ operating in Europe and South East Asia which have been catering to a big surge in tourist traffic."

Dec. 10, 2003:  UAL close to $2 billion in financing commitments from  major banks. 

    J.P. Morgan Chase & Co. and Citigroup Inc. willing to risk $ 400 M of their own money, if govt will guarantee $ 1.6 Billion.  UAL cash growing by $7 million per day.  A year ago, under the old union contract featherbedding rules, it was losing about $7 million per day.

Dec. 9, 2003:  Comair and ASA commuter pilots want their airlines to merge.

    Strenghtened ability to resist concessions---ALPA strategy.  The Comair 89-day strike of  2001, nearly destroyed the company.  Comair's pilots are the highest paid of all commuter pilots.

Dec. 9, 2003:  The Sorry State of the airline industry. 

    "Despite putting in billions and billions of dollars, the net return to owners from being in the entire airline industry, if you owned it all, and if you put up all this money, is less than zero..."  [Warren Buffet]

    Without Japan, profit on the A380 is remote.  The British Govt. may not recapture its "soft loans" of  £500m.

Dec. 6, 2003:  UAL's emerging from Bankruptcy depends on more cost cutting and pension reform. 

    DAL pilots are the highest paid in the industry and account for 1/3 of labor costs at DAL.  True to ALPA "strategy," they have resisted realistic concessions, while their employer continues to suffer large losses.

Dec. 5, 2003:  Boeing employees and politicians bow to Market Forces to get 7E7 production.

Nov. 28, 2003:  Olympic Airways forced to abandoned its high-load factor route to Australia.

Nov. 21, 2003:  House passes bill to allow airlines to defer pension payments.

    If Senate agrees, 80% percent of payments due for next two years could be deferred. 

Nov. 20, 2003:  UAL has operating profit of $60 M for October.

    In spite of having to pay retro wages of $63 M to IAM union members, it now has $7 M per day positive cash flow.  One year ago, UAL was hemmorhaging millions per day, with its union featherbedding contracts in force.

Nov. 18, 2003:  Pension Funds underfunded by $400 billion, according to some experts.

    "Many pensions have been impacted by the downturn in the stock market," Ms. Blonskij said. "Pension funds - and the union members who depend on them - need to act and take steps that will ensure pensions for their members when they retire. Too many people are simply closing their eyes to this problem and hoping that it will go away." 
    Could it be that the kind of outrageous greed, exhibited by the UAL-ALPA pilots and imposed with an extortion process in their last Dubinsky contract, had a lot to do with making it impossible for UAL to make the necessary contributions to those pension funds?

Nov. 18, 2003:  UAL to launch Ted, but can it be profitable with UAL's relatively high labor costs?

    "United officials say Ted will be profitable, but critics say United's relatively high labor costs, combined with Ted's low fares, may hobble the new carrier."   UAL may discover, that until its union workers are as productive as Southwest's, it will not be able to match those competitive low fares, and still produce a profit.

Nov. 17, 2003:  Status of wage givebacks at big five carriers: 

Ryanair € 50,582
easyJet € 41,384
Lufthansa € 41,377
Aer Lingus € 38,929
British Airways € 37,602
Virgin Express € 34,386

Nov. 15, 2003:  Japan's help essential to Boeing 7E7 success.  Heavy union presence at Boeing makes its costs too high if all production is done in-house. 

    "If you went back 10 or 15 years ago, it would have been considered sacrilege to outsource components such as the wing," said Peter Jacobs of Seattle-based Ragen MacKenzie. "But given today's environment and the changing competitive landscape, Boeing doesn't have a lot of choices."

    Other countries, Japan included, can do the work more cheaply than Boeing can, Jacobs said.

    "If Boeing limited itself to building a lot of the components in house, it would not be able to build the plane at the price that it needs and the plane would not be built or it would fail in the marketplace," Jacobs said.

    "Delta Air Lines says its fourth-quarter loss will be as much as $415 million... first time Delta's debt and other liabilities have exceeded its assets since it became a passenger airline in 1929...After Sept.11, Delta initially had stronger financial performance than most other big carriers because of its less-unionized work force and more flexible operations, including a large fleet of regional jets that allowed it to adjust to falling demand....In the third quarter, several large airlines reported profits, but Delta, US Airways and United had losses....Discounters Southwest, AirTran and JetBlue are expected to remain profitable."

Nov. 13, 2003:  Northwest seat-mile labor costs the third highest.