WWTBAM Bored

Dear co-worker:

The airline industry is in a crisis. Its business model doesn’t work with the current price of fuel and the existing level of capacity in the marketplace. We need to make changes in response.

While there have been several successful fare increases, those increases haven’t been sufficient to cover the rising cost of fuel. As fares increase, fewer customers will fly. As fewer customers fly, we will need to reduce our capacity to match the reduced demand. As we reduce our capacity, we will need fewer employees to operate the airline. Although these changes will be painful, we must adapt to the reality of today’s market to successfully navigate these difficult times.

Therefore, a program to phase out the more senior pilots by the end of the current fiscal year, via retirement, will be placed into effect immediately. Under this plan, senior pilots will be asked to take early retirement, thus permitting the retention of the new-hires who represent our future. This program will be known as SLAP (Sever Late-Aged Pilots). Pilots who are SLAPPED will be given the opportunity to look for jobs outside the company. SLAPPED Pilots can request a review of their employment records before actual retirement takes place. This review phase of the program is called SCREW (Survey of Capabilities of Retired Early Workers). All pilots who have been SLAPPED and SCREWED may file an appeal with upper management. This appeal is called SHAFT (Study by Higher Authority Following Termination). Under the terms of the new policy, a pilot may be SLAPPED once, SCREWED twice, but may be SHAFTED as many times as the company deems appropriate.

If a pilot follows the above procedure, he/she will be entitled to get: HERPES (Half Earnings for Retired Personnel's Early Severance) or CLAP (Combined Lump sum Assistance Payment). As HERPES and CLAP are considered benefit plans, any pilot who has received HERPES or CLAP will no longer be SLAPPED or SCREWED by the company.

Management wishes to assure the younger pilots who remain on board that the company will continue its policy of training pilots through our:
Special High Intensity Training (SHIT). We take pride in the amount of SHIT our pilots receive. We have given our pilots more SHIT than any company in this area. If any pilot feels they do not receive enough SHIT on the job, see your Chief Pilot. Your Chief Pilot is specially trained to make sure you receive all the SHIT you can handle.

And, once again, thanks for all your years of service with us.

Ah yes, it's a golden oldie, as relevant to Continental pilots today as it was to IBM employees when we first saw it in the early 90s. That was pre-internet, but back then, we were able to circulate it as a VM file. I even had one of my anonymous anti-management parodies quoted in the Wall Street Journal, but I was too chicken to take credit for it, since I still wanted to keep my job.

I heard on the news today that Continental was trying to get people to quit by giving them one year's worth of free travel and medical coverage. That doesn't sound like such a great deal unless someone was planning to quit anyway.

What's all this financial hardship in the airline industry that people keep referring to? Southwest turned a profit of $471 million in 2007 (excluding special items) and made $43 million in Q1 of 2008 (excluding special items.)

Problem? What problem?



In all seriousness, I hope things start to improve soon for the industry as a whole. It occurred to me, as I was reading MMFF's post, that it could easily be mistaken for something real in the current climate (well, until you get to the acronyms, at least.)

tubadave wrote:What's all this financial hardship in the airline industry that people keep referring to? Southwest turned a profit of $471 million in 2007 (excluding special items) and made $43 million in Q1 of 2008 (excluding special items.)

Did Southwest announce how much their profit (or loss) would have been if they were paying the market price for jet fuel? They were either lucky or smart to be playing the futures market, locking in their fuel prices at far below today's prices. I think Southwest does what they do very well, but some of their recent success can be attributed to hedging (gambling). That's not necessarily a strategy they can depend on every year.

TheConfessor wrote:

tubadave wrote:What's all this financial hardship in the airline industry that people keep referring to? Southwest turned a profit of $471 million in 2007 (excluding special items) and made $43 million in Q1 of 2008 (excluding special items.)

Did Southwest announce how much their profit (or loss) would have been if they were paying the market price for jet fuel? They were either lucky or smart to be playing the futures market, locking in their fuel prices at far below today's prices. I think Southwest does what they do very well, but some of their recent success can be attributed to hedging (gambling). That's not necessarily a strategy they can depend on every year.

Actually, the excluded "special items" cover a number of things, not the least of which is unexpected gains/losses related to fuel hedging. With the special items included, 2007 GAAP net income was $645 million.

Admittedly, the fuel hedging is a big boon to the airline right now, and will become less so over time, as it was something that could only be set up so far in advance, and with oil prices rising as quickly as they did, it will be difficult to keep the hedges from following suit indefinitely. I do know we're hedged pretty well for 2008....something like 70% of our fuel needs are locked in at $51/barrel. But I don't know where we are beyond that.