Financial wisdom from Fox News

[mar]

I just listened to a guest on Cavuto's show tell the world that pensions are what bankrupted the airline industry.

And of course, since he's on TV he has instant credibility right?

 

[GogglesPisano]

I'm always ammused by the weekend financial shout-fest called, "The Price of Freedom." They just can't resist naming it that, can they?

 

[Alin10123]

I just listened to a guest on Cavuto's show tell the world that pensions are what bankrupted the airline industry.

And of course, since he's on TV he has instant credibility right?

Well... to a certain extent. That is true. Think about it... good example, Delta. The older legacy carriers that once promised huge pension payouts to pilots were able to pay them out until the lower cost airlines came around that did not pay any pensions. There were company matched 401K's yes. But that is a few cents on the dollar that the pilot's own pay contribute to.

So if you think about it, even if both airlines charged the same amount of money for a ticket, the older legacy's carriers operating expenses would be much higher.

The pensions aren't the only reason. The bk courts already allowed a lot of the airlines to drop or at least cut most of the pensions anyways. So it's not the end all and be all reason. There are other examples such as certain airlines pay better, the older legacy carriers have a huge array of aircraft. Thus requiring more maintenance staff because they need more mechanics for different types. Then... for example if one FO gets an offer to upgrade to Capt in another type of aircraft, the company again has to pay for that person to get a type rating on that new aircraft. That again costs thousands. Then some of the legacy carriers have relatively older aircraft. While jetblue, southwest, and airtran all use relatively newer and more fuel efficient aircraft.

The lower cost airlines on the other hand are all using one type of aircraft in the fleet. The pilots jumping back and forth between crews dont have to get new type ratings at upgrades. I believe one carrier requires that you even pay your own type rating before they'll hire you.

Like i said... pensions are one big reason. But not the entire reason. Healthcare costs are going up as well. Which in turn the company has to pay in order to keep the employees healthcare plans up.

 

[CA1900]

The lower cost airlines on the other hand are all using one type of aircraft in the fleet.

Really? That's news to me:

http://www.airtran.com/aircraft/new_717_jets.aspx
http://www.airtran.com/aircraft/737_background.aspx

http://www.jetblue.com/travelinfo/ourfleet/default.asp

http://www.ata.com/about_ata/company_information/fleet.html


Shall I continue?

 

[mar]

Circles

The pensions aren't the only reason.

Alin, with respect, you just talked yourself around in a big circle.

Those of us in the industry know why the airlines are bankrupt, but Mr. Joe Sixpack (taxpayer) may not. And yet, he's relying on "information" (in the loosest sense of the word) from the boob toob.

Good luck.

 

[polysciguy9]

Pensions have led to the slow death of the auto industry in the U.S. as well - too much in salary and pensions being paid to people with little in the way of job training/education, but a strong union supporting them. As soon as competition came around (Japan, Europe) they realized the contracts they negotiated would lead to their suffocation. There's probably a strong case to be made that the majors are in the same boat right now.

 

[Alin10123]

Really? That's news to me:

http://www.airtran.com/aircraft/new_717_jets.aspx
http://www.airtran.com/aircraft/737_background.aspx

http://www.jetblue.com/travelinfo/ourfleet/default.asp

http://www.ata.com/about_ata/company_information/fleet.html


Shall I continue?

Bah... maybe not one. But very few.

 

[Draginass]

Pensions have led to the slow death of the auto industry in the U.S. as well - too much in salary and pensions being paid to people with little in the way of job training/education, but a strong union supporting them. As soon as competition came around (Japan, Europe) they realized the contracts they negotiated would lead to their suffocation. There's probably a strong case to be made that the majors are in the same boat right now.

Agree. And the Bush administration is selling it's soul and the US government to the Chinese. We're quickly working towards a 2 tier society.

 

[Alin10123]

Agree. And the Bush administration is selling it's soul and the US government to the Chinese. We're quickly working towards a 2 tier society.

That... i will have to agree with 150%.
Growing up around many Chinese in the US they have a "screw you, i've got what i want" attitude. Everything is about $$ and saving face. The worst part is they will only show this true side to their own kind. If you are another race, they will pretend everything is fine and dandy. There will be big problems if China becomes a superpower. Not becuase of the communism, but because of the culture and the way they do things.