Spirit seeking concessions
Posted by Prttyflyforawhiteguy@reddit | flying | View on Reddit | 66 comments
Spirit formally asked ALPA today to meet to negotiate concessions. They are looking for $100 million in cost reductions from pilot labor. If no deal is reached by Oct 1, they will seek to block the CBA.
downvoted_pilot@reddit
If Spirit folds, what is the projected impact of regional hiring? Will this continue no/slow hiring for another year or two?
Dependent-Place-4795@reddit
No it will speed up hiring at the regionals
downvoted_pilot@reddit
Explain.
theanswriz42@reddit
A good friend of mine is an FO over there and he's said that morale is insanely low at the company and everyone is trying to jump ship as quickly as possible.
lil_layne@reddit
Good. If the majority of pilots would rather jump ship than accept lower pay than they have no power over their pilots.
Trick-Ad-4550@reddit
Sure they do. The company always has power over the pilots, thanks to the RLA.
Not to mention the current administration's stance on organized labor.
Aggravating_Maybe604@reddit
Not sure why this is being downvoted.. You’re absolutely correct.
mvpilot172@reddit
That’s the worrisome part of this whole thing. Pilot moral being low leads to SOP’s slipping and incidents occurring. Be safe out there. I went through a bankruptcy at my regional and know how things can be during this process.
RGN_Preacher@reddit
The future isn’t certain, but the pilot group is solidly in step. Full pay until the last day. If management wants to save money they can wire back their fucking bonuses.
tommarca@reddit
Fuck yea. I can imagine that Spirit has given more than 100M to their executives and shareholder per year for quite some time.
Magentaline69@reddit
Forgive my ignorance but under the RLA the company can’t just block the CBA? Is that not illegal? At that point I would hope every single NK pilot quits and hopefully has a fruitful career elsewhere. How long can the company last without pilots?
554TangoAlpha@reddit
If you can’t afford to pay your pilots what they’re worth you shouldn’t be in business
dreamingwell@reddit
“What they’re worth” is the max a business model will support.
howfastisgodspeed@reddit
Checks out
Thick-Impression3569@reddit
Checks out. The majority of ATP holders don't know how to run a business.
howfastisgodspeed@reddit
The majority of PPLs would fly for free
554TangoAlpha@reddit
When the rest of the industry can afford it but you can’t then no you’re wrong
dreamingwell@reddit
Agreed. Spirit didn’t have a good business model. But they never lied about what the model was.
4Sammich@reddit
Pissing off their entire customer base to the point people literally won’t fly them seems like a bad business model.
JustAnotherDude1990@reddit
You got downvoted but it’s true in this case. People on this sub don’t like reality.
Masterofnonn@reddit
Omg it’s you again lol! “Reality Guy”!
JustAnotherDude1990@reddit
That’s how a free market works.
Dependent-Place-4795@reddit
Yea he got downvoted but that’s the free market. “Your worth” is supply and demand. Simple as that.
JustAnotherDude1990@reddit
It’s not a nice reality but reality nonetheless.
I also got downvoted for saying people shouldn’t waste time if their goal is a major airline because by mandatory retirement at 65 you’re making 500k+ a year, so delaying yourself a year now is costing you 500k+ in the long run.
MeatServo1@reddit
The business model supports parity with other airlines if the executives aren’t being compensated like they’re running a major airline. It’s not black and white; like most things, it’s nuanced, and the answer lies somewhere in the middle.
dreamingwell@reddit
Agreed. The word “max” is what the down voters seem to be missing. Reading comprehension is hard.
Bunslow@reddit
to be fair, given the incredible oversupply right now, pilots don't seem to be worth very much. 3 years ago it was very different ofc, and 3 years from now it will be different again, but right now flying jobs look rather oversupplied
febrileairplane@reddit
Your options are to negotiate your way to that $100 million, or have management's terms imposed on you by the court in the chapter 11 process. Do not think the judge won't - its been done and Spirit is desperate.
Another thing to consider is part of the bankruptcy process succeeding needs creditor support. They will be taking a haircut to keep Spirit open - and will want to spread the pain around. Intransigence will provide greater reasons to seek recovery through liquidation.
Finally, the impediments to acquisition by a more successful airline will be reduced if Spirit is able to shed its debt in the restructuring and improve its cash flow.
Enterprise Value (the value to acquire a company) = Equity + Debt - Cash
Right now, 95% of the company's value is in its debt. If Spirit restructures successfully, the total size of the airline will shrink as planes and leases are rejected, and some portion of the debt will be converted to equity. A declining enterprise value makes it easier for another company to buy Spirit. Reducing the debt within Spirit reduces the risks of integrating Spirit into the other Airline.
Right now, I am sitting reserve in a base I drive to work at. If Spirit liquidates, I am looking at an easily 30%+ pay cut to work as a direct entry captain at a regional. Not to mention seniority lost as I have to then wait for a legacy to call. If you are a Captain, the hit will be worse if Spirit liquidates. Concessions will be less painful than what my current alternatives are. I suspect this is the case for many of us without legacy class dates yet.
Even if concessions fail to make a difference and Spirit eventually liquidates, concessions will add several months more to obtain legacy class dates.
If you do have a class date, talk with those who are still stuck at Spirit. If you thump your chest and bail, it isn't you who will have to live under a contract imposed by a court, and it isn't you who will be left high and dry if Spirit liquidates.
airbrett@reddit
This is a naive take. Aside from talking with some pilots who were around in the 2000’s and before, I HIGHLY recommend you read Flying the Line I and II. Or at least listen to the abridged podcasts. There is a lot of consistent historical context to support the reasoning of “Full pay to the last day!”
Worried-Ebb-1699@reddit
Full pay till the last day.
ce402@reddit
You sweet summer child.
You think it stops at negotiated concessions?
You’re getting contract concessions imposed by the court either way. Only difference is the starting point.
Those that have been around the block a time or two know the script. Get voluntary concessions, then get the bankruptcy judge to impose more concessions on top of that.
Then limp along on that for 4 years until the whole thing liquidates and management gives themselves a $100 million bonus to walk away.
OtterVA@reddit
They can claw back the millions in bonuses they paid management... They're probably going to claim any given concessions aren’t enough and go to a judge for more anyways, let them start there.
BrtFrkwr@reddit
Frank Lorenzo (the only man ever to be barred from running an airline by act of congress) did this with Eastern. It won't be the last concession. Eastern people coined the term BOHICA - bend over, here it comes again.
Spirit is already dead. Management is just milking the corpse for the last little bit of cash.
DefundTheHOA_@reddit
Not just Eastern.
Pan Am also asked pilots to take concessions and they did.
BrtFrkwr@reddit
And Continental. Which Lorenzo owned in addition to Pan Am.
DefundTheHOA_@reddit
Lorenzo never owned Pan Am.
BrtFrkwr@reddit
Through a series of shell companies and acquisitions.
DefundTheHOA_@reddit
Lol you know you’re wrong so you’re just not going to elaborate
DefundTheHOA_@reddit
No he didn’t lol. Since you know everything can you list how you think Lorenzo owned Pam Am?
He owned Texas Air Corporation and tried to take over National Airlines that Pan Am eventually bought but he wasn’t able to acquire National Airlines.
It’s ok to be wrong dude. I wasn’t even arguing with you in my original comment. I was just adding that Pan Am also asked for concessions.
r361k@reddit
Oh man, haven't heard that phrase in years. I believe its referenced in some wooden wings pub or flying the line book.
BrtFrkwr@reddit
It was in use before Aaron Bernstein wrote Grounded https://www.amazon.com/Grounded-Lorenzo-Destruction-Eastern-Airlines/dp/1893122131 Which is an excellent history of the whole affair. It also touches on Continental and the destruction of Pan Am as well as the actions of Bob Ferguson who was the hatchet man for the demolition operation.
DepressedFoool@reddit
Are we still talking about spirit airlines? It's a failed airline that's going to go Kapoot sooner or later. End of story. We can already assume it's dead.
goooosseeee@reddit
Not sure why youre getting downvoted for this lol. Hoping they hold on though so i can jump from my regional in a year when my contract is up!
ItalianFlyer@reddit
Many airlines including my own tried this during their bankruptcies. "We won't go bankrupt if you agree to these concessions". Then after taking the concessions they went bankrupt anyways and the starting point for the bankruptcy contract pay cuts was a lower number agreed to in concessions. Don't fall for it this time.
Full pay to the last day
HornetsnHomebrew@reddit
You got it. Spirit has unit cost (CASM) and unit revenue problems that CANNOT be solved by pilot pay reductions.
554TangoAlpha@reddit
Yup, flown with many senior guys “accept this 30% pay cut and you can keep your pension” year later the pension was gone anyway in bankruptcy
Reasonable_Blood6959@reddit
Don’t do it ALPA. Keep your foot down.
My US friends, please correct me if I’m wrong, but my understanding is the government had the opportunity to protect the jobs by allowing the merger with Jet Blue, but refused it.
And Spirit have had the opportunity to protect the jobs twice through mergers with Frontier, but refused both times.
Don’t let them bully you into concessions. All that will happen is the unsustainable business model will continue, and lower the wages for everyone in the process.
My union over here gave massive concessions during Covid, and we all regret it.
The winter after Covid, they came back wanting more. Unlike the Covid concessions, we flatly rejected it. Literally the next day they said “ah never mind” we’ll be grand.
Tell them where where to shove it, and best wishes to all.
Raccoon_Ratatouille@reddit
The courts blocked the merger Because Jetblue testified they would reduce competition and increase fare prices. Then spirit testified that they would be 100% okay if the merger was blocked and they had to stay their own separate airline, so what the court did was in keeping with antitrust laws. If either side said something different the merger probably would have been allowed.
In any case spirit execs cashed in millions in bonuses after announcing furloughs so screw them. Full pay to the last day.
yaboygoalie@reddit
As someone who sat at the trial for two weeks, this is not very accurate. Not a single JB person testified that they would “reduce competition and increase fare prices.” In fact they actually referenced the NEA ruling showing that JB is a powerful competitor in lowering fare prices when entering a new market. The DOJ and the Judge took the position that fares potentially increasing in ONE market (ie Boston to San Juan) was harmful to the consumer even if average fare prices nationwide would remain the same or decrease due to a larger JetBlue.
I’m happy it was blocked it would have been bad for us to acquire spirit, but the reasoning is far from what you said and arguably the judge made a ruling that was vastly incorrect when looking at antitrust law and past airline merger rulings.
Also Fare Prices doesn’t equal total cost to travel. Something that was briefly discussed in court but not discussed enough. Over 50% of Spirits revenue comes from ancillary fees. Who cares if their fare is $50 when their all in cost for that traveler still totals to be the same(ish) cost as the carriers with bags etc included.
Friendly-Flan-1025@reddit
Won’t even kick the can 12 months. They’re losing $3mil a day. Barely get 1 1/2 months out of the concessions
mvpilot172@reddit
If the pilots take a pay cut they are just delaying the inevitable. Management will still get full pay until the last day and so should the pilots. ALPA carriers should be doing anything they can to get Spirit pilots interviews.
Ok_Excitement725@reddit
Full pay to the last day without question!
Don't take concessions until management returns their bonus checks to help the company. Any concessions now will just be lining the pockets of the C suite til the doors are ultimately shut for good...at your expense. Stay strong guys!
JPAV8R@reddit
I’ve got a 10 year plus friend who is a spirit captain and he’s starting at American next month.
If you’re still at NK leave when you can to the first place that’ll provide your lifestyle the quickest.
boobooaboo@reddit
That’s all I need - after a month of commuting cross country to lose my job on nov 1, and lose my furlough pay and benefits.
R0llTide@reddit
Flying The Line II is full of examples of concessions harming labor in the long run. Don't do it.
TrowelProperly@reddit
Don't fall for it ALPA. They need to either figure out a profitable model for the workers who will work there, or shudder. If you accept lower pay, you lower it for everyone and then you will subsidize a failed business model.
Rev-777@reddit
Shutter
igloofu@reddit
To be fair, it is also nice to see the C-suite also shudder at little from time to time.
Rev-777@reddit
Agreed
TrowelProperly@reddit
thx
80KnotsV1Rotate@reddit
Full pay till the last day. Fuck em. They made their bed. Hoping for a soft landing for all my yellow buds.
flyboy_1285@reddit
Full pay to the last day!
Y0uMadD0g@reddit
Full pay until the last day.
Bravo-Buster@reddit
Spirit Airlines won't exist a year from now. Maybe even sooner. It's about to get ugly.
172sierrapapa@reddit
I know it's been said plenty, but anyone at spirit. Get out asap, please. Especially now that they're trying to cannibalize their own pilot group. I'm no business expert so I won't give a guess on how long spirit has, but the past has taught us well about what happens next.
rFlyingTower@reddit
This is a copy of the original post body for posterity:
Spirit formally asked ALPA today to meet to negotiate concessions. They are looking for $100 million in cost reductions from pilot labor. If no deal is reached by Oct 1, they will seek to block the CBA.
Please downvote this comment until it collapses.
Questions about this comment? Please see this wiki post before contacting the mods.
I am a bot, and this action was performed automatically. If you have any questions, please contact the mods of this subreddit.