Were We At the Same US Airways Media Day?

As you know, I was at Media Day for US Airways yesterday, but when I read this article from Reuters, I began to wonder if I was in the wrong place. I didn’t hear anything that could lead to the headline stating “US Airways CEO see airline industry heading down.”

Oh sure, they got the quotes right, for the most part. But they were taken completely out of context.

Did Doug say, “Our industry is in a mess, if you haven’t noticed”? Yeah, well I remember him saying “Our industry is a mess” but that’s close enough. But what wasn’t cited here was that Doug was talking about the industry from a general perspective, not at this current moment. And it had nothing to do with the economy. And as we know, this industry IS a mess and always has been.

Did Doug say, “We’re about to head into what looks like another downturn”? Yep. But he was referring to the economy, not the airline. Doug went on to confirm that the airline hadn’t seen any weakness so far, despite the economic indicators that are out there.

Wow, just a brutally twisted report. It’s going to take me some time to get my full post on this together, but I should have it for Monday. Until then, why don’t you keep yourselves entertained with this giant rat.

This rat was outside airline headquarters yesterday as part of a protest involving US Airways labor groups. Next time the unions ask for a raise in the face of $100 oil, I think US Airways can just say the rat took all the money. I hear he works for ExxonMobil.

Brett

8 responses to “Were We At the Same US Airways Media Day?”

Bryan in San Francisco

Feb 29, 2008

US Airways workers had their pay slashed four times during two Chapter 11 bankruptcies and a merger. Now with three consecutive quarters of profit, their wages still haven’t been restored. I dunno who would tolerate that. Maybe while oil is at $100 per barrel, they shouldn’t hire a CEO who got a DUI charge and $6.8 mil in 2007. (No offense, CF!)

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Brian in Toronto

Feb 29, 2008

Seems like you and some other bloggers are being rather “fan-boyish” about all of this. Getting invited to a media day doesn’t mean you have to drink the kool-aid.

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Nick B

Feb 29, 2008

Wow. If I had known the rat was going to be there, I would have detoured through Tempe on my way to the airport instead of taking the 202.

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CF

Feb 29, 2008

It’s always the labor discussions that get the most anger, so I try to tread a little more lightly here. I understand that we’re talking about serious issues – wages can make the difference between a decent life and a poor one. I’m happy to talk about this stuff, but I just ask that everyone try to keep their comments civil. (I’ve seen these discussions spiral quickly before.)

Bryan – Yes, the employees of the old US Airways had their pay slashed, but with wages at their prior rates, the airline would not exist. Oil is now 30% of US Airways’ costs and labor is 26%. When your oil costs spike to the insane levels they have, there are two options. Lower your labor costs or raise your fares. If you raise fares to the extent you’d need to raise them, demand will go down and you’ll need fewer employees (and airplanes). So, the labor groups get stuck with either lower wages or fewer jobs. It’s a really crappy place to be, and neither one is helpful.

Unfortunately, having three quarters of profit is far from being a reason to restore wages to their prior levels. This industry is cyclical and it will always be that way. So in good times, labor will do everything they can to squeeze higher wages out of the company. Then when it all goes to hell, the company will squeeze them back. It’s a terrible game of tug of war that impacts a lot of people in awful ways.

The only way that this can work in the long run is with variable pay. Then you can get much more in good times and less in bad times. But, that’s not usually what labor groups want to hear. People don’t save in good times to store up for the bad very well. They want it all guaranteed, and it just can’t be that way at the high levels that they demand.

So, is there room for higher wages? I’d say so. I know that US Airways has publicly said they’d bring wages up to the old America West levels. Is that enough? To be honest, I have no idea. The unions certainly say it isn’t, but it comes down to economics. If you can’t afford to pay, then what can you do?

As for Doug Parker, I would say he’s one of the better CEOs out there. Is it good that he got pulled over for a DUI? Hell no. But people do make mistakes, and that doesn’t mean they aren’t fit to do the job. If he showed up to his job drunk, then that would be a different story. He’s proven to be pretty good at what he does. Remember, without him, US Airways is out of business and America West is in a much more precarious position.

Brian – Not sure what I’m being “fan-boyish” about here. My post was primarily dealing with the inaccuracies of the Reuters report. What Kool-Aid am I drinking exactly?

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Brian in Toronto

Feb 29, 2008

Why? Because after reading the Reuters report, and reading the quotes you gave, without your editorialization, the Reuters report seems pretty spot on – ignoring the positive spin put on by US. Journalists are trained to do that you know, unlike the blog-osphere…

As for the comment on Parker’s DUI, well, that is a Felony in my country….

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CF

Feb 29, 2008

Brian – Now I’m really confused. There was no editorializing. I was in the room and heard the direct quotes myself. I’ve also discussed it with two other people in attendance and none of us heard what Reuters reported. The Reuters report was not spot on – it took what was said out of context, and that is poor reporting. Not sure how you can say otherwise since you weren’t in the room.

Back to the DUI – would you then say that anyone who has a DUI on their record should be immediately fired from their jobs? We’d have a great deal of unemployment here if that were the case. Believe me, I’m not saying it’s a good thing by any stretch.

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Yo

Mar 3, 2008

To all the angry USAirways guys, we don’t care how much you suffered in the past, and, frankly, every time you bring it up, you marginalize it. Times change, airlines change and if you don’t change with it, you are left behind. Merely accusing people of drinking kool-aid doesn’t cut it anymore.

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sia

Mar 4, 2008

Hi,

I just wanted to tell you that i listened to your interview on the frommers podcast and now i have subscribed to your blog.

Keep up the great work!

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