Stayontarget

So much for the Flair merger hopes

dracir1

You forget that the "difference" saved in salary is more than LOST in revenue because the company can't retain/expand. For every pilot this company DOESN'T retain, they lose far more than the salary that pilot cost no matter what year pay they had when they left. If the company wasn't making money off of pilots, it wouldn't be in business. Why save a couple million on salaries if it means you lose tens of millions in revenue? When you look at it, the difference isn't really that much - maybe $100 more / hr. That will likely decrease the profit per pilot ratio by a few dollars in total - which is more than offset by the increase in volume of flights offered.

Which would you rather be - AA with a profit per pilot per flight of $10 (with over 15,000 pilots) or F9 with a profit per pilot per flight of $20 (and only 2000 pilots)?

This opportunity cost is almost always forgotten... In just about ANY negotiation that takes a long time (and/or is recurring), it's better to negotiate salary NOW then later. Just ask Jerry Jones that bout the Dak Prescott contract.

HSCompressor

It certainly dispels the myth of any sort of Indigo "Genius running ULCCs around the world". They are subject to the same market forces, as anyone else. Ultra low prices does not guarantee market success. You have to find the correct niche in any market. Whether or not the landscape has changed for that nich market, here vs anywhere else, is the question.

Powderkeg

They would've been fine if it weren't for that dang Yellowknife Tracon constantly screwing up their operation.

HSCompressor

Unfortunately, I have minimal experience with Canada ops. RJ days only. Never at F9.

Is Yellowknife Tracon analogous to Jacksonville Center?

Stayontarget

Lol! Excellent work.

spooldup

They just owned a portion of it... Lynx got unlucky with 737s and covid.

They also now owe indigo like 100m because of the insolvency.

fcoolaiddrinker

So now the cost of a new agreement is a couple million annually? And we’re at proposed rates? Come back to reality please.

AutoBrksMedium

Paying the pilots more doesn't expand the company. Increased demand for the Frontier product does. As long as being ranked dead last is a goal of the executive staff, we won't grow.

dracir1

No, that was meant as an example.

F9 knows a pay increase will be necessary (as to how much is yet TBD). But, they know it's coming. Their take is to save as much as possible in the interim and delay as long as possible. Assuming that the average difference in pay/hr is about $100, some real basic math would be 2100 pilots x 75 hrs/month x $100 = $15,750,000 per month or $189,000,000 per year.

Let's assume there won't be a new contract for 3 years from Jan 1, 2024. It is difficult to compare this company "savings" to what we COULD do every year w/ more pilots but I would offer that much of that $189M would be MORE THAN OFFSET by the growth of the pilot force that would far exceed existing accession and retention rate. How much more growth is reasonable? Instead of growing by 15 pilots / month (for the next 3 years), let's say we grow at 45 / month. Or 60. Or 85. How much revenu then. In essence, we need to know what is the revenue gained PER PILOT.

Well, this is kinda hard to figure out. Simple way would be dividing gross revenue by pilot or 3.5B / 2100 = 1.7M. That doesn't seem right. There could be a air seat mile exercise that would be crude at best. Let's look at that. According to the 10-K for 2023, air seat miles were 37,822,000,000. That's 37.822B miles or 18,010,476 asm / crew (or 2 pilots) or 9,005,020 / pilot. Current RASM is 9.49 (that's 9.5 cents). Yearly revenue per pilot per ASM is $171,095. But not really - way too many other moving parts.

Actually, there's a much simpler way. CASM vs RASM comparison. CASM (excluding fuel) is 6.51. RASM is 9.49. What is the CASM currently vs. the increase in CASM at the higher pay rate. Current pilot pay percentage of total cost is about 20%. I surmise that increasing by $100/hr increases CASM by about a full cent (maybe). The corresponding increase in needed revenue per passenger would be about 1/4 of that.

So, to raise pay for all pilots, they would need to increase ticket sales by maybe a few dollars. Instead of $85 fares, they charge $89.

When you're dealing w/ 3.6 B in revenue generated from moving 30+ B in passengers being moved, a simple $100 / hr increase for 2200 pilots is not all that much.