Let me assure anyone who has a real interest in this, that your numbers are completely wrong. I cannot state this with more bluntness. The details of how this agreement works will come out once it is ratified, but be assured that this is not a simple issue of union pointing gun at managements for more cash, and no concern for the long term health and viability of the company. This is a more unique solution for our group and company that will adddress mamny issues, while ensuring we are compensated very fairly in comparison to AC and any other Canadian operators.
If all the pilots get an average $15,000 raise whcih is probably low judging by what I've read about the new deal then there will be a $9,000,000 increase in expenses.
That expense takes profit sharing from the other employee groups directly and they will want a raise as well.
Considering the profit sharing cheques have been meager to say the least, I would assume that every employee will be looking for a raise in the near future.
HarkMill: You, and your numbers, are full of $hit.
If the "new deal" is ratified, I'm sure there are many WJetters who would be more than willing to enlighten the readers of this board with the details, including the useless trolls.
What I can say, with good confidence that I am not divluging information prematurely, is that the new "pay scales" etc do not add an appreciable amount to labour costs, and in fact, save the company in other ways. I for one think the new compensation proposal is nothing short of brilliant and a win/win for all involved. There will be no reason for a "me too" from other employee groups.
mods: (if saying that he is full of shit is against forum rules, i.e. a "personal" attack, (even though I speak the truth) feel free to email me and I will edit my post accordingly, or just go ahead and do it)
Ok, I know you guys are a little narly cuz' you have to go another year with a pissy little profit sharing cheque but you still can't grasp the obvious.
In previous posts it is mentioned that the pilots are in for a pretty sizable raise, I think it is about 40K for a 3rd year FO, correct? I think it also mentions 30K or so raise for Captains.
OK I went low and assumed a 15K raise for everyone.
Are we all following??? Good!
Now 15,000 x 600 pilots. (correct me if I'm wrong about the 600 pilots.)
This equals $9,000,000 dollars!!! That is added to the bottome line , NO?
$15,000,000 more expense MINIMUM! What don't I understand? Are you being given the option of a "Title" like Woody and Sam on Cheers?
Is that where I'm lost! Are all the pilots going to opt for a "Title" in lieu of a pay raise.
C'mon kids, the expenses are going way up and is higher than the revenue! As soon as the other employees see their profit sharing going to the pilots they are going to want raises too!
This has nothing to do with Unions or any of those other nasty words around WJ HQ, it is about economics! The "Piramid scheme" is over and now people want real paycheques. PERIOD.
So swear at me and remind me that "I don't understand" but the reality is WJ is now a big Canadian Airline that is operating the same way as every other Canadian Airline did before it. Clive and Max Ward should sit and have a beer cuz they have a lot in common.
Just an opinion... I know they aren't allowed at WJ HQ but on this forum I can say what I want. I don't have to use the f# like the rest of the kiddies to get my point across.
Sorry...despite your ill informed insistance , it is'nt simple. Most outside WestJet could'nt get their heads around our old pay system. The new one will really throw them for a loop.
The truth is, the company's costs will probably drop or at least remain the same if the pilots go for this deal. It's a win win for everyone. The reason is it costs the company a lot of money with the current stock options.
HarkMill, According to Clive in the Q4 conference call, the new pilot contract will have NO cost increase to the company due to operating efficiencies. What those operating efficiencies are I don't know but I'm sure our pilots can fill you in if you need to know.
CanadaEH wrote:... What those operating efficiencies are I don't know but I'm sure our pilots can fill you in if you need to know.
Uhhh...I think that's what everyone's waiting for, to hear exactly HOW this will be achieved, not every WJ employees opinion that it will be...
So far I've heard that apparently this new scheme will "throw me for a loop"...well tell ya what...take your best shot, use small words and maybe visual aids and I'll try to stretch my teeny, tiny non-WJ brain to understand...I may even apply my BComm to the numbers and make my own determination if that's AOK witcha...
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I’m still waiting for my white male privilege membership card. Must have gotten lost in the mail.
Here is the coles notes version for the mentally challenged in this thread. It is severely dumbed down to the lowest common denominator, so yes, even you HarkMill should be able to follow. Maybe even Blastor.
Currently pilots are paid a base, and it is topped up with stock options to theoretically get you to 95% of industry standard. Previously, stock options were cheap to the company. As of last year or maybe two years ago, CRA changed the rules due to Enron etc so now they cost the company as an expense. Are you mouth breathers still with me?
A yr 3 f/o gets a salary of 53K, and 67k worth of options. (if the stock is at $10 as of the strike price date, he is awarded 6700 shares). His compensation costs the company his salary, plus the option expense. Black and Sholes (some outside auditing company) says that his options, over the next 2-4 years should make him 29k (don't ask me how this number comes up, and don't ask WestJet, call Black and Sholes and tell them if you think they are full of shit, they have nothing to do with us except we are a client of theirs). I believe that this B&S value is what the company has to expense. So a yr 3 f/o costs them 53+29 = 82k. Can you dig? I won't mention the ESP top-up or profit share, since one is optional and p/s is variable (esp based on what you put in from 0 to 20% of your gross, and profit share is for beer and women if/when it comes, I and most pilots, consider it a "bonus", not part of my compensation)
Under the new proposed system, I can take up to 100% of the options (base salary and roll the dice on the options) or as little as 25% of the options. If I take 25%, I get 75% of the B&S (hahah BS, I beat you to the lame joke!) value as straight cash instead. So Mr. yr 3 f/o gets salary plus roughly 21k as cash. 53+21 cash+the raise to his base salary that we negotiated+the other 25% of the options. Cost to the company is roughly the same, since the options cost and have costed them for the past year or two anyway. There is no skin off their ass if I take the risk (options) or the cash, since they are both expensed at roughly the same rate. It puts more cash in my pocket, without the risk, if I choose. The big thing is CHOICE. I still take "ownership" since I have stock options awarded (you have to do at least 25%). Oh we also get a raise to the base salary, in line with what the other employee groups get/have gotten, thus eliminating the "me too" syndrome.
Now I can't think of an easier way to explain it. Maybe if I got some crayons and drew you a picture.
The worthless stock options that you used to get are now converted into cash? That is a great deal for the pilots BRAVO!
From what I've been told the stock options have been essentially worthless for the last 2 years due to WJA shares remaining at or below $12...
Profit sharing also seeming non-existant now and in the near future, (unless fuel goes below $50) isn't going to keeb the beer fridge stocked.
Analysts are not liking the future outlook for WJA shares and getting cash money is good for the pilots. I assume the other groups are going to want to forgo options and opt for cash money as well.
Now, once all this comes to light WJA shares are going to fall further IMO, due to the reduced volumes, i.e. supply/demand as a result of less employees buying and exercising their options. Not a bright future for WJA.TO if you ask me.
Oh, here is a Nesbitt Burns report for the non-believers...
Impact: Negative. WestJet reported Q4 EPS of $0.01 versus a loss of $0.12 last year, below our estimate of $0.06 and consensus of $0.08. Revenues were $366 million versus $273 million in Q4/04, $4 million higher than expected. EBITDAR was $66 million versus $28 million last year, $5 million less than our estimate.
Forecasts: In light of the weaker than expected results, we are decreasing our 2006 forecast to $0.50 from $0.55 and to $0.60 from $0.65 for 2007.
Valuation: Based on our forecast, WJA shares currently trade at a 3% discount to Southwest’s 2006E EV/EBITDAR and at a 5% premium to its 2006E P/E multiple. However, we believe Southwest’s track record and likely better growth prospects justify Southwest’s premium.
Recommendation: We remain concerned with WestJet’s steep valuation in light of a deteriorating growth outlook. Our target price assumes that WestJet shares will trade at roughly 17x our revised 2007 EPS estimate, 12 months from now, which we believe to be generous considering that WestJet is a slowing growth story in a deeply cyclical industry. Previously we had been valuing WestJet at 18x our 2006 EPS estimate. Our target price is unchanged at $10 and the stock remains rated Underperform.
CanadaEH wrote:What those operating efficiencies are I don't know but I'm sure our pilots can fill you in if you need to know.
It's mainly going to be the increase in monthly hours, but doing it in less time. Currently, if we fly over 80 hours we're into OT. The new deal would have us at 85 hours before getting OT. Now, what that means is that the scheduling computer was refusing to block us efficiently to avoid overtime, so most months were never blocked over 75 hours. By agreeing to 85 hours, the computer will now block us to 80 hours, making us 5 hours/month more efficient, without the fear of OT. ALSO, the new agreement will be giving us more GDO's/month, up to 15. So, more work in less time will make us more efficient, which is good for profits.
Sorry...despite your ill informed insistance , it is'nt simple. Most outside WestJet could'nt get their heads around our old pay system. The new one will really throw them for a loop.
you are 110% correct Ivan....What people don't understand is the accounting rules that will benefit WJ with the new agreement...it is simply not a hit to the bottom line vs raise in pay it goes way further with such things as taxable benefits, options being written off, productivity increase etc.....lot's of stuff the regular joe will never understand...ie Mark Hill. BTW Claude is the harshest of critics...look at Ben Cherniaski(sp?) for an opposite view....time will tell....haven't been disappointed in 10 yrs yet.
Whatever future contract WJ employees get, I'm sure it will meet their needs. So long as the industry remains healthy, I don't think there's much to worry about. There are pilots flying widebodies (capt) in this country making less than an RJ capt at AC. They don't seem to be complaining about it and although I think it's a dangerous trend for our industry, the main thing is to be happy where you work. Whatever system of income is in place, the end result is what's important. Just me humble op.
From what I've been told the stock options have been essentially worthless for the last 2 years due to WJA shares remaining at or below $12...
Gee, this year I got 115G from my useless share options
Profit sharing also seeming non-existant now and in the near future, (unless fuel goes below $50) isn't going to keeb the beer fridge stocked.
Add $1200 in useless profit share last fall and in line for triple that this Spring.
Analysts are not liking the future outlook for WJA shares and getting cash money is good for the pilots. I assume the other groups are going to want to forgo options and opt for cash money as well.
Only Claude from BMO, whose boss just happens to sit on ACE's BOD consistantly does not like our future, when Robert tells him not to.
tonysoprano wrote:Whatever future contract WJ employees get, I'm sure it will meet their needs. So long as the industry remains healthy, I don't think there's much to worry about. There are pilots flying widebodies (capt) in this country making less than an RJ capt at AC. They don't seem to be complaining about it and although I think it's a dangerous trend for our industry, the main thing is to be happy where you work. Whatever system of income is in place, the end result is what's important. Just me humble op.
Excellent post.
I guess the pilots ratified the agreement. Anyone care to elaborate on the details.
For those wondering, when pilots work more, the company saves money. A compnay will save money if pilots fly more since there are less pilots on the roster = less benefits paid, less training costs, etc. In short, 1 additional pilot = 1.5 existing pilot costs
tonysoprano wrote:Whatever future contract WJ employees get, I'm sure it will meet their needs. So long as the industry remains healthy, I don't think there's much to worry about. There are pilots flying widebodies (capt) in this country making less than an RJ capt at AC. They don't seem to be complaining about it and although I think it's a dangerous trend for our industry, the main thing is to be happy where you work. Whatever system of income is in place, the end result is what's important. Just me humble op.
Excellent post.
I guess the pilots ratified the agreement. Anyone care to elaborate on the details.
For those wondering, when pilots work more, the company saves money. A compnay will save money if pilots fly more since there are less pilots on the roster = less benefits paid, less training costs, etc. In short, 1 additional pilot = 1.5 existing pilot costs
"What people don't understand is the accounting rules that will benefit WJ with the new scale"
A past employer tried to convince me that i would be making more money by taking a certain job and its associated pay decrease due to the lower income tax that would be deducted. That was a PAST employer, give me a break.
On a serious note, clever accounting can find loopholes though.
Congrats on the ratification, best of luck and happy capitalism.
