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 A week after sending a memo to employees warning them to expect drastic cuts, the CEO of TPG Capital-backed Midwest Air Group Inc. on Wednesday detailed what is needed from various worker groups if the Oak Creek, Wis.-based airline is to remain flying.
CEO Tim Hoeksema, who orchestrated his airline's $450 million sale to a consortium led by TPG last summer to fend off a hostile bid by rival AirTran Holdings Inc., had previously told employees that the private equity firm would not continue to fund the money-losing airline absent "significant" concessions. He reiterated that challenge on Wednesday, saying salaries must be adjusted in light of the airline's previously announced plan to park one-third of its fleet and concentrate operations as a smaller airline. "Our cost structure today, in advance of this restructuring, resembles that of airlines much larger than we are, with national and even global networks, flying larger aircraft," Hoeksema wrote. "Unfortunately, there is no way to avoid deep and painful reductions to our current compensation." Hoeksema said the amount of pay cuts will be based on comparisons to what similarly sized small airlines pay their employees. Pilots, who the CEO said are currently paid 32% more than what is paid at other carriers, and flight attendants (23%) will be hit hardest on a percentage scale. Nonunion workers, who on average do not make as much relative to rivals, will see their pay cut by 5% for professional staffers and 10% for mechanics. Low-grade administration staff and workers at airport stations will not see a reduction. The executive pledged pain in the corner office as well, taking down his own compensation by 40%. Whether or not such cuts are obtainable remains to be seen. The executive said previously the concessions need to happen within weeks to avoid a Chapter 11 filing, but unionized pilots and flight attendants have given little indication they are willing to sign off on such drastic wage reductions without lengthy talks. Even if the unions agree, Midwest's future is far from certain. Unfortunately no amount of pay reduction may be enough to save an airline who's viability was a matter of debate even before the current oil spike. - Lou Whiteman
See TheDeal.com story on Midwest needing cuts CategoriesComments
From: a/c holdings investments ,
midwest needs a life line the poor american people are taking a dive on ones shirt tail time for the people of america to dump the ceo and let a/c holdings investment ceo take over at least he knows how to drive the airline to a profitable margin for the stock holders eheheheheheheheheh
Posted on:
July 2, 2008 5:56 PM
From: Fly,
Midwest Airlines Mis-Management Tim Hoeksema has just told his employees how much their wages will be cut, as high as 65% for some Pilots, but only as low as 5% for “Professional Staff.†Suddenly, it seems that Pilots and Flight Attendants are grossly overpaid, the smallest proposed pay cut for a Pilot is about 45%. Of course, Mr. Hoeksema doesn’t mention that he suddenly decided to compare our wages to commuter airlines instead of truly similar airlines we have always benchmarked to negotiate our contracts. Mr. Hoeksema’s claimed 40% pay cut only applies to his salary, impossible to tell how much he will truly sacrifice after “bonuses, etc.†Interestingly, only the 2 unionized groups at Midwest are now considered overpaid, despite the fact that for the last 10 years or so, we have been told that our negotiated and mutually agreed upon wages have been “right in line.†Of course, Mr. Hoeksema proclaims this is all “fair and equitable.†Additionally, to be able to blame the unionized employees for any failures of management, all employee pay cuts are dependent on whether the Pilots and Flight Attendants agree to the proposed lopsided reductions, with no allowance for any negotiations. Effectively, if Pilots and FAs don’t blindly agree to crippling pay cuts, no other employee group has to, and off to Chapter 11/7 we all go. At today’s fuel prices, even if every Pilot and Flight Attendant at Midwest worked for free, the airline would still be losing money so fast that bankruptcy would be unavoidable. How well managed is a business like that? Midwest, and every airline MUST raise fares to cover their costs, just like every other business. Instead, they have decided to force all employees to subsidize our passenger’s non-profit ticket prices. Every time you walk on a Midwest flight, every employee is giving you cash right out of their pocket. Someone has to pay for the expensive fuel, why should it be hard working employees instead of customers? From a fellow pilot – “If the price of copper tubing goes up, do you take it out of the plumber’s salary?†We now live in an energy driven world. No matter what mode of transportation you choose, be it car, train, bus, boat or airplane, you have to pay for the fuel it consumes. It is time for Midwest to start passing on these costs to the actual consumers, our passengers, and not penalize employees for continuing to provide “The Best Care in the Air.â€
Posted on:
July 8, 2008 12:09 AM
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midwest needs a life line the poor american people are taking a dive on ones shirt tail time for the people of america to dump the ceo and let a/c holdings investment ceo take over at least he knows how to drive the airline to a profitable margin for the stock holders eheheheheheheheheh
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