Guest

National Airlines - Important Updated News

Mon Sep 02, 2002 1:41 pm

It looks like National Airlines (the airline we all know and love  Laugh out loud) will stay flying at least for the current time being. Unfortunately, the pilots will get a 15% paycut and all other employees will get a 10% paycut. Also, National will suspend operations to Midway due to airport construction and National will also not resume flying to DCA. National will have 19 Aircraft by the end of the year, and 27 by the end of 2003. Here is the full letter I found on another message board.... Enjoy  Big thumbs up


August 31, 2002

All Employees:
Moving Forward

We expect the Company will be in the position to announce next week that it has reached an agreement for a sizeable financing package. This financing, when completed, will set the stage for the Company to successfully reorganize and move forward into the new era of aviation, one that undoubtedly will be led by low-fare, efficient airlines ??? and we are clearly one of those airlines.

On August 14th, I advised you of the denial of our loan guarantee application by the ATSB. Our disappointment with this news was expressed in a press release I issued later that day, which was widely covered by the national media. Point in fact, the ATSB denial was devastating to our prospects for survival. We were faced with two choices:

1) Fold the tent and lament on how unfair life can be, or

2) Find an alternative solution, and send a loud and clear message to the naysayers, ???that no matter how many times you knock National down, we are going to get back up.???

With your encouragement and support, we chose #2.

Cost of Moving Forward

We presented a plan to our key constituents and creditors and recommended that if they were prepared to grant major concessions above and beyond what had already been agreed, the employees of National would show their tangible support as well.

All employees will be financially affected by this agreement. On the up side, National will continue to operate. On the ???pain??? side, compensation for all employees, effective September 1st, will be reduced as follows:

Reduction Duration
Officers 20% 38 months
Pilots 15% 38 months
Directors & Managers 10% 38 months
All Other Employees 10% 4 months

These reductions are in addition to those that took place in September 2001 (Officers at 10%, Directors & Managers at 5%). Please note that in no case will any reductions occur that would place an employee below federal or state minimum wage or living wage regulations. All pay reductions will be off gross earnings (includes overtime, incentive, premiums, etc.). Per diem and other benefits, such as medical, will not be affected.

No further anniversary increases will be made to any work group while any other work group is still experiencing the pay reductions, i.e., the next 38 months.

The varying percentages, as well as the duration of the deductions for different employee groups, I am certain, will be a topic of debate and second-guessing. Given our situation and the time in which an alternative to the ATSB was needed to be found, I made the difficult decision as to who, what and for how long. I considered a great many factors and made the decision I felt was appropriate under the circumstances.

The pay reductions are significant and may require some employees to make decisions that affect their continued employment at National. Some employees may not be able to meet their obligations and/or provide for their families in a manner that a new job would allow. If we were to lose only one employee as a result, that would be regrettable. I fully respect that every employee???s top priority is to their family, and I sincerely hope that the number of employees who will be forced to seek other employment will be kept to a minimum.

Employee Equity Stake

Our new financing plan will recognize the sacrifice that is being made by all of the employees of National. Our successful emergence from Reorganization will result in the employees having a significant ownership stake in the Company. Individual employee ownership will be determined based on all wages foregone, including pay reductions and the impact of the pay freeze going back to last September, as well as the reductions discussed herein. While many details remain to be worked out, I anticipate the employee ownership stake in National will approximate at least 20%. More details on the employee ownership stake will be forthcoming in the next couple of weeks. A special Q&A email address will be set up in this regard.

What???s Next

The pay reductions, pay-freeze continuation, and the uncertainty that still remains about the volatility of our industry will no doubt combine to leave a sense of unease and continued frustration among many of you. I feel these concerns as well, but if we are to move forward, it must be in a manner that allows the Company not just to survive, but be positioned to prosper. With the implementation of the matters addressed herein, I believe we can prosper. This is not a guarantee, nor is it going to be easy, but it is our best shot and one I firmly believe is worth pursuing with all our collective efforts.
We have some very important things going for us as we pursue success:

We have a loyal and growing customer base,
We are not at each others??? throats as is the case with so many other airlines,
We are the kind of airline that the traveling public is moving towards in increasing numbers, and
We have demonstrated a tenacity not seen in this industry for quite some time, if ever.

Operations

National plans to move forward with its service to Reno/Tahoe on October 3rd, as well as seasonal service to West Palm Beach on November 21st. The Company is also planning to add a third daily flight at Miami on November 21st, as previously announced. We expect to add our 19th aircraft before year???end, and the 20th aircraft sometime during the first quarter of next year. Our business plan calls for us to be at 27 scheduled aircraft at the end of 2003, and 33 scheduled aircraft at the end of 2004. As will always be the case, any expansion will be dependent upon current market conditions and our ability to deploy aircraft at a profit.

We will announce on Monday that we will temporarily cease operations at Chicago Midway effective October 1st, until such time as the current airport construction is complete, and we are able to operate a more desirable arrival and departure schedule. In addition, we will not resume service at Reagan National Airport on October 3rd, and we have requested an extension from the Department of Transportation to begin the service sometime after the October 23rd deadline. Should the DOT refuse our request, we will, in all likelihood, lose our slot exemption. Affected employees in MDW and DCA have been notified, and the Company is working with each employee on transfers to minimize furloughs.

* * * * *

As I have professed on many occasions, you are by far the finest group of employees I???ve ever had the pleasure of being associated. National is a very special place, and it deserves to exist. Thank you for your continued support.


Sincerely,


Michael J. Conway
Chairman of the Board
President and CEO
 
B747-437B
Posts: 8777
Joined: Thu May 30, 2002 6:54 am

RE: National Airlines - Important Updated News

Mon Sep 02, 2002 2:18 pm

1) Fold the tent and lament on how unfair life can be, or

2) Find an alternative solution, and send a loud and clear message to the naysayers, that no matter how many times you knock National down, we are going to get back up.





They shoulda picked #1
"The A340-300 may boast a long range, but the A340 is underpowered" -- Robert Milton, CEO - Air Canada
 
prosa
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RE: National Airlines - Important Updated News

Mon Sep 02, 2002 2:56 pm

It looks like National Airlines (the airline we all know and love ) will stay flying at least for the current time being. Unfortunately, the pilots will get a 15% paycut and all other employees will get a 10% paycut.

A 10% or 15% pay cut is not particularly nice, but it's vastly better than a 100% pay cut  Yeah sure
"Let me think about it" = the coward's way of saying "no"
 
Guest

RE: National Airlines - Important Updated News

Mon Sep 02, 2002 3:00 pm

They shoulda picked #1

Nice opinion there buddy  Yeah sure

But seriously, when you have a thousand employees working for you and you have passengers that depend on you to get where they are going, you would hope they wouldn't just throw in the towel. Giving up is the easy way out and I'm glad they chose to keep flying. It will pay off in the end, not only for them, but for the entire city of Las Vegas.
 
Guest

RE: National Airlines - Important Updated News

Mon Sep 02, 2002 3:03 pm

A 10% or 15% pay cut is not particularly nice, but it's vastly better than a 100% pay cut

I couldn't really tell there if you were being sarcastic or not, but if you weren't, I definitely agree with you, a job is better than being out of work. Plus, the employees will get to own a share of the airline, which might prove out to be good if National makes it anywhere, which hopefully it will.
 
B747-437B
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RE: National Airlines - Important Updated News

Mon Sep 02, 2002 3:11 pm

The longer that National Airlines continues to operate a financially unfeasible operation, the more it hurts the industry as a whole. Arguably, were it not for the sizeable cash bailout they received last year, they would have faded quietly into Chapter 7 by now. Instead, they continue to undercut the market's revenue stream in a desperate attempt to stay alive, secure in the knowledge that the beauty of bankruptcy law prevents them from ever being held liable for the mountain of accumulated debt. The airline has had multiple chances to transform themselves into a viable entity, but they continue to rebuff those and pursue the same tried-and-tested business practices that led them into Chapter 11 in the first place. They are a disgrace to the industry and I for one will not shed a tear when the inevitable shutdown occurs. The industry as a whole will be better off without them.
"The A340-300 may boast a long range, but the A340 is underpowered" -- Robert Milton, CEO - Air Canada
 
flashmeister
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RE: National Airlines - Important Updated News

Mon Sep 02, 2002 4:03 pm

They are a disgrace to the industry and I for one will not shed a tear when the inevitable shutdown occurs.

This is a little over the top. National faces some of the same things that other carriers face, and we're not calling them disgraces. I do think that National's future is cloudy at best, but to call them a disgrace is utterly uncalled for.
 
B747-437B
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RE: National Airlines - Important Updated News

Mon Sep 02, 2002 4:18 pm

The key difference between National and other carriers is that whereas other carriers have taken the initiative to modify their business plans to transform themselves (or at least attempt to transform themselves) into financially viable entities, National continues to head the wrong way down a one-way street. They make a mockery out of the free market by becoming the least common denominator in the markets they compete, but operating revenue-negative subsidized by their unsecured creditors and the US taxpayer. Even Pavlov's dog learned his lesson after getting burned a few times. Sadly, National's management doesn't seem to have.
"The A340-300 may boast a long range, but the A340 is underpowered" -- Robert Milton, CEO - Air Canada
 
ben88
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RE: National Airlines - Important Updated News

Mon Sep 02, 2002 4:26 pm

You're saying a lot of words but they add up to nothing. Please provide more facts and less blabber. How exactly are they "undercutting the market's revenue stream?" I'm not saying you're wrong, it's just when someone makes claims like you're making they usually back them up with evidence. I don't know anything about National so i'd be interested in why they're so "sucky" for lack of a better word.
 
B747-437B
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Joined: Thu May 30, 2002 6:54 am

RE: National Airlines - Important Updated News

Mon Sep 02, 2002 4:40 pm

Please provide more facts and less blabber. How exactly are they "undercutting the market's revenue stream?"

In every market there exists a least common denominator (LCD), providing the bare-bones product for the lowest price. The passengers with ultra-sensitivity to price will gravitate towards this operator, sacrificing quality for price. All other operators provide value-added services for higher prices, hence giving the consumer a freedom of choice. This is a fundamental concept of the free market system.

Unforunately, this system breaks down when the least common denominator begins offering a product below their costs for extended periods. In the case of National, they are able to do so because of the protections accorded by Chapter 11 bankruptcy as well as the cash bailout they received from the Federal government. As a result of this, the other competitors in the market are also forced to reduce their prices in order to remain competitive (since they cannot be competitive with prices that exceed those of the LCD plus the value added service provided). Often, the competitors are also forced to sell their products at a loss. The cycle ends only when the LCD goes out of business and prices return to their natural level. In the meantime, the other competitors in the marketplace have been incurring losses and suffering harm.
"The A340-300 may boast a long range, but the A340 is underpowered" -- Robert Milton, CEO - Air Canada
 
gr8slvrflt
Posts: 1449
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RE: National Airlines - Important Updated News

Mon Sep 02, 2002 9:04 pm

I am hearing National is still talking with AirTran.
I work for Southwest, but the views expressed are my own and do not necessarily represent those of Southwest.
 
Guest

RE: National Airlines - Important Updated News

Mon Sep 02, 2002 10:36 pm

National_757: I have heard that the N7 employees are POed at this offer, considering that they are paid even less than Amwest 757 pilots from what I've heard.

B747-437B: My feelings exactly. National had profit margins of about (20%) in the summer(June, July), so why would they be faring any better emerging from Chapter 11 in the 2 worst quarters of the year?

I guess we'll all find out Sept. 6.
 
prosa
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RE: National Airlines - Important Updated News

Mon Sep 02, 2002 11:25 pm

A 10% or 15% pay cut is not particularly nice, but it's vastly better than a 100% pay cut
I couldn't really tell there if you were being sarcastic or not, but if you weren't, I definitely agree with you, a job is better than being out of work.

No sarcasm intended, not at all. Things could have turned out much worse for the employees. What does seem a bit unfair is that the directors and managers are facing only 10% pay cuts. Their percentage should, by all rights, be at the highest level faced by any employees.
"Let me think about it" = the coward's way of saying "no"
 
sccutler
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RE: National Airlines - Important Updated News

Tue Sep 03, 2002 12:12 am

Note that, in the prior round of pay cuts (2001) the management already took a 10% hickey while pilots took none.
...three miles from BRONS, clear for the ILS one five approach...
 
Guest

RE: National Airlines - Important Updated News

Tue Sep 03, 2002 12:52 am

Lowfareair, I wouldn't be surprised if they are POed about this offer but everyone has to sacrifice something I guess, that's the way life is.

In every market there exists a least common denominator (LCD), providing the bare-bones product for the lowest price. The passengers with ultra-sensitivity to price will gravitate towards this operator, sacrificing quality for price. All other operators provide value-added services for higher prices, hence giving the consumer a freedom of choice. This is a fundamental concept of the free market system.

So B747-437B, you must really dislike all Southwest type airlines. I mean, they are really sticking it to the major carriers by providing a similar type of service for a shocking lower price. I really doubt National, Southwest, Airtran and all the other low fare airline sacrifice "quality" for price. So what if I don't get a meal, I'll just bring my own on board. Hey, if you wanna pay two times the price for food and IFE, go right ahead. All airlines have the right to exist, don't go off and tell me because National provides the bare bones product that they shouldn't be flying. Why should I give the majors American or Delta the pleasure of ripping me off when someone else out there will do it cheaper?
 
Jeff G
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RE: National Airlines - Important Updated News

Tue Sep 03, 2002 1:09 am

Note that, in the prior round of pay cuts (2001) the management already took a 10% hickey while pilots took none.

However, the management was already adequately paid, actually rather well paid, and the pilots have always been the lowest paid large airplane pilots in the industry. It's sad when a number of RJ operators pay their pilots more. Some turboprop operators pay more. This paycut makes that disparity a lot worse. It's true that a pay cut is better than a layoff, but this is a bitter pill to swallow for a pilot group that wasn't causing the problem to begin with. It only brings them to "parity" with their own underperforming management.
 
Guest

RE: National Airlines - Important Updated News

Tue Sep 03, 2002 1:15 am

I think that while he may not like LCCs in general, he (and me too) despises N7 because they offer low fares while:

-achieving a loss of 6 million/month, with a -20% margin. This percentage is currently unrivaled to my knowledge in the US.

-Paying pilots even less than AWA BEFORE the new concessions. It wouldn't surprise me if they make about the same as a FL pilot on the 717 in the same position(i.e. second year captain).

-Flying to cities served by at least 2 other carriers where at least one of them is a lowfare carrier. (PBI is the only exception, although FLL and MIA are nearby).

-has a management team that doesn't even recognize that their plan is flawed, and doesn't give a sh*t about the company, only themselves. They don't look, let alone allow, reorg plans that don't have themselves still in as senior management.

-Has a very well compensated management team.

When they start turning a profit, pay their pilots more, and actually fly to places where they are needed, then I'll listen to your arguments.
 
B747-437B
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RE: National Airlines - Important Updated News

Tue Sep 03, 2002 1:42 am

So B747-437B, you must really dislike all Southwest type airlines. I mean, they are really sticking it to the major carriers by providing a similar type of service for a shocking lower price. I really doubt National, Southwest, Airtran and all the other low fare airline sacrifice "quality" for price. So what if I don't get a meal, I'll just bring my own on board. Hey, if you wanna pay two times the price for food and IFE, go right ahead. All airlines have the right to exist, don't go off and tell me because National provides the bare bones product that they shouldn't be flying. Why should I give the majors American or Delta the pleasure of ripping me off when someone else out there will do it cheaper?


You obviously don't understand any of what I wrote above. There is no problem with the LCD providing bare-bones services at cost. That makes them a viable and self-supporting market entity. It is when the LCD has a pattern of offering services BELOW COST that the free market collapses for the reasons I outlined above.

National continues to sell services at a price below what it takes to make a profit. They have subsidized these losses by discharging their debt through Chapter 11 protection and through the Federal government's cash bailout. Now they are seeking to cut their labor expenses even further rather than addressing their revenue stream. It is a completely flawed business model with absolutely no hope of success, something that has been proven multiple times over with their trip to bankruptcy, their ATSB rejection, etc... Unfortunately, the management has chosen to pursue this loser model, has rejected any recapitalization offers that exclude them from decision making and essentially drag everyone else down with them as they continue to plunge deeper and deeper into the abyss.

So no, I don't dislike Southwest or AirTran, simply because they have viable business models that generate profits. National does not. THAT is why National needs to shut down and liquidate.
"The A340-300 may boast a long range, but the A340 is underpowered" -- Robert Milton, CEO - Air Canada
 
SegmentKing
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RE: National Airlines - Important Updated News

Tue Sep 03, 2002 1:55 am

Actually, they didn't get raises this year, and now they wont' get raises for up to 38 months.


THAT'S NOT A 15% WAGE CUT! TRY 35 TO 50%!!

Nationals pilots or managers (less Dik, Frank, and Mike) don't get cost of living increases, annual raises, AND still take a 15% paycut... hum....

First officers at National barely make $30,000 a year... 2nd year is $34,000....

commuter airlines pay more than that!

Conway must go!  Smile/happy/getting dizzy

-n
~ ~ ~ ~ pRoFeSsIoNaL hUrRiCaNe DoDgEr ~ ~ ~ ~
 
Guest

RE: National Airlines - Important Updated News

Tue Sep 03, 2002 2:09 am

B747-437B, whoa, I did obviously misunderstand what you wrote, and for that I'm sorry. But you are right, what makes National different from Southwest or Airtran is the fact that National doesn't make money, while Southwest and Airtran do.

Conway definitely must go SegmentKing, I agree with that  Big thumbs up . National's problem is Conway and the upper management IMO.
 
SegmentKing
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RE: National Airlines - Important Updated News

Tue Sep 03, 2002 2:15 am

makes things interesting when you throw facts and numbers around, eyh?  Smile/happy/getting dizzy

-n
~ ~ ~ ~ pRoFeSsIoNaL hUrRiCaNe DoDgEr ~ ~ ~ ~
 
milemaster
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RE: National Airlines - Important Updated News

Tue Sep 03, 2002 3:25 am

I'm just thankful that when I want to go to Vegas on the cheap, National flies from my city. If/when National goes tits up, I'll just hop on America west...can't fly SWA because of the Wright Amendment.

I for one don't necessarily feel National is a completely flawed business model. But the reality is that as far as O&D goes, Vegas is probably the worst city in the nation to have a hub.

I will continue to fly National because of the fares and the 757, regardless that they may be the LCD.
 
User avatar
clickhappy
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RE: National Airlines - Important Updated News

Tue Sep 03, 2002 3:39 am

I would like to clarify....National provides much more than "bare-bones" service. Their first class to Vegas was as comfortable as anything I have gotten on Alaska, the planes were clean, the crew friendly, and we landed early on both segements.

I hope National survives  Smile
 
maiznblu_757
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RE: National Airlines - Important Updated News

Tue Sep 03, 2002 3:56 am

10% or 15% pay cut is not particularly nice, but it's vastly better than a 100% pay cut

I couldn't really tell there if you were being sarcastic or not, but if you weren't, I definitely agree with you, a job is better than being out of work. Plus, the employees will get to own a share of the airline, which might prove out to be good if National makes it anywhere, which hopefully it will.

Well, even if he was being sarcastic, its plain common sense that a 15% pay-cut is better than a 100% pay cut.
 
lazyb
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RE: National Airlines - Important Updated News

Tue Sep 03, 2002 4:29 am

B747-437B

AND how about America West who were on their ass before the gov't backed $390 million +/-. AND then proceeded to lower fares and add flights to SEA and other National routes?

AWA - poor on time record, employee angst, lost children/lost bags.

SH_T LOAD OF MONEY - everything's OK DOKEY
 
Guest

RE: National Airlines - Important Updated News

Tue Sep 03, 2002 5:22 am

LAZYB: America West showed the ATSB that they could turn the airline around. Remember-Doug Parker became CEO days before 9/11. He helped the operations turnaround of the airline, and Franke is gone.

Also, AmWest operated for 20 years. National has failed to ever turn a net profit. They were in BK for almost a year before 9/11.
 
lazyb
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RE: National Airlines - Important Updated News

Tue Sep 03, 2002 5:48 am

Lowfareair

No!

I think AWA was first to apply - when no one wanted to be first, didn't know how the board would react, wanted to see how it was going to play out.

AWA had nothing to lose and nowhere to go. They applied.

The ATSB wasn't sure of their "mandate", who they feared, and/or who they "ultimately" answered to.

ATSB caught their breath and slammed the door shut! Quietly reflecting on what they had done. And proceeded to rubber stamp NOs.
 
Fleet Service
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RE: National Airlines - Important Updated News

Tue Sep 03, 2002 5:53 am

This sounds like a job for the Air India 747 and the other message board messiah...

Quick, reform JAG! Issue a wish list...errr 'Press Release',call the deep pocketed investors....Oh wait, sorry wrong airline.  Big grin


How is National undercutting the revenue stream of the industry as a whole?

Discharging debts in Ch11? Don't look now but US Air just rejected $600 million in lease obligations and is preparing to discharge more.

IF UAL were to file and operates in 11 along with US, THAT would be more detrimental to the industry revenue stream as a whole as opposed to one relatively small carrier in a small number of markets.

Yes, I actually *do* work for an airline,how about you?
 
lasbagman
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RE: National Airlines - Important Updated News

Tue Sep 03, 2002 9:35 am

I know alot of N7 ground staf are looking around. The pay rate for the Ticket Counter in LAS for National is the worst in the airport. They start at $7.25 per hour. That is not a living wage even in LAS.
groundhandlers like GlobeGround and Swissport start out far above N7.

I have been told N7 has good flight benefits, I would rather get paid more and have a roof over my head !
 
N628AU
Posts: 355
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RE: National Airlines - Important Updated News

Wed Sep 04, 2002 3:05 pm

The below cost argument does not fly. Since deregulation, the major airlines have actually lost more than they have ever made. Everyone is losing money now, save Southwest. Therefore, everyone always has and currently is operating below cost. Air travel is a oligopoly, realtively few competitors offering fairly similiar service. This means consumers are extremely price sensitive. If one carrier cuts fares, the others must match to avoid seeing a severe shift in traffic to the lower fare carrier. One carrier cannot unilateraly raise fares, however, as the same shift will occur, only with more carriers absorbing just one carrier's traffic.

If deregulation had never come to the industry, we would all be paying much more than we do now, and this topic would never come up, as there would be no low fare carriers. September 11th moved up a problem the whole industry was going to face eventually, however the attacks coupled with a slowed economy made it that much worse. Who can adapt to the new enironment will survive and thrive, those who do not adapt will go the way of Pan Am, Eastern, and Braniff.

N747-437B, I hope you are not in the airline industry, as those of us that are never wish one of our fellow airline employees to lose their jobs. Remember, there is good and bad karma.