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Reading Between the Numbers * Maintaining Airspeed * Help is Here
Reading Between the Numbers
Q. Is there anything important to be learned from the first quarter
financial results?
A. As many ALPC readers plan their career goals, some first quarter results may indicate some very interesting trends
going into the future. The news was not all positive, but many industry participants (you and I) and investors have a lifeline to grasp on to.
The quarter was characterized by historically high fuel prices. I am not sure if there was ever a quarter where real fuel costs were higher for airlines as a per
centage of available seat miles, but actual prices paid per gallon are unmatched.
Several more airlines reported that fuel costs are now their single biggest expense, eclipsing labor costs.
At the same time, strong demand and diminished capacity allowed airlines to pass on much of the increased fuel costs to customers without experiencing a significant drop in demand for seats. This resulted in near-record revenues and strong load factors (percentages of available seat miles filled with revenue passengers). It is important to note that, regardless of rhetoric to the contrary, the U.S. economy is extremely strong and, consequently, demand for air travel is also strong.
Among the legacy airlines, Continental continued its streak of performing at the top. It set the standard for customer service and loyalty, revenue management, fleet deployment, investor confidence and employee morale. The airline is aided by a young, efficient fleet, the strong international mix others are attempting to emulate, hubs in the largest air market in the world and in America’s fourth largest city, and minimal exposure to competition from the growing low cost carriers.
Results among the low cost carriers raised some concerns. JetBlue, America’s most innovative airline, experienced another losing quarter. This comes at an unfavorable time for the company, as it had hoped to finance its small jet expansion partly through its historically profitable A320 operations. Now, the new venture will have to contribute positively to the bottom line right away. Southwest Airlines reported modest profits, but warns that cost containment is becoming increasingly important, and acknowledges that it has brought up average fares to historical heights, exceeding $100 each way for the first time in history. The company is choosing new cities and routes with more care than ever before.
AirTran, while essentially breaking even, may be growing into its 300-pound gorilla suit. Revenues outpaced strong growth, its credit is strong, its fleet new and flexible, and many hundreds of market pairs are available for eventual profitable hub and point-to-point expansion. New-hires are told to expect upgrade in two years, and, with a collective bargaining agreement nearly in place, pilot compensation will compare favorably to legacy carriers flying a similar aircraft type.
Overall, though, low cost carriers face significant challenges from the legacy airlines. Taking debt service out of the equation, legacy airlines’ costs are equivalent to their low cost counterparts. While legacy airlines will likely steer clear of traditional low cost airlines’ low-yield province, successful capture of sufficient revenue in the legacy airlines’ strongholds may prove difficult.
The most significant information came from America West…er, US Airways. First, the purchase of the original US Airways by America West came as a surprise to most industry observers. Once announced, the plan was universally panned. Airline executives dismissed the new airline’s significance as simply a combination of two smaller, weak carriers that would result in the creation of one big, weak carrier.
Employees at America West became suspicious and defensive, leading to speculation that the merge would be characterized by employee discontent. The timeline for combining operations thereby reducing overhead duplicity was stretched to three or more years. During the fourth quarter, management acknowledged that savings and revenue enhancements due to the takeover had not yet been realized. Yet, the combined company was marginally profitable in the first quarter, well ahead of industry expectations.
US Airways may well foretell the future for legacy carriers. A higher percentage of the airline’s flights directly compete Southwest Airlines than any other—by far. The company’s dedication to cost control has allowed it to compete effectively in this environment for years as America West, and is now complimented by the extremely lean remnants of US Airways, allowing it to offer point-to-point service between selected cities, and anywhere-to-anywhere full service. Make no mistake, the airline is many hundreds of furlough recalls away from hiring pilots off the street to staff the combined airline, but, for thousands of legacy US Airways pilots and employees who remain on the property, celebration for obtaining a degree of stability after so much time and so many sacrifices is warranted.
In its first post-bankruptcy quarter, United Airlines’ results were somewhat disappointing. The company’s cash flow is strong, but further cost cutting is planned to offset losses forecast for the coming months. Results for Delta and Northwest are difficult to decipher, as both companies are posting extraordinary balance sheet gains and losses as they restructure. Both companies lag the industry in revenue gains, but are making significant cost improvements. Assuming labor contracts are approved by employees and the courts, neither company appears in jeopardy of liquidation in the short term. Both acknowledge that exiting bankruptcy is the immediate goal, and that consolidation of the industry will likely find them merger partners with each other or with other competitors.
As pilots continuing to seek long-term careers, stability in the industry is what we seek. In that vein, results are somewhat encouraging. Business models for the future are taking shape, roles of low cost carriers and legacy carriers are being defined, and capacity has dropped to a level where airlines are able to adjust prices to reflect cost realities, even dynamic ones like fuel.
Q. I recently received a rejection letter after an interview that I thought went fairly well. I’m frustrated, sad, angry, and I don’t have any motivation. Will this end?
A. “There are no secrets to success. It is the result of preparation, hard work, and learning from failure.”—General Colin Powell, as Chairman of the Joint Chiefs of Staff
Surely, a psychologist somewhere has based a thesis upon the mentality of those who await word on a job interview. That time between the interview and interview result is simply profound. Everyone can answer where they were during life-altering events in their lives. Everyone knows where they were when they proposed/ were proposed to (exception: Elizabeth Taylor; reason: volume); where they were married (exception: Brittany Spears; reason: inebriation); births of their children (exception: Evander Holyfield; reason: complexity); and serious political events.
Ranking high on this list for many is receiving word on a job. I remember waiting by the telephone hours on end, willing it to ring, then plodding down to the mailbox each day hoping for free credit offers and letters from Ed McMahon, but nothing with an airline emblem embossed on the envelope. I wasn’t always so fortunate. Once, a rejection letter from a major airline literally beat me home from the interview. I was rejected by proxy, as my wife read the dreaded words on the telephone—probably at $.30 per minute in that era.
My current “dream job” started out more like a nightmare. I interviewed at the beginning of a tidal wave of hiring. Within two weeks of the announcement of plans to interview pilot candidates for the first time in six years, I was navigating my way through 11 hours worth of testing. Within a day or two, I’d heard from fellow interviewees who were tentatively offered jobs. A couple of weeks later, there were more, plus I started hearing from people who were rejected. A month later, I knew of dozens of pilots who interviewed after I did, but were already in class or had been notified of rejection. More than two months after my original interview, I received a “Letter of No Encouragement.” Nice, huh?
I have often said that the pilot profession requires us to cultivate an incredibly diverse set of skills. Our competency ranges from customer service and interaction to understanding the inner workings of sophisticated machines sufficiently to manipulate them safely and efficiently. Somewhere in the middle is the requirement to have the intestinal fortitude of a Kirby Vacuum door-to-door salesperson when it comes to dealing with rejection. When the next door is opened for you after a rejection, you need to be ready to share the many positive aspects of your product so that the consumer will be glad to buy it—at any price.
If you need a day to reflect and be sad, take it. Then, move on. There is no room for pity parties among successful people. You have more important things to do. Your current job may require your concentration and skill, you may have significant others at home who rely on your inner strength, and you continue to have a budding career that you need to feed, maintain, and grow.
An important step in dealing with your rejection, inevitable for most pilots at some time in their careers, started long before your interview. While very recent history may have been dedicated to a specific company to prepare for the advanced stages of the hiring process, you surely have been pursuing a variety of other career-enhancing prospects. In fact, you have probably neglected some during this period, so immerse yourself in them.
Refocus on these opportunities. Sit down, organize or reorganize. Put together a plan for each company in your tickle file. Peruse the current AIR, Inc. Newsletter to identify which companies are accepting résumés, then send letters, application updates and, when possible, use the telephone. This was your life before your interview, and it resulted in a good opportunity; continuing will create another.
Once a little time has passed since the interview, revisiting the event may be important for several reasons. First, you need to ensure that you maintain a healthy perspective on the event. Remember, if one airline was interested it is likely others will be too. At some point during Los Angeles Dodgers first baseman Steve Sax’s first year, he made a bad throw to first base. This was an unusual occurrence, as the young fielder had played the position for many years at a very high level, and was known to have a very consistent throwing arm. But, something happened to his confidence that day. For the next two years, every ball hit to him was an adventure. Two decades later, veteran infielder Chuck Knoblock experienced the same phenomenon. He was never to play his position again. The point is that these professionals allowed an anomalous event to diminish their proven capabilities. Do not let this happen to you. If reflecting on the interview continues to bring on intense emotion, makes you immediately fatigued, or if you are unable to think about the event at all, you may not have dealt with the rejection properly or completely.
Facing the adversity of rejection will help you grow. Realizing that it happens will allow you to accept criticisms of others and yourself, which are both realities of societal existence. Whenever you act as a captain, spouse, parent, or employee, people will react in the form of expressing criticism—good and bad. Learning to deal with this reality will help you achieve as much as you possibly can, because you will not be averse to risk of failure.
Becoming comfortable with the notion that you are capable of failing will allow you to move on to the next step of preventing rejection in the future. You need to freely and thoroughly analyze your interview performance. Start with the clothes you wore, the smile you offered the company greeter, the handshake shared with the human resources representative, the pause after listening to each question, the amount of time you allotted for each answer, your posture during the interview and the personal touches added to your thank-you card. There could be many reasons you were not selected for the particular job. It is your task to determine what most likely derailed your effort.
If the simulator ride could have gone better, consider contracting for additional practice at AIR, Inc. or elsewhere. At the very least, call an AIR, Inc. counselor and ask him or her about the specific events of the interview. At some point, consider a face-to-face preparation at AIR, Inc. You may be signing up for a little more criticism in the very short term, but the interview track record for those who have participated in this unique service is astounding.Finally, do not give up. Many airlines have historically looked favorably upon those who have been rejected but continue to express interest. In my case, I was juggling offers from other major airlines when my dream job airline called back to offer me the job. It cost me 800 seniority numbers and 10 months worth of résumés, but the job was finally mine. No, I will not forget where I was the moment I heard that news. Neither will you. (
AIR, Inc. members are encouraged to contact our airline pilot career counselors before making a career decision in the current airline climate. While all decisions will always remain yours, our counselors expertise could provide invaluable advice or suggestions that you may not have initially considered.
Please have your AIR, Inc. membership number and counseling code handy when calling our counselors toll-free, 9 a.m. to 5 p.m. EST, Monday to Friday at (888) 547-4568, or when sending an e-mail to counsel@airapps.com.
“Ask the Counselors” is a regular feature of Airline Pilot Careers. Address letters to Ask the Counselors, Airline Pilot Careers, 3800 Camp Creek Pkwy, Ste 18-100, Atlanta, GA 30331-6228; e-mail: editor@ airapps.com; or fax them to 1-800-AIR-FAXS(247-3297). Letters may be edited for space and clarity.
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