TOP 100 TRANSPORTATION AND LOGISTICS SITES
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| Sonic Auto: Possible Bankruptcy Tyler Durden submits: The Charlotte Business Journal reports that Sonic Automotive's days may be numbered. On late Tuesday, one of the largest auto retailers in the country with 169 franchises and 34 collision-repair centers, in addition to announcing a whopping Q4 $17.10 loss per share, the company stated "it risks defaulting on its debt this year and may not be able to avoid a bankruptcy filing to reorganize its operations." The company, facing $1.5 billion in debt maturities between May 2009 and November 2010, has wisely followed in Idearc's footsteps and has retained Bill and Thane's Moelis Adventure "as financial adviser to assist it in evaluating alternatives to enhance liquidity and address its debt maturities." The company already would be in default on at least a part of its debt, but it obtained a last-minute agreement Tuesday with Bank of America Corp. (NYSE:BAC).Complete Story » seekingalpha.com |
Quick Thoughts on Toyota's Recent Profitability Issues Markham Lee submits:Some quick thoughts on Toyota and their recent profitability issues: Toyota's profitability issues seem to be a classic case of "money hiding a multitude of sins", as their success caused them to abandon some of the company's key values with respect to efficiency, keeping things simple, etc. A WSJ article I blogged about a few months ago covered some of these issues, especially with regards to various aspects of the manufacturing process that were really instances of "engineers at play", more so than adding value and efficiency. All of this leads me to believe that the economic downturn will actually benefit Toyota in the long-run, as it's forcing them to confront various internal issues before they become even bigger problems down the road.Complete Story » seekingalpha.com |
British Airways Cuts Capex While Shareholders Hope for Lower Oil Michael Young submits:British Airways (BAIRY.PK) was reviewed just two weeks ago at a share price of 136.26p. Since then the firm has released June 2009 data (using June 2008 as a benchmark), updated the market on route changes and provided a business update. The prior reported highlighted the company’s “no green shoots” pessimism toward the market. The latest update advised:A 1.7% reduction in passenger capacity measured in available seat kilometres.A 3.8% fall in traffic measured in passenger revenue per kilometre.The passenger load factor also fell in June 09, relative to June 08, to 79.6%.Premium traffic has fallen sharply by 14.9%, year-on-year. Non premium traffic is 1.3% weaker.Cargo, measured by cargo tonne kilometres is 9.8% lower.Short haul routes from Gatwick to Barcelona, Madrid, Malta, Alicante, Krakow and Palma are to be suspended with the loss partly compensated via extra Caribbean flights.The update also confirmed three Boeing 757’s are to be grounded in summer 2010 and a few months later a further three 747’s will also be moth-balled. The delivery timetable for BA’s first six A380 Airbus aircraft has been delayed by five months. The anticipated arrival of six further A380’s have been delayed by around two years. Interestingly, BA suggests 7,000 staff have volunteered for cost reduction schemes which may lead to savings of £10m.Complete Story » seekingalpha.com |
Post Office Study: EV Economics Depend on Smart-Grid Revenue John Petersen submits:On August 28th, the Office of the Inspector General of the U.S. Postal Service published the results of a feasibility study titled, "Electrification of Delivery Vehicles." While the feasibility study reaches a foregone conclusion and recommends the purchase of a 3,000 unit demonstration fleet, I was surprised by the high level of Federal subsidies the Inspector General thought necessary to bring EVs within Postal Service capital investment policies. I was even more surprised by the conclusion that the tipping point in the economic analysis was revenue from ancillary vehicle to grid, or V2G, services. The Postal Service operates a fleet of 219,000 vehicles, including 146,000 delivery vehicles. The feasibility study focused on the long-life vehicles, or LLVs, that have been a part of the American landscape since the late 80's.Complete Story » seekingalpha.com |
Airlines: Some Costs They Can't - And Shouldn't - Cut Robert Herbst submits:Today, like most every day, just over 44,000 of the world's most experienced airline pilots employed by the 9 largest airlines in the United States will accept full responsibility for over 1.5 million lives sitting on the other side of their locked cockpit doors. Over the next 24 hours, these pilots will make over 13,500 take-offs literally around the world. Through every imaginable type of weather, they will be in command of over 36,000 hours of flight time. And, if today is like most days, you will never hear or read about even one of those flights.There is a perception that salaries are an important key to discretionary cost-cutting by the airlines. Charts below attempt to put that information in perspective as regards pilots. So what does it really take to be a commercial pilot? First, similar to a doctor taking years to get qualified in the operating room, there are no 'entry level' pilot jobs at the major airlines. Before being hired by a major airline a commercial pilot will likely have a college degree and either been trained as a pilot in the military or have spent several years acquiring thousands of flight hours experience on smaller aircraft. Fully depending on the airline’s growth, it could take as many as 20+ years to move from a co-pilot to captain. Airline pilot wages, benefits and working schedules are based on company seniority. If a pilot leaves one airline he/she will start at the bottom of the next airline’s seniority list as a new hire. Once hired by a major airline, regardless of prior experience, a pilot goes through several weeks of training and testing before being qualified on that airline’s specific aircraft operations. Every time he or she moves to a different type of aircraft or moves from co-pilot to captain he will again require more weeks of training and testing. Pilots have to pass a medical check every six months with an annual EKG required as they get older. Due to very stringent medical requirements, approximately 15% of airline pilots are forced to retire before they reach their mandatory retirement age. The FAA has strict limits on the maximum number of hours pilots are allowed to fly: The maximums are 1,000 in a year, 100 in a month and 30-32 in 7 days (international flight limits are slightly higher than domestic). In order to actually get an hour of flight time, depending on your seniority and the airline’s schedule, you can expect to be away from your base from two to four times actual flight hours. For the most part, a pilot only gets paid when the aircraft is moving. (Note: Pilots do not get premium pay for working holidays or weekends.) What is a pilot worth?Actually the important question should be: In the future, is the job going to be worth it for those individuals you want and expect to be responsible for so much? Since 9/11 and the bankruptcy or reorganization of every legacy airline, pilot hourly pay rates have been reduced to what they were almost 20 years ago. In addition, work rule changes force pilots to work more and longer days than they ever have. Pilots from United (UAL), Delta (DAL), Northwest (now merged with Delta) and USAir (LCC) all lost significant amounts of their pensions as those airlines went through bankruptcy after 9/11. Recognizing the above, how much of the average passenger airline ticket fare is now used to pay pilots to accept the responsibility they do? Not very much! Tables below use industry data to calculate the average 'cockpit' wage cost for two pilots per hour of flight for the average passenger fare. Data considers reported passenger revenue kept by the airline and does not include taxes and airport fees. (USAir data includes America West pro forma. Delta and Northwest merged in October 2008. Aircraft movement is considered flight time for this report. ) For year 2008 the average cockpit wage cost per average passenger fare per hour of flight was $3.73. See figure 1 for specific airlines. Figure 1 Since 9/11, United, Delta, Northwest and USAir filed bankruptcy. American (AMR) and Continental (CAL) reorganized outside of bankruptcy in 2003. In the past seven years, while inflation increased by 20%, the average hourly cockpit wage cost for the average passenger fare dropped by 29%. See figure 2 for the year over change since year 2002. Figure 2 When comparing year 2008 with 2002, Southwest (LUV) and JetBlue (JBLU) were the only two airlines that had their passenger fare ratio of cockpit wage costs increase. (In 2002, both of these airlines had the lowest fare ratios in the industry.) In figure 3 you can see how the average cockpit wage cost ratio of the average passenger fare per hour of flight changed for each selected airline since year 2002. Figure 3 As you can see, on average, the coffee you purchased in the terminal before your flight cost more than what both pilots will earn from your passenger fare for each hour of flight they accept responsibility for your safety.Whether it is in the operating room or an airline cockpit, if you want the “best” individuals there, you will have to provide the incentives to get them first. The bottom line questions are: In the future, who do you want replacing these aging and very experienced veteran pilots? Is it worth a few dollars more to attract the “right stuff” to be responsible for such an important job? Data source: SEC filings and BTS reports Disclosure: At the time of writing, the author and his family hold stock and derivative positions in AMR.Complete Story » seekingalpha.com |