The CTA Doomsday Plan

[southsider2k5]

Earlier this year, Northwest exited bankruptcy.

 

From it's pilots, it extracted a 15 percent pay cut, followed by a further 24 percent pay cut.

 

Upon exiting bankruptcy, it awarded its CEO compensation totalling $26.6 million. (That's a little over 4% of the total annual concessions that the pilots over the whole airline made)

 

If you were being asked to take a cut in pay to save the company, how would you feel if every 20th dollar you gave up went straight into the wallet of the guy who threatened to take your job away from you if you didn't take a pay cut?

 

If it wasn't "good business," it'd feel a lot like extortion to me.

 

Would you feel better as an employee in the unemployment line as the company went through a court-ordered liquidation sale?

[NorthSideSox72]

From the Trib:

Well good, but we've seen this limp-along scenario before, and it does nothing to make things safer or move the system forward. Something long term is needed as well.

 

[SoxAce]

I seriously hate this. And.. I'll leave my "stellar" post at that.

[Texsox]

Would you feel better as an employee in the unemployment line as the company went through a court-ordered liquidation sale?

 

Would you feel better as an employee who took a slightly smaller pay cut and watched as the CEO also took a cut and not a raise? I think we all would.

 

And I'll differentiate between a CEO and an owner.

[Gregory Pratt]

It's a bluff. Always has been.

[Texsox]

Well, if you want top talent to stay then you have to pay them. Why would they want to stay on a sinking ship when they can quit and join a company that is actually doing well?

 

 

Or, why would you want the folks who put the hole in the sinking ship to begin with, to stay, and give them a nice bonus? They should clean up their won mess and not expect a pat on the ass when they do.

 

And who is the customer most familiar with? Who does the customers have the most contact with? The very employees you are asking to take a cut while you are expecting a bonus.

[NorthSideSox72]

It's a bluff. Always has been.

A bluff means they have no intention of carrying it out. I'd bet that if this hadn't happened, the CTA would have done it. It makes perfect sense to them to do so. So the term bluff isn't really accurate.

 

If one thinks the CTA is capable or reparing its own problems, then maybe a more accurate term would be blackmail. Because, again, I think they had every intention of following through if no funding came out.

 

[Gregory Pratt]

I've never really taken them serious with regard to this. They won't carry it out because they know it's suicide and they know that the state will give them something eventually. Blackmail might be a better term. Whatever you call it, it's not what they'd like you to think.

 

Oh, and I found out that no, contrary to knolls' assertion, they don't get lifetime health insurance for everyone in their family.

 

Sorry. It was a good criticism while it lasted.

 

By the way, CTA is crooked and incompetent. So's the state. This is just a grand clusterf*** of small visions and terrible governance.

[Texsox]

Public transportation in this country has never been a prioroty, never been world class, never been respected.

[NorthSideSox72]

Public transportation in this country has never been a prioroty, never been world class, never been respected.

And yet, I haven't heard a single of the Prez candidates in either party even mention it. In fact, they speak very little about energy independence, which is linked in a big way to an effective transit system. Its just not even being discussed.

 

[Texsox]

And yet, I haven't heard a single of the Prez candidates in either party even mention it. In fact, they speak very little about energy independence, which is linked in a big way to an effective transit system. Its just not even being discussed.

 

No respect I tell you, no respect.

[Gregory Pratt]

Why would they discuss it? Who the hell wants to hear about that?

[BobDylan]

Public transportation in this country has never been a prioroty, never been world class, never been respected.

 

Which is a damn shame.

[mr_genius]

So you would get into a pissing contest with Rich Daley? LMAO.

 

 

huh? if i was a state rep from down state i sure as hell would. LMAO

 

edit: unless i was bribed with some really good Sox tickets. then i wouldn't

Edited September 12, 2007 by mr_genius

[Rex Kickass]

Would you feel better as an employee in the unemployment line as the company went through a court-ordered liquidation sale?

 

No but I would feel better if I worked at Delta, where most of the emergence bonus went to rank and file employees. Of course Delta, which also asked its flight attendants and pilots and mechanics to take pay cuts didn't take an adversarial position with its labor. Perhaps because its leadership realized that its crew doing the day to day operations were as vital to the airline's success as the CEO or someone on the board was. In fact, relations were warm enough that Labor stood up and fought with Delta against a hostile takeover bid by US Airways.

 

In the case of this bankruptcy, Delta worked with its labor unions to save the airline and the organization generally has a rather warm relationship with its unions.

 

Now Northwest is actually cutting 10% of its scheduled flights on a monthly basis because they're having a hard time finding enough pilots to fly their planes.

 

My point is organized labor is an easy scapegoat for why someone goes into bankruptcy. A bad relationship with labor organizations has a lot to do with poor management as well. And most of the CEO's who ran these airlines out of bankruptcy often helped put them in the crapper to begin with.

[NorthSideSox72]

huh? if i was a state rep from down state i sure as hell would. LMAO

And you'd get nowhere. But, as a downstate rep, I suppose you would be expected to put up the good fight anyway.

 

[Rex Kickass]

Why would they discuss it? Who the hell wants to hear about that?

Lots of people in metropolitan areas who are sick of 90 minute commutes that should only take 30 minutes?

[mr_genius]

And you'd get nowhere. But, as a downstate rep, I suppose you would be expected to put up the good fight anyway.

 

 

i think it's a one of the main reasons Blago is threatening a veto, he thinks he needs some support other than just Chicago.

Edited September 12, 2007 by mr_genius

[Balta1701]

My point is organized labor is an easy scapegoat for why someone goes into bankruptcy. A bad relationship with labor organizations has a lot to do with poor management as well. And most of the CEO's who ran these airlines out of bankruptcy often helped put them in the crapper to begin with.

Here's the other point I'd add on to this and to what I said earlier...

 

What forces are there that you can name that would make the average American's wage go down? Things like a poor economy, crashes, issues at a particular company, rising production costs, competition from overseas, etc. In general, you hear more about wage and benefit cuts whenever some business or some sector of the economy struggles for whatever reason. Hell, just the movement of Walmart in an area was enough to force all the grocery stores out here to make their employees take a 1/3 pay cut or so.

 

Now, what forces can you name, or what market conditions can you name that would make salaries in upper management go down? Thus far, the arguments here have been that you have to keep paying CEO's, especially in tough times, because you have to retain top talent. But as far as I can tell, when things are going well in a company, you also want to pay CEO's well to hold onto them then because they're doing a good job. So, I ask...what force out there exists that is actually counterbalancing the drive to increase CEO wages? What market situation could exist that would push them downwards?

[Gregory Pratt]

Lots of people in metropolitan areas who are sick of 90 minute commutes that should only take 30 minutes?

 

You don't say!

 

I was affirming the point I pretended to belittle!

 

Who cares about public transportation when Michael Vick is out there?

[mr_genius]

Who cares about public transportation when Michael Vick is out there?

 

 

"don't forget about me. i need news coverage too"

 

 

 

 

[Gregory Pratt]

"don't forget about me. i need news coverage too"

 

 

Well, that's actually not THAT bad an example, but I'm not going to have that discussion with you.

[southsider2k5]

Would you feel better as an employee who took a slightly smaller pay cut and watched as the CEO also took a cut and not a raise? I think we all would.

 

And I'll differentiate between a CEO and an owner.

 

If you had the skills and experience to be a CEO, would you take a pay CUT to go into a much more difficult, intense, and thankless job, where you have very little control over your finances, yet have to guide a major corporation through bankruptcy? Or would you take the other job that paid more, and offered less headaches and more control?

 

Think about this for a second. We are talking about post 9-11 airlines. Many of these companies were left for dead, for many of the reasons that Rex outlined. I don't think you guys realize that those mitigating circumstances make it harder to get someone to lead you through bankruptcy, not easier. By harder to find someone, I mean you are going to have to pay them a crapload more money to enter into a situation that might not even exsist a short time into the future. Who in their right mind would take that job without the opportunity of somekind of significant reward?

 

I have yet to hear one person say that they would take the CEO job with the airline teetering on the verge of liquidation instead of the nice safe job that paid more money. Everyone wants to pick apart details and come up with slightly different scenarios while missing the big point. You are not going to find a CEO to work in that situation for the same price as they could get a much better job for. Period. Its naive to think otherwise.

[Texsox]

If you had the skills and experience to be a pilot, mechanic, or accountant, would you take a pay CUT to go into a much more difficult, intense, and thankless job, where you have very little control over your finances, yet have to trust the CEO can guide a major corporation through bankruptcy? Or would you take the other job that paid more, and offered less headaches and more control? What if you knew your pay cut was permenent, while those above you would see increases?

 

Think about this for a second. We are talking about post 9-11 airlines. Many of these companies were left for dead, for many of the reasons that Rex outlined. I don't think you guys realize that those mitigating circumstances make it harder to get someone to lead you through bankruptcy, not easier. By harder to find someone, I mean you are going to have to pay them a crapload more money to enter into a situation that might not even exsist a short time into the future. Who in their right mind would take that job without the opportunity of somekind of significant reward?

 

I have yet to hear one person say that they would take a job with the airline teetering on the verge of liquidation instead of the nice safe job that paid more money. Everyone wants to pick apart details and come up with slightly different scenarios while missing the big point. You are not going to find someone to work in that situation for the same price as they could get a much better job for. Period. Its naive to think otherwise.

 

Fixed it for you.

[Rex Kickass]

If you had the skills and experience to be a CEO, would you take a pay CUT to go into a much more difficult, intense, and thankless job, where you have very little control over your finances, yet have to guide a major corporation through bankruptcy? Or would you take the other job that paid more, and offered less headaches and more control?

 

Think about this for a second. We are talking about post 9-11 airlines. Many of these companies were left for dead, for many of the reasons that Rex outlined. I don't think you guys realize that those mitigating circumstances make it harder to get someone to lead you through bankruptcy, not easier. By harder to find someone, I mean you are going to have to pay them a crapload more money to enter into a situation that might not even exsist a short time into the future. Who in their right mind would take that job without the opportunity of somekind of significant reward?

 

I have yet to hear one person say that they would take the CEO job with the airline teetering on the verge of liquidation instead of the nice safe job that paid more money. Everyone wants to pick apart details and come up with slightly different scenarios while missing the big point. You are not going to find a CEO to work in that situation for the same price as they could get a much better job for. Period. Its naive to think otherwise.

 

Funny you should mention that. At United, the CEO did take a paycut of about 15% to show he was serious about turning the airline around. Symbolic really, because it was about 100K a year savings to the company - but upon emergence, the CEO received a 300K bonus - equivalent to a raise of 30% for that year and 1% of United's total stock. In fact about 150 million of the 1.8 billion dollar market cap on UAL went to 400 board members and managers. The workers, who all took paycuts of 25-40 percent? They got nothing.