700 jobs threatened at Brussels Airlines?

[B.Inventive]

and mr. Pocahontas the way YOU are playing it, by 2015 we will all be flying for 10 peanuts a month, just to make sure we have a job, yet it will be YOU leaving the company for other opportunities... don't get me wrong I'm not pro-dumping people, but there should be a limit to everything, also to our combined effort at cost saving.
Also, most of the affected people are NOT the young ones, rather the old expensive ones... believe me if the company had their way, the crew population would be seriously younger in 2013....

[teddybAIR]

Feel free to adjust the hypothesis in the underlying baby proof business case to better reflect the situation at Brussels Airlines. I myself am not familiar with the company, but the levers remain the same though.

Hypothesis:
Average Gross Monthly Salary: 5.000€
Amount of affected flight crew: 500 fte
Gross Salary Haircut: 10%
Paychecks per year: 13,92

Question
How much P&L impact will the haircut have

Solution
5.000€ x 500 x 10% x 13,92 = 3,48 million € per savings year. Now, that's not gonna save Brussels Airlines if you ask me. So feel free to play with the above to better reflect the real situation, but I am quite sceptical on the effectiveness of the proposed measure by management.

[flightlover]

Feel free to adjust the hypothesis in the underlying baby proof business case to better reflect the situation at Brussels Airlines. I myself am not familiar with the company, but the levers remain the same though.

Hypothesis:
Average Gross Monthly Salary: 5.000€
Amount of affected flight crew: 500 fte
Gross Salary Haircut: 10%
Paychecks per year: 13,92

Question
How much P&L impact will the haircut have

Solution
5.000€ x 500 x 10% x 13,92 = 3,48 million € per savings year. Now, that's not gonna save Brussels Airlines if you ask me. So feel free to play with the above to better reflect the real situation, but I am quite sceptical on the effectiveness of the proposed measure by management.

Don't forget to almost double that amount when adding savings on social taxes.

[teddybAIR]

double the gross salary?!

[shockcooling]

...
Solution
5.000€ x 500 x 10% x 13,92 = 3,48 million € per savings year. Now, that's not gonna save Brussels Airlines if you ask me...

The loss for 2012 is estimated to be 110 million euro, how do you think 3,5 million would save the airline?

Why not take your example a bit further, why not give all employees a new salary haircut of 10%. It would mean your easy calculation might even double

[RoMax]

The loss for 2012 is estimated to be 110 million euro, how do you think 3,5 million would save the airline?

Where did you hear that number? The last I heard from SN itself was around or slightly less than the loss of 2011. Btw, doesn't he say he doesn't believe 3,5 million is going to save SN? Tough, your point is still valid.

But of course, saving money is not that you cut 80 million on one thing/department. You have to slice pieces from all costs made by the airline/departments.

[Flanker]

SN's problem is not costs, but revenue.
In today's environment of high competition and low yields, the only difference offer you can make is not by trying to offer the same service at a lower cost, but to offer a much better service at the same cost.

I'm not sure that that is what Lufthansa had in mind when they had those chairs installed fleet-wide.

When you take care of the people, the people will take care of you.

Even with social security savings, like Teddybair said, the savings that SN will achieve is not worth all the malaise that it's going to create.
Pilots have a tough life, having to wake up at 3 in the morning to go to work, come back home after midnight. Being exposed to all that UV light and cosmic radiation that wears on your body.
However, all the small extra's they do, like planning a good descent to save fuel, making safety decisions and so on, easily makes up for millions a year. It's part of their job, but it's also a job where the salary doesn't measure up to the responsibility that one carries.

Let's be real here for a moment, when Gustin who's paid more than any pilot makes a wrong move with his hand, the most damage he can do is to drop a pen or to accidentally hit someone on the face. If a pilot does aa wrong move with his hand at a crucial moment on a gusty approach to BRU, the worst he can do is a crater in Steenokkerzeel and hundreds of dead people. Even worse is if he survives, he will spend the rest of his life between a prison cell and the court rooms.

To take 10% away from such people is more than just a cost-cutting, it's very sour. Sure, CEO's have their responsibilities too, but cost-cutting is the easy road.

[flightlover]

Feel free to adjust the hypothesis in the underlying baby proof business case to better reflect the situation at Brussels Airlines. I myself am not familiar with the company, but the levers remain the same though.

Hypothesis:
Average Gross Monthly Salary: 5.000€
Amount of affected flight crew: 500 fte
Gross Salary Haircut: 10%
Paychecks per year: 13,92

Question
How much P&L impact will the haircut have

Solution
5.000€ x 500 x 10% x 13,92 = 3,48 million € per savings year. Now, that's not gonna save Brussels Airlines if you ask me. So feel free to play with the above to better reflect the real situation, but I am quite sceptical on the effectiveness of the proposed measure by management.

Don't forget to almost double that amount when adding savings on social taxes.

double the gross salary?!

In Belgium wages are in the books for more then only gross salary. There are also employer contributions to be payed. These are calculated on x% of the gross salary. So when the gross salary goes down, these taxes do too.

[fcw]

Don't forget to almost double that amount when adding savings on social taxes.

double the gross salary?!

In Belgium wages are in the books for more then only gross salary. There are also employer contributions to be payed. These are calculated on x% of the gross salary. So when the gross salary goes down, these taxes do too.

teddybair is correct: employers social security is 24,77%, far from double the salary...
And the governement will (probably illegally) subsidise BruAir by dropping part of these 24,77%.

[Flanker]

Well, let's put things as they are. As an employer, I can tell you for sure that the employer social security contributions is actually more like 32-34%.
The exact figures from the horse's mouth: http://socialsecurity.fgov.be/nl/over-d ... nemers.htm

On top of the 24,77%, you have the contributions mentioned below the grid, that apply differently depending on the size of the company. On top of that, don't forget that Securex, Partena & co also charge a percentage for taking care of the tax calculations.

Basically, this means that social security for SN is around 35%.

So basically, if they cut the salary for 10%, they save 10% + 10%x35% = 13.5%.
However 13.5% is definitely not 20% mentionned here before as double the savings.

And even if it were 20%, this is only on the pilot salaries, which is only 20-25% of the total staff count and perhaps 30-35% of total payroll.

So the cost savings would be of the order of 35% x 13.5% or barely 4.5% of total payroll.
That is surely, definitely, certainly, without any doubt, going to save the company.


The mistake that most businesses do in bad times, is to get obsessed with cutting costs, instead of actually driving the revenue.

When times are bad, the consumer gets more selective. That doesn't mean that they stop consuming. People still need to eat, people still need to travel, people still need to be entertained.
Sure SN needs to cut loss-making routes. But a good business man knows what it means to win market share in bad times. You can decide to lose money and prepare for better times or lose money and start charging the remaining customers whatever you can charge them, so you dig yourself in an even deeper hole.

If they get 100 millions, the only option is to get rid of all the Avro's and replace them by Q400 Nextgens. Bombardier is desperate and banks are lending for next to nothing if you got a decent plan. Stop leasing the aircraft and buy the airplanes for once. Next, start going into KLM's market, BA's market, AF's market. By that, I don't mean that you should go to their hubs. The UK, France and The Netherlands have plenty of second tier cities that need a good connection.
Sure, some people won't like the Q400, but a flight is a temporary event. If SN can offer a better fare on the Q400, and more flight options, that's what the pax care the most about. Customers want flight options.

As a customer who has an important meeting at the destination at 10:30, would you prefer to have a flight option at
-7:00 and a second option at 9:00 at 240€ on Q400 OR
-8:30 with A319 at 300€

Also, why so many A319's?
The additional cost of operating the A320 is minimal, but it offers a very different revenue opportunity.
If they really need something as big as the A319, why don't they just take all A320's? What does it save except for one cabin crew member and 100kg of fuel? Is it really worth choosing the A319 over the A320 that offers 40 seats for next to nothing... Or is the A319 already too big for SN?

[Pocahontas]

Dear mrs. B.Inventive (tone you used as well for god knows why), I will not work for peanuts in a few years. In the current economic climate, employees of almost all sectors have to do some effort. Does that mean that everybody will be working for 10 peanuts in a few years from now? Let's put it this way; Are you willing to volunteer to get fired, so I can keep my present working conditions? Or is it all ok, as long as you won't get fired?
BTW who says I am mr.???

Cheers

[teddybAIR]

Just for clarification: I did not suggest anything with the above business case. I just wanted to provide a simple and pragmatic tool to simulate the impact of the haircut Brussels Airlines asks the flightcrew.

Moreover, I am not pretending to be sufficiently informed to provide the correct hypothesis, hence the invitation to challenge the numbers.

Best regards,
bAIR

[BrusselsAirlines]

You ask your employees to work for 85% in 2013. An agreement is in close range and the next day you announce that you want half of these people to work 100% on an 85% salary, starting with the first 6 months of 2013...

This mngmt simply does not seem to go for an agreement, it is becoming destructive.

What I mostly see is low morale and I have never seen any team winning on low morale. Unfortunately.

[papysn]

Hi,

I have the feeling that the management is not looking for any kind of agreement,
it is just as they want the climate to be so deleterious that people cannot handle the pressure anymore and go away without any kind of money....
There is indeed no more team or cy spirit in Brussels airlines already long ago...

Regards.

[RoMax]

Interesting post on the already agreed points to save money, but still some extra demands from the management remain unsolved.

http://aclvbairport.com/2012/11/brussel ... sd-pilots/

Quite interesting, on the topics they already agreed they'll save 10,9 million euro each year (structural savings, so they'll continue after 2014). Extra savings for 2013 and 2014 are agreed to the level of 8,8 million in 2013 and 6,5 million in 2014.

That means they'll save 19,7 million euro on the Flight Crew Costs in 2013 and 17,4 million in 2014 and 10,9 as from 2015. Total flight crew costs in 2011 were at 68,3 million euro.
But this is wat the unions and the management already agreed on, there are still some harsh topics remaining and I have the idea this isn't going to be solved in 1-2-3.

With or without the extra demands of the management, it seems they can indeed save quite some money on the pilots instead of what certain people try to say. Combining this with the savings in other departments (tough smaller as with the flight crew) I would say they can achieve quite some savings (and it's not like SN has to fill a yearly gap of half a billion) combined with the reduced loss making European network and the extra revenue on the long haul network. Tough still a VERY LONG way to go...

[Flanker]

That means they'll save 19,7 million euro on the Flight Crew Costs in 2013 and 17,4 million in 2014 and 10,9 as from 2015. Total flight crew costs in 2011 were at 68,3 million euro.
But this is wat the unions and the management already agreed on, there are still some harsh topics remaining and I have the idea this isn't going to be solved in 1-2-3.

With or without the extra demands of the management, it seems they can indeed save quite some money on the pilots instead of what certain people try to say.

You make it sound like those savings are made just like that.

If those are the figures, please make my stupid self understand.
I don't see how you can cut 68 million back to 48 million, a 29% saving, with a 10% salary decrease for all pilots.

Is the permanent salary cut now suddenly 15% iso 10%? If that would go through the pilots, I applaud them, because that's a serious cut, even in the name of saving their own jobs.

What's the extra saving and how is it achieved?

[RoMax]

If those are the figures, please make my stupid self understand.
I don't see how you can cut 68 million back to 48 million, a 29% saving, with a 10% salary decrease for all pilots.
What are those extra savings? Is the salary cut now suddenly 15% iso 10%?

I'm sorry, I'm just the messenger this time (and I also read the post with some critisism as it's written by a union), but the list of savings and how much it will save is given... Both for the structural measures and the temporary measures for the comming two years. Saving money is not just about a lower salary or increased productivity (or the two combined), there are other things that seem small but can offer huge cost reductions.

[Flanker]

Fair enough.

If the pilots are taking it, I'm all for it. Hard working, and proud to do their job, that's moving.
If Belgium has something to be proud of, these guys are it.

[sn26567]

I just read an article saying that there is a big shortage of pilots in the US. The profession has no longer the glamour it used to have, the salaries are lower and hence attract less young people. Furthermore the DOT and the FAA have made the examinations more difficult, thus compelling pilot students to work longer and spending more money for their studies. Compounding the problem, salaries are much more attractive abroad, especially and Asia, and many pilots having a few years of experience literally fly away to these exotic destinations.

I think that we are getting a similar situation in Belgium. If the salaries of the pilots are cut too much, we might see an exodus of the most experienced ones. It mights temporarily solve the over-capacity at Brussels Airlines, but when business will be improving, they might have difficulties finding new pilots.

Just a personal opinion...

P.S. In the same article I read that US pilots routinely retire at 65.

[airazurxtror]

Bad luck for the Brussels Airlines employees.
First, like all Belgian, they have to save Belgium from bankrupt (the Government is working to find new taxes and other cuts in revenues); then, in addition, they have to save Brussels Airlines (the management is working on assorted salary cuts).
Bad luck indeed !