unitholder wrote:Hi this is unitholder again.
To moreccplease - I agree you do need something, how it is paid may make all the difference read the following.
Just a question before I start in mattedfred's post what does SN? & MC? stand for being outside this industry I am unfamiliar
with the acronyms.
And to the mbav8r - to bad your handle didn't stand for master of business administration (mba) because you would be able to understand the following,
instead you will blindly walk to your union stewards ignorant tune.
To the paranoid union members I am not management, I am a private citizen who prior to you pilots voting for a strike mandate
was a unitholder in JAZ.UN period. My background is a private business owner in a low margin business similar to the airline industry.
Margins of 10 - 15% before indirect overhead costs. Where 80-90 hour weeks by the owners were not uncommon, but hard work and hope
have provided its rewards. I came to this forum to see the pilots perspective on their negoitiations and what they are asking for
for wage increases. If I gathered right from the posts and the "rumor mill" that the air mechanic must have heard it is a 5-5-5 over
three years. Which would have about an additional $ 17 MM impact on your bottom line for each year for a cummulative total of
$45MM after three years. The oil increase will probably have a $ 100 - 150 MM impact on your bottom line and so the question
remains can you pass all that increased costs to air canada and the customer or does the unit holders have to eat it. This pie
is very small.
Now back to your negotiations. I am just giving you a unitholders point of view. As we do not need to keep our money in JAZ.UN.
You are just one of a million places to park our cash. And we are not that rat you have on this post. (Speaking of subtle disregard)
Most of your unit holders are probably people like yourselves or the pension managers which are trying to maximize there return
to try and meet those crazy "defined benefit pension plan" expectations some short term thinking union contract negotiator
got for you pilots. If you think the unitholders are undeserving, then how is it in the same breathe you want to have a company
pay you good wages now, good benefits now, let you retire early and pay you for another 40 years till you die. There is not
a company or a government (speaking of Greece/Europe etc.) on this planet that can afford those costs. And a low margin competitive
industry like the airline industry hasn't done it and never will. You can write all the contracts you want if the economics aren't
their they just aren't their.
It is not about a wedge in your solidarity it is the cold hard economic facts, something I bet your shop steward doesn't even
understand. But just like the investors that fooled Bernad Madoff it will be the blind leading the blind and in the end those
poor saps which do not want to see the cold hard facts will say it is the gov't's fault. So they should subsidize this delusion.
As per JAZZ's finacial audits it started with a deem capital of $ 246 Million (MM) in 2005 it has earned up to Dec.31, 2009
$15MM ('06) + $14MM ('07) - ($10MM) ('08) + $93MM ('09). It has raised capital of 795MM ('07) and distributed $20MM('06) +
$ 107MM ('07) + $125MM ('08) + $103MM('09). So the current Equity in your company JAZZ is calculated as follows from 2005 to 2009.
Beg.RE + Capital Raised(C) +Income/-Loss(I/L) - Distributions(D) repeated by year:
$ 246 + 15(I)-20(D)+795(C)+14(I)-107(D)-10(L)+93(I)-103(D)+6(misc) => Ending Retained Earnings $ 804MM Dec 2009.
During that same time the stock of Jazz has gone from 8-10/unit down to 4.20 per unit - a drop in value of over 500MM where as
distribution where only $355MM. From an investment point of view the management and employees of Jazz have screwed the investors.
Also from an investor point of view this company started with $1 billion dollars and has earned $112MM over four years that is less
than 2.5% per year worse than a GIC over the same time frame. In addiion, that windfall gain in earnings for 2008 is not coming back.
Your company only made that because of the world financial crisis and the precipitous drop in the world oil price. Look at the income
statement yourself the only line item which changed was the fuel costs everything else for the most part stayed that same. Your union
piped pipers are going to complain that management paid off debt instead of giving it to the deserving pilots or invested in
another company down south. Your management probably did those things because debt is what kills a company when the economy goes south
- just ask the greek and spanish citizens. And they are probably investing south because your company just missed the angel of death
last year when air canada just about went bankrupt two times in a row. Those decision are long term decisions which hopefully will
save your long term careers. There is a reason accountants have a special note put in the financial statements when a company has
an economic dependence on one customer,because it goes against the tried and tested words of advice - DO NOT PUT YOUR EGGS IN ONE BASKET.
So your statements that the unitholders are sucking the cash out is just plain wrong. The next time you are sitting in those fancy
pilot chairs and making your bread and butter using that technological marvel they call autopilot. Remember it was not your money
which gave you that seat and your pay cheque it was those unit holders cash because you did not finance it yourself. They deserve a
better return than 2.5%.
And this gets to the whole point of I why I gave my two bits, it is because unions always want to blame someone. The management's bonus,
the unitholders distributions, the governments policies but never there short sight ignorant point of view. Your raise should be a
bonus based on profitability and nothing more.
It is a fact of this world that management get big bonuses. I don't like it as an investor either but I cannot change the this fact
of life and neither can you or your union. And if you look at your company's financial statments the management's bonus does not
affect the corpate success one way or another. If you want those bonuses then go and become management that door is open to anyone
which sets it as his goal and is able to succed to get it. You can blame management all you want but you are eating your own young.
For your industry it is airport fees, employee wages, airplanes and oil that are the major cost inputs. The only reason your company
made money in 2008 was because oil prices crashed every other expense is comparable. Your new CPA agreement with that pitiful
12.5% mark up, and the new price of oil in the $ 70 - 80 dollars is what is killing Jazz and your stupid union negotiators are leading
you down the garden path on this 60 cents distribution issue. Like I said I dropped all your stock in 5 minutes on the news that
you voted to strike, because when I see the renegotiated CPA, the cost of fuel, the high unemployment, the labour strife, etc your
industry is a risk nightmare from an investor point of view. So understand this the reason you paid that debt down early was because
oil went from 140/bb down to $ 40/bb and air Canada could not change the CPA fast enough to prevent IT from losing its a$$.
It wasn't management's good deeds or bad deeds it was strickly the world economy all of which has changed now and oil is 100% higher
than it was in 2008 and your CPA is 5% less and on top of it you want to add 15% over three years to the cost base - that will make
this company fly like a rock.
So put your union paranoia aside, and go and investigate the facts for yourself and remember your worst enemy is yourself.
Would you put money in Jazz right now with that new cost structure? And if you wouldn't then why would you put your life and
career in it? It is the same thing.
And if you would put your money into Jazz then negotiate a contact where you maintain a high profitability because that is the only
guarantee you have if you are going to stay in the airline industry. And if you don't then be the big responsible pilots you say
you are and when your stock price has dropped to nothing and you need to raise money for those new planes then get your union
to cough up its own cash and you also dig into your life savings like the rest of us have to do. But then that would
require you to believe in yourself and in your company and then you would see success is not achieve by a union contract.
PS. to 4Stroke this is not a laughing matter this is your life I am just an observer. I have removed my skin in the game when
I sold my stock. I look at this as an outside obsever and someone who ran a business in a low margin industry like the airline
industry - so laugh all you want it doesn't affect me one way or another I will not be on that picket line getting handouts as
I rub my hands over the oil drum and eat food bank meals. This is your life enjoy it and make sure you rub shoulder with the
brotherhood because that is all the 90% plus vote is going to get you in that low margin airline industry. PS it is not your fault
some industries are just mature low margin industries.
Good Lord man...Go see a psychologist or get laid or something.
