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POST OF THE DAY

Berkshire Hathaway

May 22, 2000

Board Name:
Berkshire Hathaway

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Subject:  Pilot Pay
Author:  cob3898

Earlier Sandman posted an excellent and comprehensive collection of links and notes on Executive Jet. Some of that discussion alluded to the difficulty in attracting and retaining qualified pilots for Executive Jet. There was a question as to why a Captain for Executive Jet earns approx. $58,000 per year compared to a United Captain at $178,000 per year. IMHO, the wide disparity in compensation for pilots is the primary reason for vacancies and high turnover in certain flight operations. Although the scope, size and success of Executive Jet would suggest that their employees would deserve and demand an industry leading salary package, they may not ever approach top airline salaries for very simple reasons. Commercial pilot salaries are largely correlated to where those pilots are along the food chain hierarchy:

-- the size of the equipment flown....(the logic being the more passengers carried, the greater the responsibility, etc)....the most significant factor.

-- longevity within the company which also implies greater experience (greater seniority leads to an an automatic and orderly advancement into larger equipment and seat position)

-- the degree to which organized unions can wrestle away concessions from management during the militant and oftentimes rancorous debate that goes on during contract renewal.

Below I have listed a comparison of selected pilot contract provisions in effect as of April 30, 2000 for 5 major airlines (Continental, Delta, Northwest, United, and US Airways). The data was developed by ALPA ( Airline Pilot's Association) Economic and Financial Analysis and Retirement Departments.

For simplicity, on average, pilots for a major carrier may fly approximately 1000 hours per year....using this figure and multiplying by the hourly rates below will provide a fair estimation of annual salary.

For the young aspiring pilot who decides at some point to take up aviation as a profession, the road is long and costly....and most would consider a shot at United Airlines to be the pinnacle of success with other flying opportunities along the way serving as an apprenticeship to the ultimate goal of working for a major airline.

The young aspiring aviator might first obtain a private pilot's license, maybe work as a crop duster, scratching out odd jobs along the way so as to afford to build flying time needed to qualify for a commercial license.

Perhaps, he/she might work towards an instructor rating, so as to eke out a meager living teaching while allowing the students to pay the expenses. If one still has a burning desire to fly for a living after the many hours of instructing students who are trying to kill you each and every day all the while you are managing to dig yourself deeper into debt, then the next logical step might be air taxi (drunk abusive celebrities with their gal pals), night freight haul (ouch!!, body clock problems again), or corporate flying (jeez, I'm always on call!....Executive Jet, for example).

Still the drudgery and being on call for long hours, along with the major expense of acquiring new ratings, will have invariably taken a serious taken toll on a young family by now. Moreover, it may take a few more years to move into that coveted corporate Captain's job, but meanwhile, the lure and temptation of taking a shot at a high paying major airline job with all of the other attendant benefits is still lurking on the horizon.

And there's still another avenue that might have to be taken to enhance one's qualifications with that major airline....moving on to those low paying regional/commuter entry jobs with long hours approaching FAA monthly minimums, very few days off, but with the kind of jet experience into high density airports that the airlines prefer and actively seek out on a regular basis in a pilot candidate. So, after all of the time building experience and working long hours making $15,000 to $20,000 per year, it is no wonder why many decide to climb the ladder as far and as fast as the competition will permit.

All of this suggests that so long as the attractive compensation packages continue to exist among the major carriers which stand in stark contrast to other flight jobs along the entire food chain, outfits like Executive Jet may continue to suffer high turnover and increasing training costs to seek out new hires. (oh yes, there's that turnover word again)....Ironically, that synergistic effect will be good news for Flight Safety, whose business it is to constantly pump out new candidates to meet the growing need for pilots, whether due to the massive numbers entering retirement, airline expansion, or simply the natural progression of pilot's looking to move on from corporate/commuter jobs to garner a better financial deal and quality of life with a major airline.

So, here's the sweet deal waiting at the end of a long and winding road:

Airline Pilot Hourly Pay
 CAL DAL NW UAL USA
Wide Body 12 year Captain $202 $265 $241 $222 $244
Wide Body 5 year First Officer $115 $160 $143 $136 $144
Large Narrow Body 12 year Captain $172 $198 $188 $182 $185
Large Narrow Body 5 year FO $96 $118 $110 $110 $111
Small Narrow Body 12 year Captain $152 $201 $181 $175 $161
Small Narrow Body 2 year FO $68 $70 $60 $72 $73

Large Body Aircraft would include B777, B767, B747, A330.

Large Narrow Body Aircraft would include B757, MD80.

Small Narrow Body Aircraft would include B737 - 2/3/4/5/6/7/800 series, A319, DC-9.

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