Now That The Meltdown Is Over, Here’s What Southwest’s Pilots Have To Say

The Southwest Airlines pilot union sent its members a note in the aftermath of their airline’s meltdown, diagnosing the core issues and challenges at the company. It’s a mix of correct analysis and hobby horses.

Tom Nekouei, 2nd Vice President of SWAPA, mostly dumps on former CEO Gary Kelly, who retired early in 2022, and correctly flags that the company has deferred technology investment for decades. However he also goes down the rabbit hole of stock buybacks, repeating the incorrect trope that buybacks increase share price.

In doing so he tries to connect choosing to underinvest in technology as a way to increase shareholder return. Only it doesn’t do that, quite the opposite! It may mislead investors for a time into thinking that the business will run on lower costs, but the investment deficit will need to be made up, and the year-end debacle at Southwest will cost the airline hundreds of millions in lost revenue and in traveler reimbursements. That’s ultimately bad for shareholders.

Here’s the full analysis:

December 31, 2022

Two Legacies
Tom Nekouei, 2nd Vice President

“You put your employees first. If you truly treat your employees that way, they will treat your customers well, your customers will come back, and that’s what makes your shareholders happy. So there’s no constituency at war with any other constituency. Ultimately, it’s shareholder value that you’re producing.”
— Herb Kelleher

“Arguably, our shareholders have suffered for a long time when it comes to getting a return and our employees have been very well taken care of.”
— Gary Kelly

How did we get here? How did we go from the most stable and profitable airline in history to the greatest meltdown in airline history? As with most organizations, the answer can be distilled down to one word: Leadership. Actually, in our case, it’s three words: Lack of leadership. While we continue to receive saccharine corporate-communications-department-written and legal-counsel-reviewed “we’re sorry” and “I love you” meaningless and generic messages from SWA corporate executives, they obscure a genuine cancer within our Company that has been an ever-growing existential threat that must be excised before it becomes terminal. And these messages obfuscate the actual corrective action that is absolutely necessary to pull out of this graveyard spiral that our Company’s so-called leaders have placed us in. That fix is actual and tangible accountability above the front-line worker level for the first time in our recent history. It is time to have a frank discussion about the root cause of the quagmire that we find ourselves in today. That root cause has a name.

Systemwide meltdowns at Southwest Airlines have been increasing in frequency and magnitude over the past 15 years. From the original Midway Meltdown (and then the second larger one 1/3/2014) to destroying our on-time-performance with the added “virtual airframes” experiment to the “router brownout” (2016) to the “Jacksonville Center debacle” (Columbus Day weekend, October 2021) to what we are experiencing today, there are two common threads that bind each of these incidents together.

First, they were all results of conscious operational, manpower, or tech infrastructure investment decisions made at the senior levels of our Company.

Second, there has never been any real accountability for the decision-makers as a result of any of these fiascos, or the numerous smaller ones in between. If the saying that “insanity is doing the same thing over and over again while expecting different results” is true, then what is it when the same people are allowed to do the same thing over and over again? Supreme insanity, perhaps?

Herb’s legacy and the culture he built from the ground up was centered on his employees and empowering them to make proactive decisions at the lowest level possible. However, the culture that Gary Kelly ushered in with his ascension to the throne was the exact opposite. Gary’s vision was to become the darling of the investment community while building an insulated and vertical hierarchical structure where all decision-making authority was slowly stripped from front line experts with the most situational awareness and moved further up the cubicle chain in Dallas far removed from line operations. During that time, he took our Company from being known for our personality and agility to becoming a classic technocrat’s dream with an explosion of stove-piped vice-presidential fiefdoms that all communicate vertically with little-to-no horizontal integration.

Rather than keeping the organization flat and lean with minimum distance between the nerve center of the organization and its executing appendages as Herb had originally designed, he added layer upon layer of bureaucratic fat, staffed by corporate automatons whose defining skills are sheltering the boss from bad news from below and never disagreeing with him. In his two decades at the helm, Gary Kelly managed to build an organization of yes-men and yes-women around him and promoted within that organization, based on agreeability rather than competence. As Pilots, we need look no further than the string of milquetoast headquarters “leadership” we have been subjected to within our own operations stovepipe in the Company. Additionally, one need only look at last week’s viral memo from the SWA VP of Ground Ops to his workers in Denver to see how far Gary Kelly allowed this Company to deviate from the culture and principles that Herb cultivated. Despite negatively impacting our Denver operation in a concrete manner and humiliating SWA on a national level, this VP remains in his position and will likely do so indicating the tacit approval for his “leadership” style by SWA executives. If nothing else, the world now knows that SWA management embraces the words of Herb’s legacy for public relations purposes only while having completely abandoned them in deeds. Image versus reality.

With the above changes instituted by Gary Kelly came the proliferation of single-points-of-failure within our Company’s individual stovepipes, and at the top of that operational stovepipe as Chief Operations Officer, Gary Kelly installed another accountant and friend, Mike Van de Ven. And just like that, we were suddenly an operational flying and customer service company with the top three positions occupied by three holders of bachelor’s degrees in accounting from the University of Texas. A recipe for operational ignorance and collective groupthink. A monetization of the once vaunted Southwest culture and instead turning it into a headquarters-centric cult. A good old boys and girls network indeed. While this would temporarily bode well for our shareholders for the last decade, it slowly eroded our Company from within to set the stage for our current and complete meltdown.

While altering the personnel culture around Southwest Airlines headquarters, Gary Kelly also instituted an obsessive focus on cost-control to increase shareholder return, turning Herb’s founding philosophy on its head. He introduced the much-ridiculed term Return On Invested Capital, or ROIC, to Southwest Airlines.

Herb Kelleher once said that his greatest mistake was not embracing and investing in technology. This was a prescient warning to his successor, but it was one that his successor chose to essentially ignore for 20 years in his obsessive quest to maximize ROIC. Twenty years when the importance of technological infrastructure was going from “nice-to-have” to “must-have.” A fantastic accountant, Gary Kelly’s lack of strategic vision beyond a singular focus on increasing revenue at all costs has come to result in the grievous injury our Company is suffering through today.

During Gary Kelly’s tenure as CEO, Southwest Airlines has returned approximately $12 billion to shareholders while increasing his own total annual compensation by more than 700%. Much of that money was spent executing billions of dollars in share buybacks. Share buybacks that were once illegal, that provide no benefit for the Company itself while artificially inflating share prices (thus inflating stock-based executive compensation) and sent the clear message that the Company has excess cash on hand but that the CEO thinks there is no better place for investment of capital within his Company. All while there were clear and constant signals that there were aspects of our operations that were in desperate need of significant investment and upgrade. And all while subject matter experts, including our analysts at SWAPA, pleaded with management to make the investments into our tech infrastructure before we suffered an existential meltdown.

Even as recently as early November, SWAPA President Casey Murray said, “I fear that we are one thunderstorm, one ATC event, one router brownout from a complete meltdown. Whether that’s Thanksgiving, or Christmas, or New Year, that’s the precarious situation we are in.”

SWAPA has been beating this drum to management for nearly a decade pleading with them to spend the necessary capital to prevent the ultimate consequence someday. As CEO, Gary Kelly made a conscious decision to make the less than necessary investments in tech upgrades in favor of maximizing shareholder return because, well, “our tech’s been working ok for 20 years.” While Gary’s financial acumen cannot be debated, his poor operational leadership and judgment have been demonstrated repeatedly with each meltdown and finally laid bare with the current situation we find ourselves in. A situation only exacerbated by the fact that he chose to surround himself with people who dare not disagree with him. However, while remaining the current Chairman of the Southwest Board of Directors, Gary did manage to hand over CEO reins to Bob Jordan this year before the ultimate consequence of Gary’s lack of investment in his own Company manifested itself. Meanwhile, Gary basks in the glow of a shelf full of awards from the business, finance, and investment world while they all completely ignore the internal damage he did to our Company in pursuit of those accolades. The airline darling of Wall Street who Gordon Gekko’d his own company from within through greed, ambition, and neglect for the operation itself.

The Vote of No Confidence in Gary Kelly and Mike Van de Ven that your SWAPA Board of Directors took in 2016 after what was, at the time, the worst meltdown in our Company’s history has never been rescinded. We took that vote then because it was evident that neglect for tech infrastructure investment in favor of maximizing stock price was becoming an existential threat to our careers and our Company’s longevity. We took that vote as a symbolic message to Gary Kelly in an attempt to wake him up to the fact that, while he may be the darling of Wall Street, his employees knew that he was risking the future of the Company we love through his lack of focused investment to fortify our operation. But instead, Gary Kelly continued his aggressive growth of the network in the pursuit of ever-increasing revenue without the commensurate investment in tech infrastructure necessary to support that explosive growth. A classic symptom of the “but that’s how we’ve always done it and it has always worked” sickness within our corporate leadership while ignoring the reality that “it has always worked” because the network was much smaller.

And now, Gary Kelly’s chickens have come home to roost. In true Southwest fashion, our executives continue to apologize and “accept responsibility” out of one side of their mouths while making banal excuses that deflect from the true cause out of the other side. “Unprecedented storm,” “employee no-shows,” “decreased pick-up rates,” “point-to-point network,” and the list goes on. While many of us thought that perhaps this event would be the final straw that snaps the Southwest Board of Directors out of their fiduciary slumber and wake them up to the fact that they have allowed Gary Kelly to be an unchecked one man show to the eventual detriment of the Company itself, it is clear that Southwest management is circling the wagons as they have always done in the past. No acknowledgment of the magnitude of the mistakes they have made. No attempt to hold the responsible decision-makers accountable. No indication that there will be a course correction in the future. No understanding of the fact that the people who drove the bus into the ditch in the first place must be first removed from the bus before it can be removed from the ditch and repaired.

Gary Kelly still reigns supreme on the board of this Company despite having overseen the decisions and setting the conditions that made this most recent fiasco possible. I, for one, am tired of seeing my Company’s good name, and in some cases our fellow employees’ reputations, dragged through the mud in national media. I’m tired of the abuse they are receiving on the line from rightfully frustrated travelers whose travel plans and worlds were turned upside down during the most important family and travel time of the year. I am fearful for the future of our Company as the long knives come out from government regulators, lawmakers, the flying public, media, and lawyers and get pointed directly at the heart of our future careers. This meltdown was easily avoidable. It was predictable and it was predicted.

This is not a Southwest Airlines problem. This is not an employees of Southwest Airlines problem. This is not an unprecedented weather problem. This is a Gary Kelly problem. First to step forward over the years to take credit and accept all his CEO of the Year awards, Gary Kelly is nowhere to be found to step forward and take responsibility for this crisis that has his DNA all over the scene of the crime. He and his complicit Board of Directors are in hiding likely planning their public relations strategy to “survive” this and keep their lucrative income streams intact. The cold hard truth in this scenario is simply that the highest layer of management in this Company will not have their families’ lives upended by the turmoil their decisions have caused. They will be able to walk away with millions of dollars over the years and further cash in their stocks and options to not impact their standards of living even one iota. Gary Kelly will still enjoy living in his newly constructed retirement mansion in the toniest of Dallas neighborhoods while waxing philosophical in financial media interviews about what it takes to be a successful CEO. But the burden of Gary’s and his fellow senior executives’ and board members’ folly will be borne by the front-line employees without millions of dollars in compensation packages to their names. The ones whose futures and family fortunes literally depend on the success of our Company.

I do not begrudge the vast sums of money our executives earned for working their way up the corporate ranks. I am a capitalist, and I love American upward mobility. I do, however, begrudge earning vast personal wealth while running our Company’s operations and culture into the ground. But that’s not how “shareholder capitalism” works. All that matters is share price, and Gary Kelly knows share price! Gary Kelly was charged with protecting the precious legacy that was passed to him by Herb Kelleher. Herb had already done the heavy lifting; all Gary had to do was not drop it. But instead, Gary Kelly’s only enduring legacy is that he destroyed Herb Kelleher’s. Rest in peace, Herb.

Respectfully and with a heavy heart, 
Captain Tom Nekouei, SWAPA 2nd Vice President

I think it’s important to note that the Gary Kelly quote about shareholders suffering – an 8 year old quote from a former CEO of the airline – is very much taken out of context. At the time Kelly reiterated his commitment to continue taking care of the airline’s employees. He sought work rule changes from its unions along with higher wages, so that the airline could remain profitable.

The sociology of pilots, and pilot unions, is fascinating because here the second vice president of the Southwest Airlines Pilot Association declares “I am a capitalist, and I love American upward mobility.” You’d never hear that from Sara Nelson.

Pilot unions work to limit entry into their profession, to give them greater leverage in work rule and salary negotiations. But they don’t have the same narrative of desperate class warfare that other airlines do. Indeed, like law enforcement unions they tend to skew more Republican.

About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel - a topic he has covered since 2002. Co-founder of frequent flyer community, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

More articles by Gary Leff »


  1. Seems well written/said and sounds like new leadership is clearly necessary
    I’ve seen the company get more greedy yet the SW team managed to be better than industry average from their former culture

  2. These comments shouldn’t surprise anyone after all Gary is gone. SWA KNEW this storm was coming far long before it hit, current management had to opportunity to ramp up their systems, flight operations apparently they didn’t. I’m not saying that older generation IT didn’t play a part far from it however as a semi retired CEO I always frowned on staff dumping on someone that has left/ retired from the company. Of course then there is Sec. Buttigieg.

  3. Sorry Gary, that letter is spot on. This latest SWA melt down is all on their upper management, who have neglected investing in their own company and have operated in the same manner as the management idiots at Boeing who have similarly destroyed that company.

  4. Flash in the pan!

    Years ago, the hospitality industry, had attorneys and bankers running hotels, and in the C Suite.

    They would rotate them, to cover their predecessor. Then, one day in a dark room, a light came on, when some lackey in the back of the room, hollered out, “Marketing executives make for better managers”.

    FACT: (The only one better, is the “Founder”. Once the Founder steps down, the proverbial “crap” hits the fan, and eventually, everything goes, to hell in a hand basket! Typically, second generation Founders children, don’t fare well either.)

    Makes sense,. They have the training and experience, and are responsible, to fill their “products”, with warm bodies. They have the vision, and the know how, to get the job done.

    While there are some very successful, accountants, attorneys and Administrative executives, across unrelated industries, my money is on marketing!

    Whether you are a fan of the “Donald”, or not, he is the epitome of “marketing”, and wrote the book, on the “Art of the deal”!

    Every company, every executive, every manager, follows their leader. Compare what the SWA Founder started, to what his replacement has done!

    Nuff said!

    Happy and successful New Year, 2023, to one and all

  5. If they had only gotten a 35% raise (besting DL) then none if this wouldn’t have happened right SWAPA? If you have some extra time, check out Airline Pilot Forums and feast your eyes upon the SWAPA guys licking their chops to use this as “leverage” and sabotage WN even further in an effort to extort more from them. I don’t use Southwest that often unless the conditions and schedule are right….which they frequently aren’t but I’d caution anyone using them for any kind of critical travel for the next year or so. If their crew scheduling and tracking is that messed up, what do you thing their Maintenance Control is like?

  6. It’s the same problem seen at countless other American companies, with Boeing being among the most prominent examples currently, or General Electric after neutron Jack Welch, who during his tenure as Chairman & CEO of GE from 1981 until 2001 was similarly lionized by Wall Street & the press, only to have his greed & destruction laid bare after he retired & Welch’s successor, Jeff Immelt, took over in 2001.

    Many point to the legalization of stock buybacks in 1982 during the Reagan administration after being outlawed for nearly 50 years as a cancer afflicting American companies, with Southwest the latest example of why buybacks ought to outlawed once again.

    Given the ever skyrocketing & obscene sums of cash allocated to stock buybacks in recent years (note: airlines, including Southwest, were prohibited from using CARES Act [Covid19 pandemic aid/subsidies] monies to fund dividends & share buybacks from March 2020 until September 2022), with a reported $5.6 billion spent by Southwest over the three years prior to the pandemic, with $2 billion each authorized in May 2018 & 2019 for a combined total of $4 billion in the final two years before Covid19 emerged & upended the industry (source: Southwest Airlines Investor Relations), not to mention the disastrous outcomes seen at the aforementioned Boeing & GE, I agree that repealing, or if that’s not possible, sharply curtailing stock buybacks is more than warranted.

    There’s a reason why stock buybacks were outlawed after the stock market crash in 1929 & onset of the Great Depression in the 1930s.

    Leading academicians, economists, even a featured columnist at the one time self-proclaimed “Capitalist Tool”, Forbes Magazine, have all made persuasive arguments in favor of outlawing stock buybacks once again.

    I, for one, could not agree more.

    Further, I agree with Captain Tom Nekouei’s assertion calling for a change of leadership as he’s correct, expecting the same people who drove the bus into the ditch to “fix” the company they broke is pure folly – just as it is at Boeing.

    PS: I will include links to articles re Stock Buybacks in a separate reader comment below as links often are delayed until reviewed & approved for posting.

  7. FOG = Friends of Gary

    It’s no surprise that Southwest has transitioned from proactive management team and corporate culture to a reactive culture that invests only after the damage is done.

    Should be interesting to see how much longer Gary remains as Chairman once the additional multi-year, multi-billion dollar hit to FCF is finally revealed as a result of not investing in infrastructure for the last 20 years. My guess is that Herb would not endorse nor retain a single member of the entire C Suite.

  8. I always found it a bit funny that a bunch of guys making $300k a year are in a union and make copper wire from fighting over pennies. Maybe the less fortunate management should sign cards?

  9. @L3

    I am NOT an economist & have NEVER claimed to be one.

    I was, however, a Registered Representative (aka Stockbroker) at Smith Barney who not just completed its trainee program with distinction, but achieved 93% score on the Series 7 Exam, which was the 2nd highest score in my trainee class at the then corporate headquarters office in NY City.

    To wit, because I’m NOT an economist, and make no pretenses of being one, although the links to research have yet to be approved & posted by the moderator, this is *EXACTLY WHY* links to leading scholars from Harvard Business & Law Schools & other economic experts were included in a separate reader comment post.

    Others with different opinions are happily encouraged to disagree on the merits as I expressed an opinion as a layperson who’s background expressly includes training, education & licensing by what was once regarded as among the premier investment firms of its era, plus another five or so years as a featured, bylined columnist & data analyst at a trade publication, PlaneBusiness Banter, who’s readership largely consisted of industry managers, labor leaders, government officials, the financial & investment communities & more.

    Furthermore, my data models & analysis of capacity (& job) cuts in the aftermath proved to be accurate within hundredth’s of a percentage point, & my allegations that some airlines were fudging facts more than others – or “cheating” – as Donald Carty, Chairman & CEO of AMR Corp (the parent company of American Airlines at the time) described it in a keynote address after publication was also highlighted the next year by rival publication, Airline Business, in its own analysis in an Editorial regarding capacity cuts made by airlines when, it, too, concluded some airlines fudged facts after the 9/11 terror attacks.

    In October 2017 my reader comments & analysis (expressed here in View From The Wing, Seeking Alpha and Leeham News & Analysis re Bombardier’s C-Series & Airbus coming together to produce the since renamed Airbus A220 at Airbus’s USA Final Assembly Line in Alabama as a remedy to Boeing’s ill-advised attempt to kill the C-Series by starting a trade-war with Canada *TEN DAYS* before Bombardier & Airbus stunned the industry with their historic announcement to this day remains among the only, if not the only, commentary & analysis of its kind.

    And while there are many other published credits I’m proud of (including PBB research republished; interviews with leading industry CEOs & other experts; not to mention my very 1st work being featured on the front page above the fold in The NY Times BusinessDay section that was so impactful trading of AMR’s stock was delayed for 38 minutes due to an order imbalance), my research regarding the scope of sales tax exemptions for public-private terminal projects at JFK Airport using NY State Industrial Development Agency funding has since been adopted by foreign & domestic airlines with operations in NY State, worth hundreds of millions of dollars in savings since introduced as Principal Researcher on consulting assignments with British Airways, Terminal One Group Association, LP, Korean Airlines Cargo & others 1999-2001.

    So, yeah – so NOT an economist.

    But, for sure, a voracious reader & accomplished researcher (who, btw, graduated from Northwestern University) with receipts to prove it.

  10. That’s in the aftermath of 9/11 terror attacks in the fifth paragraph immediately above – family is calling so time for editing is limited today! 🙂

    With apologies for the omission/error!

    Happy & Healthy New Year to all!

  11. Sorry about the rant; my bad!

    Maybe I should’ve refrained from replying to the personal attack.

    It’s been a while since I’ve posted reader comments in this forum – if only because of the excess personal attacks & baseless, cheap shots directed at Gary & others in recent years.


  12. Once again, a self professed aviation “expert” who is really nothing more than a self glorified frequent flyer program advisor uses his platform to host an anti-labor hit piece.
    Your elementary level financial analysis along with your poor insight into an internal struggle between labor and management at Southwest misses the mark completely.
    There is an ongoing struggle by Southwest’s employees to turn the company in the right direction before the Titanic strikes the iceberg. Captain Nekouei’s letter really hits the nail on the head and lays bare the efforts that the pilot union, among others, has made at Southwest to try and keep the company on track despite the utter lack of concern by upper management due to the ability for the company to mint cash despite failures and meltdowns that have increased in both frequency and severity in the last decade. This is due to lack of investment by company management in proper technology and processes that are required to keep a complex operation running during disruptions. When the company buys back billions of dollars in its own shares despite lacking that capability, you have to ask why that is and what can justify that decision.
    Mr. Kelly failed Southwest Airlines. His legacy is thousands of families with ruined or disrupted Christmas plans who instead of making memories with their loved ones got to sleep on airport floors and eat from vending machines for days on end. Yet he continues to pull the puppet strings as the chairman of the board while the customers and front line employees of Southwest live with the consequences of his poor decision making.
    I don’t know of any other organization in America that can allow this level of absolute failure without holding its leaders accountable.

  13. Thanks, @Jojo!

    Yes, still alive & kicking 🙂

    Hope all is going well for you, too!

    Best wishes for a happy & healthy New Year to you & your loved ones.

  14. No Mr Miller, I was talking about the pilot VP in the article!
    I found your comments most enlightening and enjoyable!
    My apologies for the confusion…..

  15. You can dislike unions, and debate the pros/cons of their impact on companies and industries. That argument has little bearing on whether or not Gary Kelly underinvested in Southwest’s IT infrastructure. Any reasonable observer would say that he did. SWA bought a brand new reservation system that CAN’T ACCEPT FOREIGN CURRENCY. It’s been running the same crew scheduling system for 20 years. The meltdown revealed critical flaws in the companies tech, flaws that should have been fixed with some of the $10 Billion spent on stock buybacks. That is the takeaway from the pilot union message.

  16. @Ghostrider5408 Sure blame the government. And if they had tried to micromanage technology at a private company, you’d be screaming about ‘socialism’.

  17. Share buybacks do increase stock prices, in that more money chasing the supply of already-issued shares trading on the secondary market means increased demand for those shares, ceteris paribus. And a reduced supply of shares facing the same or increases demand from outside investors mean higher prices for the shares.

  18. How about some actual research on share buybacks rather than pontificating?

    “The average repurchase in our sample, 0.30% of outstanding shares within a month, increases the stock price by 40 to 70 basis points relative to the non-repurchased class of stock. The effect dissipates completely over the subsequent month unless extended by continued repurchases. This small, short-lived price effect leaves little scope for CEOs to benefit from value-destroying repurchases motivated by self-interest.”

  19. Read a post on Twitter yesterday from someone that had flown 4 segments on Southwest. On 3 of the 4, pilots did not make any mention of the meltdown, much less flight attendants.

    On the 4th leg, Captain addressed the issue and apologized to everyone.

    Southwest – There is an elephant in the room and it needs to be addressed. Otherwise what is your point?

  20. Mr. Leff,
    For me, you did yourself damage by taking one small portion of a perfectly written, logical, correct and thoughtful analysis and tried to define the letter as some sort of political issue. Here is what you wrote:

    “Pilot unions work to limit entry into their profession, to give them greater leverage in work rule and salary negotiations. But they don’t have the same narrative of desperate class warfare that other airlines do. Indeed, like law enforcement unions they tend to skew more Republican.”

    Whether or not the union is as you describe or not is irrelevant to the issue of SWA leadership. I take offense that your unnecessary comment strives to inject your personal political leanings into what otherwise might have been a good article. Perhaps Republicans, like me, tend to care more about the safety of others…like law enforcement and pilots.

    In addition, Sara Nelson is a self important ego inflated knee jerk Democrat. Here is a bit of who she is: “ She believes Flight Attendants can play a pivotal role in strengthening the Labor Movement with more public contact than almost any other job and access to every corner of the earth.”


    You have now lost a reader; I will find some other blogger to keep me up to date.

  21. Of course the Pilots in general skew more to Republican.
    Being a pilot generally requires having a higher IQ, critical thinking and proven real life skills.. (opposite of the vast majority of Politicians, who skew heavily to the left of course, they love to live out of other people’s pockets).. so it’s only natural to skew that way.

    I have many pilot friends and they were among the first to group to have the vision of the death of Venezuela by communism, the were the ones that left Venezuela early and the vast majority of pilots i interact with (as I love aviation) tend to be anti communists.

  22. “This small, short-lived price effect leaves little scope for CEOs to benefit from value-destroying repurchases motivated by self-interest.”

    That line by itself speaks to the bias of the author(s) and is an example of pontification poorly camouflage as objective research. The “research” is meant to try to advance the author’s bias: “value-destroying repurchases motivated by self-interest” aren’t a problem and thus share buybacks shouldn’t be considered for additional regulation.

  23. Señor Leff,

    Odd, I thought you are complimenting Sara Nelson for her looks and thus like bribing her up on VFTW often no matter how tenuously related she is to a discussion.

    Are you hoping to have a private one-on-one dinner discussion with Sara Nelson and hoping to get her attention via Twitter or this blog? Or do you have the Mike Pence rule when it comes to having meals with people of the opposite sex? 😀

  24. @GUWonder: I don’t think any claims of bias on the part of CEOs are even helpful to the analysis. Buybacks credibly signal mgts. inside information on the value of the firm.

    They alter the capital structure.

    They effectively pay dividends in a way that can have tax advantages to the recipient.

    Little wonder that they clearly do alter stock price.

  25. BBK: thanks for my laugh of the day!
    It’s simple. The pilots are in the upper 2%
    (they are rich) and don’t want to pay taxes. The Republican party exists for one thing: to shovel as much money to the rich as possible. All that cultural war baloney created by the Koch Brothers Machine is a red Trojan herring. To bad the KBM didn’t realize they were releasing the Kraken which is impossibleto control and difficult to kill. And of course, the maga wing has extra fascist ideas.
    The Democrats (when they are not distracted by shiny stones-looking at you Sinema/Manchin) follow the original uncorrupted concepts of JESUS CHRIST
    (the original leftist): empathy for others, help for those less fortunate, concern for our elders in retirement, fairness and honesty in all dealings, etc. IQ has nothing to do with it.
    Republicans are in it for themselves,
    Democrats are in it for everyone.
    It’s simple…..

  26. Share buybacks credibly signal that management wants to boost the share price and will use its own cash flow to boost the price of the shares as a way to enrich management and its share”holders” sooner than later regardless of the long term consequences on the company’s operations arising from this form of capital deployment.

    When a company acts as if the best use of its cash is to buy its own shares, that speaks to management’s short-term focus and lack of ability or willingness to: reinvest in the operations; and/or diversify on behalf of the company and its owners.

  27. “When a company acts as if the best use of its cash is to buy its own shares, that speaks to management’s short-term focus and lack of ability or willingness to: reinvest in the operations; and/or diversify on behalf of the company and its owners.”

    No. It signals that they consider the company’s shares to be undervalued.

    Also, read your own sentence. Why did you appoint management that was so stupid/short-term/lacking ability? Or did you just say something incredibly stupid?

  28. People appoint people to further self-serving get rich quick(er) schemes. This is part of the program at publicly-traded companies too, although people prefer to use euphemisms instead of calling out the activity for what it is and what it signifies.

    If share buybacks were driven by the idea of the company being undervalued and the best investment opportunity available to company management, then they would use the company cash to invest in growing the business rather than buying the company shares on the secondary market.

  29. “If share buybacks were driven by the idea of the company being undervalued and the best investment opportunity available to company management, then they would use the company cash to invest in growing the business”

    Of course they wouldn’t! The shares offer an abnormal return. Growing the business offers only a normal return in equlibrium.


    And your first paragraph is just unsupported gibberish. Move the letters around, it will make just as much sense.

  30. s@ JorgeGeorge Paez. Wow, just WOW! what gibberish comparing Democrats to Jesus Christ. Before you stick your other foot in your mouth may I suggest you research the Democrat party and their involvement in geopolitical wars. No sir, Democrats are in it for Democrats. I wish I could say that isn’t true for Republicans but neither party sufferers any of the consequences for their actions (the same as lawyers).
    BTW, having been an ALPA and SWAPA member I can say that union leadership thinks Republican but votes Democrat.

Comments are closed.