Delta plans no follow-on aircraft order anytime soon

[Dornier 335]

source

Delta plans no follow-on aircraft order anytime soon

By Lori Ranson


Delta Air Lines has quashed speculation that it intends to place a second aircraft order following its decision last month to order 100 Boeing 737-900ERs.
Previously Delta had stated it could order up to 200 aircraft, and praised the technological advances offered by the Bombardier CSeries.
But speaking on 13 September during the Deutsche Bank Aviation and Transportation Conference Delta President Ed Bastian clearly stated: "We are done talking about aircraft for the near to medium term."
Bastian acknowledged there has been a "lot of industry chatter" about a second tranche of aircraft being ordered, but "there's no second step of aircraft whether it be with Bombardier or Embraer or Boeing or Airbus. We're very comfortable with where we will be sitting for the next several years. I do want to put to rest any thought that we are in the market considering a new aircraft decision".
A major driver behind Delta's decision to cap aircraft orders at the 100 Boeing narrowbodies is keeping its capital expenditures in a $1.2-$1.4 billion band on an annual basis, explained Bastian.
He added Delta's goal is to generate operating cash flows of $3-$4 billion per year and take "that incremental two billion and pay down the balance sheet".
"We'll be talking in the future about aircraft," said Bastian. "But nothing in the next couple of years."

 

[redflyer65]

Wow, didn't see that coming. Oh wait, they just said the schedule this fall is a full 5% less than last year.

RF

 

[Sacha]

On Your Six,

How many have you got below you? Just sayin babe... There is always that strip club over in East Point. ... They like fat chicks there from what I heard. Furloughed again...Bummer....

GODSPEED!!!

 

[Andy]

Age 65 should be able to take care of some furlough concerns. Problem is, most senior Delta pilots bailed prior to bankruptcy so most of the retirements they'll see are from the Northwest side. I think that's a bit less than 200 per year. Comparatively, American and Continental/United should be around 500 per year.

 

[GuppyWN]

Maybe Delta is buying a bunch of 717's.

Gup

 

[General Lee]

Wow, didn't see that coming. Oh wait, they just said the schedule this fall is a full 5% less than last year.

RF

There is a reason it is 5% less this Fall/Winter than last year, they are adding mods to the 744s (lie flat seats and AVOD--personal video), and they are adding crew rest facilities to the A330s this Winter. They want the A330s to be fly over 12 hours (Lagos to ATL, DTW to Tokyo Haneda starting next April), but they need to have 4 crew members for anything over 12 hours, and that means 2 bunks, not just one currently in the A330s). They are actually installing new crew rest facilities in the 767ERs as well, under the cabins. With normal Europe traffic falling after Labor Day anyway, the decision was made to complete a lot of these mods this Fall. They are actually adding a couple routes this Winter anyone due to rising demand in Japan (stronger Yen)---we start Honolulu to Fukuoka starting in December. (a route NWA used to fly with DC10s).

Any other questions Redflyer? As far as ordering 100 seaters, the order has been put off 2 more years so the balance sheet can be cleaned up more, which is a good idea. DL had $16 Billion in debt, and management is trying to get that down to $10 Billion by 2013 (2 years from now.....amazing how that works). DL actually paid down $700 million in debt just last quarter, and $2 billion last year alone. Have a great one!



Bye Bye----General Lee

 

[General Lee]

Maybe Delta is buying a bunch of 717's.

Gup

It did say delaying an order for NEW aircraft, but we all know DL likes used aircraft too. (MD90s---25 coming next year alone, many are in GSO and IND right now getting galley mods) I haven't heard anything else about those 717s in awhile, though. Maybe not.


Bye Bye---General Lee

 

[General Lee]

Age 65 should be able to take care of some furlough concerns. Problem is, most senior Delta pilots bailed prior to bankruptcy so most of the retirements they'll see are from the Northwest side. I think that's a bit less than 200 per year. Comparatively, American and Continental/United should be around 500 per year.

There is a flowdown to Compass and Mesaba in the left seat if there ever was a furlough again, but we just had an early out retirement (unexpected, management thought initially maybe 40-50 Captains would take the offer, and instead 130 Captains and 35 or so FOs took the offer) so we are not fat on pilots. Delta always has extra pilots in the Fall, and not enough in the Spring and Summer. With large retirement numbers coming down the pike, very doubtful that there would be any furloughs, but rather hiring sometime next year. Those flowdowns to Compass/Mesaba would obviously be expensive, and that was the main reason DL did not furlough during the 2007/2008 recession period, which could have made sense back then I guess. Also, this year will have a year over year profit, and this Q3 is expected to be a large profit. Gas also is way down compared to what was expected (in the $130 a barrel range for Brent Crude, now in the $112 range), and fuel surcharges have kept steady. SWA actually just went along with a fare increase.



Bye Bye---General Lee

 

[Andy]

GL, can you do me favor and PM me your contractual furlough protections? Including all actions that kick in according to your contract? I'd like to push for some of those added to the CAL/UAL JCBA.

 

[General Lee]

On Your Six,

How many have you got below you? Just sayin babe... There is always that strip club over in East Point. ... They like fat chicks there from what I heard. Furloughed again...Bummer....

GODSPEED!!!

No talk of furlough thanks to the expensive flow down to Compass and Mesaba. I have heard that a furlough would have to last over 2 years to make it worth the cost of getting a type rating for the furlough, bumping the E175 Capt to FO, etc. And to top it off, management has stated they expected a PROFIT for the year, and a big Q3. As earlier stated, in Q2 DL supposedly paid down $700 million in debt alone, and $2 billion was paid down last year alone. Not bad.........but you would like to scare OYS if you could. Don't worry OY6, things are looking good still..... just no 100 seat aircraft order yet.


Bye Bye---General Lee

 

[General Lee]

GL, can you do me favor and PM me your contractual furlough protections? Including all actions that kick in according to your contract? I'd like to push for some of those added to the CAL/UAL JCBA.

You're getting a PM....


Bye Bye---General Lee

 

[BentOver]

Why does Delta need a President/CEO, executive team or any other leadership..they've got GL!!!


Shouldn't Delta be taking over the world by now? I thought that's what was predicted a few years ago?

 

[On Your Six]

Why does Delta need a President/CEO, executive team or any other leadership..they've got GL!!!


Shouldn't Delta be taking over the world by now? I thought that's what was predicted a few years ago?

I think you are right about GL. He's got my vote.

Here is a synopsis of the June Quarter results, September outlook, and onward looking, originally posted on another Website by another poster(BB), who copied those from the conference call.



June quarter notes:

• Revenue premium results in 636 million operating profit despite 1 Bn increase in fuel costs. Revenue has outpaced fuel price increase!
• Reduced to 13.8Bn debt
• 8 ½% return on invested capital

September Quarter looking better than expected:

• Operating margin between 9 and 11% (2% better than forecast)
• Fuel coming in slightly lower than expected
• Strong bookings with yield improvement (12% to 15% increase in revenue)
• Capacity down 1% Y2Y (elsewhere stated as down 3%)

Going forward:

• Managing for high fuel prices
• Managing non fuel costs, must get costs back to 2010 costs
• Winter flying down 5% Y2Y, especially in markets where revenues do not cover fuel prices
• Flying 20% fewer seats in the winter than the summer
• Done making money in the summer and losing money in the winter
• Good at selling to business. Not as good at selling to customers. Working offerings like economy comfort which has been selling very well. Thinking about using the product domestically as well. Putting WiFi in RJ’s & Lie Flat seats. Very excited about the new JFK terminal which will be the core of “mainline.”
• Delta.com & Res sales is 50% of sales. Better if we can sell direct
• 10-12% down over the Atlantic. Decreasing everywhere but Latin America. Shrinking smaller hubs, especially Memphis.
• $450 million in hedge benefits on fuel cost increases
• Capacity reductions ARE causing non fuel costs to RISE.

Fleet renewal:

• 737-900 15% to 20% reduction in fuel costs per seat and much lower maintenance costs compared to the 757. 757 flying will be reduced. Cash flow positive and accretive from a P&L basis. Thanked Boeing & Airbus for their work on the competition and look forward to talking to them in the “out years.”
• Very comfortable with fleet. Put to rest any thought that we are in the market for another aircraft order. Reason … watching Capital Expenditure. No orders in the next couple of years.
• Expect to get to 10 Bn debt level in 2013. That will save us $500,000,000 a year.

Q&A

• Paying down debt before stock buy back
• NWA merger credited with business sales strength
• US Domestic is our main market with 50 to 60% of our business. Much of our international business is sold in the US. Emirates and Air Asia are not direct competitors, but they do pressure margins. We are investing in Aero Mexico and feel being partnered well allows us to compete.
• Part of our RASM growth was the excise tax suspension
• Very pleased to be an investor with a seat at the table with Aero Mexico. We can bring our skill sets into the emerging marketplace in Mexico and Brazil and we will benefit from lower labor costs. We are looking at other internal markets, especially in South America

Good stuff!


Godspeed!



OYS

 

[On Your Six]

On Your Six,

How many have you got below you? Just sayin babe... There is always that strip club over in East Point. ... They like fat chicks there from what I heard. Furloughed again...Bummer....

GODSPEED!!!

I think I'll be just fine, thanks anyway. When did you go to the East Point strip club? Back in the 50s, when you were training on the DC6 at Eastern?


Godspeed!


OYS

 

[Sacha]

OYS,

What kind of aircraft will you be First Officer on at Compass? Enjoy your Akron overnights...

Good Stuff.....GODSPEED!!!

P.S. Your career is a disaster.

 

[On Your Six]

No talk of furlough thanks to the expensive flow down to Compass and Mesaba. I have heard that a furlough would have to last over 2 years to make it worth the cost of getting a type rating for the furlough, bumping the E175 Capt to FO, etc. And to top it off, management has stated they expected a PROFIT for the year, and a big Q3. As earlier stated, in Q2 DL supposedly paid down $700 million in debt alone, and $2 billion was paid down last year alone. Not bad.........but you would like to scare OYS if you could. Don't worry OY6, things are looking good still..... just no 100 seat aircraft order yet.


Bye Bye---General Lee

Lee,

I'm not worried. That flowdown obviously helps, and profits and paying down debt doesn't hurt either.

Godspeed Lee!


OYS

 

[On Your Six]

OYS,

What kind of aircraft will you be First Officer on at Compass? Enjoy your Akron overnights...

Good Stuff.....GODSPEED!!!

Maybe I'll make it to Grand Rapids, and see you on the 717 there too. I'll buy you the first beer!


Godspeed!


OYS

 

[Fubijaakr]

Maybe Delta is buying a bunch of 717's.

You might have a point....

 

[ACL65PILOT]

717 or the deal with one of these manufactures is done and no further discussions are needed.

 

[Freebrd]

geez those two putzs crack me up, replying to each other now and right after the other

 

[Dornier 335]

Maybe Delta is buying a bunch of 717's.

Gup

Or maybe Delta is waiting for something like this:

source

Benelux special: NG Aircraft plans Fokker 100 revival


By Max Kingsley-Jones


One of the longest-running sagas in recent civil aerospace history may conclude this summer if the planned relaunch of the Fokker 70/100 regional jet gets the nod.
Ever since production of the Dutch twinjet ended in 1997, there have been on/off plans to relaunch the popular 80- to 110-seat family, masterminded by Jaap Rosen Jacobson, who was owner of Antwerp-based VLM Airlines. For many years the revival effort was made under the umbrella of the curiously named "Rekkof Restart" (the first word being Fokker spelt backwards). The latest revival is being attempted by Rekkof's successor, NG Aircraft, which is still headed by Jacobson. He is being assisted by a small team that includes former Fokker marketing chief and Fokker Aircraft USA chief executive Maarten Van Eeghen.
Powered by the Rolls-Royce Tay 620/650, the 107-seat Fokker 100 was a major derivative of the 1960s F28, which entered service with Swissair in March 1988. It was joined in 1995 by the smaller, 79-seat Fokker 70, but the collapse of Fokker a year later led to the twinjet's premature demise after 324 had been delivered. "I could have signed a very large order at that time with Mesa for the Fokker 70, but Fokker folded," says Van Eeghen.

© Fokker

NG Aircraft's focus will be the larger Fokker 100

After various abortive attempts over the next decade to relaunch the programme, when Jacobson managed to source all the production tooling from the manufacturer and suppliers and the intellectual property from the receiver, NG Aircraft believes it now has a strong business case to revive the aircraft.
"The whole project started again because one of our major operators told us it could see little or no improvement over the Fokker 100 with what's on offer today - that's because the aircraft is so light," says Van Eeghen.
NG aims to bring the twinjet back within five years, with build and performance updates, additional fuel capacity and - significantly - power from a new, but yet-to-be revealed engine. This will ensure full competitiveness with new-generation rivals such as the Embraer E-Jet family as well as the Pratt & Whitney GTF-powered Bombardier CSeries and Mitsubishi MRJ regional jet, believes NG Aircraft. The focus of the exercise will be the larger Fokker 100, but the 70 will also be offered.
For the dream to become a reality, NG Aircraft is awaiting approval in June from the European Union for a €20 million ($27 million) loan agreed with the Dutch economics ministry to be provided on the basis of supporting innovation in civil aircraft development.
Brussels approval - which Van Eeghen says should be a formality - will clear the way for the launch of the programme this summer, when the engine will also be revealed. The funding required to get the programme off the ground and through the demonstrator phase is €90 million, most of which has been committed, Van Eeghen says. "The programme will require around €500 million," he adds. "Once we get the green light for the loan we can start modifying the original prototype Fokker 100 and that should fly around 18 months later."
NG has linked with Stork's two Fokker divisions to support the revival, says Van Eeghen. "Lead engineer for phase one is Fokker Services in Nieuw Vennep. The proof-of-concept development aircraft will be modified by Fokker Aircraft Services at its Woensdrecht plant."
The demonstrator, expected to be ready by early 2012, will undertake "a couple of months" of testing, ahead of the construction of the first aircraft, which should arrive in 2015 and enter service by the end of that year.
Van Eeghen says work is under way to complete a digital mock-up of the entire aircraft. This will be key to NG's plan to modernise the production process, with a 20% reduction in build-costs targeted. Meanwhile the Dutch national aerospace laboratory NLR is designing a winglet for the enhanced aircraft.
Once launched, NG will finalise the production plan, which should include supplier partners responsible for major build packages. "We are already in negotiations with one or two potential partners. We are going to be far leaner than the old Fokker - we are a supply chain management company," says Van Eeghen.
NG Aircraft's market analysis predicts the revived twinjets could capture "a steady 12%" of the long-term market, "around 50 aircraft a year, which is probably too conservative," Van Eeghen says. "This aircraft could easily go for another 20 years as we don't see anything new being planned that will offer better performance - if necessary we could even make another jump like Boeing with the 737."

 

[On Your Six]

Delta spending delays dash Bombardier hopes
From Wednesday's Globe and Mail
Published Tuesday, Sep. 13, 2011 7:40PM EDT
Last updated Tuesday, Sep. 13, 2011 7:52PM EDT

Delta Air Lines Inc. (DAL-N7.990.618.27%) is delaying an order for new narrow-bodied aircraft for several years, dashing hopes that Bombardier Inc. (BBD.B-T4.260.030.71%) is about to land the biggest order yet for its new C Series airplane.

The Atlanta-based airline announced three weeks ago that it will buy 100 Boeing Co. 737 planes and was believed to be set to follow that up with the purchase of 100 smaller narrow-bodied planes later this year or next year.

“We are done talking about aircraft for the near to medium term,” Ed Bastian, Delta’s president, said on Tuesday. “There’s no second step of aircraft [purchases], whether it be with Bombardier or Embraer or Boeing or Airbus.”

Montreal-based Bombardier and Embraer SA of Brazil were believed to be the two contenders for an order for planes that would seat between 100 and 150 passengers in a deal that would almost double the number of orders for the C Series.

Airlines have ordered 133 C Series planes, which represent Bombardier’s $3.4-billion bet that it can compete in the biggest segment of the commercial airplane market and challenge the duopoly Boeing and Airbus SAS have enjoyed for decades.

The delay of several years in replacing some DC-9 airplanes that have been in service for 33 years is another sign of growing concern among U.S. companies about the health of the U.S. and global economies.

“This was about Delta, not about the airplanes,” said industry analyst Scott Hamilton, a principal at consulting firm Leeham Co. LLC. Bombardier went more than a year without landing orders for the C Series before several airlines signed on around the Paris Air Show in June.

“The declining U.S. economy in particular, the softening global economy and the narrowing of profits in 2011 versus 2010 caused Delta to pull back from the 100-150 seat airplane order for now,” Mr. Hamiton said. Delta did not want to place an order now that would have included down payments, progress payments as the planes were being built and additional debt on its balance sheet, he said.

The order for Boeing planes is worth about $8.5-billion (U.S.), while an order for 100 C Series planes would have been worth about $6-billion at list prices.

Delta needs to reduce the $13.8-billion on its balance sheet and the risk that brings to the company, Mr. Bastian told a Deutsche Bank AG transportation conference in New York on Tuesday.

The plan, he said, is to maintain annual capital expenditures in the $1.2-billion to $1.4-billion range to 2014. Delta’s capital expenditure hit $2.2-billion in 2008, but fell to $1.3-billion in 2009 and is expected to be $1.2-billion this year.

In addition to delaying airplane purchases, Delta will trim fourth-quarter flights by between 4 and 5 per cent, Mr. Bastian said, and by 2 to 3 per cent next year.

The number of transatlantic flights will be cut by at least 10 per cent in the fourth quarter, he noted.

Dallas-based American Airlines, a unit of AMR Corp., said it will cut capacity in the fourth quarter while United Continental Holdings Inc. said it will hold its 2012 flight levels steady at 2011 levels.

The first flight of Bombardier’s C Series is scheduled next year and the first planes are scheduled to be delivered to customers in 2013.

The biggest single order is from Republic Airways Holdings Inc., which operates Frontier Airlines and other regional U.S. carriers. Republic has 40 of the planes on order and options for another 40, but also said during the Paris Air Show that it will order A319 planes from Airbus.

The A319 with more fuel-efficient engines competes directly with the C Series.


Or maybe Delta wants to bring the debt down to $10 billion by 2013, and then save $500 million per year in interest? Ordering more planes right now would add more capital expenditures, and maybe management is focusing on gaining that $500 million in savings first? Sounds smart, and then maybe certain employees can gain some extra cash too, knowing that extra savings will be there at that time?


Godspeed!


OYS

 

[On Your Six]

geez those two putzs crack me up, replying to each other now and right after the other

I am so happy Freeturd is flying on the other side of the plant, in between Hanoi and Ho Chi Min City. He probably tried to get on with a big airline in the States, and they rejected him. Now he goes to Vietnam and still can't fly for the largest airline there, instead following RJs to SE Asia. Sad tale, but at least he found his long lost love there, a young, skinny man named Thran.


Godspeed to Freeturd and Thran!


OYS

 

[Andy]

Or maybe Delta wants to bring the debt down to $10 billion by 2013, and then save $500 million per year in interest? Ordering more planes right now would add more capital expenditures, and maybe management is focusing on gaining that $500 million in savings first? Sounds smart, and then maybe certain employees can gain some extra cash too, knowing that extra savings will be there at that time?

Paying down high interest debt in the current economic environment is the smartest thing to do, whether you're talking individual, corporate, or government balance sheets.

 

[Superpilot92]

Age 65 should be able to take care of some furlough concerns. Problem is, most senior Delta pilots bailed prior to bankruptcy so most of the retirements they'll see are from the Northwest side. I think that's a bit less than 200 per year. Comparatively, American and Continental/United should be around 500 per year.

These numbers aren't accurate and Deltas retirement numbers are on par if not higher than most other carriers going forward. Fwiw

 

[Andy]

These numbers aren't accurate and Deltas retirement numbers are on par if not higher than most other carriers going forward. Fwiw

I'm sure you're correct. Do you have a link to reliable numbers? I confess that I was going off of my fading memory.
While Delta may be on par to most other carriers, I suspect that they're a lower percentage of the seniority list.

Here are older UAL retirement numbers based on age 60. Add 5 years to the retirement year:
2008 234
2009 231
2010 201
2011 167
2012 228
2013 245
2014 237
2015 270
2016 331
2017 307
2018 381
2019 355
2020 463
2021 506
2022 506
2023 575
2024 574
2025 538
2026 560
2027 408
2028 300
2029 226
2030 153
Old CAL numbers:
2008: 246
2009: 218
2010: 210
2011: 220
2012: 217
2013: 194
2014: 201
2015: 167

Adding UAL and CAL comes to ~500/yr starting in 2013. OK, a bit less than 500. Call it 400-500/yr.

Edit: I found these numbers on APC:
Pilot retirements
Year AA UAL DAL CAL
2007 281 263 30 322
2008 402 234 60 246
2009 405 231 70 218
2010 363 201 91 210
2011 318 167 132 220
2012 312 228 159 217
2013 388 245 220 194
2014 478 237 268 210
2015 571 270 335 167
2016 628 331 475 190
2017 683 307 558 178
4829 2714 2398 2372

Year USAIR FedEx UPS SWA NWA
2007 271 126 89 129 200
2008 223 151 61 120 239
2009 279 131 60 95 166
2010 246 162 45 122 188
2011 290 153 52 128 187
2012 332 189 62 102 207
2013 334 185 65 X 207
2014 366 156 79 X 230
2015 358 183 98 X 278
2016 360 211 96 X 260
2017 321 213 97 X 295
3380 1860 804 2457

Post #84: http://www.airlinepilotforums.com/regional/34536-2012-boom-hiring-9.html#post645259

I don't know if AA's numbers include TWA; they're probably included, making my guess too high on their retirements. DAL/NWA looks like 250-300/yr so I was off by quite a bit there.

 

[Sacha]

WSJ- Weds. Sept.14,2011

"Ed Bastian, the president of Delta, the second-largest airline by traffic, said the airline will extend it's planned 4% to 5% fourth quarter cut in capacity into the first quarter of 2012. The airline plans to CUT capacity by 2% to 3% for ALL of 2012, compared with 2011.

 

[twobits]

I believe the emphasis of the head honchos is that DL is re-sizing the airline by reducing headcount and fleet. Memphis will have 25% less departures, and overall 140 aircraft are in the process of being retired.

Trying to cut non-fuel costs never works out good for pilots, nor does an overall 2-3% capacity cut. The devil is in the details.... guess we will find out at the end of October.

 

[xjhawk]

All you Delta guys who think you are flowing to Mesaba.....according to our union-when all but 108 of us were lied to-stabbed in the back and were not allowed to keep our promised flow like Compass was given-I say do F#$% yourself by thinking you can flow back to Mesaba screwing us even more after again being screwed by the union seniority list integration.

Yes I am pissed-not only did I lose a flow slot, but my good company was sold to a crappy one who is mismanaged with a bitter pilot group who now blames MEsaba for this......oh and then ALPA has such bad policies concerning merging seniority lists that it in essence gave one pilot group great gains in contract and seniority (colgan)-gave gains to the ultra senior mesaba pilots in seniority-while screwing the rest, and essentially is preventing may pinnacle FO's from upgrading for 5 years. AND NOW YOU WANT TO FLOW DOWN when there is threat of furloughs? Selfish busters you are- cancel my flow when you have the world at your feet and now this sort of talk-your moms must be proud

 

[Sacha]

All you Delta guys who think you are flowing to Mesaba.....according to our union-when all but 108 of us were lied to-stabbed in the back and were not allowed to keep our promised flow like Compass was given-I say do F#$% yourself by thinking you can flow back to Mesaba screwing us even more after again being screwed by the union seniority list integration.

Yes I am pissed-not only did I lose a flow slot, but my good company was sold to a crappy one who is mismanaged with a bitter pilot group who now blames MEsaba for this......oh and then ALPA has such bad policies concerning merging seniority lists that it in essence gave one pilot group great gains in contract and seniority (colgan)-gave gains to the ultra senior mesaba pilots in seniority-while screwing the rest, and essentially is preventing may pinnacle FO's from upgrading for 5 years. AND NOW YOU WANT TO FLOW DOWN when there is threat of furloughs? Selfish busters you are- cancel my flow when you have the world at your feet and now this sort of talk-your moms must be proud

You will like OYS when she flows down. (read furloughed) she just wants what is fair. You can complain all you want, but she has the right to your seat in her fantasy world....

GODSPEED!!!