http://www.commercialappeal.com/news/2012/jul/25/delta-reaffirms-fleet-realignment-plan-but-wont/
Delta Air Lines officials weren't showing their cards Wednesday regarding a high-stakes fleet realignment plan that could affect the future of Memphis-based Pinnacle Airlines Corp.
After announcing what was described as one of the company's best April-June quarters ever from an operational and performance standpoint, Delta executives deflected analyst and media questions about how fleet changes might affect regional carriers.
Delta reported a $168 million loss including nonrecurring items that included a $561 million adjustment related to fuel-price hedging. The carrier said it would have made a $586 million profit, a $220 million improvement over a year earlier, without the one-time costs. Analysts had expected earnings of 68 cents a share.
Delta shares rose 14 cents to $9.47.
CEO Richard Anderson told analysts the company has "a confident path" for reducing 50-seat jets from about 320 to 125 and replacing some with Boeing 717s and two-class regional jets. Officials are counting on fleet realignment to produce part of $1 billion in anticipated cost savings over the next couple years.
When an analyst asked what Delta can do if a regional partner under long-term contract doesn't want to dump its 50-seat jets, Anderson said, "We have a steady path to be able to get to 125 ... we have a confident path of moving to the 125 and I will just leave it at that."
The fortunes of Pinnacle and Memphis International Airport are closely tied to Delta's push to ground 50-seat regional jets, which are considered inefficient to operate and due for major maintenance overhauls in the next few years.
Pinnacle operates about 140 50-seaters for Delta out of Memphis and other airports. Memphis Mayor A C Wharton's aviation consultant, Brian Campbell, said last week that about 58 percent of flights serving Memphis are provided by planes with 50 seats or fewer.
Delta reached agreement with its pilot union in June to make a "significant reduction" in 50-seaters and expand two-class, 76-seat regional jets by 70 aircraft. The agreement forced Pinnacle officials to go back to the drawing board to figure out how best to keep the company afloat coming out of a Chapter 11 bankruptcy filed April 1.
Pinnacle had previously filed a plan to move forward post-bankruptcy as a Delta-only carrier utilizing 181 jets, including 140 50-seaters. But Pinnacle officials said Delta's pilot agreement signaled that Pinnacle needs to lower costs to successfully compete for future Delta contracts.
During the earnings call, Aviation Week reporter Andrew Compart asked about a report that Delta Connection partner SkyWest is balking at the notion of having to park 50-seaters that SkyWest has under long-term contract with Delta.
Anderson said Delta has "a number of operators and a number of contracts" up for renegotiation and added, "We've been able to do 180. I think you just need to stay tuned. It's going to happen."
Delta is the provider of Pinnacle's debtor-in-possession financing yielding a net of $30 million in new liquidity.
Delta Air Lines officials weren't showing their cards Wednesday regarding a high-stakes fleet realignment plan that could affect the future of Memphis-based Pinnacle Airlines Corp.
After announcing what was described as one of the company's best April-June quarters ever from an operational and performance standpoint, Delta executives deflected analyst and media questions about how fleet changes might affect regional carriers.
Delta reported a $168 million loss including nonrecurring items that included a $561 million adjustment related to fuel-price hedging. The carrier said it would have made a $586 million profit, a $220 million improvement over a year earlier, without the one-time costs. Analysts had expected earnings of 68 cents a share.
Delta shares rose 14 cents to $9.47.
CEO Richard Anderson told analysts the company has "a confident path" for reducing 50-seat jets from about 320 to 125 and replacing some with Boeing 717s and two-class regional jets. Officials are counting on fleet realignment to produce part of $1 billion in anticipated cost savings over the next couple years.
When an analyst asked what Delta can do if a regional partner under long-term contract doesn't want to dump its 50-seat jets, Anderson said, "We have a steady path to be able to get to 125 ... we have a confident path of moving to the 125 and I will just leave it at that."
The fortunes of Pinnacle and Memphis International Airport are closely tied to Delta's push to ground 50-seat regional jets, which are considered inefficient to operate and due for major maintenance overhauls in the next few years.
Pinnacle operates about 140 50-seaters for Delta out of Memphis and other airports. Memphis Mayor A C Wharton's aviation consultant, Brian Campbell, said last week that about 58 percent of flights serving Memphis are provided by planes with 50 seats or fewer.
Delta reached agreement with its pilot union in June to make a "significant reduction" in 50-seaters and expand two-class, 76-seat regional jets by 70 aircraft. The agreement forced Pinnacle officials to go back to the drawing board to figure out how best to keep the company afloat coming out of a Chapter 11 bankruptcy filed April 1.
Pinnacle had previously filed a plan to move forward post-bankruptcy as a Delta-only carrier utilizing 181 jets, including 140 50-seaters. But Pinnacle officials said Delta's pilot agreement signaled that Pinnacle needs to lower costs to successfully compete for future Delta contracts.
During the earnings call, Aviation Week reporter Andrew Compart asked about a report that Delta Connection partner SkyWest is balking at the notion of having to park 50-seaters that SkyWest has under long-term contract with Delta.
Anderson said Delta has "a number of operators and a number of contracts" up for renegotiation and added, "We've been able to do 180. I think you just need to stay tuned. It's going to happen."
Delta is the provider of Pinnacle's debtor-in-possession financing yielding a net of $30 million in new liquidity.
