Delta 717's

[Linedriver]

I understand the lease is another 5 years or so. Are we keeping them after the lease or getting rid of them?

 

[General Lee]

I understand the lease is another 5 years or so. Are we keeping them after the lease or getting rid of them?

Keeping them. Most of the sub-leases from SWA go to 2020-2024, but the sweetheart part of the deal was after the leases are over, Boeing is supposedly allowing DL the right to purchase the 717s outright for "then value." So, if in 2024 a 717 is worth $4 million with the engines, then that will be the price. The MD90s that are coming now are in the range of $8-9 million each including the engines.


Bye Bye---General Lee

 

[Cornelius]

I heard WN is putting 2 million into each 717 that DL is taking possession of. Sweet little deal for Delta.

 

[maxblast72]

I heard WN is putting 2 million into each 717 that DL is taking possession of. Sweet little deal for Delta.

The numbers I heard were about $140 million to convert to Delta Specs. Supposedly, it was going to run about $50 million to convert from AirTran to Southwest specs and Boeing Capital kicked in a $40 million credit towards future SWA aircraft. So in the end, SWA is paying an extra $50 million to sub-lease to Delta. At an extra 20-26 seats of revenue per flight and essentially the same trip cost as the 717, it won't take more than a year for SWA to recoup that $50 million cost.

I wish the economics would have worked for SWA to keep the AirTran B717 fleet. I would have made an extra $200K over the next 5 years had the B717s made it to lease expiration.

 

[maxblast72]

Keeping them. Most of the sub-leases from SWA go to 2020-2024, but the sweetheart part of the deal was after the leases are over, Boeing is supposedly allowing DL the right to purchase the 717s outright for "then value." So, if in 2024 a 717 is worth $4 million with the engines, then that will be the price. The MD90s that are coming now are in the range of $8-9 million each including the engines.


Bye Bye---General Lee

General, what's up with that AE you guys just issued that included the initial bids for the B717? Did I read it right when it basically said no new hires through the end of the bid (Q2 2014)?

 

[redflyer65]

The numbers I heard were about $140 million to convert to Delta Specs. Supposedly, it was going to run about $50 million to convert from AirTran to Southwest specs and Boeing Capital kicked in a $40 million credit towards future SWA aircraft. So in the end, SWA is paying an extra $50 million to sub-lease to Delta. At an extra 20-26 seats of revenue per flight and essentially the same trip cost as the 717, it won't take more than a year for SWA to recoup that $50 million cost.

I wish the economics would have worked for SWA to keep the AirTran B717 fleet. I would have made an extra $200K over the next 5 years had the B717s made it to lease expiration.

A savings of over 300 million dollars per year to Southwest, every year.

 

[airplane wizard]

I heard WN is putting 2 million into each 717 that DL is taking possession of. Sweet little deal for Delta.

2 million on what?? Airtran is a 121 carrier.....SWA is a 121 carrier.....Delta is a 121 carrier...what do they have to do?

 

[General Lee]

General, what's up with that AE you guys just issued that included the initial bids for the B717? Did I read it right when it basically said no new hires through the end of the bid (Q2 2014)?

I don't know about no new hires until Q2 2014, but DL is currently about 400 pilots fat. There were close to 200 returning furloughs coming back from military leave, which was sort of unexpected. So, with that many extra pilots, the initial 16 717s have current FOs heading to them, along with 14 MD90s coming. Part of it is also due to the changing of fleet ops. The 320/319 fleet used to do more long stage flights from DTW and MSP, but now do shorter stage lengths due to their lack of IFE, so 738s do more of the stuff they used to do thanks to the TVs onboard. So, that fleet is deemed fat for that reason, shorter stage lengths equals fewer pilots needed. A lot of system tweaking going on. But, this supposedly is the last negative bid for awhile, with consistent hiring and retirements coming up......it will eventually happen, maybe flow ups first during the beginning of next year??


Bye Bye---General Lee

 

[General Lee]

2 million on what?? Airtran is a 121 carrier.....SWA is a 121 carrier.....Delta is a 121 carrier...what do they have to do?

I have heard full mx checks (c checks?), repaint, reconfigure seats, and wifi install I believe...


Bye Bye---General Lee

 

[fletch717]

2 million on what?? Airtran is a 121 carrier.....SWA is a 121 carrier.....Delta is a 121 carrier...what do they have to do?

All new interiors, and a few options. The all knowing, greatest airline in history decided to pay the competition 150 million dollars to fly their inherited airplanes against them on the same routes. The same airplanes that made money flying against The greatest airline ever.

 

[scoreboardII]

Only at RJ wages, were the 717 economical.

 

[i fly boxes]

I heard delta was also looking at dc 3s and 707s to continue their strategy of buying the oldest planes possible. They have also pushed their Dreamliner order back to 2032

 

[General Lee]

Only at RJ wages, were the 717 economical.

Or unless you allow someone else to pay for the C-check, repaint, remod, and wifi install, plus you have bag fees and a refinery......


Bye Bye---General Lee

 

[General Lee]

I heard delta was also looking at dc 3s and 707s to continue their strategy of buying the oldest planes possible. They have also pushed their Dreamliner order back to 2032

Rumor has it there are more used planes on the way, a lot larger than 717s, though...


Bye Bye---General Lee

 

[PropPiedmont]

I have heard full mx checks (c checks?), repaint, reconfigure seats, and wifi install I believe...


Bye Bye---General Lee

Don't forget that SWA is also paying for the wing spar AD for Delta too.

 

[maxblast72]

All new interiors, and a few options. The all knowing, greatest airline in history decided to pay the competition 150 million dollars to fly their inherited airplanes against them on the same routes. The same airplanes that made money flying against The greatest airline ever.

Well, here are the numbers Gary Kelly looked at for 2016: either fly 88 leased B717s with 120 seats on them or keep 88 paid off B737-300s with the 143 seat evolve interior for a few years longer. Gary Kelly has told Wall Street on numerous occasions that the B717s and B737s have very similar per trip costs.

If you do the math, the 88 B737-300s that are kept around longer will pull in hundreds of millions more per year in revenue than the B717s would have. That doesn't even count the costs of having a second fleet type which adds complexity to the SWA system.

You mean to tell me if someone said to you pay me $150 upfront and then I will pay you $300 per year for 4-6 years, you would turn them down? That is why bean counters run airlines better than pilots.

 

[maxblast72]

But, this supposedly is the last negative bid for awhile, with consistent hiring and retirements coming up......it will eventually happen, maybe flow ups first during the beginning of next year?

General, do you know what the deal is with flow ups? Are half the new hire classes fill with Compass and Pinnacle guys for a while?

 

[maxblast72]

Rumor has it there are more used planes on the way, a lot larger than 717s, though...

Of course Delta is getting more used aircraft. There balance sheet won't allow for the procurement of newer more fuel efficient aircraft:

Year End 2010 DAL Stockholder equity: $800 million
Year End 2012 DAL Stockholder deficit: $2.1 billion

Heading the wrong direction there General. Delta going need some bigger profits to be able to pay for all those pension obligations and interest payments to service their long term debt. Isn't it better to have more assets on your balance sheet than liabilities?

 

[Monster Buck]

I understand the lease is another 5 years or so. Are we keeping them after the lease or getting rid of them?

Getting rid of them, the delivery schedule is over a 3-4 year period. We only want them for five total and then they are gone.

 

[General Lee]

General, do you know what the deal is with flow ups? Are half the new hire classes fill with Compass and Pinnacle guys for a while?

I don't know the exact numbers per class, but I believe Compass also has a limit per year, meaning if there are a lot of classes and the number is hit early, there might not be any in the later classes of the year. I don't think PNCL has that restriction. I wouldn't be surprised if half of each class is comprised of flow ups. But again, I don't remember the exact numbers.


Bye Bye---General Lee