Cal

[DarnNearaJet]

What's happening at CAL?

I understand it's one of the healthiest global carriers around these days. Any sign of recalls?

 

[Red Leader]

Last word on recalls was NONE in 2003. Cal is the reason I'm happily swimming in the big LUV pool and currently selling my soul back to Uncle Sam for a few bucks. They have announced NO plans for growth anytime soon. The sentiment is that recalls will happen in 2004 to replace retirements. It would appear that CAL's future outlook rests with it's ability to exploit the RJ. CAL is surviving on XJET's ability to fly 3 hour leg lengths on paltry wages. Alot of good people there and I wish them all the best in the current environment. However, it's time for me to move on.

ciao

 

[CAL to T-1A]

CAL is very conservative on the growth side. I wouldn't expect recalls until the Iraq issue gets resolved and the economy recovers.

As a result of CAL's conservatism and pay and benefits that are significantly lower than most competitors, CAL loses less money than most majors and was making small profits when the economy was healthy.

 

[zonker]

I'm reasonably optimistic about my chances of returning to CAL. It really depends on what happens with a lot of things in the next year.

Over 1000 pilots are going to retire at CAL in the next 5 years, not counting loss of medical or termination. As long as there is an airline industry to return to, I think CAL will be in good shape - and a survivor.

 

[BLUE BAYOU]

CAL is extremely similar in many aspects to NWA. There is slow to nearly no growth except in the RJ arena. Then there's cash in the bank and outlays. It seems that NWA might be weathering the storm better than CAL. Remember what happened after 9/11? The first major to sqwuak was CAL. CAL needs a good flow of cash to continue its service-- it appears that they're holding on. It will be interesting to see if this CAL-NWA-DAL code-sharing will be approved. CAL and NWA already share on many routes.

 

[CAL to T-1A]

NWA is weathering the storm. CAL decided to buy back their stock from NWA last year prior to 9/11. It cost CAL about $2B. That $2B is now enough to buy CAL!!!!!!!!!!!

NWA also owns a larger portion of their aircraft making CAL a highly leveraged airline.

 

[COpilot]

$2B???
Everything I read said it cost us $350M, where did you get that number?

Next year we retire 130,

2004, 102

2005, 158

2006, 231

2007, 302

2008, 236

 

[G4G5]

Actually CAL is not in a great position. Of all the majors they have the least amount of assets to tap from. The problem with having a young fleet is that you have not had time to pay it off. Most of their aircraft are leased and not owned. So they have no aircraft to lease(generate cash from).

According to Goldman Sachs they are loosing $1.2 million per day for the fourth quater. They are relying on the cash flow generated by advance sales(like everyone else). The problem comes in 1Q03, when cash flow is slow, you have little to lease and God forbid a war. They are better off then UAL/U but no where near as stable as Luv.

 

[zonker]

All of that is true, buit it's also true that CAL reported an operating profit for the 3rd quarter, and if not for federal security taxes, would have made money. CAL is not in a good position NOW, but they will be when the economy turns around. The question is their ability to weather the financial downturn and yes, a war. A prolonged war is not going to be good for anyone.

Also, they stand to benefit from the CAL/DAL/NWA merger, if approved. Plus, they have CalEx to spin off, which should raise about 500 million in cash...so they're far from dead.

Comparing them to SWA is apples to oranges...

 

[COpilot]

G4G5,

So what number are you on the combined AA&TWA list?

I hope this whole thing does not become a race to exit Chap.11 for all of us. If so I bet you we can get out before you guys. Haha... Remember even though those airplane are leased, we can dump them fast, and use low cost x-jet for everything.

("Great, what am I saying"!) I'll be out of a job but CO will be a survivor.