2 New DL routes from ATL that Airtran won't do

[Ty Webb]

We then changed the way we do business at our hubs, doing quicker turns and so far we are doing well with our de-peaking hub operation. We turn the planes faster and added 81 flights a day to ATL alone, and that allows us more legs per day to try to create revenue.

I know you were responding to Fletch, but I have to point out that those legs you add only make money if you are charging fares over your costs. With that basic fact in mind, those 81 flights could mean more net, or it could mean more of a loss.

Our Simplfares program was initially created in CVG to attract our CVG passengers back, instead of driving to other cities close by and flying Airtran or others from Dayton etc. It was a huge success, and that spring boarded the plan into our current deal. That will affect Airtran, no doubt.

Or, it could have the unwanted effect of drawing us into CVG . . .

Your 737 CASM example is interesting. So, your 737s fly longer legs and lower the CASM and make you more money flying more people on longer legs.

Yep. Our CASM have actually gone down, and will continue to do so as we take delivery of more 737NG aircraft.

We fly huge 767s with a lot more seats than your 737s, and our CASM on those planes is VERY LOW. The reason our total CASM is high is because our RJs are lumped in with us. Our mainline CASM is a lot lower than yours, since we have larger planes flying farther distances than your 737s.

I will have to check into this (Delta's CASM), but the fact remains, your company is charging fares at less than their cost, which means more losses.

While you have 1 daily 737 to SFO, we have 5 flights with 757s and 767s, which are full.

We are treating SFO as seasonal service- it will increase in the Spring. Regardless, your company is trying to compete on those routes, and, again, is offering fares that cause you to lose more money.

Bye-Bye, General Lee!

 

[General Lee]

I know you were responding to Fletch, but I have to point out that those legs you add only make money if you are charging fares over your costs. With that basic fact in mind, those 81 flights could mean more net, or it could mean more of a loss.



Or, it could have the unwanted effect of drawing us into CVG . . .



Yep. Our CASM have actually gone down, and will continue to do so as we take delivery of more 737NG aircraft.



I will have to check into this (Delta's CASM), but the fact remains, your company is charging fares at less than their cost, which means more losses.



We are treating SFO as seasonal service- it will increase in the Spring. Regardless, your company is trying to compete on those routes, and, again, is offering fares that cause you to lose more money.

Bye-Bye, General Lee!

Ty,

We lost quite a bit of money last year and last quarter, but a lot of that was taken without the new pay cuts and lease cuts in mind. We also had a money losing hub at DFW, and that is now history. For you to say with assurance that we always lose money on our flights is wrong. We have trimmed down our costs to be able to afford those lower fares, and really the only fares that were majorly cut with simplifares were the super expensive walk up fares that business people hated. We didn't add more bottom basement fares, that is a misconception that obviously a lot of people have. And, Airtran really doesn't compete with us on a lot of city pairs. Let me list you the ones from ATL alone:

Albany Ga, Albany NY, Albuquerque NM, Alexandria LA, Allentown Pa, Amsterdam Neth, Appleton WI, Aruba, Ashville NC, Augusta GA, Austin TX, Baton Rouge LA, Beaumont TX, Belize City, Bermuda, Birmingham AL, Bogota Col, Brunswick GA, Brussels Bel, Buenos Aires, Cancun, Caracas, Charleston SC and WV, Charlottsville VA, Chattanooga TN, Chicago Ohare, Cincinatti OH, Cleveland OH, Colorado Springs CO, Columbia SC,,,,,,,,,,,and on and on and on.

Can you see that? I just stopped at the C's. Do you affect our Vail, CO fares or Jackson Hole, Gunnison, or Steamboat Springs flights from ATL? Nope. With these examples, it kinda shows our size compared to yours, and with us getting leaner and taking pay cuts and lease cuts, that doesn't help you out. Do we lose money on Vail flights? Nope. Do we lose money on our Tokyo flights from ATL? Heck no. Do we lose money on our LA flights? We might have before, but now our Simplifares have spurred middle price fares or walk ups for only $499 or $599, instead of grabbing a few super high fares and then mostly bottom rung fares. That is the key.


So, your CASM will continue to go down with more 737NGs. You may be right, but think about all of the 757s and 767s (along with our own 738s with a better CASM than your 737-700s because of more seats and now lower crew costs) that we fly transcon and beyond? What could our 767-300 CASM be with more than 250 seats flying 5 hours to LAX with our new pay cuts also included. I bet it is fairly low. That will help us out.

And, you guys going to CVG? Riiiight. Absolutely no gates available, unless you want the new DHL cargo ramp that they will be evacuating when they move to Wilmington, OH with ABX. Go for it chief! Adios Ty.

Bye Bye--General Lee

 

[MedFlyer]

The reason our total CASM is high is because our RJs are lumped in with us. Our mainline CASM is a lot lower than yours, since we have larger planes flying farther distances than your 737s.

Bye Bye--General Lee

Delta actually does report CASM for both mainline/regional combined and mainline alone.

Q4 2004

DL mainline CASM (fuel neutralized): 9.47 (down 3.9% from 2003)
DL combined CASM (fuel neutralized): 10.15 (down 2.2% from 2003)
Airtran CASM (fuel neutralized): 7.64 (down 5.9% from 2003)

Now, I don't know about you General, but where I come from 7.64 is lower than 9.47. And while DL is making progress in cost cuts, DL's yields are falling just as fast. Even worse, DL's yields are falling faster than Airtran. Airtran's yield fell 5.6%, while DL's fell 7.1%.

And if fuel prices remain high, DL is on track to easily lose another 1-1.5 Billion this year. Given DL's current cash position, DL could easily face another liquidity crisis by year end. DL will either be forced to sell additional assets, cuts costs further or get additional financing (more debt!!!).

 

[General Lee]

Delta actually does report CASM for both mainline/regional combined and mainline alone.

Q4 2004

DL mainline CASM (fuel neutralized): 9.47 (down 3.9% from 2003)
DL combined CASM (fuel neutralized): 10.15 (down 2.2% from 2003)
Airtran CASM (fuel neutralized): 7.64 (down 5.9% from 2003)

Now, I don't know about you General, but where I come from 7.64 is lower than 9.47. And while DL is making progress in cost cuts, DL's yields are falling just as fast. Even worse, DL's yields are falling faster than Airtran. Airtran's yield fell 5.6%, while DL's fell 7.1%.

And if fuel prices remain high, DL is on track to easily lose another 1-1.5 Billion this year. Given DL's current cash position, DL could easily face another liquidity crisis by year end. DL will either be forced to sell additional assets, cuts costs further or get additional financing (more debt!!!).

This was pre pay cuts and pre lease cuts. I never said our CASM was lower than Airtran's, but rather our CASM was lowering to become more competitive. Our DCI RJs have not helped, and I think they were lumped in. As far as yeilds go, our walk up fares were cut in half, and Simplifares was created to increase revenue eventually, not cut into it. This was an offensive move, not only a defensive move. As far as a liquidity crisis, I predict selling some assets that are really not needed, like owning the W.O.'s, and that will probably generate enough cash to get us through the slow Winter period, and after that we are forcasted to get over the hump and start making some sort of profits. I never said this would be a fast or easy process. Yeah, we may have to borrow more, but it is all about current liquidity, and I don't see them getting too low without doing anything. Could they cut costs further? Sure. They only took 10% from the other employees, so I can see another 10% maybe coming down the line. We have a contract and had a 32% pay cut along with medical premium raises. The CFO works on the liquidity issues, and I am sure he is looking into everything. He has options riding on it, which is a good carrot. I can see Comair and ASA being sold this year---but then remaining DCI carriers--by the end of the year---just a guess though.


Bye Bye--General Lee

 

[General Lee]

Medflyer,



Here is a recent article for you to calm your fears somewhat:



Analyst Likes Delta's Chances
http://www.thestreet.com/tsc/c.gif
By Ross Snel
TheStreet.com Staff Reporter
2/15/2005 10:49 AM EST



Delta Air Lines (DAL:NYSE - commentary - research) shares gained Tuesday after Calyon Securities upgraded them on a rosy assessment of the company's turnaround plan.

Shares were up 9 cents, or 1.6%, at $5.67 after rising by as much as 7.2%.

Ray Neidl, Calyon's airline analyst, raised his rating on the stock to add from neutral. "After meeting with management, our confidence that Delta can execute its plan to address its cost structure and overly leveraged balance sheet has increased," Neidl wrote in a research note explaining the upgrade. (Calyon has not received compensation for investment banking from Delta in the last year and does not expect to receive or seek such compensation in the next three months.)

After achieving $1 billion in annual savings from a new pilots contract late last year, Delta last month rocked the industry with its SimpliFares program, which simplified pricing and reduced maximum fares. The airline also executed a major rescheduling at its Atlanta hub.

"We believe that, over the next 12 months, while the company addresses its overly leveraged balance sheet, Delta will also realize the benefits from its recent cost cuts, schedule changes and streamlined operations," Neidl wrote. "As a result, we believe that Delta could have substantial upside potential in returning to profitability and in its stock price. We believe that Delta will now survive the slow winter period, even with the dilutive impact of SimpliFares, and then benefit from the higher cash flow typically seen during the spring and summer seasons."

The Atlanta-based carrier had a fourth-quarter net loss of $2.2 billion, or $16.58 a share, including noncash charges totaling $1.4 billion, vs. a loss of $327 million, or $2.69 a share, a year ago. The airline industry has been plagued with high fuel prices, overcapacity and cutthroat price competition.



Bye Bye--General Lee

 

[Spooky 1]

General,

Answer this question if you can? Exactly what is Delta's policy regarding the use of the APU prior to start and after landing? I know that it is written somewhere in your Ops so if it is in fact policy that you don't start it until four minutes prior to start, "so be it" to quote another great Delta leader. Just answer the question as I am sure it is in your FOM somewhere. As a matter of fact just quote your FOM if you care to.

Never been on Air Tran in my life so I can't respond to their operations. Come on General you know that there must be a written policy, that at least in this case puts economy ahead of comfort. Another great decision from the 4th floor I suppose. I really would like to see Delta suceed but these types of decisions are not working in your favor (or mine).

So? Whats is the policy at Delta regarding the APU prior to and after flight?

 

[CatYaaak]

So? Whats is the policy at Delta regarding the APU prior to and after flight?

Judging from General's answers, apparently the policy is to not be proactive, but rather leave it shut down until the complaints of suffering passengers begin to be heard in the cockpit.

Really General it ain't rocket surgery and you shouldn't have to be told. Without the APU running there isn't an aircraft made that doesn't quickly heat up to discomfort levels when there's a heavy load of pax especially when they're moving around boarding or de-planing. Aren't you guys getting paid to think about those things?

 

[General Lee]

Judging from General's answers, apparently the policy is to not be proactive, but rather leave it shut down until the complaints of suffering passengers begin to be heard in the cockpit.

Really General it ain't rocket surgery and you shouldn't have to be told. Without the APU running there isn't an aircraft made that doesn't quickly heat up to discomfort levels when there's a heavy load of pax especially when they're moving around boarding or de-planing. Aren't you guys getting paid to think about those things?

Spooky and Catyaaak,

Ok, what? We absolutely have a policy. If there have been no complaints and one of us doesn't feel hot or cold, then we turn it on 5 minutes prior to departure. It is that simple. Do we need to have it running all of the time? Are we pilots zombies who can't feel if it is hot or cold? I guess the stews can't feel hot or cold either? Give me a break. Then, when we come back into ATL, we turn on the APU prior to parking at the jetway, so we can immediately shut down the engines. We keep it on after ground power has been plugged in, and use the APU for air conditioning if it is hot or will be hot for the passengers as they deplane. It is that simple. We do not want to make the experience bad for any passenger, but sometimes it happens and we are sorry for that. I am not ducking any questions, and we do not want to roast anyone.


Bye Bye--General Lee

 

[IAHERJ]

Finally we reach page six. I looks as if the General's airline is better and will crush the competition over at concourse C. I had better start updating my logbook. We can finally put this issue to rest. Delta is the largest regional airline in the South and they also fly to some seasonal ski resorts once a day not unlike successful majors like NWA, CAL and AA.

To sum things up; Huge 767's will eventually eat small 737's and 717's. Turn the lights out folks, it's done.

IAHERJ

Now running away from a giant 767-300 domestic airliner that looks hungry.