Comair's fate hinges on Delta

[jarhead]

But experts and analysts see three likely scenarios in the event of a Delta bankruptcy:

• Comair is included in the restructuring under the Chapter 11 umbrella, since it is part of the entire Delta Air Lines Inc. corporation. Experts say this is the most likely outcome in the event of a Delta bankruptcy, which raises the possibility of Comair restructuring its labor contracts, most notably with its pilots - who went on a three-month strike in 2001.

• Comair is spun off either as a privately held or publicly traded company. It essentially would be sold to raise cash for Delta.

• Delta retains Comair and its other subsidiaries but does not include the smaller airlines in the restructuring. That could lead to some interesting situations, such as Delta pension fund managers looking to raid Comair's assets.

What confuses me most in this article is in the listing of the three possible scenarios. In the third option, the very last sentence makes no sense to me.

How could Delta possibly “raid’ any “assets” of Comair? I thought Delta owned all the assets. Revenues, stock, profits, aircraft, facilities, etc. Am I wrong with this understanding? How could DAL ‘raid’ assets of Comair? DAL already owns them all, does it not?

Help! Please!

What do the writers of this article mean by that statement?

 

[lowecur]

Comair's "fake" profitability is such a drain on Delta that Comair pilots should propose changes in their contract that will help to restore Delta's bottom line. It is only fair for us to help the Company and the Delta pilots, since they have "given" us everything we have. It is time to thank them for their past generosity and pay back what is really theirs.

As mother DL is insinuating: "pay me now, or pay me later." Cynical ideas aside, Greenjeans is playing DALPA like a finely tuned Gibson. He has focused all of his attention on DALPA and he will let them be the scapegoat. Overall, he knows that the company needs a multitude of changes for long term health, and 11 will be his solution.

 

[lowecur]

jarhead

What confuses me most in this article is in the listing of the three possible scenarios. In the third option, the very last sentence makes no sense to me.

How could Delta possibly “raid’ any “assets” of Comair? I thought Delta owned all the assets. Revenues, stock, profits, aircraft, facilities, etc. Am I wrong with this understanding? How could DAL ‘raid’ assets of Comair? DAL already owns them all, does it not?

Help! Please!

What do the writers of this article mean by that statement?

Just an amateur guess, but I believe it's the incorporation of Comair/ASA into DL (no longer subsidiaries). As subsidiaries, I believe they have certain protections from the mother-ship. This would be a distasteful scenerio and would probably lead to a complete mutiny. I don't see this happening.

 

[AFELLOWAVIATOR]

Comair's "fake" profitability is such a drain on Delta that Comair pilots should propose changes in their contract that will help to restore Delta's bottom line. It is only fair for us to help the Company and the Delta pilots, since they have "given" us everything we have. It is time to thank them for their past generosity and pay back what is really theirs.

Here are some ideas.

1. We should offer that all the 70 seaters be crewed by furloughed Delta pilots. That way CMR pilots can move back to the 50 seaters, where they belong. That's only for starters though -- see #9.

2. We should alter our pay scales for the 70-seater and agree to fly them for $2/hr less than the U pilots fly the EMB-170 @ MAA. That would make the top pay $56/hr, which would make us "competitive". It won't matter since the planes will be flown by DL pilots anyway and they need job security more than we do.

3. We should lower the 50-seat rates accordingly, including no credit for longevity. There is no reason the Company should pay us more than Mesa to fly these planes. Think of the "growth" that might come if we can undercut Mesa. That would get all the furloughees back in a heartbeat.

4. We should remove all the stupid "work rules" and agree to fly to FAR's. That will improve productivity and help the Company. Since most CMR pilots will be replaced by furloughed DL pilots it won't affect us much and the DL pilots will be so happy to get back to work that they won't care either. This would really help the Company.

5. We should give up those DC pension benefits. Since all of us want to fly for a "major" some day, we don't need any "retirement" from a place where we aren't going to retire. That includes the Company's 401K match as well. When we do get to be real airline pilots at a major we will be able to recover all and more by participating in their superior DB retirement plans.

6. Things like "premium pay", duty rigs, trip rigs and minimun day are unnecessary at a regional airline. The CFI's that now fly our airplanes aren't accustomed to that and won't care. Besides, they are all going to flow-through/migrate to DL at some point anyway. While we're at it, we should also do away with cancellation pay. That "risk" should be absorbed by the pilots, not the company.

7. We should encourage the re-establishment of PFT, with an exemption for the DL pilots that move over. The rest of us need to pay for the jobs we have, given our lack of experience.

8. We should indicate our willingness to accept a "pure staple" with DL mainline and beg the DL pilots to consider it (the company might agree if we do all those other things above first). That way a 3-yr DL furloughee can be senior to a 25 yr CMR captain. That is their rightful place anyway, so why not give back to them what they have given to us? We won't lose more than 1000 jobs, so most of the "lifers" that we have will still keep their employment. Some might have to downgrade, but so what. The increase in the quality that the company will get from the "experience" of the DL pilots is well worth it. This is a little risky because the DL pilots might give concessions in work rules too and that might furlough a whole lot more. Still, the beneift of a staple outweighs the risk. Everything will be back to "normal" in 10 years anyway. Not to worry.

9. In the interest of unity with the DL pilots and to gain the blessing of ALPA, we should agree that the DMEC scope clause should be lowered so that DL pilots fly everything over 40 seats in a couple of years, and later on all jets. That should finally put a stop to all these useless RJs that Delta has chosen to operate (once these airiplanes are flown by "the mainline" they won't be RJ's anymore. We'll just call them "small jets"). The flying belongs to DL pilots anyway and we have been "stealing" it for too long. Let's be honest and give it back. As a side effect, it will also improve the credibility of the Boyd group and people may even start to believe DW as well.

10. These things will allow us to "share the pain" of the DL pilots, which is what they want, and we all know deep down that what they want is just and it is what they should have. These things will help return the "mainline" to profitability and reduce the loss that they suffer from subsidizing Comair. One day the DL pilots will "forgive" us for all the bad things we have done to them. That way when the mainline grows we can all aspire to the "preferential hiring" that they will surely force their company to give us in return. We must learn to trust the DL pilots who really have our best interests at heart. After all they did pay the assessment and they gave us money during the strike. We "owe" them.

11. Finally, if we do this, the DL pilots will help us to get a Scope Clause like theirs and we can eliminate SkyWest, Chatauqua and any other outfit that wants to subcontract with Delta. That will return all the "growth", we will get new airplanes, and every one will be recalled in a short time. When its all settled you will be able to call yourself a "mainline pilot", even a Delta pilot, which is the greatest benefit of all.

I'm sure that mangement will accept these ideas and have little doubt that we will gain the full support and love of ALPA, the DMEC and the DL pilot group. It will also help the Company to pay for all those "hidden costs" that Delta mainline is now paying for us on the backs of the impoverished DL pilots.

PS. Don't worry about ASA, if we do this right we can get some of their flying back for the DL pilots too.

LMAO!! That was good. What is sad is that this is what a lot of the Delta pilots think should happen.

 

[bvt1151]

What confuses me most in this article is in the listing of the three possible scenarios. In the third option, the very last sentence makes no sense to me.

How could Delta possibly “raid’ any “assets” of Comair? I thought Delta owned all the assets. Revenues, stock, profits, aircraft, facilities, etc. Am I wrong with this understanding? How could DAL ‘raid’ assets of Comair? DAL already owns them all, does it not?

Help! Please!

What do the writers of this article mean by that statement?

Look closer at the last scenario. Its not Delta who's raiding Comair's assests, its the pension fund managers. More specifically, the Delta pilots pension fund managers. I believe they are their own entity independent of Delta and are a creditor to Delta right now, due to the pension shortfalls. If the judge allows it, they get what they want (money) which could mean the raiding of Comair's assets. The point to understand here is Comair would be raided by the Delta pilots pension fund. Not only is the pension killing Delta, but they want to use it to leach from Comair as well.

I'm sure the RJDC has a contingency for this, and a very real detrimental effect. However, I'm not sure I've ever heard of a pilots pension taking airframes and assets and slipping the rug out from underneath another pilot group who belongs to the same union. EAL/CAL may have some precidence, but I'm not sure.

This will not sit well with the DCI pilots. We already feel like we're subsidizing Delta pilots paychecks, and this would be a blatant act of aggression and greed. Couple that with forced concessions and you've got two very pi$$ed off pilot groups.

 

[jarhead]

bvt1151

I fully understand your premise here. The problem I have with the concept of "raiding Comair's assests" is that they (CMR) have no assets to be raided. It's like a theif trying to rob you, but then they find an empty wallet in your pocket. What specific assest does Comair have, that is not owned by Delta?

 

[lowecur]

I fully understand your premise here. The problem I have with the concept of "raiding Comair's assests" is that they (CMR) have no assets to be raided. It's like a theif trying to rob you, but then they find an empty wallet in your pocket. What specific assest does Comair have, that is not owned by Delta?

Don't know specifically what CMR owns, but I don't believe DL can sell individual CMR assets as a subsidiary(they can sell the company though), but they could sell individual assets if they were no longer a subsidiary. CMR still has it's own board and decision making process that is separate from DL. They are bound together at this point by a contract of fee for service, but a subsidiary relationship still legally separates the two entities.

 

[jarhead]

Don't know specifically what CMR owns, but I don't believe DL can sell individual CMR assets as a subsidiary(they can sell the company though), but they could sell individual assets if they were no longer a subsidiary. CMR still has it's own board and decision making process that is separate from DL. They are bound together at this point by a contract of fee for service, but a subsidiary relationship still legally separates the two entities.

Comair does have its own president and other officers, who report to the president of DCI. DCI is a puppet entity also, and reports to DAL mangement. Comair's management has its strings pulled by DCI and DCI is the puppet entity of DAL.

I am confused by your comment that they (assuming you mean 'they' to be DAL) could sell individual assets if Comair were no longer a subsidiary.
If CMR were no longer a wholly owned subsidiary, DAL couldn't sell any of CMR's assets, any more than my next door neighbor could sell my car or lawn mower. It's not theirs to sell if they don't own it.

The thing I am trying to convey, without much success, is that Comair (and ASA) are in fact, WHOLLY OWNED SUBSIDIARIES of DAL. Since they are WHOLLY OWNED, how can they have any assets at all? They can't, as by definition, Delta owns all the assets, as well as all the liabilities, do they not?

 

[bvt1151]

The creditors (pension fund managers in this instance) would be entitled to anything under the Delta umbrella, including Comair assets. I'm sure Delta is much more interested in selling off Comair's assets to make the pension payments than they are to sell of their "own" assets. Comair is worth more right now in parts than it is as a whole, due to the horrible condition Delta has put itself in. Like we've discussed several times in this forum, Delta won't stand to make much money from a Comair sell-off, but if the prices are right they could stand to make more (or relieve more pension debt) by selling off the assets bit by bit. I'm not sure if this is the case or not, but it is possible. I wouldn't put it past Delta and I most certainly wouldn't put it past the Delta pilots pension managers.
The Comair stock ticker no longer exists, it is incorporated into the DAL stock price. This means that the creditors who collect from Delta could also collect from ASA and Comair, since they are both considered assets to Delta. There is no subsidiary clause that allows immunity from creditors for the subsidiaries of a company. In bankruptcy, everything's up for grabs.

This doesn't mean that Comair will be raided by the Delta pilots, though. An IPO or an outright sell to another airline could net Delta more money. Remember there were still two other scenarios.

 

[lowecur]

The thing I am trying to convey, without much success, is that Comair (and ASA) are in fact, WHOLLY OWNED SUBSIDIARIES of DAL. Since they are WHOLLY OWNED, how can they have any assets at all? They can't, as by definition, Delta owns all the assets, as well as all the liabilities, do they not?

You're asking a non lawyer questions that could probably only be answered by a corp lawyer. I'll give it a try anyway. Legally a subsidiary operates on it's own. Individually it's assets and liabilities are their own, but in whole they belong to DL (only for the purpose of selling the whole corp). In order to maintain the liability and tax advantages of a subsidiary, DL must exercize a minimum of control or face losing the advantages of having a subsidiary(mainly taxes and legal liability).

In bankruptcy DL may elect to scrap CMR/ASA as subsidiary's and just incorporate them as DL. The boards would be dissolved and the CMR/ASA subsidiary's would just be incorporated under mother DL. Under your statement "If CMR were no longer a wholly owned subsidiary, DAL couldn't sell any of CMR's assets, any more than my next door neighbor could sell my car or lawn mower. It's not theirs to sell if they don't own it." - CMR assets would not belong to DL. I contend they would, if the subsidiary relationship were dissolved.