crjdxr
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Selections from DAL's re-org plan:
PART B
COMAIR FINANCIAL PROJECTIONS
Notes to Projected Comair Statements of Operations
Operating Revenue
Revenue: The Comair Debtor s revenue primarily consists of a capacity purchase agreement between Comair and Delta. Under the capacity purchase agreement, Delta retains control and responsibility for all of Comair s scheduling, ticket pricing and seat inventories and are entitled to all revenue, including ticket, charter, cargo and mail revenue, associated with the operation of Comair s aircraft. Comair is responsible for operation of the aircraft and is compensated by Delta based on a market-based negotiated block hour rate multiplied by the actual block hours flown plus a mark-up, up to 7%, if certain operational performance goals are achieved, subject to certain adjustments and limitations. A 5% mark-up is assumed over the Projected Period.
The Comair Financial Projections assume revenue decreases of 8% from $1.3 billion in 2006 to $1.2 billion in 2007 due to a reduction in capacity primarily related to the rejection of certain leased aircraft associated with Comair Debtors Chapter 11 proceedings and the leasing of certain aircraft from Comair to SkyWest, Inc. Subsequent to 2007, it is assumed that revenue will increase in 2008 and 2009 due to capacity increases associated with new aircraft to ratably enter into service in 2008 through 2009.
Landing Fees and Other Rent: Landing fees are incurred as a function of arrivals/departures, aircraft weight and rates established by the various airports. The Comair Financial Projections anticipate a reduction in landing fees from 2006 to 2007 and increases from 2007 to 2010 related to capacity changes.
Aircraft Maintenance Materials and Outside Repairs: Aircraft maintenance expense is primarily driven by the timing of scheduled airframe and engine maintenance activities. All significant engine maintenance work is outsourced to Delta. The decrease in maintenance cost from 2007 to 2010 is driven by the timing of scheduled maintenance activities, the return of older aircraft at lease expiration and the acquisition of new aircraft.
Aircraft Rent: Aircraft rent reflects the operating expense associated with the Comair Debtors aircraft financed under operating leases. During the Chapter 11 proceedings, aircraft related obligations were reduced by rejecting certain aircraft leases and certain mortgaged aircraft, and renegotiating aircraft obligations for certain retained aircraft. Negotiations are still ongoing for certain aircraft. As part of these negotiations, it is anticipated that some of the mortgaged aircraft will be converted to leased aircraft. Therefore, aircraft rent is projected to increase offset by a related reduction in depreciation and interest expense. Additionally, aircraft rent is anticipated to increase due to the lease of new aircraft, partially offset by the return of certain aircraft as their leases expire from 2008 to 2010. Many of these transactions are subject to definitive documentation and Bankruptcy Court approval.
Cash Flow From Operating Activities: During the Projection Period, it is estimated that
Comair Debtors will generate positive cash flow from operations. Cash flow from operating activities is projected to increase from an estimated $68 million cash inflow in 2006 to $133 million cash inflow by 2010 for aggregate cash produced from operating activities during the Projection Period in excess of $500 million. Improved cash flow is a result of, among other things, the projected growth in revenue from 2008 to 2010 coupled with cost reduction initiatives implemented during the Chapter 11 proceedings.
Take it FWIW
PART B
COMAIR FINANCIAL PROJECTIONS
Notes to Projected Comair Statements of Operations
Operating Revenue
Revenue: The Comair Debtor s revenue primarily consists of a capacity purchase agreement between Comair and Delta. Under the capacity purchase agreement, Delta retains control and responsibility for all of Comair s scheduling, ticket pricing and seat inventories and are entitled to all revenue, including ticket, charter, cargo and mail revenue, associated with the operation of Comair s aircraft. Comair is responsible for operation of the aircraft and is compensated by Delta based on a market-based negotiated block hour rate multiplied by the actual block hours flown plus a mark-up, up to 7%, if certain operational performance goals are achieved, subject to certain adjustments and limitations. A 5% mark-up is assumed over the Projected Period.
The Comair Financial Projections assume revenue decreases of 8% from $1.3 billion in 2006 to $1.2 billion in 2007 due to a reduction in capacity primarily related to the rejection of certain leased aircraft associated with Comair Debtors Chapter 11 proceedings and the leasing of certain aircraft from Comair to SkyWest, Inc. Subsequent to 2007, it is assumed that revenue will increase in 2008 and 2009 due to capacity increases associated with new aircraft to ratably enter into service in 2008 through 2009.
Landing Fees and Other Rent: Landing fees are incurred as a function of arrivals/departures, aircraft weight and rates established by the various airports. The Comair Financial Projections anticipate a reduction in landing fees from 2006 to 2007 and increases from 2007 to 2010 related to capacity changes.
Aircraft Maintenance Materials and Outside Repairs: Aircraft maintenance expense is primarily driven by the timing of scheduled airframe and engine maintenance activities. All significant engine maintenance work is outsourced to Delta. The decrease in maintenance cost from 2007 to 2010 is driven by the timing of scheduled maintenance activities, the return of older aircraft at lease expiration and the acquisition of new aircraft.
Aircraft Rent: Aircraft rent reflects the operating expense associated with the Comair Debtors aircraft financed under operating leases. During the Chapter 11 proceedings, aircraft related obligations were reduced by rejecting certain aircraft leases and certain mortgaged aircraft, and renegotiating aircraft obligations for certain retained aircraft. Negotiations are still ongoing for certain aircraft. As part of these negotiations, it is anticipated that some of the mortgaged aircraft will be converted to leased aircraft. Therefore, aircraft rent is projected to increase offset by a related reduction in depreciation and interest expense. Additionally, aircraft rent is anticipated to increase due to the lease of new aircraft, partially offset by the return of certain aircraft as their leases expire from 2008 to 2010. Many of these transactions are subject to definitive documentation and Bankruptcy Court approval.
Cash Flow From Operating Activities: During the Projection Period, it is estimated that
Comair Debtors will generate positive cash flow from operations. Cash flow from operating activities is projected to increase from an estimated $68 million cash inflow in 2006 to $133 million cash inflow by 2010 for aggregate cash produced from operating activities during the Projection Period in excess of $500 million. Improved cash flow is a result of, among other things, the projected growth in revenue from 2008 to 2010 coupled with cost reduction initiatives implemented during the Chapter 11 proceedings.
Take it FWIW
