DAL has lowest unit costs among network carriers!

[737 Pylt]

This is taken from Gary Beck's code a phone at DAL:

"Also, Delta reduced mainline unit costs by 3.9%, and excluding special items and fuel expense, reduced mainline unit costs by 14.3%. Remarkably, our quarter mainline unit costs are lower than any of the network carriers that have reported their results to date."

So let me get this straight. AMR, CAL reported nice profits for Q2, and DAL loses hundreds of millions, yet we (DAL) have the lowest mainline unit costs?! Perplexing that the airline with the highest # of rj's is losing the most amount of money. Don't get me wrong, I think the rj has its place, but frequency is not the answer. It has been proven that price rules!

And before you start the slamming, I leave you bashers with this from Yahoo Financial:

"Like other regional airlines, ExpressJet is reimbursed for its expenses by its network airline partner and receives additional payments designed to help it hit a specific operating profit margin"

Now, let the slamming begin!
737

 

[chperplt]

How many more RJs in the Delta system that the others?

 

[tuna pimp]

737; you make some interesting observations. Got me curious to look at the numbers myself. You are correct that Delta has the lowest unit costs (vs. AA & CO) at 9.92 cents for mainline. Mainline unit revenues (from pax & cgo) don't hold up however and are only 9.67 cents vs. 10.55 at AA & 10.62 at CO.

You are correct in that RJs helped contribute to our loss, but interestingly not as much as at AA & CO. Looking at just mainline, Delta's difference between RASM & CASM is (0.25) vs. 0.52 at AA & 0.70 at CO. (RASM is lower than CASM at DL but higher at the other two.) When the regionals are factored in DL's difference still drops to (0.32) but at AA it drops to 0.35 and at CO down to 0.46 - much larger drops. And this is with RJs representing a larger % of total ASMs vs. the other two carriers. So while you are correct in that RJs also lost money for DAL, from a purely P&L standpoint they were more of a drag on profits with AA & CO.

Not sure what you mean by the comment about Expressjet...as they are not owned by CAL paying them cost plus is a standard Mainline-RJ provider agreement. DL does the same thing with Skywest & Chatauqua for example. With ASA & Comair we don't have to pay a premium on top of costs to essentially charter the aircraft like we do at the other DCI partners because we own them.

 

[DGdaPilot]

booyah

 

[Crash Pad]

Let me help you all out with this. If you can't make money now with planes full in a massive summer rush... You can't make money. Get ready for bankruptcy! I think we can all see which legacys are retooled and ready... and which are not.

 

[MedFlyer]

Maybe DL's loss has something to do with DL's focus on catering to leisure travelers. You don't see AA or CO tearing out their first class cabins and converting their planes to all-coach. In fact, CO is adding first class seats to their 753's. So while DL is chasing the $99 transcon crowd, AA and CO are picking up the business travelers.

 

[tuna pimp]

Maybe DL's loss has something to do with DL's focus on catering to leisure travelers. You don't see AA or CO tearing out their first class cabins and converting their planes to all-coach. In fact, CO is adding first class seats to their 753's. So while DL is chasing the $99 transcon crowd, AA and CO are picking up the business travelers.

There's some truth to this IMHO. Though I think Song is the right product for the Northeast to to Florida runs. Not sure about the west coast Song flying. We'll see if it makes money or not. Pulling those Business Elite seats out of the int'l 763's was just plain stupid.

 

[Oakum_Boy]

Not to mention the efficiency and quality lost by having six RJ connection airlines in the system. Including American Eagle if I'm not mistaken. Also, what about the rendundant Comair/ASA managements which could be run effectively by one? I'm not convinced Delta knows what they are doing. Having flown on American, I can say it is a better and more polished product. If I were a businessman, I would go with someone other than DL. Check out the passengers traveling through Hartsfield. Not looking particularly particular, are they?

 

[General Lee]

Let me help you all out with this. If you can't make money now with planes full in a massive summer rush... You can't make money. Get ready for bankruptcy! I think we can all see which legacys are retooled and ready... and which are not.

Yeah, and going into bankruptcy rids Legacies of many obligations, and most (unless mechanics want to ruin the party) get out with a new lease on life. Delta hasn't done well in awhile, but things have improved. The problem is that we are a tad bit late in the process. We are on the way to $5 billion a year in savings, but we don't have much left for higher fuel costs. IF we do go into bankruptcy, it may lead the way to a better life---maybe one with a new partner(merger), maybe one with less obligations (minus some debt and maybe minus some whollyowns).

Delta has a plan, it is just tardy. We have restructured a lot of our own operations-----a lot since Jan 31st of this year. We left DFW, we revamped our operation at ATL, we have expanded Song, we have parked some fuel guzzling planes, we have added a couple new DCI carriers, and we are about to get some pension relief (14 year extension on payments). Even with all of this, we still have debt and high fuel bills. A trip to court may reduce one of those, and allow us to keep fighting. Who knows? Only Delta senior management.


Bye Bye--General Lee

 

[General Lee]

Not to mention the efficiency and quality lost by having six RJ connection airlines in the system. Including American Eagle if I'm not mistaken. Also, what about the rendundant Comair/ASA managements which could be run effectively by one? I'm not convinced Delta knows what they are doing. Having flown on American, I can say it is a better and more polished product. If I were a businessman, I would go with someone other than DL. Check out the passengers traveling through Hartsfield. Not looking particularly particular, are they?

What? Ok.....Most of the rich ones are in the Crown Rooms, where YOU ARE NOT. You don't see the high milers? I do, they occupy the first class cabin on our 767s and 757s. I see them all of the time. You probably don't see many going to Fayettevile, NC. Ft. Bragg is not full of rich people. How about when you fly to Golden Triangle, MS? You like the chicks there, don't you? Go have fun at AA.


Bye Bye--General Lee

 

[General Lee]

Maybe DL's loss has something to do with DL's focus on catering to leisure travelers. You don't see AA or CO tearing out their first class cabins and converting their planes to all-coach. In fact, CO is adding first class seats to their 753's. So while DL is chasing the $99 transcon crowd, AA and CO are picking up the business travelers.

How about DL putting their RJs up against LCCs, while AA Eagle and COex stay on routes away from LCCs? Look at COex (Expressjet). They fly from IAH, EWR, and CLE to places that most airlines do not fly to. They fly unopposed to many Mexican resorts--with higher priced tickets. They fly to Quebec City and St John's NF from EWR. They hit the smaller FLA cities from EWR--like DAB and SRQ. They charge higher prices flying to cities like Flores, Guatemala on a 50 seat RJ. We at DL fly RJs up against SW and Airtran. We need to follow COex's lead and fly the RJs to smaller cities with no LCC competition. Put larger planes (if we could afford them, one way would be to STOP buying RJs) on routes with lower fares---and be able to turn a profit faster--spreading out the costs. (a la Song---199 seat 757s)

Look at Indy Air and all of the initial problems with an all RJ fleet. To get out of their problems, they needed to buy larger planes (A319s) to compete with TED and United out of IAD. The RJs and lower prices DON'T WORK. We have wasted 4 or 5 years buying RJs that businessmen DON'T like. $99 fares on Song might work with 199 seats, but not 50 or 70 seats. You need to look in your own backyard Medflyer.


Bye Bye--General Lee

 

[MedFlyer]

How about DL putting their RJs up against LCCs, while AA Eagle and COex stay on routes away from LCCs? Look at COex (Expressjet). They fly from IAH, EWR, and CLE to places that most airlines do not fly to. They fly unopposed to many Mexican resorts--with higher priced tickets. They fly to Quebec City and St John's NF from EWR. They hit the smaller FLA cities from EWR--like DAB and SRQ. They charge higher prices flying to cities like Flores, Guatemala on a 50 seat RJ. We at DL fly RJs up against SW and Airtran. We need to follow COex's lead and fly the RJs to smaller cities with no LCC competition. Put larger planes (if we could afford them, one way would be to STOP buying RJs) on routes with lower fares---and be able to turn a profit faster--spreading out the costs. (a la Song---199 seat 757s)

Bye Bye--General Lee

I guess all those DCI RJ's flying to places like Erie, Sioux Falls, Lewiston, Fredericton, Kinston, Monterey, Naples, Redmond, Brunswick, Ottawa, Halifax, Providenciales, etc don't count. Give me a break!

DL uses it's RJ's the same way as CO and AA...to feed their hubs and provide point to point service. DL's hubs may be more infested with LCC's, but that's DL's fault for being unable to defend it's hubs. You can't blame that on RJ's as the LCC invasion in both SLC and ATL came before RJ's were prominent in the DL fleet. DL MAINLINE lost those battles.

Cleary DL management has no confidence in mainline as they deferred all mainline deliveries in 2006 to 2008.

 

[Oakum_Boy]

Everyone knows Delta was in the best financial position of all network carriers post 9/11. Why then, while Continental was busy serving meals, was DL sitting back, buying regional jets, and figuring out how to lower cost (quality) by whipsaw. I'm telling you, Delta is cutting off it's nose to spite its face by not doing anything except "testing" new interiors, and signing contracts with the cheapest regionals it can find. Bethune said once- "You can make a pizza so cheap, no one will eat it." Looks like he was right...

 

[737 Pylt]

Cleary DL management has no confidence in mainline as they deferred all mainline deliveries in 2006 to 2008.

I can't believe someone is stupid enough to write that!
737

 

[tuna pimp]

Delta hasn't done well in awhile, but things have improved. The problem is that we are a tad bit late in the process...Delta has a plan, it is just tardy.

Bingo.

Right after 9/11, when carriers like AA & NW were throwing people out on the street Delta immediatly focused on building cash (through debt) anticipating another 9/11 type event (which thankfully-knock on wood) didn't happen. Which was a prudent move at the time given the post 9/11 uncertainty but in hindsight probably not necessary. The other thing DL management did was approach cost cutting measures such as layoffs in a more deliberate and generous manner than the more draconian actions taken elsewhere. The initial severance packages offered were very generous (to non-pilots at least) considering the circumstances. Delta honoured the recently negotiated pilot's contract even though pilot costs at DL were no longer even remotely competative. Delta could have, and perhaps should have, been much more agressive, ala AA right after 9/11 and cut costs allround more quickly and more deeply.

So DL management got burnt for initially focusing on preserving cash, and for being overly cautious and considerate to it's employees in how it reduced employee costs - something that we are getting burnt for right now as AA & CO swing to modest profits in 2Q05.