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DAL has lowest unit costs among network carriers!

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737 Pylt

Um....Floats anyone??
Joined
Jul 8, 2003
Posts
3,085
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
 
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.
 
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.
 
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.
 
MedFlyer said:
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.
 
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?
 
Crash Pad said:
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
 
Oakum_Boy said:
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
 

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