DAL Management-Analyst Disconnect

[densoo]

As I have indicated here previously, the situation at Delta is, in my opinion, much worse than the situation we have at Northwest or at United Airlines. The situation at Delta runs deep and it runs throughout the airline's management ranks. And it certainly runs through the airline's revenue management group.

This airline, as it has proven over the last year, does not know how to make money. I'm not saying the airline doesn't know how to maximize it's revenue. I'm saying it does not even understand how to make the underlying revenue in the first place.

The airline now finds itself with aging airplanes with aging interiors, a fractured brand, thanks to Song, huge regional jet exposure, and no clue as to how to make money. Oh, and let's not forget that because management waited so long to file for Chapter 11, there are no more assets to collateralize.

http://finance.messages.yahoo.com/bbs?.mm=FN&action=m&board=7081626&tid=dal&sid=7081626&mid=206779

Yet, management says they can break even next year with a $325 million pilot pay cut?! So if they only get $95 from the pilots DAL will only lose $230M in 2006, down from $1.1 billion in last quarter alone? Now that is some magic trick. Sounds like a deal management should take now while it's still on the table.

"On Friday, a Wall Street investment banker testified that Delta, which filed for bankruptcy in September, has seen a key measure of profitability drop sharply since 1999. But if Delta gets the $325 million in pilot wage cuts it is seeking, the airline will achieve its goal of breaking even next year, Timothy Coleman, senior managing director at The Blackstone Group, told the court."

http://www.usatoday.com/travel/flights/2005-12-03-delta-judge_x.htm?csp=26

Sounds like Holly Hegeman is right. If they think that the last piece of the puzzle to breaking even next year is a pilot pay cut, then they really are lost.

 

[Tim47SIP]

Analysts will say anything required of them for the right price. It's all how you bend the rules!

 

[FlyBoeingJets]

So Densoo....How much of the 1.1 Billion lost is due to early termination charges for leases? Did you know most of those charges will be waived by the BK judge?

C'mon. Look forward, not back at one time charges that might actually be gains next year when they are reduced.


But terminating the pilot pension will cost....

 

[densoo]

So Densoo....How much of the 1.1 Billion lost is due to early termination charges for leases?

Don't know.

Did you know most of those charges will be waived by the BK judge?

No.

C'mon. Look forward, not back

OK.

 

[CapnVegetto]

So Densoo....How much of the 1.1 Billion lost is due to early termination charges for leases? Did you know most of those charges will be waived by the BK judge?
..

$648 million of that $1.1 billion was 'bankruptcy related' losses. Actual operating loss was in the low $300 millions. It was in USAToday.

Fuzzy numbers though.

 

[Heavy Set]

Anyone who understands accounting realizes that "profit" is an opinion. You can take charges for restructuring or you can depreciate an asset differently or you can "book" revenue differently or provide incentives for early payments, etc., etc., etc.

Blackstone (like the Texas Pacific Group) is a private equity firm that is probably circling like a vulture looking to invest in airlines at the lowest possible price - it has an incentive to paint the bleakest picture possible to reduce the valuation of any potential acquisition target... Delta management also has the incentive to paint the absolute bleakest picture so that it can extract the greatest concessions from the pilots. Watch out - the sky is falling!!!!!