DAL/NWA Combination....should regional guys be worried?

[PuffDriver]

Of course. Yield is key to the success of any airliner/market.

But the mainline scope has prohibited Delta from trading in the CRJs for CL-700s & 900s. It has impeaded the company's flexibility to deploy the right sized, most efficient airliner to a given market. That hurts the whole company.

You can not control the marketplace with a union contract.

Wrong again. It is happening as we speak. The interesting part will be what gets hammered out if/when the merger goes through. What a fantastic time to restore some scope with the leverage we have. Unfortunately, at least from a Delta MEC perspective, I have been told that the substandard contracts that exist out there from operators of 76 seat aircraft prevent the Delta pilots from being competitive in that environment. I do not know the NWA MEC feelings. So it would appear that 76 seat aircraft are safely in the hands of regional operators for now.

Meanwhile, marketing has decided that despite your analysis so scientifically produced, 50 seaters--especially junk CRJs have lost their competitiveness. As such, they are parking them. How many have been parked at Comair? I want to say somewhere in the vicinity of 30-40 but I don't know for sure.

 

[Sedona16]

This Just In.....

US regional CRJ fleets feel the squeeze - 2/14/2008

Chautauqua Airlines is to begin culling its Bombardier CRJ200s fleet this year, while fellow US regional carrier SkyWest is to reduce the block hours of its 50-seat jets in the face of high fuel costs.

Chautauqua's 24 CRJs were flown on behalf of Continental Airlines, which is reducing capacity in some markets. Seven aircraft will exit the fleet this year, followed by 10 aircraft in 2009 and the balance in 2010. "We're making an assumption that all CRJs [will be] returned as they come off their leases," says Chautauqua parent Republic Airways Holdings chief executive Bryan Bedford.

Chautauqua says it has no plans to replace the outgoing CRJs.

Previously an all-Embraer ERJ operator, Chautauqua began leasing secondhand CRJs in 2006 on two-to-four year leases to satisfy the terms of its feeder deal with Continental. Chautauqua began operating the CRJs after Continental pulled 69 aircraft from its capacity deal with former wholly owned subsidiary ExpressJet.

Meanwhile, management at SkyWest is refraining from releasing capacity estimates for the second half of the year as its network partners drop daily block hour levels close to contract minimums.

According to chief financial officer Brad Rich, the 50-seat CRJ200s will see the greatest reduction in block hours, primarily the aircraft flown for partner Delta Air Lines. Rich says the CRJ200s are affected the most by block hour cuts as a result of that particular fleet taking "the biggest hit from fuel".

Rich predicts a possible rebound later in the year, saying that the company "feels optimistic" that during the summer its major airline partners should become more aggressive in their scheduling and "We would expect utilisation to come back up a bit".

 

[FDJ2]

Of course. Yield is key to the success of any airliner/market.

But the mainline scope has prohibited Delta from trading in the CRJs for CL-700s & 900s. It has impeaded the company's flexibility to deploy the right sized, most efficient airliner to a given market. That hurts the whole company.
not control the marketplace with a union contract.

N, Delta can fly any aircraft on any route it wants. What has you all wound up is that the Delta pilots wont let you fly it for less.


The bottom line is that your high cost RJ is obsolete and being parked. Frankly the mainline can no longer afford to subsidize you.

Delta will use the right size aircraft for the market, the problem for you is that the right size aircraft is a mainline aircraft flow by mainline pilots and their scope clause won't let you sell your services for less on those aircraft.

 

[skywdriver]

Does anyone know what a merger would do in terms of the current regional contracts with their respective carriers? Would those contracts be void? For example, CAL/UAL merger assuming that CAL will be able to hold on to their current scope clause (hopefully) what would happen to all the 70 seat flying that is currently done under the United Express name?

 

[DTW320]

But the mainline scope has prohibited Delta from trading in the CRJs for CL-700s & 900s.

No it hasn't. Delta can do that whenever they want. It's just that they have to be flown by DAL pilots.

 

[Sedona16]

I know this article is a month old but it appears Boyd was actually right on this one:

http://www.aviationplanning.com/Predictions2008.htm

Two Words
$100 Oil
It's Re-Engineer-The-Business Time...
On An Emergency Basis
[FONT=Tahoma, verdana, lucida]Sector One: Small Lift Providers[/FONT]
[FONT=Tahoma, verdana, lucida]Say Good-Bye To A Lot of Regional Jets, Real Soon.
Fuel Pass-Throughs Will Pass Them Directly To The Desert[/FONT]
[FONT=Tahoma, verdana, lucida]It should be back-to-the-drawing-board time for small lift providers, what some still call "regional airlines." Maybe time for a period of sheer panic, too. The issue: 50-seat and smaller RJs are being economically marginalized by skyrocketing fuel costs. [/FONT]
[FONT=Tahoma, verdana, lucida]Major carriers will be looking to quickly cull out dozens of RJs in the coming months. And hundreds more in the next five years, with no replacement for this lift - or many of the markets they operate - in sight.[/FONT]
[FONT=Tahoma, verdana, lucida]Most SLP agreements provide for fuel costs to be a pure pass-through to the major carrier, and that means the majors are eating a lot of red ink. A lot of RJ mission applications that once provided adequate revenue generation are now net drains on major airline systems. They cannot but move quickly to restructure (read: reduce) the fleets of RJs they're leasing in.[/FONT]
[FONT=Tahoma, verdana, lucida]Faster Retirements Than Predicted.[/FONT]
[FONT=Tahoma, verdana, lucida][/FONT]
[FONT=Tahoma, verdana, lucida][FONT=Tahoma, verdana, lucida]Now, with oil hovering at $100 a barrel, that forecast has been revised. The retirement projections are for over 1,700 RJs to come out of fleets for the same ten year period, with the rate front-loaded in the 2008 - 2013 period, representing approximately 835 RJs taken out of service in the US alone. [/FONT]

[FONT=Tahoma, verdana, lucida]The net-new figure represents larger CRJs (mostly -900s) coming into SLP fleets to replace 50-seat -200s. But even here, there isn't a whole lot of demand going forward. There are no new-generation <70 seaters on the horizon to replace the current fleet of 50-seat and smaller RJs. That means new fleet mixes.[/FONT]
[FONT=Tahoma, verdana, lucida]It also means fundamentally-revised airline route systems.[/FONT]
[FONT=Tahoma, verdana, lucida][/FONT]
[FONT=Tahoma, verdana, lucida][FONT=Tahoma, verdana, lucida]Late Night Oil Burning In The Planning Department. As we speak, planning departments at comprehensive network carriers are in full metal jacket status, working to moderate the level of financial drain smaller RJs are inflicting on their systems. [/FONT]
[FONT=Tahoma, verdana, lucida]Legal departments are working, too, reviewing current service agreements with SLPs. Most contracts are relatively long-term - to 2013 or beyond. The problem is that there is no way that the current number of these RJs can be supported until then with jet-A heading to $3 a gallon and up. Culling the herd in is the cards.[/FONT]
[FONT=Tahoma, verdana, lucida]Many agreements contain an early-out provision for the CNC, where a six-month notice can be given. In most cases, however, these notice dates don't become effective until late 2008 or 2009, and majors cannot afford to wait that long to cut RJ lift. So that means doing some deals with current SLPs. A cash payment in exchange for an early-out. Renegotiating the agreement with a financial incentive for the SLP to shift to larger CRJs or even into E-Jets, depending on the status of scope clauses at the CNC.[/FONT]

[FONT=Tahoma, verdana, lucida]Small Lift Providers To Watch. Clearly, 50-seaters are in the economic cross-hairs. And any jet airliner smaller than that is just marking time 'til the grim-reaper comes to take it to the Budweiser plant. So the question arises regarding how the SLP sector will survive.[/FONT]
[FONT=Tahoma, verdana, lucida]The hard reality is that the SLP sector will be shrinking markedly over the next three years. Hard fact: there are more 50-seat jets than can be economically flown. Hard fact: that means cutbacks in the number of operators.[/FONT]
[FONT=Tahoma, verdana, lucida]SLPs must move to hasten their fleet migration into larger CRJs or, better, into the Embraer E-Jet platform. But that means bigger units of capacity, higher sector costs, and, ergo, fewer markets where such aircraft can operate compared to what 50-seaters could do before the price of jet-A headed toward the Moon.[/FONT]
[FONT=Tahoma, verdana, lucida]The first option - larger CRJs - will provide better per-seat economics for the CNC customer, and for CRJ-200 operators, a relatively painless shift. But it's still an RJ, and with more seats and higher sector costs, it won't do much for the communities that are in line to see loss of service as the 50-seat cost bar goes up and CNCs cut flights. [/FONT]
[/FONT][/FONT]

 

[Sedona16]

Then Re-read this recent press release by Skywest and tell me what Delta is thinking:

AP
SkyWest Profits Up on Limited Fuel Cost
Friday February 8, 8:26 am ET
SkyWest Posts Sharp Rise in 4th-Quater Profits With Higher Fuel Reimbursements From Partners

ST. GEORGE, Utah (AP) -- SkyWest Inc. said Friday its profit rose sharply in the fourth quarter as it passed surging fuel costs on to its partners and limited other expenses. (Delta's profits dropped sharply for the same quarter ultimately causing a loss)

The airline posted a 30.7 percent gain in net income, to $40.9 million, or 66 cents per share, from $31.2 million, or 48 cents per share. Revenue rose 8.3 percent to $854.7 million from $789.6 million.

Analysts polled by Thomson Financial expected a profit of 64 cents per share, on average.

SkyWest, which operates regional flights for other carriers like Delta Air Lines Inc. and United Airlines, grew capacity 12.7 percent during the quarter. However, it flew emptier planes with less unit revenue as traffic did not keep up with that growth. SkyWest offset those declines by raising fuel-cost reimbursements, keeping its net unit fuel costs flat. Again, during this same time frame Deltas profits went down causing a loss

.SkyWest posted a 9.2 percent rise in full-year profit, to $159.2 million, or $2.49 per share, from $145.8 million, or $2.30 per share, in 2006. Revenue rose 8.3 percent to $3.37 billion from $3.11 billion.

 

[Occam's Razor]

The PID was shot dead in August of 2000 at a hearing before the Executive Council. The BOD meeting you're referring to was in October 2000. No discussion of shared sacrifice ever happened in October [at least between the MECs] because the PID was dead.

Golly, you're saying the highest governing body in ALPA is the Executive Board? Really? Your attempt to gloss over or dismiss the efforts to make it work are indicative of why it failed: Tunnel Vision.

Tell me again about that Marine integrity you try to wear on your sleeve. You're just making this stuff up.

Whoa! Has it been 28-days already? SOMEBODY needs a Midol booster!

 

[Occam's Razor]

Does anyone know what a merger would do in terms of the current regional contracts with their respective carriers? Would those contracts be void? For example, CAL/UAL merger assuming that CAL will be able to hold on to their current scope clause (hopefully) what would happen to all the 70 seat flying that is currently done under the United Express name?

Don't know about XJT. What CAL Scope are you referring to?

The only Airlink that I know of with any language related to mainline mergers in the successor definition of Section 1 is Compass.

 

[~~~^~~~]

Occam - What are you hearing about the merger?

Did NWA really suspend interviews, or hiring?

DOH, ratio, how tall and long are the fences?

Compass / Mesaba flow down going to survive?

 

[FDJ2]

Occam - What are you hearing about the merger?

Did NWA really suspend interviews, or hiring?

DOH, ratio, how tall and long are the fences?

Compass / Mesaba flow down going to survive?

PMFJI, but floating rumors or leaks wont help anyone. Fins, I know it's frustrating and everyone is looking to see how this will effect them, but just be patient. Wait for an official announcement and don't pay much attention to the background noise.

 

[~~~^~~~]

Yeah - you're right.

 

[Occam's Razor]

Occam - What are you hearing about the merger?

The table positions. As to what will be settled...too soon to tell. They're still apart on some key stuff.

Did NWA really suspend interviews, or hiring?

Not as of today. Saw a bunch of candidates today. Curt was wracking them thru the sim. Met a CMR guy I knew during the strike, and he thought his interview today went well.

DOH, ratio, how tall and long are the fences?

No. Yes (blended), "None", if we want maximum "harmonization" goodies (not settled yet)

Compass / Mesaba flow down going to survive?

Yes/Don't know.

Met the Mesaba flow-through guy in class today. The other 5 will start later, but 2 of the 5 already have their number at NWA. I haven't seen the MSA flow-through language, so i don't know if it "succeeds" in a merger. The Compass language does. All Compass pilots are represented by the Council 1 (NWA) Captain rep, so our Contract Admin has purview over flow-through grievances.

 

[michael707767]

No it hasn't. Delta can do that whenever they want. It's just that they have to be flown by DAL pilots.

And there you have it. Delta has never been restricted from operating any aircraft as long as Delta pilots fly it.

 

[PeanuckleCRJ]

Where did this sillyness come from?

I can get a CRJ down to 2500 pounds per hour total with 50 people and a jumpseater at cruise.

You can hardly attain that on one engine in a 737 or MD-80.

Who are you trying to kid? The CRJ gets great gas mileage.

Keep telling yourself that. The 757 gets 6000 lbs/hr with 183 people on board at cruise. About 10,000 lbs/hr with 250 on board on the 767.

 

[737 Pylt]

N, Delta can fly any aircraft on any route it wants. What has you all wound up is that the Delta pilots wont let you fly it for less.


The bottom line is that your high cost RJ is obsolete and being parked. Frankly the mainline can no longer afford to subsidize you.

Delta will use the right size aircraft for the market, the problem for you is that the right size aircraft is a mainline aircraft flow by mainline pilots and their scope clause won't let you sell your services for less on those aircraft.

And you wonder why the rjdc lost thier suit!? :laugh:

737

 

[N2264J]

Golly, you're saying the highest governing body in ALPA is the Executive Board? Really?

Where do you think I said that? The Board of Directors is the highest governing body but the PID never made that far as you claim. It was killed in committee by the Executive Council in August.

Your attempt to gloss over or dismiss the efforts to make it work are indicative of why it failed: Tunnel Vision.

There was never an attempt to make it work. By the time you arrived to the scene in October, the PID was dead. There was never a discussion about shared scarifice between the MECs. And to this day, E&FA denies there was ever a study done to calculate the cost to the pilots of merging the Delta/Comair/ASA lists.

Why do you think there was? Are you being told there was?

 

[Occam's Razor]

The Board of Directors is the highest governing body but the PID never made that far as you claim. It was killed in committee by the Executive Council in August.

That resolution...yes. The effort to bring it to the BOD...no. I know this because I was involved in it. You know that. For some reason, you're showing signs of some form of amnesia.

That's cool. At least two of us know you're just trying to be cute.

I still support your right to act like a victim.

There was never an attempt to make it work. By the time you arrived to the scene in October, the PID was dead. There was never a discussion about shared scarifice between the MECs.

"..arrived on the scene.."?

Good one! I'd been on the BOD since '95, and working closely with others seeking single-carrier status (eg: Wychor) from Day One.

You know that too.

And to this day, E&FA denies there was ever a study done to calculate the cost to the pilots of merging the Delta/Comair/ASA lists.

Why do you think there was? Are you being told there was?

1. I saw it.
2. My MEC (and one other) commissioned it.

The fact that E&FA wouldn't discuss proprietary work done for another MEC to a twerp who was actively suing the Association is confusing you?

Get help.

Seriously.

 

[Lear70]

That's cool. At least two of us know you're just trying to be cute.

I still support your right to act like a victim.

I don't care WHO you are... that's funny.

 

[N2264J]

That resolution...yes. The effort to bring it to the BOD...no. I know this because I was involved in it.

Again, there was no effort to bring it to the BOD. The PID was already dead by October. However, resolutions were brought to the BOD to put teeth back into ALPA's merger policy but they failed too.

The fact that E&FA wouldn't discuss proprietary work done for another MEC to a twerp who was actively suing the Association is confusing you?

What's proprietary about it? You were on this board last year telling us what was in this alleged study.

What's confusing me is why wasn't the Comair and ASA MECs shown that study if it existed in 2000? And why would E&FA deny it's existence to the Comair MEC recently?