death of delta and effect on asa

[casper1nine]

hola,

as a potential asa employee, i am concerned with the luming death of delta airlines and its effect on asa. now i realize there is a market demand for the seats that asa flies, and that won't go away, but WHEN delta dies (by strike or liquidation or whatever), what does it mean for asa as an airline? i realize that asa has its own internal issues and strike concerns, and there has been plenty posted about that already.

regards,
casper1nine

 

[OCP]

I'd bet if Delta went Ch7 then Skywest Inc would likely furlough (sp?) ASA. Or disolve the company and take the assets it wants. Maybe even offer ASA employees preferental hireing at Skywest.

 

[mamba20]

not so sure Delta is going anywhere. . . how many times over the last year did we hear the same things about USAir? They arent going anywhere. Though I'm sure plenty of the cockroach airlines are hoping that will happen.

 

[uncle_rico]

not so sure Delta is going anywhere. . . how many times over the last year did we hear the same things about USAir? They arent going anywhere. Though I'm sure plenty of the cockroach airlines are hoping that will happen.

by "cockroach" you mean the airlines who have figured out what it means to compete in todays market and make money or at least strive to cator to thier customers wants??

like it or not the days of airlines doing what they want and pulling the passengers behind them are over. airline travel is a cheap commodity now and you can like it or leave it.

 

[mamba20]

So how long have you been waiting for the SWA phone call?

 

[General Lee]

IF we go Chap 7, it is likely that all of the affiliates with 50 seat RJs would see them parked immediately. Comair would likely disappear, ASA would be grounded, and SkyWest would likely file Chap 11 since almost half of it's flying would cease. Chautaqua and Mesa would also likely park many planes. This is absolutely high stakes poker, and hopefully it will turn out ok, but the company and the union will have to actually negotiate. Chap 11 isn't meant to be a grab bag. We already gave once, and we are willing to give something again, but not everything.


Bye Bye--General Lee

 

[Coloaviator]

SKW wouldn't file chap 13 they have over 500 million in the bank and only 30% of their flights/rev is delta related. They would be one of those roach airlines

 

[Coloaviator]

excuse me chap 11 sorry to much legal crap in my brain

 

[CRJ puppy]

Um, think you forgot to add the ASA "division" into that 30%...

 

[casper1nine]

IF we go Chap 7, it is likely that all of the affiliates with 50 seat RJs would see them parked immediately. Comair would likely disappear, ASA would be grounded, and SkyWest would likely file Chap 11 since almost half of it's flying would cease. Chautaqua and Mesa would also likely park many planes. This is absolutely high stakes poker, and hopefully it will turn out ok, but the company and the union will have to actually negotiate. Chap 11 isn't meant to be a grab bag. We already gave once, and we are willing to give something again, but not everything.


Bye Bye--General Lee

hey general, thanks for the reply. my question (likely out of ignorance), is that there is obviously a demand for the seats that asa flies for the big D, so why couldn't asa continue to market, sell, and fly those seats as it's own brand in the event of a delta ch 7? what's more, in the event of a delta liquidation, would it be to the advantage of SKW (if possible), to purchase the ticketing, reservations, awards program, and even the delta brand? (didn't b-m buy the pan-am name)? anyway, just idle thoughts bouncing around in my head.

-casper1nine

 

[wmuflyguy]

so why couldn't asa continue to market, sell, and fly those seats as it's own brand in the event of a delta ch 7? what's more, in the event of a delta liquidation, would it be to the advantage of SKW (if possible), to purchase the ticketing, reservations, awards program, and even the delta brand? (didn't b-m buy the pan-am name)? anyway, just idle thoughts bouncing around in my head.

-casper1nine

So run an indepenent airline with 50 seaters? Hasn't this been tried before?

What other airline would need to purchase that much 50 seat lift?

Likely if you Delta goes down. Comair is gone. ASA is gone. Most of Republic is gone. It is pretty grim.

 

[CFIT]

IF we go Chap 7, it is likely that all of the affiliates with 50 seat RJs would see them parked immediately. Comair would likely disappear, ASA would be grounded, and SkyWest would likely file Chap 11 since almost half of it's flying would cease. Chautaqua and Mesa would also likely park many planes. This is absolutely high stakes poker, and hopefully it will turn out ok, but the company and the union will have to actually negotiate. Chap 11 isn't meant to be a grab bag. We already gave once, and we are willing to give something again, but not everything.


Bye Bye--General Lee

The whole idea of SkyWest going 11 just made General tool spot, please be more careful in the future!

 

[General Lee]

SKW wouldn't file chap 13 they have over 500 million in the bank and only 30% of their flights/rev is delta related. They would be one of those roach airlines

Chap 13? Sure, they also had an extra $400 million in the bank before they bought ASA, and then in the case of a DL chap 7 they would likely park all of the planes. Southwest would fill in on the West Coast, and Airtran and Jetblue would fill in on the East. SkyWest would be left hurting, really bad. Same with CHQ and Mesa. Not good, but that is what high stakes poker is all about. I hope it doesn't get to that point, but it may.


Bye Bye--General lee

 

[General Lee]

The whole idea of SkyWest going 11 just made General tool spot, please be more careful in the future!

Possibly parking half of your fleet can do that. (now owning ASA makes it worse---more exposure) You initially had about 25% of the DCI flying from SLC and DFW(when we had DFW), and now you have about 60% with ASA included. Again, I hope it doesn't get to the strike point, but it might if there are no real negotiations.


Bye Bye--General Lee

 

[Mookie]

Genral,

When is your Md 88 upgrade class???

Mookie

 

[CoATP]

Sorry to sidetrack ... what'sa DCI?

 

[General Lee]

Sorry to sidetrack ... what'sa DCI?

Delta Connection. I believe it covers the companies that are owned by Delta (Comair and ASA ---although ASA is owned by SkyWest now), and to us it covers the airlines that feed Delta. We Delta pilots sometimes use the term to cover the regionals flying for us.

Bye Bye--General Lee

 

[ohplease!]

Oh My God!!! the sky is falling. Everyone, run and hide! Quick!

You're all going to feel silly in a couple of years when the industry comes back around as it always has.

I do however hope those of you who are senior to me continue to leave and get out of my way. Please find something else to do.

 

[737 Pylt]

Sorry to sidetrack ... what'sa DCI?

With that avtar, you can sidetrack any time!!!!
737

 

[Phony Marconi]

Oh, comon! It's a big bluff....a game of chicken!

It's not "poker", since we can all see the Delta pilots' hands....they're bluffing.

Do you think any Delta pilots would risk losing their careers, even at half pay, given that there are NO jobs in aviation paying more than about $30K to start, with dismal upside potential.

And, save for a few lucky ones, they've got no alternatives other than aviation.

Worst case is a small disruption, maybe even a quickie (illegal) walkout. No Chapter 7.

But even if they do strike, there are tons of regional pilots ready to be scabs and fly the 777 at 50-seat pay!

 

[737 Pylt]

Oh, comon! It's a big bluff....a game of chicken!

It's not "poker", since we can all see the Delta pilots' hands....they're bluffing.

Only time will tell, but I'm leaning toward what you said.

Do you think any Delta pilots would risk losing their careers, even at half pay, given that there are NO jobs in aviation paying more than about $30K to start, with dismal upside potential.

For the senior guys, I agree. But the bottom 1/3 of the list. Top pay working weekends, holidays, no dead head pay, 1/2 pay for sick time, losing rigs, you could get a 9-5 government job with a "protected pension." as a better investment if you are a junior pilot and have nothing to lose. Of course, the most junior pilot is now a 5th year pilot.

And, save for a few lucky ones, they've got no alternatives other than aviation.

I agree. We as pilots back ourselves into a corner with this choice of career. That's why DAL is a "second job" for me. My first job/career keeps me floating with DAL as the "extra income."

Worst case is a small disruption, maybe even a quickie (illegal) walkout. No Chapter 7.

But even if they do strike, there are tons of regional pilots ready to be scabs and fly the 777 at 50-seat pay!

There in again lies the problem We have become our worst enemies in this industry. If you were to seriously count how many people out there would be willing to fly "wide body" airplanes for "regional salaries," I think the numbers would actually scare you.
737
sad what has become of this industry

 

[On Your Six]

Oh, comon! It's a big bluff....a game of chicken!

It's not "poker", since we can all see the Delta pilots' hands....they're bluffing.

Do you think any Delta pilots would risk losing their careers, even at half pay, given that there are NO jobs in aviation paying more than about $30K to start, with dismal upside potential.

And, save for a few lucky ones, they've got no alternatives other than aviation.

Worst case is a small disruption, maybe even a quickie (illegal) walkout. No Chapter 7.

But even if they do strike, there are tons of regional pilots ready to be scabs and fly the 777 at 50-seat pay!

Bluffing? Yeah, that's what they said about the Eastern mechanics... Look, Chapter 11 is not supposed to be a complete grab bag - sure, let management TAKE ANYTHING THEY WANT... Grinstein emphatically stated during the first round of cuts that the 30% chunk would be final - I remember his quote, "let's do it once and let's do it right." Well, now they want more and more and more and more and more. When does it end? How does changing the sick leave policy help to ensure liquidity in the short term? Get it?????????????? It's called a grab bag...

How are the other employees impacted? Why focus so much attention on the pilots? So many questions and very few answers. If it comes to a strike, I think a lot of the junior pilots will go for it because they have many years ahead of them and they're not going to stand for bullying because management will exploit them every time... I wish my Delta friends luck.

 

[General Lee]

Thanks On Your Six. Well, it will be interesting to say the least. Apparently last Wednesday the judge ripped into Management asking them why they are "picking" on the pilot group. She also said "Had you not bought $2.5 billion worth of stock before 9-11 this whole thing might not have happened." We get to give our full story (we had 100 pages of rebuttles) on the 28th and 30th of November. We'll see how that goes, but remember it is the judge's job to protect the creditors foremost. Maybe she will see our point of view and make us all negotiate more. Believe me, I still think another pay cut is coming, and that is fine, except not to the point that we have to give back more than they really need. You are right, this AIN'T NO GRAB BAG.


Bye Bye--General Lee

 

[737 Pylt]

Grinstein emphatically stated during the first round of cuts that the 30% chunk would be final - I remember his quote, "let's do it once and let's do it right." Well, now they want more and more and more and more and more. When does it end? How does changing the sick leave policy help to ensure liquidity in the short term? Get it?????????????? It's called a grab bag...

Here's the exact quote from the Washington Post article.

Delta to Reduce Workforce by 10%
Airline Hopes Cuts Will Avert Bankruptcy
By Keith L. AlexanderWashington Post Staff Writer
Thursday, September 9, 2004; Page E01
Delta Air Lines Inc. will cut up to 7,000 jobs, or about 10 percent of its workforce, as part of a restructuring aimed at avoiding a slide into bankruptcy, Gerald Grinstein, the airline's chief executive, said yesterday.
Under the plan, Delta will close its hub at Dallas-Fort Worth International Airport, thin its management ranks by 15 percent and trim employees' pay -- all in an effort to slash costs by about $5 billion a year by the end of 2006. About 2,100 Delta job losses will come at the Dallas-Fort Worth hub.
Grinstein acknowledged that bankruptcy was a "real possibility" if the airline is unable to secure $1 billion in concessions from its pilots, Delta's only unionized work group. The nation's No. 3 airline also is trying to slow the rush of early retirement requests from pilots who are seeking to avoid possible cutbacks in their pension and pay and benefits.
"We're working hard and fast to avoid [bankruptcy]," Grinstein said, "but if the pilot early retirement issue is not resolved before the end of the month, or if all of the pieces don't come together in the near term, we will have to restructure through the courts."
Delta is reeling from the same pressures faced by other traditional carriers: the growth of low-cost, low-fare airlines such as Southwest, Air Tran and JetBlue and the easy availability of low fares on the Internet. The low-cost airlines and the Internet have sparked brutal competition in the airline industry and forced the older carriers to reduce their operating expenses.
United Airlines, struggling to lower its costs under bankruptcy protection for nearly two years, plans to eliminate more jobs and seek additional concessions from its employees in a bid to emerge from Chapter 11. US Airways, based in Arlington, is close to filing for bankruptcy for the second time in two years as it seeks to cut about $1.5 billion in costs. Even Houston-based Continental Airlines, financially stronger than most of the other traditional carriers, announced recently that it will slash 425 jobs and will postpone payments into its pension fund in an effort to save about $200 million a year.
"There is a massive, fundamental structural change that is taking place in our business," Grinstein said. "There are new competitive forces at work in the market that are changing how all the carriers are looking at what they do."
Since the Sept. 11, 2001, attacks, which significantly reduced air travel, Delta has cut about 16,000 jobs. It has racked up more than $5 billion in losses in the past three years. The airline has already slashed about $2.3 billion in costs since the attacks.
In his presentation to employees, the media and Wall Street investors, Grinstein said he decided on the large job cuts all at once to avoid the repeated cost-reduction efforts of US Airways and United. He said cutting jobs in several rounds has a profound impact on remaining workers and eventually affects customer service.
"If you have to go back again and again, re-jiggering won't work," he said. "You do it once and do it right. That has to be one of the key pieces."
As part of the restructuring, Delta also will limit the types of aircraft it flies to save on pilot training and fuel costs. Instead of 12 aircraft models, it will use eight.
The restructuring plan includes more than cutbacks. Grinstein said Delta plans to add 31 destinations out of its dominant hubs in Atlanta, Cincinnati and Salt Lake City. The carrier will cut 20 arriving flights in Atlanta to help ease congestion.
Delta will increase the number of flights of its subsidiary, low-cost carrier Song, adding 12 planes and expanding its service overseas. The move marks a turnaround for the fledgling airline, which had seemed doomed after Delta trimmed several of its flights and pulled its service out of Washington Dulles International Airport earlier this year. But yesterday Grinstein said that to his surprise Song was now a success.
"I was one of the skeptics," he said. But, he added, "even old dogs can learn new tricks."
http://www.washingtonpost.com/wp-dyn/articles/A6583-2004Sep8.html

 

[FDJ2]

remember it is the judge's job to protect the creditors foremost.
Bye Bye--General Lee

Actually, it's the judges job to apply the law. Section 1113 was established to protect employees from management arbitrarily rejecting their CBAs. There are generally nine tests that must be satisfied before a motion to reject a CBA can be granted.

1.The debtor in possession must make a proposal to the Union to modify the
collective bargaining agreement.

2. The proposal must be based on the most complete and reliable information
available at the time of the proposal.

3. The proposed modifications must be necessary to permit the reorganization of the debtor.

4. The proposed modifications must assure that all creditors, the debtor and all of the affected parties are treated fairly and equitably.

5. The debtor must provide to the Union such relevant information as is necessary to evaluate the proposal.

6. Between the time of the making of the proposal and the time of the hearing on approval of the rejection of the existing collective bargaining agreement, the debtor must meet at reasonable times with the Union.

7. At the meetings the debtor must confer in good faith in attempting to reach mutually satisfactory modifications of the collective bargaining agreement.

8. The Union must have refused to accept the proposal without good cause.

9. The balance of the equities must clearly favor rejection of the collective bargaining agreement.

Here's a little tid bit on the balance of equities test.

"In evaluating the balance of the equities, the Court must first consider the prospects of a pilot strike in the event of contract rejection. See Carey, 816 F.2d at 93; Int’l Bhd. of Teamsters v. IML Freight, Inc., 789 F.2d 1460, 1463 (10th Cir. 1986) (reversing a bankruptcy court’s decision permitting rejection because the bankruptcy court failed to consider that the antagonistic labor relations atmosphere made it likely that a damaging work stoppage could result from rejection); In re Garofalo’s Finer Foods, Inc., 117 B.R. 363, 371 (Bankr. N.D. Ill. 1990) (“Courts have utilized various factors in the [§1113] analysis. . . . [including] whether the employees would react to rejection by striking, and if that would injure the debtor.”); cf. In re Pesce Baking Co. Inc., 43 B.R. 949, 961 (Bankr. N.D. Ohio 1984) (denying rejection because “[c]onsidering the risk of a strike or decreased productivity, [the debtor’s] projected savings is highly speculative.”)."

Here's a little quiz for the flightinfo talking heads:

1. What does Delta project its pilot CASM to be in 2006 without any concessions?

2. What does Delta state it needs its pilot CASM to be in order to reorganize?

3. Based on Delta's public filings of its pilot costs, what average level of concessions are required to achieve its stated pilot CASM?

 

[Crash Pad]

Back to the original question. If Delta goes all the connection feed goes with it. The correction that needs to be made is that there is no demand for the flying ASA does on its own. Let me restate that. There is a demand. The demand would not, however, support an airline made up of regional jets. If you ever get a shareholder report for an airline... Buy one share you'll thank me. You will see that the revenue brought in from a regional is always less than the cost.
Oh and General what happened. You used to be the "Song is doing well", "I'm ready for my pay cut", "the international is doing wonders", etc. guy. Did they finally cut enough that it affected you?
One more question. Is "grab bag" the new Union talking point? I've read it way to much on this website as of late. I'm glad you guys aren't using "the bar"... That one was getting old.

 

[Phony Marconi]

Scabs all lined up.

I just can't wait to start IOE on the 767 for $19.02 and hour, and say "heavy" on the radio.

Sure beats working at Walmart.

I moved up fast in this career!

 

[General Lee]

Back to the original question. If Delta goes all the connection feed goes with it. The correction that needs to be made is that there is no demand for the flying ASA does on its own. Let me restate that. There is a demand. The demand would not, however, support an airline made up of regional jets. If you ever get a shareholder report for an airline... Buy one share you'll thank me. You will see that the revenue brought in from a regional is always less than the cost.
Oh and General what happened. You used to be the "Song is doing well", "I'm ready for my pay cut", "the international is doing wonders", etc. guy. Did they finally cut enough that it affected you?
One more question. Is "grab bag" the new Union talking point? I've read it way to much on this website as of late. I'm glad you guys aren't using "the bar"... That one was getting old.

Crash Pad (Mr. 40,000 hour wonder),

Well, thanks for believing in me. In reality, I was the one actually setting the fares for Song, and I intentionally set them way too low. Mission accomplished. I wanted to lose a whole lotta money. But hey, you and Phony Marconi can pick up where we leave off and fly the Song 757s for $19 an hour. You guys go have fun. Tootles.


Bye Bye--General Lee

 

[~~~^~~~]

There is no doubt that a failure at Delta would force an immediate realignment at ASA. But, signs are that Atkin has considered post Delta options, beginning with the negotiation of the gates in Atlanta.

There are many markets which can be profitably served with RJ's, as long as they are premium markets. The RJ is a niche airplane and it serves its niche well. Just now everyone seems to be realizing that the RJ is not a 737 replacement and massive scope is not required to stop it. The other extreeme view that it is going away is not true either.

There will be a reduction in the number of RJ's flying - forcasts are calling for around 12% to 15% of the CRJ fleet getting parked. This isn't huge it is simply an adjustment to market realities given competition and the cost of jet fuel. But, at the same time growth in the United States is becoming more decentralized, technology allows folks to live about anywhere and still be productive. Boyd reports airports like GSO, GSP, CHS, MGM, SHV, AZO and LAN will grow and for the most part these are the sorts of places where business travellers still pay big bucks to go at the last minute.

Further, Skywest has positioned itself to be the last player standing in DCI, if it comes to that. Skywest (ASA's parent) has locked up Atlanta and put significant cancellation fees in their contract with Delta.

So far, I admire and appreciate what Jerry Atkin has done. ASA is probably the best bet in the DCI system and if Delta does fail, we are pretty well positioned to continue our history of profitability. Jerry Atkin talks openly about buying a non regional carrier and perhaps ASA will serve in another role. ASA has seen a bunch of airlines come and go out of ATL, Braniff (who used to run ASA's codeshare like Delta does now), Southern, Eastern Metro, Eastern, Kiwi, and Valujet. Who knows if Delta goes away AirTran might become a big Boeing 787 customer, or we could feed Continental's new Atlanta hub. Hopefully Delta will pull out and all of this will remain conjecture but in any event - I think ASA is well positioned at the World's Busiest Airport.

~~~^~~~

 

[General Lee]

Here is what Boyd said today:

"The Delta system in particular appears to be way over-invested in RJ deals. Tossing cost-plus RJs into off-hub, point-to-point missions to destinations in Florida where yields are lower than W's approval rating, looks like an expensive way of maintaining market share.

Finally, using RJs on routes competitive with carriers operating mainline-cabin equipment, such as 737s or even E-170s, makes passengers get real itchy to take another airline. This was one of the major problems with Delta's now-gone DFW hub - it became RJ-centric and non-competitive."


He is right on many levels. Why did we start Comair CRJ service from Lexington to FLL? Why? That was cancelled a few months after it started. How about JFK to Pensacola? Maybe for commuting Delta pilots? Dumb. Half of the flights out of TPA and FLL should be canned. Fred Greed thought RJs were "the future of business travel", except he didn't ask the business travellers what they really wanted or needed. And Fins, without huge Delta feed to points all over the States and Intl destinations, ASA will cease in ATL quickly. The other airlines will fill in the other gates and offer better connections to major cities. You guys will have some C gates and not much else. Let's hope negotiations continue, but they also include scope to keep 79 seat and up flying. It will get interesting, no doubt.



Bye Bye--General Lee