Delta Air Lines buys 49 percent of Virgin Atlantic for $360 million

[General Lee]

Is Cabotage hiding in there somewhere?

Where will Virgin Atlantic be flying any routes WITHIN the US? They have a certain number of slots from Heathrow, and some of them could be changed to fly to DL hubs to allow more passengers to connect onto DL mainline flights. Plus, this deal took a potential deal away from some Middle East Carrier with deep pockets who would have loved to have some possible say in new flights to the US East Coast. I think you are wrong. You should be looking at this as DL coming to ruin your possible future parade with AA and BA, if and when you ever merge with AA. This was a spoiler on your potential dominance. Not anymore...


Bye Bye---General Lee

 

[Flyby1206]

I read somewhere the DL/VA plan is to have at least 9 daily shuttle flights between JFK-LHR, this would be in direct competition to the planned BA/AA schedules. Should get interesting...

 

[General Lee]

Contractually, is there much difference between a major buying a regional and buying a stake in any other airline?

Theoretically, if DAL had purchased 100% of Virgin, would the DAL pilot group handle that differently?

I think DL wants out of the regional business. As far as buying into another airline, I think DL can do whatever they want, to an extent. They can't have another carrier competing with DL. They can't own all of Frontier, for example, and then use it to compete against DL. The DL pilot contract has rules against that. If they did buy the controlling interest in another airline, I believe the pilot contract states they would have to merge lists, etc. But, as per EU rules, they cannot do that with an EU carrier. (hence the 49% stake) This is an investment, that still needs to be approved by the pilot union and the Gov'ts on both sides of the Atlantic. A Joint Venture means both airlines fly the routes, not just one. DL currently has 9 daily flights out of LHR, and there aren't anymore slots for sale currently. CAL bought 4 pairs of slots a few years ago for $210 million I believe. This investment was $360 million.


Bye Bye---General Lee

 

[General Lee]

I read somewhere the DL/VA plan is to have at least 9 daily shuttle flights between JFK-LHR, this would be in direct competition to the planned BA/AA schedules. Should get interesting...

Correct. Before this, DL had 3 daily, and VS had 6. With an AA/BA combo of close to 13 or so daily, it would be tough to get the best corporate contracts that generate the biggest revenue. By offering more choices, more corporate contracts could come this way.


Bye Bye---General Lee

 

[KarmaPolice]

Virgin flies from LHR to BOS, Chicago, LAS, LAX, Miami, JFK, MCO, SFO, IAD and Vancouver.

We're sharing seats on a metal neutral basis, but the seats are not going to be on the same kind of airplanes. We'll trade a seat on their wide body for a seat on our Narrow. If you look at their route structure, it just makes sense we'll give them more 10 seats LAX to LHR, while we take ten seats LAX to SAC.

Delta has no wide body order, and the reason is because we are shifting our focus to be domestic feed for a massive international code sharing operation.

If this trend continues, we will see less variety in our international destinations as we focus on feeding JV codeshare hubs. (CDG, AMS, and now LHR), AND SIMULTANEOUSLY feeding Air France, KLM, and Virgin Atlantic WIDE BODIES parked at US airports.

And this talk of our contractual protections against this I hear???
The contract language basically states that in the event the company enters into a JV/Codeshare agreement, the flying that we already have to the host country can be no less than it already was. Yes, that means the way to GROWTH is to codeshare it away because it's cheaper.

This is good for DAL pilots, but it depends on how you look at it.

 

[KarmaPolice]

If we look at it from the perspective of what we as pilots want for ourselves, (more international wide body flying to more exotic locations), this is bad.

But we also want to work for a profitable carrier for the rest of our careers, and I think this is good for that goal. This is a hedge against a restructured UAL, AA, and also against Middle Eastern airlines in attack mode.

I'd love to see Delta buy 100 777s and go toe to toe with the competition that way, but I have no other option but to trust that the company has looked at that option and sees this avenue as being more beneficial in the long run.

 

[SBD]

How much did Delta buy Comair/ASA for? That's right, billions. I know it's for the international market and that's where the money is. I swear DL mng't is a bunch of monkeys with airlines on a dart board and they're gonna see where it lands.

 

[greasejob]

Virgin flies from LHR to BOS, Chicago, LAS, LAX, Miami, JFK, MCO, SFO, IAD and Vancouver.

We're sharing seats on a metal neutral basis, but the seats are not going to be on the same kind of airplanes. We'll trade a seat on their wide body for a seat on our Narrow. If you look at their route structure, it just makes sense we'll give them more 10 seats LAX to LHR, while we take ten seats LAX to SAC.

Delta has no wide body order, and the reason is because we are shifting our focus to be domestic feed for a massive international code sharing operation.

If this trend continues, we will see less variety in our international destinations as we focus on feeding JV codeshare hubs. (CDG, AMS, and now LHR), AND SIMULTANEOUSLY feeding Air France, KLM, and Virgin Atlantic WIDE BODIES parked at US airports.

And this talk of our contractual protections against this I hear???
The contract language basically states that in the event the company enters into a JV/Codeshare agreement, the flying that we already have to the host country can be no less than it already was. Yes, that means the way to GROWTH is to codeshare it away because it's cheaper.

This is good for DAL pilots, but it depends on how you look at it.

Usually when you look at seats, you look at seat miles. Therefore 10 LHR-SFO seats doesn't equal 10 LAX-SAC seats (I'm assuming you mean SMF). In thin markets I think you will see Virgin opting to fly to a Delta hub instead and connect their passengers, instead of operating a money losing flight. Furthermore, we didn't buy NWA for their domestic system, we bought them for the Pacific. We converted most of our B767 to ETOPS and took them out domestic and put them on int'l instead, something we wouldn't do if we wanted to become a domestic feeder. This purchase is about gaining access to LHR and also to prevent a middle east airline to get it.

 

[greasejob]

How much did Delta buy Comair/ASA for? That's right, billions. I know it's for the international market and that's where the money is. I swear DL mng't is a bunch of monkeys with airlines on a dart board and they're gonna see where it lands.

We have a new management team running the airline now. Leo Mullin was sacked long time ago.

 

[GogglesPisano]

So why buy 49% to get a JV? Seems awfully expensive. Unless, of course, you think Branson would have gone with a Middle East carrier.

 

[KarmaPolice]

Usually when you look at seats, you look at seat miles. Therefore 10 LHR-SFO seats doesn't equal 10 LAX-SAC seats (I'm assuming you mean SMF). In thin markets I think you will see Virgin opting to fly to a Delta hub instead and connect their passengers, instead of operating a money losing flight. Furthermore, we didn't buy NWA for their domestic system, we bought them for the Pacific. We converted most of our B767 to ETOPS and took them out domestic and put them on int'l instead, something we wouldn't do if we wanted to become a domestic feeder. This purchase is about gaining access to LHR and also to prevent a middle east airline to get it.

I wondered about the seat miles issue, but I couldn't find it in the contractual protections, all I could find was block hours. I will look again. But I agree, my main point is that this is about domestic flying on our side and giving up growth over the atlantic.

 

[General Lee]

Virgin flies from LHR to BOS, Chicago, LAS, LAX, Miami, JFK, MCO, SFO, IAD and Vancouver.

We're sharing seats on a metal neutral basis, but the seats are not going to be on the same kind of airplanes. We'll trade a seat on their wide body for a seat on our Narrow. If you look at their route structure, it just makes sense we'll give them more 10 seats LAX to LHR, while we take ten seats LAX to SAC.

Delta has no wide body order, and the reason is because we are shifting our focus to be domestic feed for a massive international code sharing operation.

If this trend continues, we will see less variety in our international destinations as we focus on feeding JV codeshare hubs. (CDG, AMS, and now LHR), AND SIMULTANEOUSLY feeding Air France, KLM, and Virgin Atlantic WIDE BODIES parked at US airports.

And this talk of our contractual protections against this I hear???
The contract language basically states that in the event the company enters into a JV/Codeshare agreement, the flying that we already have to the host country can be no less than it already was. Yes, that means the way to GROWTH is to codeshare it away because it's cheaper.

This is good for DAL pilots, but it depends on how you look at it.

VS has the same number of slots to play with that they currently have. No change there. DL has 9 flights a day from LHR. That probably won't change either. DL can't fly narrowbodies from the US to LHR. So, where is your beef again? They can't get anymore slots to LHR. No more are for sale. THEY CAN'T EXPAND IN LHR. SAME NUMBER OF SLOTS. Do you think they will start ATL to CDG service next? Very doubtful. (also, AF would get mad) They have some options on moving around city pairs from those slots at LHR, but that is it. Nothing else. Was DL going to expand more at LHR before this? DL did add 1 765 flight to ATL, but I don't see anymore slots for sale. So, the answer is NO. The good thing about this is now DL and VS can fight the larger AA/BA alliance and not be squashed. DL will still have their 9 flights a day (maybe more if VS allows it), and VS will have the same amount of flights, but they may change a few around to help feed ATL and take away routes that might be money losers to the US. Instead, they will feed DL through the hubs. If this didn't happen, a Middle Eastern Airline may have come in and tried the same, and that could have added another, richer, competitor to the already competitive route (LHR-JFK).


Bye Bye---General Lee

 

[KarmaPolice]

VS has the same number of slots to play with that they currently have. No change there. DL has 9 flights a day from LHR. That probably won't change either. DL can't fly narrowbodies from the US to LHR. So, where is your beef again? They can't get anymore slots to LHR. No more are for sale. THEY CAN'T EXPAND IN LHR. SAME NUMBER OF SLOTS. Do you think they will start ATL to CDG service next? Very doubtful. (also, AF would get mad) They have some options on moving around city pairs from those slots at LHR, but that is it. Nothing else. Was DL going to expand more at LHR before this? DL did add 1 765 flight to ATL, but I don't see anymore slots for sale. So, the answer is NO. The good thing about this is now DL and VS can fight the larger AA/BA alliance and not be squashed. DL will still have their 9 flights a day (maybe more if VS allows it), and VS will have the same amount of flights, but they may change a few around to help feed ATL and take away routes that might be money losers to the US. Instead, they will feed DL through the hubs. If this didn't happen, a Middle Eastern Airline may have come in and tried the same, and that could have added another, richer, competitor to the already competitive route (LHR-JFK).


Bye Bye---General Lee

RIGHT NOW there aren't any slots. I'm looking into the future and guessing slots will become available, especially with how much Virgin is losing, and projected to lose against a restructured AA/BA team.

The beef I see towards DAL pilots is that as slots become available in the future, that North Atlantic growth goes to Virgin with us picking up the passengers in our Domestic hubs and putting them on Narrow Bodies. I'd like to see us grow international routes organically. But I have to trust that Anderson and the gang see a better strategy.

I agree that with Singapore shopping around their 49%, It's better to have it in our hands than in Emirate's. And 360 is a deal.

 

[greasejob]

I wondered about the seat miles issue, but I couldn't find it in the contractual protections, all I could find was block hours. I will look again. But I agree, my main point is that this is about domestic flying on our side and giving up growth over the atlantic.

However you look at it, I believe it's measured between US/UK, therefore LAX-SAC (SMF) wouldn't compensate for lost Atlantic flying. If we wanted to give up Atlantic flying we could have given that to AF/KLM. Again, this is about LHR, the only way to get in there was to buy Virgin before someone else did. There would be no growth possible into LHR since the airport is operating at capacity.

 

[greasejob]

RIGHT NOW there aren't any slots. I'm looking into the future and guessing slots will become available, especially with how much Virgin is losing, and projected to lose against a restructured AA/BA team.

The beef I see towards DAL pilots is that as slots become available in the future, that North Atlantic growth goes to Virgin with us picking up the passengers in our Domestic hubs and putting them on Narrow Bodies.

However, I agree that with Singapore shopping around their 49%, It's better to have it in our hands than in Emirate's. And 360 is a deal.

Bingo! We paid a 1/3 of what Singapore did. If and when slots becomes available there is no guarantee that we would get them or that we would get very many. With this deal we go from being no 5 or 6 in LHR to no 2 and that's not insignificant because the guy with the corner office in Manhattan wants frequent flights to LHR and if Skyteam can't provide that Star and Oneworld can. So this deal is also hugely important to get corporate accounts and, if they sign with us they fly us to other destinations as well and that's jobs for us.