Delta Can AVOID Chap 11 Filing This Year Says Grinstein...

[Tomct]

Well whoever buys us will be in for a big surprise when we go on strike! Not a lot of people will want to take on a company that is on such Terrible terms with its employees. One thing that would be great....is if GG picked up the BAT PHONE and told Skippy to get this contract done NOW!! (i.e.give us what we want) so that we would be more attractive to an investor. Without that, I don't see anyone wanting to buy ASA!
On a side note, is it true that Comair folks are getting into fist fights over their pay freeze, amongst themselves? Heard that from a cop at CVG?

 

[anon]

Why should anyone buy ASA/Comair at this time. Just wait a little while, DAL files BK, and then pick up the pieces at firesale prices.

Go ahead and sell ASA/Comair. The employees might have a better chance with Skywest/Virgin.

 

[MedFlyer]

Right now we have some major problems at DL besides fuel costs, and they are debt and the upcoming pension payments that are due. Selling ASA/Comair would lower debt payments because we have plenty of RJ debt---the CVG Chief Pilot telling me around $8 billion worth.
Bye Bye--General Lee

I've got some bad news for you General.....selling ASA/Comair WILL NOT rid DL of the RJ debt.

Let's say SkyWest buys ASA (just a hypothetical) which would include ASA's RJ's debt. However, SkyWest would then turn around and negotiate a fee per departure rate schedule for all the "new" ASA flying. These rates would be set so that they cover all of SkyWest's costs to own and operate the RJ's PLUS a profit margin. Built into this rate would be the fees necessary for SkyWest to service the RJ debt that they have acquired.

The RJ debt hasn't gone away. DL will simply end up paying it out in higher fee per departure rates. All of the added debt will simply mean that DL will lose HUGE amounts of cash as they have to pay outrageous fees to SkyWest. DL still pays for the debt, but instead of paying it directly to the financier...they have to pass the payments through SkyWest.

This is why you'll notice that most in the financial community aren't getting all excited about the benefits of a Comair/ASA sell-off. Other than some quick cash, the spin-off does little to help DL as it doesn't fundamentally change DL's debt payments and it doesn't lower DL's cost structure.

In fact, over the long-run a sell-off of ASA/Comair will probably cost DL more. A combined SkyWest/ASA or SkyWest/Comair would control a huge chunk of DL's feed and DL would have less negotiating power. SkyWest will be able to extract premium fee per departure rates from DL and DL will have less leverage.

 

[ATRGuy]

There is a way to get out of the RJ debt and I am sure it is under consideration. It would take nothing to "create" a shell company, spin off CMR/ASA to this "company" then have that company file CH 7, liquidate and shut down. Voila, Delta is out of the RJ debt. There is a glut of RJs on the market, Delta can then negotiate a sweet fee for departure or risk sharing deal with a company and they replace the feed with no problem. PS. look for CHQ to land another BIG (much bigger than the one they have now) order with Delta for additional 170/190's.

btw, Mesa is in the deal because they agreed to be responsible for the leases on the DOJets. They are not going to fly them for Delta, just the CRJ's, but they "bought" there way into the Delta system. Don't expect them to stay long. (think TransStates of old)

 

[General Lee]

I've got some bad news for you General.....selling ASA/Comair WILL NOT rid DL of the RJ debt.

Let's say SkyWest buys ASA (just a hypothetical) which would include ASA's RJ's debt. However, SkyWest would then turn around and negotiate a fee per departure rate schedule for all the "new" ASA flying. These rates would be set so that they cover all of SkyWest's costs to own and operate the RJ's PLUS a profit margin. Built into this rate would be the fees necessary for SkyWest to service the RJ debt that they have acquired.

The RJ debt hasn't gone away. DL will simply end up paying it out in higher fee per departure rates. All of the added debt will simply mean that DL will lose HUGE amounts of cash as they have to pay outrageous fees to SkyWest. DL still pays for the debt, but instead of paying it directly to the financier...they have to pass the payments through SkyWest.

This is why you'll notice that most in the financial community aren't getting all excited about the benefits of a Comair/ASA sell-off. Other than some quick cash, the spin-off does little to help DL as it doesn't fundamentally change DL's debt payments and it doesn't lower DL's cost structure.

In fact, over the long-run a sell-off of ASA/Comair will probably cost DL more. A combined SkyWest/ASA or SkyWest/Comair would control a huge chunk of DL's feed and DL would have less negotiating power. SkyWest will be able to extract premium fee per departure rates from DL and DL will have less leverage.

Are you sure about that? You talk to GG and know what he thinks? Right..... How about the 90 day notice given to SKywest for termination of their product? Would that scare them, since United is about to strike and could go away with a large strike from stews and mechanics? Sounds like Skywest had better "buy" into helping Delta. Also, maybe after a couple airlines do go away fares might go up, helping DL pay those extra fees for departure. A lot could happen, but selling ASA or Comair would VERY LIKELY lower debt payments. And, Mesa is still coming to party with DCI, along with CHQ in the mix. Yes, Skywest buying ASA or Comair would still give them the largest chunk, but that wouldn't kick out Mesa or CHQ, and any furture growth may go to them. This is all speculation---on both of our parts---mind you. And, why would GG constantly be saying that he would sell ASA and Comair? Sounds like it might be good for us somehow. Call him up and ask him.


Bye Bye--General Lee

 

[xdays]

You don't need ch 11 to get rid of the pensions. You can bargain them away any time. To dump them on the pbgc may be another matter.

This statement is only partially correct. You cannot negotiate away pension benefits that have already been accrued. That would be illegal. You can negotiate how any future pension plan, beyond what has already accrued, is structured.

 

[MedFlyer]

And, why would GG constantly be saying that he would sell ASA and Comair? Sounds like it might be good for us somehow.

He isn't constantly saying it. In fact, GG has only on a few occasions mentioned it and that was usually when people specifically asked him. He has only said that the possibility was there to sell ASA/Comair...he's NEVER said anything more definitive.

Sure, a sale of ASA/Comair might be good for DL. It would most certainly give DL extra cash to burn through. However, outside of this board, I have NEVER seen anyone say that it would lower debt payments on the RJ's.

Keep in mind that GG has also stated that he doesn't like RJ's (you brought this up many times in the past), yet DL keeps bringing them in. Mesa's getting 30, Comair's getting 10, ASA's getting 32 and those are all CRJ's. That's 72 more CRJ's for DL (not to mention the E170 at CHQ).

Maybe ol' GG's not being so truthful..........

 

[skiddriver]

Are you sure about that? You talk to GG and know what he thinks? Right..... How about the 90 day notice given to SKywest for termination of their product? Would that scare them, since United is about to strike and could go away with a large strike from stews and mechanics? Sounds like Skywest had better "buy" into helping Delta. Also, maybe after a couple airlines do go away fares might go up, helping DL pay those extra fees for departure. A lot could happen, but selling ASA or Comair would VERY LIKELY lower debt payments. And, Mesa is still coming to party with DCI, along with CHQ in the mix. Yes, Skywest buying ASA or Comair would still give them the largest chunk, but that wouldn't kick out Mesa or CHQ, and any furture growth may go to them. This is all speculation---on both of our parts---mind you. And, why would GG constantly be saying that he would sell ASA and Comair? Sounds like it might be good for us somehow. Call him up and ask him.


Bye Bye--General Lee

How do you think Delta would get any money for CMR/ASA if the buyer can't recover the cost of debt payment PLUS the cost of operations PLUS a profit margin? Do you really think that some entity is going to be so gullible that they'll buy your RJ feed without ensuring the deal is structured so that they have a chance of making a profit off the deal?

Go back and ask your genius CP how much he thinks someone will pay to assume (his figures) $8 billion worth of debt? Or was his idea that Delta would pay someone to take that off your hands?

"Hope is not a method". Gen. Gordon R. Sullivan. Probably worth a read at this point.

 

[ASApuppy]

Why is nobody speculating an operational merger between ASA/CMR and perhaps mainline?

We've always said that management would never go for ONELIST because it would give too much power to the unions. The last few agreements prove they have the power.

Why did Delta write off the value of ASA and Comair? If you were going to sell, wouldn't you just write off the net loss after the sale?

There has been a fairly large management shake up at at both regionals, with Delta people moving in.

Our MEC's used to be very vocal about merger details, but now silence.

I do believe that there would be significant cost savings by reducing our duplicate operations. The spoils could be sold off for small profit and no loss of capacity to DAL.

I would have never guessed DFW closing, but it makes since now. It doesn't pay well to be the number 3 dog in town. I see DAL management making long term decisions. It is hurting them in the short term. That said, I see DAL owning its feed as the long term plan. Just my thoughts. Along for the ride like everyone else.

 

[General Lee]

How do you think Delta would get any money for CMR/ASA if the buyer can't recover the cost of debt payment PLUS the cost of operations PLUS a profit margin? Do you really think that some entity is going to be so gullible that they'll buy your RJ feed without ensuring the deal is structured so that they have a chance of making a profit off the deal?

Go back and ask your genius CP how much he thinks someone will pay to assume (his figures) $8 billion worth of debt? Or was his idea that Delta would pay someone to take that off your hands?

"Hope is not a method". Gen. Gordon R. Sullivan. Probably worth a read at this point.

So, we're going to keep the debt? What? You guys don't know how that works I guess---buy the airline, get the debt. If Skywest buys ASA, then they assume whatever the debt is for all of their RJs. As far as Comair goes, I don't think Skywest will buy them---since their CEO called Comair a "disease" (according to my Skywest buddy who heard that in recurrent two weeks ago). Why would he say that? We all know the answer.

As far as making a profit off of the deal, how about just tagging along--still providing feed? Is that better than getting jettisoned with 90 days notice and looking for more feed opportunities or maybe starting an Indy Air deal? I think there will always be some sort of profit guarantee, but it is getting smaller. Let me see now---park the planes or fly them and at least break even....? Hmmm.


Bye Bye--General Lee

 

[General Lee]

He isn't constantly saying it. In fact, GG has only on a few occasions mentioned it and that was usually when people specifically asked him. He has only said that the possibility was there to sell ASA/Comair...he's NEVER said anything more definitive.

Sure, a sale of ASA/Comair might be good for DL. It would most certainly give DL extra cash to burn through. However, outside of this board, I have NEVER seen anyone say that it would lower debt payments on the RJ's.

Keep in mind that GG has also stated that he doesn't like RJ's (you brought this up many times in the past), yet DL keeps bringing them in. Mesa's getting 30, Comair's getting 10, ASA's getting 32 and those are all CRJ's. That's 72 more CRJ's for DL (not to mention the E170 at CHQ).

Maybe ol' GG's not being so truthful..........

Did you read the article from USAtoday? Did you read Bafan's quote from GG at the retired Delta pilots association meeting? Do you think he is joking around here? He wants to get some cash and he wants to get rid of some debt. Just watch chief.


Bye Bye--General Lee

 

[chperplt]

He wants to get some cash and he wants to get rid of some debt. Just watch chief.

Sure he wants to get some cash.. sure he wants debt relief. I want a million bucks in the bank.. Doesn't mean any of it is reality.

How do you think he's going to do it? Who on this planet will buy CMR or ASA right now? You think that Skywest will be forced to buy one of us to keep the Delta feed?

I agree that selling one or both is needed, but the reality of the situation is that it probably can't be done. You can't walk into a car dealership with a 0 fico score and expect to drive away with a new car. You can't expect someone to jump to the plate and purchase a company and absorb billions (8 I think you said) in debt in this environment.

If it was possible, you would have seen it done already. If someone wanted to buy either of us, we would have been sold or IPOd already.

 

[skiddriver]

So, we're going to keep the debt? What? You guys don't know how that works I guess---buy the airline, get the debt. If Skywest buys ASA, then they assume whatever the debt is for all of their RJs. As far as Comair goes, I don't think Skywest will buy them---since their CEO called Comair a "disease" (according to my Skywest buddy who heard that in recurrent two weeks ago). Why would he say that? We all know the answer.

As far as making a profit off of the deal, how about just tagging along--still providing feed? Is that better than getting jettisoned with 90 days notice and looking for more feed opportunities or maybe starting an Indy Air deal? I think there will always be some sort of profit guarantee, but it is getting smaller. Let me see now---park the planes or fly them and at least break even....? Hmmm.


Bye Bye--General Lee

I see, so it's a volume deal. Lose money on every flight, but at least you make it up in volume. Or better yet, Delta is so big and bad that they can muscle providers into buying ASA/CMR at a loss just to keep your feed? Beyond wishful thinking. No independent provider would sign up for that deal.

If they can't make a profit, including debt service, they won't buy your asset. Period. I have plenty old mil buds flying at Mother D who I would hate to see out on the street, so I can only say that it's lucky that you only fly 'em. If you were anything other than a forum cheerleader, the company would be doomed.

Listen to Brother Stevie: Superstition

"If you believe in things that you don't understand, then you suffer"

 

[General Lee]

Sure he wants to get some cash.. sure he wants debt relief. I want a million bucks in the bank.. Doesn't mean any of it is reality.

How do you think he's going to do it? Who on this planet will buy CMR or ASA right now? You think that Skywest will be forced to buy one of us to keep the Delta feed?

I agree that selling one or both is needed, but the reality of the situation is that it probably can't be done. You can't walk into a car dealership with a 0 fico score and expect to drive away with a new car. You can't expect someone to jump to the plate and purchase a company and absorb billions (8 I think you said) in debt in this environment.

If it was possible, you would have seen it done already. If someone wanted to buy either of us, we would have been sold or IPOd already.

People from Skywest have been in ATL this week. You come up with your own conclusions...... The Mesa addition to DCI probably forced this situation. All Skywest needs is a 90 termination notice. Mesa would love to fill in I am sure.


Bye Bye--General Lee

 

[General Lee]

I see, so it's a volume deal. Lose money on every flight, but at least you make it up in volume. Or better yet, Delta is so big and bad that they can muscle providers into buying ASA/CMR at a loss just to keep your feed? Beyond wishful thinking. No independent provider would sign up for that deal.

If they can't make a profit, including debt service, they won't buy your asset. Period. I have plenty old mil buds flying at Mother D who I would hate to see out on the street, so I can only say that it's lucky that you only fly 'em. If you were anything other than a forum cheerleader, the company would be doomed.

Listen to Brother Stevie: Superstition

"If you believe in things that you don't understand, then you suffer"

Why don't you call GG and ask him? Do it. Call him up and tell him he is insane. I think he has a better grasp of the situation than you or I do. He has mentioned a possible sale, and it will happen eventually. He even said we don't need to own you to have value with your services----HE SAID THAT. Expect a sale soon, and I believe Comair will be dumped last, at the lowest price. Oh well, at least the debt will go away.


Bye Bye--General Lee

 

[chperplt]

All Skywest needs is a 90 termination notice. Mesa would love to fill in I am sure

Come on General.. You've gone through your entire list of why's and how's and now you're pulling this crap out of the bag.

What makes you think Skywest is in a position to assume 8 billion, or a portion of that, in new debt? You think that GG is going to put some pressure on our friends from Utah and make them buy CMR or ASA? You think Johnny O has the cash to buy one of us?

I think you've become a little too narrow minded. CMR and or ASA may be IPOd... An extra few million is better than nothing.. A sale, especially in the manner in which you describe is very far fetched and not a good reality. No one will be assuming 8 billion in debt. Delta will continue to pay the debt.. That's the reality of the situation.

You can jump up and down like a little child and say that it's going to happen because GG said we don't need to own you (us) to keep the feed.. The fact of the matter is the economy and industry will not support it.. It just won't right now.

I can understand you being nervous about your future. You should be... we all should be.

 

[On Your Six]

So, we're going to keep the debt? What? You guys don't know how that works I guess---buy the airline, get the debt. If Skywest buys ASA, then they assume whatever the debt is for all of their RJs. As far as Comair goes, I don't think Skywest will buy them---since their CEO called Comair a "disease" (according to my Skywest buddy who heard that in recurrent two weeks ago). Why would he say that? We all know the answer.

As far as making a profit off of the deal, how about just tagging along--still providing feed? Is that better than getting jettisoned with 90 days notice and looking for more feed opportunities or maybe starting an Indy Air deal? I think there will always be some sort of profit guarantee, but it is getting smaller. Let me see now---park the planes or fly them and at least break even....? Hmmm.


Bye Bye--General Lee

If DAL spun or sold off ASA/Comair, it would become a more viable operation - that cash could be crucial to its ultimate survival and provide a bridge to "liquidity." The fact that Delta would do such a thing would make it more attractive to potential investors - Delta would have a greater likelihood of surviving...

As for assuming debt, it's all negotiable. Why would DAL want to support the debt of RJs that are being used by or "owned" by another airline? Doubt it. It will be a package deal - Skywest or whoever else acquires ASA/Comair would assume some liabilities after taking assets. Otherwise, Delta should just declare Chap. 11 and seek to restructure all of the debt.

Now that Mesa has entered the picture, Skywest & CHQ/SA will need to "play nice" or eventually get squeezed as Mesa would get more flying. If Skywest balks at taking ASA/Comair, Delta could sell them to someone else (maybe an investment firm) and then seriously reduce Skywest's percentage of feed (it could line up another feeder and then give Skywest a 90-day termination notice). Mesa has changed the dynamic at Delta and provides yet another bargaining tool...

 

[General Lee]

Come on General.. You've gone through your entire list of why's and how's and now you're pulling this crap out of the bag.

What makes you think Skywest is in a position to assume 8 billion, or a portion of that, in new debt? You think that GG is going to put some pressure on our friends from Utah and make them buy CMR or ASA? You think Johnny O has the cash to buy one of us?

I think you've become a little too narrow minded. CMR and or ASA may be IPOd... An extra few million is better than nothing.. A sale, especially in the manner in which you describe is very far fetched and not a good reality.

I can understand you being nervous about your future. You should be... we all should be.

Do you think we would just sell ASA or Comair and keep the debt? Do you really know anything about companies buying other companies? Skywest would be getting a deal on the purchase price by far, but expanding always carries a risk, and assuming debt comes with any large deal. Look at any corporate merger or aquisition and you see them assuming debt. That is the way it goes. Someone has to pay for those aircraft, and Delta didn't pay cash for everyone of them. Come on now. And, why would the CVG chief pilot lie to me? He said that the combination of ASA and Comair have about $8 billion in total debt. Would we keep that? He said no---and he said selling them would help us out a lot. Is he wrong too? Are we all wrong? You and Skids think so. Well, ok then. And, you don't see GG panicing, do you? He has some sort of plan.


Bye Bye--General Lee

 

[chperplt]

As far as Comair goes, I don't think Skywest will buy them---since their CEO called Comair a "disease" (according to my Skywest buddy who heard that in recurrent two weeks ago). Why would he say that? We all know the answer.

Why don't you enlighten us?

 

[chperplt]

Do you think we would just sell ASA or Comair and keep the debt

You're either too blind or dumb to understand what I'm saying here. NO.. I don't expect Delta to sell ASA and Comair and keep the debt. I don't expect Delta to sell ASA or Comair because of the debt.

Understand what I'm trying to say here? I realize you being 40ish and all the brain starts to slow down.. The state of the economy and industry will make any sale cost (debt) prohibitive. NO ONE had the funds or credit to absorb 8 billion in additional debt.

I don't think GG is wrong about wanting to/needing to sell one or both of us. I don't think it can be done now and accomplish what needs to be accomplished. He's a couple years too late.