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Delta - ComAir, ASA

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Marcy Projects
Jan 12, 2002
What are the changes of Delta spinning off ComAir and ASA as seperate companies to raise much needed cash? Mullin said today after they posted a $186 million loss that the rough times are still ahead.

The trend seems to be spinning off regionals, like Northwest and Continental have done... of course the Continental one was planned before 9/11.
Cash Cow

As far as I know, Comair is making money...don't know about ASA. It's been written on this board recently that Delta is minimizing its losses with the cash infusion from Comair, so why would they sell the goose that lays the golded eggs?
Too right, Delta would be mad to sell Comair, they would be better off selling Delta mainline!
When main line makes a profit, then they should sell Comair, believe me, everyone at Comair would be a lot better off not having mainline dragging us down!!!

The chances of DAL selling off CMR or ASA are just about zero.

As previously stated, the WO DCI carriers are the only ones generating a profit for the company as a whole. I don't know for sure, but I'd guess they generate a much larger % of the cash flow/Profit for DAL than the "spun off's" did for their respective mainline owners. This is a big factor.

2nd, in today's current economic environment of investor panic (Look at the DowJones) it would be impossible for DAL to get anywhere near what they paid for the WOs back if they were to try an IPO. The purchase price of CMR and ASA was in excess of $2.5 Billion (with a "B") No WAY an IPO in this climate will get anywhere NEAR that in return. In short, they'd be selling a valuable asset for less than they paid for it. Now granted, they COULD sell off a portion of the WOs, but would the short term cash influx be worth the loss of revenue? That's one for the bean counters I suppose.

Also, keep in mind that the "trend" of spinning off regionals has not met with real success on Wall Street. Mostly because of the above mentioned reasons, but also because of the fact that Wall Street understands that there ARE still scope restrictions in place, and they (some day) will ultimately limit the revenue generating ability of any spun off airline that functions strictly as a code share. Why invest in a company who's potential is controlled by another company's labor group?

ASA and CMR aren't for sale. (IMHO)

On the other hand, what the hell do I know? I fly airplanes for a living.
Northwest has not yet spun off Pinnacle. They have delayed indefinitely the IPO because they can't get the price they were hoping for.
A couple of points here:

1. CAL has not yet spun off Express.

2. A major may still retain some of the profits from a spun-off regional carier depending on the arangement the companies have after the spin-off.

3. The advantage of the spin-off is that the mainline carier gets a much needed cash infusion while it ratains the feed it had previous to the spin-off.

Im not infering that CMR/ASA will be spun, I just think you guys are fooling yourself thinking that because they are profitable you are protected from this type of arrangement. CoEx has ALWAYS made lots of money (over 20 mil. profit last Qtr). We were still IPO'd because CAL was able to maintain its arrengement with the new company AND get 500 million for its initial sale.

I do not however feel as some do that this spin-off has weakened our bargaining power. CAL needs this feed as they did the day before the IPO. Nothing has changed here post IPO.

Just my 2 cents. See yah.

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