PCL-28
First of all...DAL does wear black with gold strips...the whole idea of our uniforms at Delta Connection was to make the customers see a seamles transistion from DAL to DCI when they fly. The only difference in our uniforms is my winds say Delta Connection, and their wings say DAL.
TonyC...you wanted hard numbers for pilot expenses. Since we've all been estimating, here's what an airline analyst says.
from
http://www.enquirer.com/editions/2004/04/18/biz_delta18.html
Pressing the case
Company officials and analysts see the pilot situation as the biggest problem.
"Pilot reductions alone won't make Delta profitable, but Delta will not become meaningfully profitable without such pilot reductions," Buttrick said.
Grinstein said in Wednesday's conference call that he has met with more than 1,000 pilots in town hall-style meetings to push his case, although he has yet to make his case to pilots here. The union includes nearly 7,400 pilots, including nearly 800 based in Cincinnati. The company is seeking a 30-plus percent pay cut along with productivity increases.
"Our main competitive disadvantage continues to be our pilot costs," said Grinstein, pointing out that the pilots are due to receive a 4.5 percent raise on May 1. "That continues to be the boulder weighing us down."
The pilots' union has countered with a proposal that calls for a 9 percent wage cut in addition to holding back the impending raises, an offer the union says could help Delta restructure its debt.
Union officials have said that they continue to be open for further negotiations. But they characterize the company's offer as being presented as "take it or leave it," which they say is unacceptable.
"In our analysis, the magnitude of the demand is not justified by the data we have been given," said union spokesman Chris Renkel. "We do acknowledge that our plan addresses the debt, which seems to be the $20 billion elephant no one seems to want to talk about."
Still, "we're just a phone call away." Renkel said.
How long this goes on is up to the pilots, Buttrick said, saying the company could be spending $50 million a month more on pilots than its nearest competitors.
"The sooner the pilots accept the marketplace reality, the smaller the concessions will have to be," he said. "The longer the wait, the deeper they have to be.
"That's just math."
Poison pill possible?
All the swirling problems have led many analysts to begin speculating about Delta's potential for entering bankruptcy. With nearly $2.2 billion in ready cash on hand, Buttrick said the company could survive at least the rest of this year and into next year.
Beyond that, he would say only that "Delta will not be OK after two years," a sentiment echoed by many other analysts in several reports issued this week.
Buttrick and others have openly asked about the potential of spinning off regional subsidiaries Comair and Atlantic Southeast Airlines, which could raise more cash, but Grinstein said the two airlines are "valuable parts of the Delta network."
Grinstein also told analysts he was committed to turning the company around without resorting to bankruptcy.
"I believe we can make Delta a great airline once more, and I believe we can do it without resorting to court-ordered restructuring," he said.
end of article
So there you have it...just as in Dec 2001...my conclusions are backed up by every those folks whose job it is to study the industry.
My points
1. DAL pilot wages are totally out of line with the market.
Analyst says....
"How long this goes on is up to the pilots, Buttrick said, saying the company could be spending $50 million a month more on pilots than its nearest competitors.
"The sooner the pilots accept the marketplace reality, the smaller the concessions will have to be," he said. "The longer the wait, the deeper they have to be."
"That's just math." (gosh I love it when I'm right...especially that part about "the longer they wait, the deeper they'll have to be"...told UAL78 the same thing back in early 2002...that the union should've gone to management immediately after 9/11 and began helping to save the company...of course I was told by the "old head experienced" guys that I didn't understand the industry, and that they need to "preserve the profession.")
2. Pilot wages are a part...but not the whole..solution
Analyst says...
"But the airline's problems don't stop with the pilots. Its credit is tapped out. Fares continue to be depressed, thanks to increased competition from low-cost carriers and price pressures from Internet shoppers."
"Pilot reductions alone won't make Delta profitable, but Delta will not become meaningfully profitable without such pilot reductions," Buttrick said."
Sounds to me like expensive gas hogs need to be parked. and some less expensieve, more profitable aircraft might be needed to make money off the lower fares (DAL just might be able to borrow some money to lease some aircraft if they were able to bring their cost structure down...the reason no banks will loan them anymore cash is they see exactly what I see...there is no way DAL can be competitive in the airline industry without a huge reduction in overhead costs.)
3. DAL has about 18 months left
Analyst says
"Poison pill possible?
All the swirling problems have led many analysts to begin speculating about Delta's potential for entering bankruptcy. With nearly $2.2 billion in ready cash on hand, Buttrick said the company could survive at least the rest of this year and into next year.
Beyond that, he would say only that "Delta will not be OK after two years," a sentiment echoed by many other analysts in several reports issued this week. "
I guessed 18 months...might have been off by a month or two.
You know...it's not that I'm so smart...it's that I read the analysts' predicitons about UAL and US Air in 2001...and they are exactly...almost word for word...the same now in 2004 for DAL.
Again...time will tell who is right...but I fail to see any major differences between UAL/US Air in 2001 and DAL in 2004.
This is the reality at DAL.
1. DAL pilot wages are at least 50% above the industry average.
2. DAL...even with increased capacity and increasing load factors is still losing a billion a year.
3. DAL can no longer borrow money. They have 18-24 months of cash reserves, then they (we) are done.
4. Competition and lower fares wil continue to put more pressure on DAL as AirTran and Jet Blue begin to acquire hundreds more aircraft up and down the NE corridor in direct competition with DAL.
5. DAL needs hundreds of aircraft in the 70-100 seat range...at rates competitive with Jet Blue/AirTran...to have any hope of battling these airlines. Jet Blues 100 new 100 seaters will be serious competition for DAL in NY, as will the 100 new 737s at AirTran in ATL.
6. The longer DAL waits to bring it's cost down , the more debt it incurs, and the less margin and capital it has to make strategic moves...every day is one closer to the "B" word...in which case management will have ALL the leverage...if you don't beleive me, ask my friends at UAL.
UGGHH!!! It's so frustrating...I'm just trying to help my fellow pilots...and their pride and arrogance is just so thick...
I guess that's what I would expect from mostly former AF guys (I being one of them) "we live in fame, go down in flames."
