Heavy Set said:
Coex was SPUN OFF to the public (selling shares to the public) and Comair could very well be spun off as well. Grinstein said it best when he said, "We don't need to own Comair to retain the operational benefits." Coex still supports Continental and yet Continental does not retain full ownership.
Spinning off Comair to the public would bring the following benefits to Delta:
1. Source of much needed cash (probably a couple hundred million dollars as long as Delta guarantees some of the flying over the next 5-7 years)
True. Maybe as much as 600 million cash for Delta.
2. Delta would not be responsible for any future fleet changes (would not have to guarantee the debt used to buy any aircraft). Delta could also shove some of the debt associated with past aircraft purchases tied to Comair directly onto Comair's balance sheet (rid itself of onerus debt).
True again. Delta could transfer ALL of the debt associated with the aircraft that Comair retains.
In turn, Comair would no longer have to operate aircraft dictated by Delta. It would be free to operate the fleet mix of its own choosing. That might result in the replacement of many 50-seaters with 70-seaters (reducing costs + increasing revenue). Comair would have to service its own debt (as it did before it was "acquired" but would also retain its own profits.
3. Delta could force Comair to improve its performance and quality by stipulating in future contracts certain performance and cost standards (overall cost, on-time arrivals and passenger complaints) - in the long-term, Delta could discontinue its relationship with Comair if it does not live-up to its standards.
You presume that Comair's "performance" is lacking when in fact it is substantially better than Delta's and has always been. The same is true of Comair's "quality". Comair's on-time performance suffers as a result of Delta's decisions, without which it could be returned to normal, i.e., substantially better than Delta itself. As far as customer service and passenger complaints, Comair's people have always delivered better customer satisfaction than Delta with fewer passenger complaints or lost baggage. Declines in Comair "performance" can be directly attributed to Delta's way of doing business. An independent Comair (if truly independent) could quickly return to its prior standards, which were better than most.
Delta would gain flexibility - it could ultimately shop for the cheapest (and yet within set quality standards) feed like UAL is currently doing
Yes, Delta could do that. Comair would also gain flexibility, provided the spin off is real and not a gimmick. With a "free" Comair, Delta would quickly discover that Delta isn't the only game in town. Comair just might gain far more than it would lose.
No more long-term regional labor headaches - if a partner regional strikes, then seek feed elsewhere as stipulated in contracts.
You're right again. Comair unions would no longer have to deal by remote control with an entity they can't talk to. Comair people would be able to make decisions with Comair people and most of the "labor headaches" would go away. There is no need to "strike" when you have the chance to make agreements in your own interest with your own management. The millstone of Delta management would go away. Delta would indeed be able to "seek feed elsewhere" and, by the way, so would Comair.
Ultimately, this spin off of Comair (if it does happen) would likely mean lower salaries and benefits for its pilots in the long-run because Comair would need to compete for business with the likes of Mesa, Skywest and CHQ...
Well, history (which Comair does have) indicates that Comair had no trouble competing with the likes of Mesa, etc. in the past. Comair has been around for awhile and Comair people certainly didn't learn how to run a "regional airline" from Delta. A truly independent Comair would restore the entrepunerial spirit of Comair people. Working for themselves, instead of for a bunch of people with no common interest, Comair people will have no trouble holding their own. Perhaps lower salaries and benefits might result, but that is virtually guaranteed under the yoke of a mismanaged "owner". Left to their own devices, Comair people will solve Comair problems and Delta people can be left to wallow in their own inefficiencies. That would be a welcome change.
On the plus side for Comair, it could diversify its flying among several airlines and it might be able to ultimately add bigger aircraft (to fly for other airlines - like Republic or TSA). It's a roll of the dice. But look to Coex as the example in this case - it can happen.
Yes, it's a roll of the dice like everything else in this business. However, the di that Comair people get to "roll" under Delta are loaded in favor of snake eyes, not sevens. A truly independent Comair (and that depends on how the "spin-off" deal is structured) would have a great many opportunities that it does not have today. Fortunately, Comair's management team has managed (to a great extent) to avoid being completely decimated since the acquisition. It could easily be "restored" once Delta "control" is out of the picture. Comair didn't become successful as a result of Delta management and it's previous success can be restored far more easily if its management structure is no longer burdened with the current Delta crew.
"We live in interesting times". I say go ahead and spin us off. There's nothing quite like emancipation. If you've always been a slave it is hard to understand the benefits of freedom. On the other hand, if you were once free and became enslaved the prospect of restoring freedom is not a source of fear.
