Delta may shrink

[General Lee]

General the 50 seaters still have better seat mile costs than a DC9 and when times get tough, how much you want to be that management will not want to fill those airplanes up with the seats it was designed for?

Well, just by looking at management's actions in the last few months, I would say they don't like 50 seaters as much as they used to. Some markets may indeed justify a 50 seater, but many do not, and management is learning that now.

Bye Bye--General Lee

 

[Fly4hire]

General the 50 seaters still have better seat mile costs than a DC9 and when times get tough, how much you want to be that management will not want to fill those airplanes up with the seats it was designed for?

Maybe a CRJ has better CASM, however you have to run 2 CRJ's to 1 DC9 for the same number of seats.

 

[PeanuckleCRJ]

So sayeth my n-dub brethren (I am a brotha from another mother), the 9 has better seat mile than any of the RJ's.

So sayeth, not so I sayeth.

 

[Superpilot92]

It's simple self preservation, not altruism. Sell out the 100 seater's and you have sold out a sizable portion of your NB flying, furlough thousands, and open the door wide for a disenfranchised group of former major pilots who would probably willingly do their fraternal brothers who sold them out flying in a NYC minute. ALPA and airline pilot unionism would truly die with such a move.

Exactly! Tell the senior guys that selling out scope means farming out the heavies and see what they say. Anyone who thinks selling out scope wouldn't further degrade this industry needs a swift kick in the nuts.

 

[~~~^~~~]

So sayeth my n-dub brethren (I am a brotha from another mother), the 9 has better seat mile than any of the RJ's.

So sayeth, not so I sayeth.

Yea verily Fins sayeth unto you, let your flock feed in a field with a large, tall, fence to protect your sheep. Your fence must be built to hold your sheep in, for a fence to keep your sheep out makes no sense. Peace be unto you.

I too found it hard to believe, but ALPA's E&FA team did an analysis of Delta and other potential merger partners. These costs were graphed using the airlines' cost data. It's an eye opener.

It is likely is that the 3 to 1 growth ratio permits the replacement of a DC9 with a CRJ700/900, or E175. That provides 70% of the DC9's capacity (driving up revenue) while costing around 57% of what the DC9's expenses are. Figure something like 90% of the revenue for a little more than half the cost. (also, passengers like big airplanes, but they buy frequency and connections)

No one would love for the scope wars to be over MORE than me. But, we are not there. NWA's plans to replace the DC9 still make sense on paper and realistically we are not talking old beat up CRJ200's, we will see the E175's that are already on order doing this flying.

Management saying that they are going to keep the 9's around for the forseable future (aka until the merger) also makes sense politically. What is going to save our bacon is scope (under our control) or a baby dreamliner. We can't control the Certification of a 100 seat jet, but what we can do is at least ask our Reps to get these replacement jets on the property. We've got rates for them.

Without a similar provision to scope in the RJ's, I'm planning on a 12 to 16 months before the 90 day letters get sent. Delta's 2001 hires are protected, but it is unlikely new hires are going to get throught this fleet renewal completely unscathed. Huge variable is OIL. Another variable is Jerry Atkin walkin' around with a Billion dollars burning a hole in his pocket.

Even if the jets are on the Compass property, give those guys a staple and provide a route for displaced DC9 pilots to perform "their" replacement flying.

 

[ACL65PILOT]

Sad but true, but what is the best business decision is not always the one that is taken.
Fin, as you know, we passed on the 195 because of the need for a 15+ year lease on them. I am guessing that the E-175 has the same terms. It still may not make sense to get rid of the 9 in favor of the 175. Now if they change their terms on the 195 that is a possibility.
What I see happening is keeping the 9's and waiting for Boeing or the C Series to arrive. When that happens, I bet you see the 9's, 88's and a few 73's and 75's go away. Their efficiency with be unmatched. The nice thing is that off of this flying should be performed by mainline.

 

[~~~^~~~]

ACL: You are right about the lease terms, I forgot about that. Of course if a third party, like SkyWest or Republic, is willing to lease/buy the aircraft it would remove that objection.

But overall, I sure hope you are right. You hearing anything, or just putting the puzzle together like the rest of us?

Other parts of the puzzle, yet to be placed:

• Comair sale announcement
• Mesa litigation reveals just how "walk away" these contracts are, or are not
• Delivery dates on the C Series
• Performance of the scaled down Pratt GTF. Engines usually lose some efficiency when made smaller. The 50% fuel savings claimed by Williams with their baby RB211 turned out to be an engine which would not run for more than a couple hours off a test stand. The revised GTF uses a different core than the one in testing now. Pratt thought they'd be on 737's, not C Series jets and is having to adjust. Also, is the tough gearbox lubrication problem fixed? Oil supply disruptions result in nearly instant catastrophic failure.

I'm thinking 500 orders immediately by domestic airlines and probably 1,000 internationally if the jet makes its' numbers. Don't know why Boeing and Airbus have no interest. The 737NG is basically a 757 now. Boeing risks being left behind.

The 757 is still advertised as the most efficient aircraft on the planet. Wonder about a life extension program, or are those getting parked that used up?

 

[ACL65PILOT]

Fin;
Agreed that the first action would be to see if SKW or Republic would be risk sharing partners in those leases. It would be my first move. Understand that some of the blanked out verbiage in the DCI contracts is for type of aircraft. With brining on a 195,175,C-series, or the CRJ 1000, there would need to be an amendment to that contract. I am sure that Jerry would want assurances from DCI that these new airplanes would be flown for 10-15+ years under our livery. I am not sure if DAL is willing to do that. We got in to our current mess with doing that with the 50 seat jet. Hence the need to raise scope on the 76 seat sIZE so that DCI can be profitable in the near and long term. What these bigger airframes allow DAL to do is; honor their contracts with the aforementioned DCI carriers while making it profitable for the Mama Delta. If we were not to have these larger jets on property the DCI arm of DAL would be a sure money looser.
As we all know the 900 is a nice airframe. First class seats allow DAL to charge a permium on these flights where we have never been able to do that before. Raising the bar to 90-100 seats will cause a lot of issues.
1) DALPA, and our scope is a major sticking point. I believe that this line will be a lot harder to move than it previously had. 100 seats is just to darn big to allow a subsidiary to fly them.
2) Because of number one they would be a money maker only in 50-65 dollar a barrel oil. 76 seats in a plane that big would not be cost adventitious.
What I see is a power struggle that we as DALPA, NWALPA better win. It is one that if we acquiesce we will be signing our own pink slips. Plain and simple. I see those jets coming to main line after this power play. Management knows that they will probably loose this fight, and may not even try. RA is a smart guys and trying something like that in the current environment, where we are all just a little miffed, my be the straw that breaks our back. Sooner or later ALPA will wake up. Does management really want to help in that process. We could go along in our current dismal state for years to come. But, if one big event happened, (100 seat jets being sold out) it may get our act together. (Just a thought)

 

[~~~^~~~]

ACL:

Thanks.

Of course the logic of making DCI profitable snowballs all the way to the 777. Jerry Atkin and Bryan Bedford are never happy with the status quo, their mantra is "grow or die." He'd be happy to buy Comair, kick in a half a billion and get more Delta code. Indirectly, the NWA pilots probably helped sidetrack that since his "peak leverage" and theirs coincided. (just rumors, but RAH & private equity were allegedly lined up with cash, probably now waiting to see what DAL and NWA together negotiate)

In my view all outsourced flying is at a loss. ASA, even with it's warts, has been one of the most profitable airlines on Earth. It would be preferable to keep that profit at Delta, rather than making our friends in Utah rich.

I'm not so sure management has not already won. Pilots see a big line at 100 seats. Management just sees revenue. If a CRJ900 with 76 seats in it makes 8/10th's the revenue at 1/2 the cost of a DC9, it does not matter if it has 70, 76, or 100 seats in it.

Management does not care who pilots the jet. If we are hoping a 100 seater has good enough numbers to disuade management from taking Jerry's millions and outsourcing the capital acquisition cost, I think we have a lot at risk.

ALPA's wake up call needs to come in the form of a new strategy. We need to scope flying in, rather than trying to scope out airplanes that we don't like.

Oh jeesh, I've been repeating myself for a decade -sorry. I need to retire from FI.

 

[ACL65PILOT]

n my view all outsourced flying is at a loss. ASA, even with it's warts, has been one of the most profitable airlines on Earth. It would be preferable to keep that profit at Delta, rather than making our friends in Utah rich.

I'm not so sure management has not already won. Pilots see a big line at 100 seats. Management sees revenue. If a CRJ900 with 76 seats in it makes 8/10th's the revenue at 1/2 the cost of a DC9, it does not matter if it has 100 seats in it.

Quite correct FIN. Delta has been trying to raise it yeild. In doing so they have turned toward smaller airframes to perform the required segment. The problem with that is market share. This is a very slippery slope when it comes to a big versus a small jets. If you make all of your domestic feed smaller jets, you run in to the issue of size and scope of operation. Many people see DCI as DAL but the word is getting out to even the most uninformed travelers that they are separate and cheaper operations. Small cities will accept this due to their size, but cities that are 1 million plus will not. Hence the desire for a low cost alternative to your tradational trunk carriers. (reference DAL's issues with ICT and Air Tran)
We as a company need large gauge airframes that can generate the yeild that the bean counter are looking for. We have them, but oil is our alkalies heal. Alas the need for the C-series or an E version of the 737. This will happen in due time. Personally I do not see Boeing quick to jump on development. Why? Well the 737 is still selling better than any other airframe out there. Until the sales fall off there really is not a need to commit billions to R&D.
In the mean time the DC-9 is a good short term answer that allows a few things. One they are paid for, and two with them being paid for it allows DAL a wait and see approach to its and the 88's replacement. They may be loosing money on paper, but with the international yeild going through the roof, it is a write off that many are willing to take. Why buy and airframe that may give you a five to ten year advantage when you can wait five to six years to get a 100 seat jet that could last for 15-20 on the low side.
If the 175/195 was the answer, we would have them on property, but DAL does not see it that way. We may get them in the next few years, but only after DAL makes sure that there is not a market changer out there that would bite them in the butt.
I think that you are more likely to see more 737's than a 195. Why? Boeing will give us a better trade-in when it is time to buy the new one. All the major airlines know this, and so does Boeing.