Delta sees SOLID PROFIT GROWTH for 2012

[curtaindriver]

Dec. 14, 2011, 3:11 p.m. EST
Delta Air sees ‘solid’ profit growth for 2012

Business travel is expected to climb next year as economy grows




B MarketWatch --By Christopher Hinton



WASHINGTON (MarketWatch) — Delta Air Lines said Wednesday it expects “solid” profit growth next year on the back of strong business-travel demand and cost cutting.

For 2012, the Atlanta-based carrier said it would trim between 2% and 3% from its system-wide seat capacity to help boost its ticket prices. For trans-Atlantic flights, which include some of the industry’s highest-yielding routes, Delta and its joint venture partners want to pull their combined capacity down by 7% to 8% in anticipation of a European recession.



Globally, however, Delta expects the economy to grow slowly, spurring more deep-pocketed business people to travel. Corporate travel is expected to rise 6% to 8% next year from 2011 levels, the airline said in a government filing.
In the last four weeks, health care, financial services and transportation sector related travel are up sharply from the same period last year.

Earnings in 2011 are projected to be $800 million, or $1.1 billion after adjusting for restructuring and loss on extinguishment of debt, Delta said. Analysts surveyed by FactSet Research were looking for full-year adjusted earnings of $977 million, on average.

Delta posted an adjusted profit of $1.44 billion last year. Shares of Delta have had a rough year with fuel prices up sharply and concerns a sovereign-debt crisis in Europe could drag down the global economy and reduce the demand for flying. In the past year the carrier’s stock is off by nearly 38%, and it’s down about 3% in the last three months.
On Wednesday, Delta shares rose more than 2% to an intraday high of $8.35. More recently the stock was up 2% to $8.15.
To offset a roughly 40% jump in its fuel bill, Delta said it intends to lower its non-fuel costs to 2010 levels, but a climbing labor expense and higher airport fees have frustrated the attempt. Non-fuel costs per available seat mile next year is expected to rise by 2% to 4%, or about 40 cents higher than the targeted level.

Delta will focus on structural changes to help bring costs down, including the delivery on new, more fuel efficient Boeing Co. 737-900ER jets at the end of 2012 that will lower maintenance costs. There are also opportunities to increase employee productivity and eliminate more smaller-gauge aircraft, especially 50-seat regional jets.


Combined, these structural changes could lower the airline’s costs by $600 million to $750 million. The airline is also focused on reducing its debt, and projects its adjusted net debt at the end of 2011 will be $12.9 billion, down from $17 billion at the end of 2009. By the end of 2013, Delta wants to get its debt down to about $10 billion.




Bye Bye---General Lee

I appreciate you being so proud of your respective airline, but a couple of points:

1. Most carriers will experience the same in 2012.

2. It will be nice to see revenue growth coupled with actual growth of the airline.


CD

 

[fam62c]

This is EXACTLY what management wants.

That's what I was going to say. A rift within the pilot group that reduces unity and distracts the union officers from focusing 100% on contract negotiations can only be a good thing for the company. This will burn up union resources and waste time and energy. What is the difference between DALPA and DPA? Either way the union is made up of the members of your pilot group. If you change unions, elect new officers, etc. you will burn up at least a year with internal issues.

We seem to have entered an era where pilots spend most of their energy fighting with each other instead of focusing on goals that benefit the whole group.

In any case, I'm not sure it really matters anyway. Unless there is some reason the company wants you to have a new contract the way the NMB operates today means that negotiations in the airline industry are essentially endless. One problem with having a small number of mega-carriers and reduced industry capacity is that the NMB will be very hesitant to release anyone from mediation and even if they do no president will let a union stop the operation of a giant airline that's essential to the transportation system. The general public has become very anti-union.

Any leverage that unions once had in this industry is largely gone. The only thing that could change this would be a massive, worldwide pilot shortage that was so severe that airlines had to compete with one another to attract pilots. That's the dream that never seems to come true.

As strange as it seems the best way to have leverage might be to not have a NMB-certified union at all. With a tight pilot market (essential for this to work) a highly unified (this is key) and well organized group could use the "wildcat" strike as a weapon that could not be stopped by the NMB or a president. No big airline could hope to replace enough of it's pilots fast enough to avoid catastrophic losses. A non-certified pilot organization could negotiate an agreement with the company outside of the confines of the RLA thus preventing endless mediation and agreements that remain in the amendable stage for years. The RLA has become way too one-sided to work for labor anymore and the bankruptcy process that allows management to unilaterally vilolate the RLA and change agreements with no recourse options for labor just adds insult to injury.

 

[Scoot 11]

Gotta' disagree with you here, Dan. DPA most certainly does NOT equal USAPA. Having an inhouse union has its plusses and minuses, and that's for individual groups to decide. For a big enough airline (us or you), it can be great, overcoming the shortcomings of a national union (ALPA). On the other hand, if not run well, it'll probably hurt. It's certainly your choice; I'm not advocatiing either option for you.

However, to repeat: Delta forming an inhouse union is NOTHING like USAPA. DPA would be to replace ALPA and represent the Delta pilots as a whole, whereas USAPA was formed specifically to circumvent an arbitrated list, and specifically to advance the interests of one set of the pilots against the other set of the pilots. Unless you're insinuating that DPA is a ruse to pit one subset of Delta guys against another, they are worlds apart. Are you saying that's the case?

Bubba

Bubba:
I think the point here is that DPA is using the same legal representation as USAPA, ergo it's bad advice.
You make some valid points, but IMHO, the Delta pilots are better served by ALPA than the abortion counsel they have at USAPA.

 

[On Your Six]

I appreciate you being so proud of your respective airline, but a couple of points:

1. Most carriers will experience the same in 2012.

2. It will be nice to see revenue growth coupled with actual growth of the airline.


CD

Yeah, no biggie....... Your airline will probably do the same. Yeah, that's the ticket.....

Looks like the only way to combine revenue growth with high oil is to restrict capacity, but you want to grow too. More consolidation will probably be the next move, to limit the growth even more.


Godspeed!



OYS

 

[BrickTop]

I appreciate you being so proud of your respective airline, but a couple of points:

1. Most carriers will experience the same in 2012.

2. It will be nice to see revenue growth coupled with actual growth of the airline.


CD

DELTA is planning to cut ANOTHER 2-3% next year 2012. I would love to Punch Anderson in the teeth. Airports are SLAMMED, planes are stuffed like a college dorm room closet and these dipsh!ts continue to cut capacity when there is a MARKET DEMAND for more capacity. Again more evidence that the hiring boom hopefuls should seek a reality pill. Corporate profitability is the ONLY motivator of Staffing, operational and shrinking measures.

???? GROWTH??? What growth?

 

[Hpilot]

Gotta' disagree with you here, Dan. DPA most certainly does NOT equal USAPA. Having an inhouse union has its plusses and minuses, and that's for individual groups to decide. For a big enough airline (us or you), it can be great, overcoming the shortcomings of a national union (ALPA). On the other hand, if not run well, it'll probably hurt. It's certainly your choice; I'm not advocatiing either option for you.

However, to repeat: Delta forming an inhouse union is NOTHING like USAPA. DPA would be to replace ALPA and represent the Delta pilots as a whole, whereas USAPA was formed specifically to circumvent an arbitrated list, and specifically to advance the interests of one set of the pilots against the other set of the pilots. Unless you're insinuating that DPA is a ruse to pit one subset of Delta guys against another, they are worlds apart. Are you saying that's the case?


Bubba

Totally agree, you can't compare USAPA to a DPA or APA. USAPA gives inhouse unions a bad name, which is unfortunate.

 

[Hpilot]

Bubba:
I think the point here is that DPA is using the same legal representation as USAPA, ergo it's bad advice.
You make some valid points, but IMHO, the Delta pilots are better served by ALPA than the abortion counsel they have at USAPA.

You're kidding? Why would someone take advice from the same group that produced absolutely nothing for several million dollars? Wow, it's like those CEOs that go from bankruptcy to bankruptcy, tanking company after company and they keep getting offered jobs.

 

[retired guy]

Someone correct me if I`m wrong, but, when a pilot signs the list for a new union (DPA) doesn`t the signature become invalid after one year? If this is true then there aren`t 4000 signatures requesting a vote on a new union, only the pilots that have signed up in the past year. Someone educate me on this.

 

[General Lee]

DELTA is planning to cut ANOTHER 2-3% next year 2012. I would love to Punch Anderson in the teeth. Airports are SLAMMED, planes are stuffed like a college dorm room closet and these dipsh!ts continue to cut capacity when there is a MARKET DEMAND for more capacity. Again more evidence that the hiring boom hopefuls should seek a reality pill. Corporate profitability is the ONLY motivator of Staffing, operational and shrinking measures.

???? GROWTH??? What growth?

That's for the RJs, not mainline. Lots of 50 seaters will probably be parked next year. Mainline will continue to get MD90s and trade them in for DC9s that are leaving. There is actually a net gain there in seats, and the MD90s pay more. Delta will also be getting at least one 767-300ER from GOL (Brazillian) too.

When you cut capacity, you are allowed to bump fares up, improving yeild. How are the legacies going to be able to buy new planes and compete against the Emirates of the World? When was the last time a legacy bought NEW widebodies? American just bought 5 777-300ERs, but then went into BK. That's it for large widebodies. The 787s were ordered awhile ago for CAL (now UAL), and NWA ordered some, but they have been pushed until 2020. Emirates is getting 90 A380s and now 50 new 777-300ERs. The legacies HAVE to make profits in order to actually order new planes to compete in the future. New large widebodies need to be ordered, and profits need to be had. Expect there to be only 3 legacies in the future, along with a few LCCs, and a few mega regionals flying limited flying for those legacies after losing a bunch of 50 seaters. Fewer airlines means less competition, and better pricing power. It's time for this industry to have sustained profits to help fund that growth.


Bye Bye---General Lee

 

[General Lee]

Someone correct me if I`m wrong, but, when a pilot signs the list for a new union (DPA) doesn`t the signature become invalid after one year? If this is true then there aren`t 4000 signatures requesting a vote on a new union, only the pilots that have signed up in the past year. Someone educate me on this.

If there is a lowball TA given to us by Dalpa from the company, I think they will be able to get 6500 signatures over a weekend.


Bye Bye---General Lee

 

[retired guy]

If there is a lowball TA given to us by Dalpa from the company, I think they will be able to get 6500 signatures over a weekend.


Bye Bye---General Lee

Well, that`s interesting, but doesn`t answer my question.

 

[FDJ2]

If there is a lowball TA given to us by Dalpa from the company, I think they will be able to get 6500 signatures over a weekend.


Bye Bye---General Lee

And DPA would do what? Nothing, nothing at all. They lack the resources, structure and political influence to accomplish anything other than pander.

The overwhelming number of Delta pilots realize this.

If you don't like the TA, vote it down, if you don't like your LEC rep, vote for someone you do like. So simple even a caveman can do it.

DPA and their supporters are doing significantly more harm than good for the Delta pilots.

 

[FDJ2]

Someone correct me if I`m wrong, but, when a pilot signs the list for a new union (DPA) doesn`t the signature become invalid after one year? If this is true then there aren`t 4000 signatures requesting a vote on a new union, only the pilots that have signed up in the past year. Someone educate me on this.

You're right, their cards are expiring and my guess is that most wont be tricked into filling out a new one.

 

[xray678]

If you don't like the TA, vote it down, if you don't like your LEC rep, vote for someone you do like. So simple even a caveman can do it.

And if you don't like your union, you can vote them out too.

Caveman simple.

 

[BrickTop]

That's for the RJs, not mainline. Lots of 50 seaters will probably be parked next year. Mainline will continue to get MD90s and trade them in for DC9s that are leaving. There is actually a net gain there in seats, and the MD90s pay more. Delta will also be getting at least one 767-300ER from GOL (Brazillian) too.

When you cut capacity, you are allowed to bump fares up, improving yeild. How are the legacies going to be able to buy new planes and compete against the Emirates of the World? When was the last time a legacy bought NEW widebodies? American just bought 5 777-300ERs, but then went into BK. That's it for large widebodies. The 787s were ordered awhile ago for CAL (now UAL), and NWA ordered some, but they have been pushed until 2020. Emirates is getting 90 A380s and now 50 new 777-300ERs. The legacies HAVE to make profits in order to actually order new planes to compete in the future. New large widebodies need to be ordered, and profits need to be had. Expect there to be only 3 legacies in the future, along with a few LCCs, and a few mega regionals flying limited flying for those legacies after losing a bunch of 50 seaters. Fewer airlines means less competition, and better pricing power. It's time for this industry to have sustained profits to help fund that growth.


Bye Bye---General Lee

And if your are correct, plan to see thousands of pilots OUT OF WORK.