Delta selling aircraft

[bladeusa]

Not exactly good news...
anyone have more info?

Delta also said that it will sell 11 Boeing 737-800 aircraft scheduled for delivery to Delta in 2005, which will reduce capital expenditures by approximately $500 million through 2005. Delta will recognize a charge of $26 million, net of tax, in the December 2003 quarter as a result of its agreement to sell the 11 B737-800 aircraft. This transaction also includes an option for the undisclosed buyer to purchase up to 10 additional aircraft scheduled for delivery to Delta in 2006 and 2007

 

[lowecur]

blade

They are just readjusting the fleet to accomodate the purchase of a 100 seater. I trust this money will be reallocated to the EMB 190.

 

[rjcap]

They are just readjusting the fleet to accomodate the purchase of a 100 seater. I trust this money will be reallocated to the EMB 190.

Keep dreamin.

 

[lowecur]

rjcap

And why would that not be a possibility? Afterall, if DL wanted a smaller BA jet, I'm sure BA would allow them to substitute the 736 or 737NG. DL needs to satisfy DALPA that they are serious about bringing the furlough's back. If they want to maintain capacity, bring pilots back, and still be profitable, they need a smaller mainliner that can do that....ie the 190.

Another scenerio that could play out is an ACA deal. ACA wants to buy 10-20 BA or AB a/c for long range flights. ACA could be the buyer, and you could see DL purchase 75% of the ACA CRJ fleet.
They could start a 3rd DCI unit to force Comair to bend. ACA could then purchase the EMB to substitute for the CRJ a/c that were sold.

There are lot's of options for DL.

 

[FDJ2]

Most major U.S. airlines have extracted wage cuts and other concessions from their workers, but analysts say Delta is lagging the pack in terms of securing labor-related savings.

Delta has a labor force which is 82% non-union with no contract and they can't secure labor related savings????

 

[General Lee]

Of course the pilots do not want to take paycuts. And, of course the analysts and managment want them to. I still think there will be some---around 15%----but that can't cure everything. I think the 737-800s will be sold to someone outside the US---like Qantas---someone who can't hurt us domestically, although I don't really know who they will go to. I think Lowcur is probably right about using the money for other types of planes that "right size" the current market (as Surplus1 would say). Also, they have under-utilized the current aircraft, and probably will try to fly them more each day, along with trying to increase the turn times to 50 mins etc....(They are trying that at Song and with mainline at RDU)

RJCAP,

I think it is better chance that the money would be going to 100 seaters than more 70 seaters......

Bye Bye--General Lee

 

[Heavy Set]

The deal COULD be a sale and leaseback with a leasing company - so Delta could still retain the rights to use the 800s - after pay cuts...

 

[rjcap]

I think it is better chance that the money would be going to 100 seaters than more 70 seaters......

I don't neccessarily disagree with you but I just feel that Fred Reid's (sp?) comment regarding a 100 seat jet for DAL by the end of the year was more or less a knee jerk reaction to the unexpected announcement by JBlue of the EMB 190 orders.

Anything is possible but I think DL was or is in more of a reactionary mode than anything else.

Time will tell.

 

[General Lee]

RJCAP,

They have been supposedly looking at 100 seaters for awhile. (This rumor has also been around for years) I think that with Jetblue ramping up regional service with the EMB-190, and USAir also getting a lot of EMB-170s and CR7s, that Delta will have to respond with something that can make money on the lower fares. If Jetblue offers $59 one way tickets from JFK to SAV, there is no way we can make any money with a 50 seat RJ doing the same type of route (from LGA). The larger plane lowers the CASM. That is why we put 757s with 199 seats on Song. But, I also can see paycuts ahead also--and that won't be very much fun. This will get interesting, no doubt.

Bye Bye--General Lee

 

[FDJ2]

Delta has firm orders for 61 737-800s, which they don't need right now since DAL already has existing capacity it is not using or under utilizing, so it is no surprise that a portion of those orders would be either sold or deferred. I don't really think that DAL is in the market for more 150 seat jets right now, the hunt is on for 100 seaters. This will probably just reduce some of the debt and preserve some capital for future expenses.

 

[lowecur]

HEAVY SET

One of the posters on another board mentioned that the sale is to GECAS. So you may be right.

 

[highflyer7]

I noticed in the press releases that management as well as analyst continue to refer to the high pilot costs contributing to Delta's bottom line and the reason Delta is at a competive disadvantage to other majors. Has there been any further requests by management to continue talks regarding pay cuts? It seems as if they are really trying to push the matter by getting that out there.

 

[~~~^~~~]

Highflyer :

Delta management always wants to talk, they are pushing as hard as they can, believe me.

The Delta MEC / ALPA set preconditions on talks for concessions. Amongst the pre-conditions are that Delta secure cost reductions from other employees (including those that already make less than industry standard wages). Delta will lose good employees that they need, if such cuts are made. So ALPA has Delta in between a demand and a self-imposed hard place. ALPA is playing a game to see if theings get better and if costs are reduced further to offset any cuts of pilot wages.

Very candidly ALPA is sacrificing the junior guys to preserve pay rates for the senior pilots. As noted, Delta is reducing fleet size because their costs are too high.

ALPA also runs the risk of things getting worse at Delta (and needed concessions being much, much, larger). After all, Delta lost 26 million to defer these airplanes and will continue to service the same debt load with a shrinking fleet of airplanes. In history - no airline has ever shrunk its way to prosperity.

General :

A 15% pay cut still leaves your pilots 47% above the industry average and 32% above the next most highly paid pilots on Earth. Isn't anyone concerned that a combination of an aggresive MEC and unrealistic management might just kill the golden goose?

I am disappointed by the sale & deferral of the 737-800's. It is a good airplane. As you mention, its pilot costs are split between 33% more seats than the earlier 737's.

I really do not see a place for a 100 seat jet. It takes the same resources to operate as the 737-800, same gate space, etc... but only carries 30% more capacity than the CRJ700. Bryan Lebreque ( another DAL manager doing time at ASA ) tells us with the training and support costs the airplanes that makes sense are what Delta ordered, CRJ's and 737-800's. Comair management is running around talking about growth for concessions while we are hard up against the scope limit in early 04 with the last CRJ deliveries.

None of this seems to add up to an economically viable 100 seat aircraft, in fact it more adds up like the Delta MEC has indicated some flexibility on scope in exchange for smaller salary reductions.
If you look at the history of the Delta MEC, they have always sold scope for compensation - heck that is how we got here. Duane Woerth's comments to the Comair pilots last week leave me with some small hope that if there are changes to Delta's scope that the door might be cracked open to working together for the mutual benefit of pilots who perform Delta's narrow body flying.

Your furloughees need to get back on line. Today was a disappointing set back IMHO.

~~~^~~~

 

[General Lee]

Fins,

First of all, the sale of the planes COULD be to GECAS---which would do a sale-lease-back--and after wages concessions could give them back to us. It is done all of the time with the lessors. They just allowed the $500 million to go to somewhere else---like paying off debt or paying for new 100 seaters. Also, they are accepting two 777s in 2005, which still shows growth on the INTL side. They have not sold the remaining 11 MD-11s, and the rumor is that they will be back by the next Summer. Our VP of Marketing said that we "left money on the table" last Summer by parking them, and that would have lowered our loss for the quarter somewhat. Also, I read that our fuel prices have gone up lately. I read yesterday in my favorite paper--USAToday--that Russia is going to go against OPEC and bring down oil prices to around $25 a barrel---down from $31 a barrel now. That would be huge, since fuel is our second highest expense. That would save money right there, but management wants the paycuts anyway. And, 15% is better than nothing---especially since 85% of Delta is NON-union. You pay monthly for protection with dues---you either have it or you don't.

As far as your quote:


"Very candidly ALPA is sacrificing the junior guys to preserve pay rates for the senior pilots. As noted, Delta is reducing fleet size because their costs are too high."

I don't know where you come up with that? Where are they reducing the fleet size? Michelle Burns, our CFO, said that we were bringing back 8-10% of our capacity, and we are bringing 9 737s out of the desert, along with 2 767-200s. Also, concerning the 737-800s, we don't know if they will get them back in a sale-lease-back, and someone on another board said that GECAS could be the buyer. As far as the senior guys sacrificing the junior ones, I don't think that has happened, yet. The senior pilots are all currently moving up to bigger equipment at a fast rate, and that increase to the next higher aircraft will preserve their current pay atleast, even with a paycut. The senior guys are also getting a large amount of greenslips now (double pay if they fly on their days off), due to those retirements in Sept. We just had a huge bid announcement yesterday---and the numbers were huge for ATL---19 767ER Capt bids, 58 Dom 767 Capt bids, 15 MD-88 Capt, 25 737-200 ATL Capt bids, 18 LAX 767 Capt bids, 12 SLC 767 Capt bids, 33 SLC 737 Capt bids, and only 1 777 and 1 764 Capt bids----due to lack of training space(they are currently allowed to train at all hours of the night to get the new 777 and 764 Capts/FOs finished with sims--and they are still full through the end of the year)--meaning there will be another huge bid probably with 30 or so bids open for 777 and 764 Capts. The only downside was a DFW displacement---but that should be absorbed easily in the other bases due to the higher seniority of the DFW guys. (They are moving the small DFW 737 category to SLC) What I am saying is that the senior guys at Delta are enjoying huge upgrades due to the early retirements---208 of them EARLY OUTS. The Dalpa guys I have talked to said they will not increase productivity until our furloughs are back, and the senior guys are not getting affected as much due to the numerous upgrades.

The 100 seater is a pretty good bet, with a lot of spicy additions---like set recalls of furloughs etc---before we would sign off on any new 70 seaters for you. The promise of some growth on our side will probably allow some on yours. To combat the LCCs, we need to have seats--and a lot of them so we can spread out the costs. 50 seat RJs will not do it, and even more 70 seaters will not help much against the Jetblue EMBs. Sure, lower salaries might help, and they will get that by negotiating new lower rates on new 100 seaters.


Yeah, this wasn't the best of news today, but it sounds like there is a chance we might get them anyway, through a new lease arrangement--after we get paycuts. See, they try to tempt us with growth just like they do with Comair and ASA. That's great...


Bye Bye--General Lee

 

[G4G5]

My guess is that they are going to WestJet in Canada, DAL has already done a ;ease deal with them. AA has been sending theirs to Qantas.

Their is no need to take a pay cut unless mgt is willing to compensate them in other ways. As Leo once said, a contract is a contract. To think that he is going to stop transfering flying or that he will change his tune is absurd.

 

[General Lee]

Remember, we are selling aircraft we don't have yet. Our current aircraft still have many years left on leases, and we have parked planes before and brought them out of the desert--like our 737-300Gs now on the Shuttle. Those 737-800s could very well be going to a lessor like GECAS, and coming back later. Also, that money used to buy them could go to paying off debt or to 100 seaters. Nobody but the Delta management knows for sure. Yes, they want paycuts badly, and there are things that Dalpa wants in return, like no more bonuses for managment while there are paycuts for regular employees, and contract extensions---because we could give up some now and still get hammered during negotiations. They will have to pick one or the other. It is in our best interest to help the company, but not get "taken" in the process.

Bye Bye--General Lee

 

[ATR-DRIVR]

General,
In one sentence you say that the senior pilots are getting alot of
"green slips" and then later, " Dalpa guys I have talked to say they will NOT increase productivity until the furloughs get back".
That sure sounds like the senior guys are 'increasing their own productivity'. Shouldn't they NOT pick these up so scheduling can tell mgmnt they need more pilots????

 

[General Lee]

ATR-drivr,

In some ways, you are correct. But, all of the senior guys would tell you that accepting a greenslip prevents Delta from "assigning" a trip to someone who doesn't want to fly it anyways. The guy on reserve who has days off can now supposedly stay with his family while the guy with the days off who wants the extra cash can have the trip. Get it? I know that sounds stupid and I have not and would not take one, but there are guys who do. And, Delta does look at the number of greenslips awarded and apparently will call back more if that number $$$$$ gets too high.(Apparently) We can only hope that more recalls will be on the way.....

Bye Bye--General Lee

 

[N2264J]

ATR-drivr,

In some ways, you are correct. But, all of the senior guys would tell you that accepting a greenslip prevents Delta from "assigning" a trip to someone who doesn't want to fly it anyways. The guy on reserve who has days off can now supposedly stay with his family while the guy with the days off who wants the extra cash can have the trip. Get it?
Bye Bye--General Lee:rolleyes

Yeah, I get it. You and your MEC blame the your furlough problems on Comair while the senior guys pick up open time. Quite a racket.

 

[General Lee]

N2264J,

A very small percentage of our 7600 or so pilots get greenslips, and it is a personal choice. I choose not to do it, and we were sued by Delta for not doing it during our contract negotiations, and lost. You and I both know that UNITY sometimes doesn't exist in every airline. (There might be some exceptions....)

Bye Bye--General Lee

 

[FDJ2]

Re: Re: Delta selling aircraft

Yeah, I get it. You and your MEC blame the your furlough problems on Comair while the senior guys pick up open time. Quite a racket.

No one blames our furloughs on Comair. That's just more " I'm a victim" dribble from the rejected, jealousy driven chumps better known as the RJDC. The DAL pilots have shown a great deal of support for our furloughed pilots and we have reduced our CAP to 75 hours. Those "green slips", you refer to, directly effect the manning formula at our company and they are consistant with our PWA. I suppose you blame ASA pilots for flying reregistered CMR jets during the CMR strike and effectively bringing about a TA with no appreciable gains from the last offer.

 

[General Lee]

Hey, I think the Skywest guys flew CMR CRJs also. Greenslips were designed to "punish" the company for not having the correct manning formula---paying twice the pay for not having enough pilots. It seems, though, that the company would rather pay twice now than have to pay for extra benefits for more personel. Everyone except the senior guys lose on that one, but they now can't complain if they eventually get paycuts---because they have now made up the difference with all of the extra cash in ADVANCE.

Bye Bye--General Lee


ALSO: The 737-800s were sold were to "a third PARTY." We do not know who that is, and someone I talked to in the ATL Chief Pilot's Office said he didn't know who they went to, but said that management said it wasn't to a "competitor." Could it be a lessor???

 

[FlyingSig]

ATR-drivr,

In some ways, you are correct. But, all of the senior guys would tell you that accepting a greenslip prevents Delta from "assigning" a trip to someone who doesn't want to fly it anyways. The guy on reserve who has days off can now supposedly stay with his family while the guy with the days off who wants the extra cash can have the trip. Get it?

I got it... only I think ATR-drivr really gets it.

A. the guy on reserve on days off that wanted those days off was stupid enough to answer the phone, then little can be done for that person.

B. While other assignments (jetway/ACARS/etc..) may hold true at first, take a look at what would happen if nobody did green slip. Yes, people would start getting assigned. But that would only be temporary. First the people getting assigned will have conflicts with future flying. That future flying will need to be covered, but if all the reserves are out flying, and the people who were supposed to fly the trip now can't due to legalities, then you have a staffing problem and need more pilots.

Greenslipping is a contractual benifit. Unless you take it out of the contract there is nothing the union can do to prevent it. However, ATR-drivr... the senior guys haven't really been the problem. While the 777 and the 767-400 have been having staffing issues due to retirements, I've noticed the largest chunk of greenslips coming from the co-pilot side of the fence (737 and MD88).


N2264J

FDJ2 hit the nail on the head. Get over it. I'm a DAL furloughee and I don't blame any Comair pilot or the Comair MEC for being furloughed. Nor do I blame them for hiring pilots while DAL furloughed pilots. Blocking employment opportunities for furloughed pilots? Yes, that's another story..... but being furloughed ... no.



....back to lurking mode....

 

[Freebrd]

Reuters
Delta Sold 737 Jet Slots to Lombard
Friday October 17, 4:08 pm ET
By Kathy Fieweger


CHICAGO (Reuters) - Delta Air Lines Inc. (NYSEAL - News) has sold 11 Boeing (NYSE:BA - News) 737-800s scheduled for delivery in 2005 to Lombard Aviation Capital, an aircraft finance unit of Royal Bank of Scotland (London:RBS.L - News), according to sources familiar with the matter.
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Delta, in its third-quarter earnings release earlier this week, said it had agreed to sell the 11 737-800s to an unnamed third party, reducing its capital spending by about $500 million through 2005, while incurring a fourth-quarter charge of $26 million.

The deal also included an option for 10 additional aircraft scheduled for delivery in 2006 and 2007.

Atlanta-based Delta, the No. 3 U.S. airline, also announced it would defer until 2008 delivery of eight more 737-800 aircraft originally slated for 2005, but said it would still take delivery of two 777-200s in 2005 as scheduled.

Selling aircraft delivery positions outright is not typical, the sources said. Airlines generally arrange sale/leaseback transactions or delay taking deliveries.

"What that tells you is that Delta made some money off of this," said one source who asked not to be identified.

A spokeswoman for Delta declined to comment. Officials of Lombard Aviation could not immediately be reached to comment.

Boeing declined to comment on the specifics of the transaction.

"We are going to be selling these airplanes to Delta and what Delta does with them after that is between them and their third party," said Boeing spokesman Nicolaas Meijer.

DEMAND FOR NEWER 737S HOLDING UP

While demand for many older, classic jet models including some of the 737 family is down sharply since the Sept. 11, 2001 attacks, the newer 737-800 series has held up relatively well.

Executives of Lombard Aviation, which entered the aircraft lessor ranks shortly after the U.S. airline industry staggered into an unprecedented financial crisis in late 2001, have stated they believe the jet leasing market has reached a low point.

The lessor is said to be aggressively adding to its aircraft portfolio in anticipation of a market rebound.

When airline traffic fully recovers and airlines begin to post consistently profitable results, desirable aircraft will become more scarce and lease rates will rise.

Delta reported its third-quarter loss was halved to $164 million, or $1.36 per share, compared with a net loss of $326 million, or $2.67, a year earlier. But it also forecast a loss of between $225 million and $275 million in the fourth quarter.

(Additional reporting by Chris Stetkiewicz in Seattle)

 

[ASApuppy]

Delta selling jets to leasing companies is not new. It may be new to the mainlline, but has been standard practice at ASA dating back to pre 9-11 days. Here is the gig as it was explained to me..... When Delta signed that big order with Bombardier for almost 500 jets, they got one hell of a price break. Basically, the $22 million sticker price slashed to $15 million. Delta must buy the jet to get this price. They then flew it home. It is now used. Next day, sell it to a leasing company for $20 million and sign long term lease. Delta walks away with $5 millon cash. Increases their debt, but improves their cash position. With the 20 year exclusive provider contract that Delta signed with Boeing in the late 90's, I know that Delta is able to secure these jets for far less than any leasing company. Funny thing to me was how they were able spin a charge into this. Anything to show a loss and get the employees to beg for a concession.

I'll bet anything, that these aircraft show up on property at the mainline. Scare tactics.............

 

[General Lee]

ASAPUPPY,

I like the way you think. But, from what I have heard is that they were sold to a lessor with a "non competitor" clause---meaning that they will go somewhere outside the country. That is ok, though---we should use the planes we have more throughout the day---and we have nice planes overall. (even the 737-200s can autoland) The problem is that we continue to give up routes, especially in the West.

Bye Bye--General Lee