Delta selling Comair?

[mrnolmts]

Don't know if this has been discussed here yet:
http://www.washingtonpost.com/wp-dyn/content/article/2006/03/27/AR2006032701387.html
Management sure seem to be milking it for everything they got, eh?

 

[atlcrashpad]

I sure hope that the stockholders are aware of the fact that the CFO wants to sell off Comair. Buy High, sell low... makes sense? Not cents. Buy a company for over a Billion and sell it for less than half that, how did they get their MBA? Maybe they don't have an MBA. Doesn't sound like a sound business decision to me.

 

[Ben Dover]

I sure hope that the stockholders are aware of the fact that the CFO wants to sell off Comair. Buy High, sell low... makes sense? Not cents. Buy a company for over a Billion and sell it for less than half that, how did they get their MBA? Maybe they don't have an MBA. Doesn't sound like a sound business decision to me.

Actually, purchase price has nothing to do with a forward looking decision such as whether to sell an asset, stock, or company like Comair. The price that was paid is a sunk cost. Holding on to Comair simply because it was purchased for over a billion dollars several years ago would be irresponsible business practice.

 

[h25b]

Actually, purchase price has nothing to do with a forward looking decision such as whether to sell an asset, stock, or company like Comair. The price that was paid is a sunk cost. Holding on to Comair simply because it was purchased for over a billion dollars several years ago would be irresponsible business practice.

Exactly... If you're out of cash and you have something to sell to keep your core business afloat doesn't that make sense ??? Furthermore, due to high costs and the demise of the economic feasability of the 50 seat RJ Comair's inherent value has indeed declined in terms of the current market...

 

[TO/TO]

Originally Posted by atlcrashpad
I sure hope that the stockholders are aware of the fact that the CFO wants to sell off Comair. Buy High, sell low... makes sense? Not cents. Buy a company for over a Billion and sell it for less than half that, how did they get their MBA? Maybe they don't have an MBA. Doesn't sound like a sound business decision to me.


Sometime early last year, delta wrote off the goodwill (the amount paid in excess of book value of an asset.). In accounting there are several reasons to do this.

Reason 1. GAAP requires that assets be presented fairly on the balance sheet to accurately reflect it's market value. (i.e. you have to be conservative)

If market value of the asset increases, you still report the asset at it's acquistion cost (what you paid for it).

If however over time the value of this asset goes down, you must report the new value of your investment. GAAP requires that you make an adustment in the books to accurately present the true value of the asset so as not to mislead stockholders. (see Enron, World Com, ect)

Reason 2. The write off (or Loss) is a tax deduction which will probably be amortized over several years.

Reason 3. You are getting ready to sell the asset. No use having the Goodwill on your books if the asset itself is gone.

shortly after the writeoff happened in 05, ASA was sold. Comair will probably be next.

 

[spinproof]

Actually, purchase price has nothing to do with a forward looking decision such as whether to sell an asset, stock, or company like Comair. The price that was paid is a sunk cost. Holding on to Comair simply because it was purchased for over a billion dollars several years ago would be irresponsible business practice.

So what you're saying is DAL is starting to act responsibly? :laugh:

Forward looking decision?:laugh:

Yes those forward looking decisions like adding more flights in and out of ATL. Especially when an excessive amount of morning dew can delay traffic for an hour!!!:laugh:

 

[Tim47SIP]

Look Out Comair!

I just hope Mesa doesn't get their slimy hands on Comair. Mesa seems to be the only one that could pull it off. They maybe strapped for cash with the Islands upstart though. Man is this industry ion a spin!

 

[XJohXJ]

Boy, with snappy phrases like: "core business" "looking forward" and "economic feasability" you guys could certainly get a job at Mesaba on our sterling Senior Leadership Team. Be sure to tell them you'd be willing to do it for 25% less!

Good luck guys.

 

[Caveman]

"Boy, with snappy phrases like: "core business" "looking forward" and "economic feasability" you guys could certainly get a job at Mesaba on our sterling Senior Leadership Team."

They won't sell Comair, but they might 'monetize' it.

 

[Broke in CVG]

Maybe Larry Flint will buy Comair. When the FAs walk out, we can start over with some of Flint's girls. Maybe change the name to Whorejet.

 

[doh]

Maybe Larry Flint will buy Comair. When the FAs walk out, we can start over with some of Flint's girls. Maybe change the name to Whorejet.

You're going straight to sensitivity training for that one!

 

[h25b]

Boy, with snappy phrases like: "core business" "looking forward" and "economic feasability" you guys could certainly get a job at Mesaba on our sterling Senior Leadership Team. Be sure to tell them you'd be willing to do it for 25% less!

Good luck guys.

Boy, with that type of rose colored glasses everything must be really nice in your world. So you think an airline running a whole bunch of 50 seat RJ's that's codeshared with a single bankrupt carrier is worth more than it was a few years ago ?? I suppose you must think your car is still worth the sticker price to? Bottom line, Comair will be sold if they can find a buyer..

 

[sniper]

I just hope Mesa doesn't get their slimy hands on Comair. Mesa seems to be the only one that could pull it off. They maybe strapped for cash with the Islands upstart though. Man is this industry ion a spin!

Mesa had the chance and said no thanks.

It will be a hard sell.

 

[Crash Pad]

Comair is the tip of something bigger. I'm thinking CVG will be gone in the next couple years. Whenever I look at a DAL route map I see CVG and wonder what it is doing there.

 

[~~~^~~~]

Crash pad - I think about half of the analysts are with you on that one. CVG has been profitable in the past and it actually works better as a hub than ATL, but I've not seen the revenue numbers in a long time.

If Delta was serious about selling Comair they should yank the airplanes from Chautauqua and take advantage of the Comair concession monkeys votes to fly E170's. Delta should drop serious hints about assigning Comair E190 flying and whip the market into a frenzy, then have an initial purchase offering. To sell Comair, Comair must be sexy. Unfortunately Comair is looking a lot more like Kirstie Alley than Sharon Stone, even though they are nearly the same thing....

This is just the sort of deal Leo Mullin was made for. He never created anything of substance, or made a reasonable long term decision, but he is great for getting in front of COngress and getting cash, while the money is used to fund his and his buddies (including the two lesbians') exit cash.

No way someone is going to buy Comair, with under utilized older aircraft (which artifically inflates unit costs) which has an uncertain future while Delta is sending flying out to all the carriers they don't own. Delta has to start making decent decisions before Comair has any value. It is amazing how Delta fails to manage its resources. Having SkyWest buy ASA was like having the lights turned on. Even Delta admitted they thought ASA would be better run, if they did not run it.

 

[Otto]

If Delta can't unload Comair, they have nobody to blame but themselves since they have consistently lowered the value of their own investment by inviting every other regional in creation to join the Delta Connection portfolio. The primary person responsible for implementing the portfolio frenzy was none other that the current Comair president Fred Buttrel. Oh the irony!

 

[sweptback]

If Delta can't unload Comair, they have nobody to blame but themselves since they have consistently lowered the value of their own investment by inviting every other regional in creation to join the Delta Connection portfolio. The primary person responsible for implementing the portfolio frenzy was none other that the current Comair president Fred Buttrel. Oh the irony!

You and Fins have the right idea.

Especially with CHQ getting the "sexy" new 170s, and Mesa coming in to trash the rates of 50-seat flying at DCI, why would anybody buy Comair? Sure, the employees are working cheaply (or will soon), but that doesn't really help the viability of a business after a while. An airline needs to have a growth plan for the future to continue lowering costs, and CMR has none.

On top of that, Delta shrunk the CVG hub and deployed ASA and CHQ to fight for table scraps. Mesa got an additional chunk of Dash 8 flying out of JFK as well. Notice how none of this is good for CMR as a company? It's not helping for CMR the investment either.

Since ASA was sold, there's a list of covenants that must be met for future growth. I'm sure that the Mesa has a similar list. CHQ probably does too, and I wouldn't rule out an "investment" into bankrupt Delta to further solidify the growth plan for their 170s. With options for every other DCI carrier, there can't be too much left. Especially since everybody knows that there are too many RJs.

My opinion is that Delta tried to sell ASA and CMR as a package, and SkyWest was only willing to bite off on one. After getting turned down by Mesa and Republic, I think Delta is just about out of options.

Good luck to you Comair guys, but I think Delta has a 'Plan B' in case they can't sell you off. And I really don't think it's good.

 

[FatAlbert]

CHQ probably does too, and I wouldn't rule out an "investment" into bankrupt Delta to further solidify the growth plan for their 170s.

Bingo!