Delta sells 777s

[9rj9]

Dow Jones Business News
Delta Air Lines Announces Planned Fleet Changes To Reduce Cap
Tuesday February 10, 6:35 pm ET


ATLANTA -(Dow Jones)- Delta Air Lines Inc. (NYSEAL - News) plans to limit the size of its Boeing 777-200 fleet, as the nation's No. 3 carrier continues efforts to lower costs companywide and bolster its balance sheet.
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In a press release Tuesday, the airline said it plans to sell two Boeing 777- 200 aircraft scheduled for delivery in 2005, a transaction that would cut Delta's capital spending requirements by about $300 million through 2005.

Delta and Boeing have agreed to defer until the second half of 2005 delivery of these two aircraft, and Delta has struck a deal with an undisclosed third party to assist in the sale.

Additionally, Delta plans to either acquire other Boeing planes instead of three Boeing 777-200 aircraft scheduled for 2006 delivery, or to sell those three aircraft. The company hasn't identified which aircraft it would buy in lieu of the Boeing 777-200s.

The company noted that it intends to keep operating the eight Boeing 777-200 aircraft in its fleet and is "pleased" with their operational performance.

Last week, Delta put on hold its plans for a nationwide rollout of its low- cost airline, Song, as it determines whether pursuing the discount option makes financial sense. The carrier, which is seeking union wage concessions it says are needed to stay competitive, trimmed $1.2 billion from annual operating costs last year and is looking for another $1 billion in savings this year.

The company had cash of $2.9 billion at the end of 2003 but has about $12.5 billion in debt, of which about $1 billion matures this year.

 

[MedFlyer]

So much for all that "profitable" international expansion the General thinks is coming.

 

[General Lee]

What? Medflyer---you have NO CLUE again what you are talking about. First off, we are not parking or selling our current 8 777s, and we will probably buy something else with the proceeds. We know that 2005 will be a huge year with Capital expenses and debt maturities due---so the CFO is actually making sure we can afford it. Sounds good to me.....That is her Job. We are still taking all airplanes out of the desert (including 4 767-200s), and will start flying 767-400s to Europe---instead of just 767ERs and 777s. (like CO) But, I think it is smart to make sure we can pay what we need to pay---don't you? I haven't seen anything about cutting INTL routes---actually expanding them in May (CVG--AMS, FCO and extra ATL--MUC and LGW). Then we are also flying extra flights per week to Athens for the Olympics, and starting JFK--Santo Domingo and San Juan. Yeah, we sure are cutting back....

I think the CFO is watching everything carefully and cutting what needs to be cut in order for us to avoid worse things. I have also heard that we are coming up with new proposals possibly from our MEC---and that would help too. You are way too negative on Delta----lighten up a bit please.

Bye Bye--General Lee

 

[MedFlyer]

Take a chill pill there General. No where in my post did I say DL was grounding the existing 777's. You made that up yourself.

Second, the expansion that you mentioned is all for this year and is covered by the existing fleet. But, how will DL expand internationally in 2005, 2006 and beyond? Those additional 777's were supposed to support that expansion, now they won't be there.

I just think that it is disappointing that with the economy recovering (as you have pointed out about a million times) that DL continues to cancel mainline deliveries.

 

[Heavy Set]

I think the recovery is still in the beginning stage globally - but there will be better times to come. Europe ALWAYS lags the US economy. That being said, the 763s and 764s probably better fit the demand for the medium term. Why use expensive 777s when 763/4s would be more appropriate at this time?

I think this demonstrates that Delta is being more proactive about building profits and not just "wasting" money. Delta is not like Emirates or Qatari Airlines where they can waste away the Governments' money (sorry Typhoonpilot - tell me if you don't agree) and provide overcapacity - definitely the case with Qatari with its upcoming A380s...

By utilizing existing 777s as well as 763/4s better, Delta should be able to preserve its margins as Europe continues to recover... Why not cover existing debt maturities better when the need for 777 capacity does not yet exist?

I haven't seen many orders for 777s lately (Airbus continues to kick a$$ in the order department) - perhaps it won't be soooo difficult to secure some in a few years time when demand warrants incremental supply...

 

[PCL_128]

I agree with the General, this is exactly what should be done to keep costs in line. All of the majors should be looking at options like this rather than keeping the status quo while wasting time demanding concessions. Although Gerald still wants concessions in some form from the pilots, at least he is looking at other ways to keep costs down also. Seems like a smart move to me.

 

[General Lee]

Medflyer,

I have taken your advice, and I just took a chill pill---or a Xanax....

Ok, I went to the source (ATL Chief Pilot Office) and asked them (via the phone) what was up. They said that we do want to trim those expenses for 2005---probably our toughest year in the future for payments---and this was one way to ensure it. I also asked about future flying, and they said the 767-400 will do more INTL flying (a bid today offered 20 new Capt slots and 20 FO slots for the 765--or the INTL 767-400 in ATL--a new catoagory)---including replacing a 767-300 DOM on the ATL--Lima, Peru flight. They also may start some Europe flying in the Summer, plus nonstop ATL and CVG to HNL. They also said that the four 767-200s returning from the desert probably will replace some of that DOM 764 flying, and that some of the LAX 765 guys will do a little more DOM flying instead of only Hawaii. Do I wish that we still would get the 777s for future INTL flying? Sure I do---but our management must be thinking of something else, and so far RJs can't fly nonstop to Europe from ATL.

PCL,

I agree, I think it is smart and I do think we will give some money to the company--probably in the low 20%'s---and some other benies. We will also PROBABLY give a little relief on 70 seaters, but that may be tied in with helping our furloughs.....I don't know.

Heavy Set,

Good analysis as always.

Bye Bye--General Lee

 

[Palerider957]

General:

Most DCI carriers are more than willing to help with furloughees--have always been willing to help, as long as DALPA asked (nicely).

As I've said before, if DAL/DCI tried working together, this combination would be a $$ making monster, as well as a great place to work.

I know DAL/CMR have some friction, but I bet with some kind of agreement (more 70's, or help at the bargaining table from DALPA), a lot of wounds could be healed.

Just my thoughts (after 4 beers)......

 

[PCL_128]

I know DAL/CMR have some friction, but I bet with some kind of agreement (more 70's, or help at the bargaining table from DALPA), a lot of wounds could be healed.

Dropping that frivelous RJDC lawsuit might help reduce some friction too. Just a thought.....

 

[General Lee]

Palerider,


The Comair guys have not helped whatsoever. The ASA guys have, and even the Chataqua guys. That will be remembered. As far as the 70 seaters, I bet we will give some relief, and then we will see how the furloughs fit in. We cannot forget those pilots---I have not.

Bye Bye--General Lee

 

[~~~^~~~]

Call it what is is - Jets for (er) Jobs?

Scope was at 105 seats when I hired in. The Delta MEC took it all the way back to 50 seats with the grandfathered 70 seaters that were already ordered. If the Delta MEC gives"relief" on 70 seat jets all the Delta MEC has accomplished is the ability to establish one way seniority rights at a different (much lower paying) airline. This is not a favor to ASA, or Chitauqua pilots.

If the Delta MEC wanted to do this right, they could push for a list merger. Anything else is an ALPA job grab, where jobs are given to ALPA's preferred members at the expense of Connection pilots.

Have any of you been following the final days of ALPA's representation of Allegheny?

None of this was what I was wanting to post about - what I wanted to know is the status of the MD11 and MD-88/90 fleet.

Regards,
~~~^~~~

 

[~~~^~~~]

Dropping that frivelous RJDC lawsuit might help reduce some friction too. Just a thought.....

Sure, it would grease the skids so the Delta MEC could just take what they want without any external review.

By the way, Judge Glasser has already ruled the lawsuit is not frivolous - that is year old news. Discovery is beginning and in the interim ALPA is being very, very, nasty to the similarly situated Allegheny pilots. ALPA's actions on the US Air property provide a good illustration of how we could expect to be treated without the RJDC.

So tell us - at what point should the Delta MEC be restrained? Should I have to trust Delta management to defend us from our own union?

 

[PCL_128]

So tell us - at what point should the Delta MEC be restrained? Should I have to trust Delta management to defend us from our own union?

Restrained from what? I have yet to have an RJDC supporter explain to me with facts and figures about how their career has been adversely affected by DALPA. Comair continues to hire pilots and expand. It seems to me that DCI is doing quite well. I fail to see what the DAL MEC needs to be restrained from doing.

 

[~~~^~~~]

Facts and figures? You have not seen the facts and figures? You have not been looking very hard ~ or you have only been looking at ALPA's publications.

Remember the Bilateral Scope Impact Committee? What have they reported regarding the impact of predatory scope? Nothing and nobody at ALPA has asked.

Here you go, glad you asked:

Scope analysis (one of many)

And here is another thread about the effect of predatory mainline bargaining tactics (with the assistance of ALPA National)

ALG Thread

~~~^~~~

 

[spanky2]

~~~^~~~ and any others,

Topic is DCI / Delta mainline merger that you had a few threads up? Any ideas how to accomplished this?

Inquiring mind

 

[General Lee]

Fins,

I won't get into it with you on the RJDC lawsuit. I still think PCL is right---you guys have gained a lot more since 9-11, and probably will get even more here shortly.

As far as the MD-11 fleet---we still own most of the 14, and I believe we either sold three to World Airways or are sub-leasing them 3. The other 11 are still in the desert and we are still paying daily lease rates on them. I had heard a rumor that Fedex and UPS offered us a very low ball offer for them, and we refused. We still own an MD-11 sim, and I believe we still use it to train MD-11 pilots in ATL.

I haven't heard anything about replacing the MD-88s or MD-90s---I think we were going to replace them with new 738s--but we obviously sold 11 future orders, so that might take awhile. No news on selling them early...

And, I think our evil MEC was in favor of you guys merging your lists (Comair/ASA). That would save a lot of money in V.P. costs--but now with USAir low balling everyone on the 70 seat rates, I think management will want to hold off and try to low ball you guys.....I hope that doesn't happen.

Bye Bye--General Lee

 

[PCL_128]

Fins:

Unfortunately, I have to leave for a 4-day trip in a few minutes, so I won't be able to look at all that RJDC propaganda until next week. When I get back I'll be sure to look at all of the data and get back to you.

 

[typhoonpilot]

I think this demonstrates that Delta is being more proactive about building profits and not just "wasting" money. Delta is not like Emirates or Qatari Airlines where they can waste away the Governments' money (sorry Typhoonpilot - tell me if you don't agree) and provide overcapacity - definitely the case with Qatari with its upcoming A380s...

Sorry HeavySet I don't agree. The problem with airlines in the United States is that they have become too small minded. They fail to realize that revenue is the key to success. The more revenue you can get the better and the best way to optimize revenue is to fly big airplanes. Emirates can't get enough big airplanes to meet demand. They will report record profits this year and will pay a record profit share to the employees. Here are some loads for tomorrow, the 12th of February:

Dubai - London Heathrow 3 flights

Coach Business First

336/320 50/42 8/18
368/320 46/42 14/18
230/320 37/42 3/18

Dubai - Birmingham

264/251 27/27

Dubai - Bombay

212/183 40/42 11/18
368/320 45/42 18/18
377/320 43/42 8/18

Dubai - Cairo

275/236 54/49

Dubai - Hong Kong

351/304 48/49

Dubai - Tehran

278/251 27/27
274/251 32/27

So you can see that at what most would consider a slow time of year Emirates is flying with a better than 90% load factor. The smallest airplane they operate is an A330-200.

The other part of the equation is cargo and the big airplanes carry a lot of cargo which is a major portion of the airlines revenue. The 777 is a great airplane for cargo and smart airlines use it to optimize revenue on long haul routes with it's cargo capabilities.

The last time the government of the Dubai put money into Emirates was when it started in 1985, ever since then they have been on their own. They thrive in an environment of open skies with superior marketing ability, superior customer service, and a strategic geographical position.

I would agree that Qatar is throwing money at their airline because they are not near as successful as Emirates. But don't confuse the two. Emirates is a leader and Qatar is just a follower.

Typhoonpilot

 

[ILStoMinimums]

Well said Typhoonpilot!

What destinations do you fly to in the USA? I believe JFK and LAX are 2 of them?

 

[Heavy Set]

Typhoonpilot,

Yes, I knew EK would be a stretch - I will restrict my example to Qatari only next time... You are definitely lucky to be associated with a great airline like EK - plus you get to fly a 777 - not a bad gig...