Delta set to rumble

[LiveFreeorDie]

furloughfodder

You are like a special olympian--even if you win you are still retarded.

 

[XRMEFLYER]

FDJ2,

Specifically what bills are paid by DAL and what is your source?
When you say that Delta is maintaining the debt and absorbing the depreciation on the equipment for the WOs, are you suggesting that ASA and Comair are not paying for their aircraft?

 

[furloughfodder]

A guys tells me to GO "F" MYSELF and I am the one who gets flamed? Boy you guys sure are sensitive.

Am I wrong in saying that one of the main reasons airlines like Delta, and AA are being asked for 20-30 percent pay cuts is to put them on par with the LCC pay scales?

You guys get so freakin' defensive everytime anyone mentions the pay at pre-911 Majors and the LCCs.

I also know that you guys seem to get a big kick out of the fact that I am furloughed from a Major. I know, I know...what an idiot I was for applying to the Majors. We can all look back now and realize how stupid I was, and how right you guys all were who "chose" AirTran, ATA, JetB, etc...

Good luck, and may you never find yourselves furloughed....just keep making those "right" choices and you never will be.

 

[FlyComAirJets]

FDJ2, you are confusing imaginary (what you call X - Y - Z dollars which are an internal accounting scheme) with real dollars. But thanks for making the best case yet that ASA/CMR/DAL are truly operationally integrated.

Take the top ten major airlines and compare them to the top ten regional carriers, some of whom are independant, others are wholly owned. Easy question: Which group would you say is in better financial condition? Chautauqua seems to be doing quite well these days. Comair and ASA were consistently profitable during the last big downturn during Persian Gulf War I.

"Now exactly who supplements who?" Obviously the regionals do!

 

[MedFlyer]

FDJ2, you are confusing imaginary (what you call X - Y - Z dollars which are an internal accounting scheme) with real dollars. But thanks for making the best case yet that ASA/CMR/DAL are truly operationally integrated.

Take the top ten major airlines and compare them to the top ten regional carriers, some of whom are independant, others are wholly owned. Easy question: Which group would you say is in better financial condition? Chautauqua seems to be doing quite well these days. Comair and ASA were consistently profitable during the last big downturn during Persian Gulf War I.

"Now exactly who supplements who?" Obviously the regionals do!

The only reason most regionals make a dime is because they run off a fee for departure system. It almost GUARANTEES a profit...the regionals can't lose money unless they are absolutely stupid and negotiate a crappy contract.

Let's say it costs CHQ $5000 per flight. They sign an agreement with DL that gives CHQ $6,000 per flight. So every flight is basically a guaranteed profit. Now, the economy goes in the crapper (war, terrorism,etc) and CHQ's RJ's are mostly empty. Guess what? CHQ still makes that 6K while DL takes a bath on all the empty seats.

Basically, the regional's have lived in a risk free world letting the majors do the dirty work.

 

[~~~^~~~]

The only reason most regionals make a dime is because they run off a fee for departure system. It almost GUARANTEES a profit...the regionals can't lose money unless they are absolutely stupid and negotiate a crappy contract.

Let's say it costs CHQ $5000 per flight. They sign an agreement with DL that gives CHQ $6,000 per flight. So every flight is basically a guaranteed profit. Now, the economy goes in the crapper (war, terrorism,etc) and CHQ's RJ's are mostly empty. Guess what? CHQ still makes that 6K while DL takes a bath on all the empty seats.

Basically, the regional's have lived in a risk free world letting the majors do the dirty work.

MedFlyer, very, and I mean very, few people have seen the compensation schedules for regional airlines. They are very closely guarded secrets. But I can tell you that most fee for departure arrangements start at a slight loss to the regional. The regional then has performance bonuses that turn the loss into mildly profitable. The profit margins are quite slim and frankly, it requires a good operation on a good day to hit the performance targets.

I don't know that Comair can operate a CRJ for less than CHQ gets for a E145. The E145 is very slightly more efficient for the stage lengths of most of these flights.

But the "guaranteed cost" allows the mainline partner to keep all the revenue. Using non confidential sources, like Conklin and DeDekker, you can run the numbers on the E145 and come up with just shy of $1,500 per hour for variable costs (last summer when we ran the numbers and I posted the analysis on this board). This is not the number for the compensation schedule, but it is not far off. Now consider that in one hour, you could fly 50 folks from ATL to SAV. You can do the math how ever you like, but breaking even is $30 a person.

Also, the 15% or so of passengers that RJ's feed into the mainline aircraft make all the difference in the world between profit and loss on something the size of a 757.

Overall, the relationship between regionals and their partners has been win / win, but the numbers are tight for the regionals too. For reference, consider that ACA had to refuse United's revised compensation schedule and plans to strike out on their own as Independence Air. ACA had no choice, the revised United deal was a known loss for them.

~~~^~~~

 

[XRMEFLYER]

Furloughfodder,

No one here is happy about your situation. It is bad for you and bad for us. It is the manner in which you "say" what you are saying.

all the LCC's dragging the pay scales down

Now go on back to the "Regionals" board junior

It comes off as patronizing and pedantic.

Best of luck to you also and may you soon find yourself back in the game.

AMF

 

[Ty Webb]

FL717,

It is soooo easy to get your blood boiling.

Now go on back to the "Regionals" board junior.

That's about as stupid as me saying that you should be on the Home Depot board, FurloughedFodhead.

If your company convinced you that you need to take a pay cut to compete with us, and you were stupid enough to go for it, it is your problem, not mine.

You've given them the pay cuts. If that was the solution, then where are the profits?

Any idiot can figure out that the difference between AMR's previous Fokker crew pay and our B717 crew pay wasn't going to make a bit of difference. It's not even as important as selling one additional revenue seat, for crying out loud.

The bigger problem is your company's failure to adapt to a changing environment.

 

[Tim47SIP]

FDJ2

You are partly right when you claim that DAL must still must bear some of those other costs regardless of whether they use a WO or CC, but DAL must pay more of those costs for a WO. Specifically maintaining the debt, and absorbing the charge to depreciation, which system wide was $1.2B last year alone.

OK, you lost me. I admit, I did go to school on the short bus. Well actually, it was a mini van that had the words "Talented and Gifted" with the "Talented" crossed out! Hey, just look at my spelling!

Where was I, Oh ya, "Maintaining the debt", and "absorbing the charge to depreciation". Unless you are trying to tell me that Delta pays for all of the CC's aircraft (and their debt) that fly for Delta, then I am having trouble trying to figure out your fuzzy math (not that it is incorrect). Take Skywet, they have all of the SAME costs (not identical numbers) associated with operating their company as ASA. They fly from point A to point B. Delta has to pay all of those "other" costs to get a pax on either aircraft. Skywest has to pay for their aircraft cost as Delta has to pay for ASA's aircraft costs. Now we come to the real difference. Delta does not have to pay ASA a profit margin. They pay all of those "other" costs and the cost to fly the aircrat. With Skywest, they pay all of those "other" costs, the cost to fly the aircraft, AND the PROFIT.

You are wrong if you think that the CC cost more to operate than the WO. Have you noticed that CMR got zero growth aircraft due to their non competitive cost structure? Not one, yet Chautauqua and Skywest did.

The CC's may not cost more to operate for their specific companies, but as far as Delta's cost is concerned, they most definitely cost more to pay them their operating expenses plus a profit. Additionally, please explain why ASA got 25 of the 45 aircraft if we cost more and Delta will have to accrue debt.

My guess on Comair: they are being punished. Delta can not ask for concessions and offer them 80+ aircraft, then give them aircraft after they turned down the concessions. As far as Chitaco and Skywest being awarded airframes, those carriers will buy them. No cost to Delta.

 

[furloughfodder]

That's about as stupid as me saying that you should be on the Home Depot board, FurloughedFodhead.

If your company convinced you that you need to take a pay cut to compete with us, and you were stupid enough to go for it, it is your problem, not mine.

You've given them the pay cuts. If that was the solution, then where are the profits?

Any idiot can figure out that the difference between AMR's previous Fokker crew pay and our B717 crew pay wasn't going to make a bit of difference. It's not even as important as selling one additional revenue seat, for crying out loud.

The bigger problem is your company's failure to adapt to a changing environment.

FurloughedFodhead? What are you...3 years old?

So I guess you don't agree with me on my simple post stating that the primary reason the Majors are taking huge pay cuts is to compete with the LCC's?

Don't get me wrong, I’m fully aware of the ineptitude of most Major airlines management teams. I am not a fan, believe me. Nor am I a huge fan of the Union to which I belong. Unfortunate set of circumstances for me isn’t it?

Oh well, what are you gonna do?

PS- I still haven’t received that letter of recommendation from you guys…I don’t want to miss the window down there in Hotlanta.

 

[FDJ2]

Re: FDJ2

[B Delta does not have to pay ASA a profit margin. [/B]

Delta however does need to get a return on investment. IOW, Delta paid over $3B to acquire ASA/CMR, that adds to the debt at DAL. That debt needs to be paid. DAL did not invest $3B in the CCs. What does DAL get out of it if it can get the same lift for less from a CC? Assume ASA/CMR make a $100M "profit" each year, it would take 30 years to payoff the principle and that's without interest. It makes no sense to buy the cow when you can get the same milk from someone else for less.

 

[surplus1]

FDJ2 (and MedFlyer)

You fascinate me with your alphabet soup and your financial analysis of the Delta empire and "drag" that CMR puts on it. I especially like your references to MB's (who reminds me of Martha Stewart) words of wisdom.

I'll be first to admit that I don't understand Delta's "system" for accounting for the subsidaries. I'm not even sure they do. Maybe you are "subsidizing" us and maybe the profits for CMR that Delta reports are all bogus.

Anyway, I have my own opinions and I willing to risk having you call me an a$$hole because of them.

1) I don't know if CMR is currently a "fee for departure system" as a Delta subsidiary. I do know that before Delta completed its forced purchase of Comair, it was never a "fee for departure" airline. In fact one of the things that caused Delta to buy Comair was Comair's refusal to accept a contract with Delta based on "fee for departure".

2) I also know that while Comair was a revenue sharing (not fee for departure) subcontractor, paying all of its own bills, and buying all of its own airplanes, and paying Delta millions for contracted services provide by Delta, carrying 60% or more of its own passengers (who never set foot on a Delta owned airplane)Comair was consistently ranked No. 1 or No. 2 among the world's most profitable airlines.

3) If Comair is loosing money today, as you seem to think, and has to be "subsidized" by the hemorraging mainline, then it looks to me like the only thing that has F'd up Comair was its acquisition by Delta.

Tell me, how is it that Delta managed to turn the goose that laid the golden egg in to the money losing ugly duckling that you claim it is today? Lay some more wisdom on me and tell me how you all manged to do that?

Maybe you and your supporters should be candidates for political office. You're better at smoke and mirrors than either Bush or Kerry.

We have all taken a big hit from the economic down turn, the foolish airline price wars, the over capacity and the tragedy of 9/11. On top of that we are now taking another hit from an ill-advised war, which instead of lowering oil prices has caused them to soar to more than $37 a barrel with no end in sight. Some of those things no one could forsee or control and others they should have forseen and failed to control.

Like it or not. labor is a contributor to the staggering losses at some of the legacy carriers. The contract that Dubinsky/ALPA forced on UAL, followed by your DMEC "United plus" campaign and UMEC's absurd (for a big commuter airline) "parity + 1%" policy, coupled with your foolishly restrictive scope against your own company's interests (not just DAL but all 3 + AA), have helped to put you into the place you're all in now. Notably, Delta is the only one that didn't have to deal with the rediculous "scope" before your C2K so it didn't hurt you like it did the others.

I don't think you should "give up the farm" by any means and I feel the General's ideas are pretty close to reasonable thinking, but what you're spouting is .... well, let's just say lacking.

 

[FurloughedAgain]

UMEC didn't think up Parity +1%. Stephen Wolf did.

 

[LiveFreeorDie]

IF, If, if...

No one said they were smarter than you by taking a job at the competitive airlines. If I had seperated from the AF a year earlier I would have been at AA and not SWA.

As far as your premise that I am bringing you down by taking a job at a so called LCC, I couldn't care less.

This is a (for the most part) freemarket. If you want to make more money, figure it out for yourself. $h!t happens. Careers change. So you can't make six figures flying (very little) for AA. Wha, wha! So someone else is willing to fly for less, so what? Its a free market, you have just as much chance as the next guy, so quit bitching and get to work.

 

[XRMEFLYER]

so quit bitching and get to work

Words to live by!

AMF

 

[XRMEFLYER]

FDJ2,

Are you not going to answer my earlier questions?

 

[FDJ2]

FDJ2,

Are you not going to answer my earlier questions?

Some of my sources are DAL's published SEC filings, ALPA's economic financial analysis, news interviews with DAL executives, and statements as well as Q&A made by our MEC EFA team regarding DAL's finances.

 

[FDJ2]

Surplus, thanks for one of your mercifully shorter posts.

Just a few points.

1. The purchase of CMR was not forced. Cmr could have gone its own way. That is just a fact.

2. CMR did well prior to the acquisition because of its lucrative DAL contract, not because CMR was some independent power house. When DAL refused to sign another obscenely lucrative contract, due to an abundance of RJ lift becoming available, CMR knew the gig was up and was only too happy to join DAL as a wholly owned subsidiary.

3. CMR is not losing money today, it just can't be deterimined if it is making any for DAL.

You state:

Tell me, how is it that Delta managed to turn the goose that laid the golden egg in to the money losing ugly duckling that you claim it is today?

Than you go on to state:

We have all taken a big hit from the economic down turn, the foolish airline price wars, the over capacity and the tragedy of 9/11. On top of that we are now taking another hit from an ill-advised war, which instead of lowering oil prices has caused them to soar to more than $37 a barrel with no end in sight.

It sounds to me that you just answered your own question.

Your comments about DAL's restrictive scope having hurt the bottom line is amusing at best, particularly since DAL has unlimited RJ50s at its disposal and hasn't acquired all the 70 seaters its allowed to outsource. But if you believe that scope hurts the bottom line, than why do you have scope that precludes CMR from contracting MESA pilots to fly your RJs. Wouldn't that have made CMR competitive for the new RJs. I guess in your world scope is bad if it prevents you from being the low ball bidder, but good if it prevents someone else from doing it. That's very interesting.

 

[XRMEFLYER]

my sources are DAL's published SEC filings, ALPA's economic financial analysis, news interviews with DAL executives, and statements as well as Q&A made by our MEC EFA team regarding DAL's finances.

ALPA, Delta execs, and your MEC huh? Yeah, they don't have an agenda.

As for the SEC filings, Arguably the only source that could even remotely be considered reliable, they absolutely do NOT support your statements.

It is preposterous for you and your henchmen to suggest that the WOs are being in any way subsidized by mainline.

AMF

 

[KingAirKiddo]

FDJ2 (and MedFlyer)


1) I don't know if CMR is currently a "fee for departure system" as a Delta subsidiary. I do know that before Delta completed its forced purchase of Comair, it was never a "fee for departure" airline. In fact one of the things that caused Delta to buy Comair was Comair's refusal to accept a contract with Delta based on "fee for departure".

2) I also know that while Comair was a revenue sharing (not fee for departure) subcontractor, paying all of its own bills, and buying all of its own airplanes, and paying Delta millions for contracted services provide by Delta, carrying 60% or more of its own passengers (who never set foot on a Delta owned airplane)Comair was consistently ranked No. 1 or No. 2 among the world's most profitable airlines.

3) If Comair is loosing money today, as you seem to think, and has to be "subsidized" by the hemorraging mainline, then it looks to me like the only thing that has F'd up Comair was its acquisition by Delta.

I think Surplus is right on...to draw a comparison, ACA had its best years as a company when it was revenue sharing with United.