Delta set to rumble

[FDJ2]

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.

That's why revenue sharing isn't in vogue. Fee for departure on the other hand is gaining in popularity. The carrier that can submit the most competitive bid will get the flying.

 

[FlyComAirJets]

FDJ, I disagree with all three of your premises:

1) As a publically traded company, DAL went to the CMR Board of Directors with an offer. If CMR had said 'no' it would have been easy for DAL with already a quarter of the company's stock to have bought controlling interest in the company. This is called a hostile takeover and is fairly common. It is doubtful DAL would have let CMR "go ... its own way." Not after having lost Business Express to AMR.

2) CMR had a good deal going because they had reached such critical mass pioneering the deployment of the 50 seat RJ that they were feeding a majority of passengers to themselves. DAL wanted those "obscene" profits and bought CMR and ASA. So there was money being made then which is why you contradict yourself on point 3.

3) ASA and CMR were making lots of money before, now you can't bring yourself to admit they are making money now. DAL has for many years reported their profits by operation, for example, Pacific operations, Atlantic operations, shuttle operations, and domestic operations, to name a few. Do you dispute that too?

Since you cannot accept that the wholly owneds contribute even one penny to the bottom line ask yourself where did all the money go? If the profits are gone, then the blame rests with greedy DAL management who call all the shots these days.

As a self-proclaimed expert on scope, surely you know that our contract does not prohibit contracting aircraft to MESA, it only states that any flying in the service of Comair would have to be provided by pilots on a common CMR pilot seniority list. The ASA/CMR sought to equitably join with the DAL pilots and we know where that went.

 

[FDJ2]

1) As a publically traded company, DAL went to the CMR Board of Directors with an offer. If CMR had said 'no' it would have been easy for DAL with already a quarter of the company's stock to have bought controlling interest in the company. This is called a hostile takeover and is fairly common.

I'm sorry but not only is that revisionism but your definition of a "hostile takeover" is incorrect. A hostile takeover is when management opposes the takeover. With regards to the CMR acquisition Mr Mueller and Mr Siebenburgen stated:

“They are our friends, our colleagues and now truly our partners,” said David R. Mueller, Comair chairman and co-founder. “I speak for all Comair people in welcoming this relationship with Delta.”

Comair CEO David A. Siebenburgen: “Both companies had to look to the future,” Mr. Siebenburgen said. “How to best compete in the long range? It's a win-win situation in my view.”

That doesn't sound too hostile. Beyond that CMR had basically three choices, become an independent carrier, become a contract carrier for hire, or become a wholly owned subsidiary. CMR management chose what was behind door number three, because being an "independent" was too risky, and being a contract carrier meant competing against a growing number of regionals who could provide small jet lift for far less than what CMR had been getting.

CMR had "obscene" profits because it was flying DL code passengers with a very lucrative DAL contract. Once DAL made it clear that those days were over CMR quickly came to the realization that the days of double digit profits were over. Without the DL code, CMRs future was very murky and most certainly not as profitable as it had been.

As a self-proclaimed expert on scope, surely you know that our contract does not prohibit contracting aircraft to MESA, it only states that any flying in the service of Comair would have to be provided by pilots on a common CMR pilot seniority list.

I'm not a self proclaimed scope expert, but doesn't the CMR contract allow for dry leasing of CMR aircraft for up to 90 days to other companies? If so, why the 90 day limit and why not wet leasing? That sounds like predatory scope since the CMR pilots are placing arbitrary limitations on pilots other than the pilots for which your CBA is negotiated.

As far as the profits are concerned, the profits are gone because the actual cost of getting passengers into a CMR seat and to his destination on that jet is greater than what that passenger pays. The true costs are more than just the operational costs that CMR incurrs. Even though CMR might make a small profit, that doesn't mean that DAL is profitable using CMR jets, since it is DAL that must make up the difference. Some of those costs have already been outlined and they are significant.

 

[FlyComAirJets]

In an effort to keep my remarks relativelly brief, I deleted several paragraphs related to the nature of Comair's purchase by Delta. Suffice to say, we completely disagree on whether it was friendly or not. If you buy into the feel good rationalization given by Siebs after the deal was done, then I've got a bridge I want to sell you.

There is no "revisionism" at work here, I base my opinion on my having been there when those events during took place. I went to every shareholder and employee meeting. I took notes when management tried to sell us the sell out. I did not like it then, I sure as heck don't like it now. I should not be surprised one iota that those who see no meaningful contribution in our existence would believe the worst.

And you know what, it does not really matter because it's done, it's history. It is kinda neat to watch what comes around, goes around.

You wont be seeing old Siebenbergen rubbing elbows around the boardroom with other Delta VPs like he was in the Annual Report following the purchase. His star fell quickly out of favor three years ago when we took our little stroll down picket lane.

 

[surplus1]

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.

If you believe that your understanding of big business is limited. In either case, it is no longer relevant. What's done is done.

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.

"Only to happy"? Again, if that is what you want to believe nothing that I say will change your mind. If it makes you feel good to believe that well, I'm glad you feel good. The point is now moot from either perspective.

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

Sorry, my bad. I thought you said it was being "subsidized" by Delta. Now you say you "can't determine". I could maybe buy that. Just make up your mind. Either it is subsidized or you don't know. There's nothing wrong with not knowing and it's consistent with the rest of your remarks.

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.

If you really read what I said you would know that I claimed that Delta escaped the bottom line "hurt" or predatory scope effect because is was not in the Delta PWA prior to C2K. That is exactly why Delta has done well compared to the other legacy carriers who did have that type of scope.

For the record, Delta has not "outsourced" a single 70-seater as yet. Subsidiaries are not outsourcing. The Company (DAL) owns and operates all of those aircraft, just as it owns and operates the 757's at Song. Do not confuse your desire to fly those airplanes yourself, instead of their being flown by ASA and Comair pilots, with outsourcing.

The purpose of scope is to protect the pilots' jobs. That includes the jobs of ASA and Comair pilots as well as the jobs of Delta pilots. In the past, you (the Delta pilots) did not want certain types of flying jobs so you gave up your right to protect those jobs (aircraft with 70-seats or less) to the Company in exchange for money on your pay stub.

That was your doing. No one forced you. You did it because, at the time, you considered youselves too good to do that type of flying. Now that you are no longer so "privileged" you covet your neighbor's goods. Sorry, it's too late.

After the Company agreed to that, you are now, in your new contract, emulating the other majors by telling the Company what aircraft it can operate, how many it can operate, and where they can fly. That hurts the Company's bottom line. Not Comair's but Delta's.

You are doing this for several reasons, among them: 1) You have second thoughts about bargaining away your flying in small aircraft (I agree it was a stupid mistake), 2) Your efforts to get it back by putting your pilots in the cockpits of the small aircaft and displacing those pilots (currently there) in the process have failed, 3) Since you can't do that, you have decided to attempt to stop the Company from selecting the type of aircraft that best fits the available markets. That is the same as telling the company that it may not fly 737's but it must fly more 767's, because that is what YOU prefer to fly. In other words, you seek to manipulate and control market forces with Scope. That is not the purpose of Scope. That is a perversion of Scope.

You efforts have not been successful only because Delta management has refused to let you do all that you wanted to do. However, some of what they allowed you to do (restrict the number of 70-seaters) was foolish on their part. It will not make them fly more 737's, which is what you would like, but it will cause them to lose market share and revenue. While they had no competitors in that area, they now do.

At a time when the Company is losing large sums of money, such restrictions on its flexibility are stupid. Now that USAir and United are both bankrupt, those pilot groups have been forced to remove those stupid restrictions. As a consequence, their fleets of 70-seat + regional jets are expanding at alarming rates. Additionally, they will be flown by pilots who earn far less than Comair or even ASA pilots, all of whom have (with the help of your union) jumped at the opportunity to give up their contracts and wages for the "growth". This will simply put more pressure on Delta, which stands to lose the competitive advantage it gained by not having the restrictive Scope limits prior to C2K. In turn, that will put more pressure on Delta pilots to make matching pay concessions in your own pay and benefits. It will also increase the pressure on Comair and ASA pilots to further widen the gap between your compensation levels (current or revised) and theirs. That in turn will continue to proliferate the small jets that you are trying to prevent (the Company will force you to do this) and to reduce the number of 737's you might otherwise have, IF you were making money and had the markets in which to use them. Your actions (DMEC & ALPA) are a classic case of attempting to cut of your nose to spite your face.

Bottom line. - Not securing ALL the flying for yourselves from the beginning was foolish and bad for Delta pilots. You let the Genie out of the bottle and now you're trying to put it back. You will not succeed.

Having made that mistake, not having restrictions on the small aircraft operated by contractors (or subsidiaries) in your contract prior to C2Kwas smart. Good for the Company and therefore, good for the pilots. It allowed Delta to gain considerable market advantage over the other idiots with restrictive market control Scope.

Changing that smarter policy to restrictive clauses that remove the Company's flexibility, especially in bad times, does nothing to help Delta pilots, does much to harm the Company of Delta, and is the equivalent of attempting to destroy deliberately the careers of the small airplane's pilots in a misguided effort to enhance your own position. Predatory!

Both ALPA and your MEC need to get their heads out of dark places. What is needed is an agreement between the big airplane and small airplane pilots as to where the dividing line will be set, on a permanent basis. This is NOT something that you can impose unilaterally and efforts to do so are doomed to failure. Once that agreement is reached, the Company's flexibility must be restored by the removal of attempts to restrict its selection of aircraft types. Only the Company should decide which aircraft are to be operated, how many of what type will be operated and where they will be operated. Finally, the pilots of the big airplanes together with the pilots of the small airplanes must act in unison to prevent continued outsourcing to companies not owned by Delta.

There's no question that this has become a mess. The responsibility for creating that mess rests squarely on the shoulders of the ALPA leadership and the mainline pilots. Pandora's box was opened, management has taken full advantage of it, and it is YOUR fault.

We small airplane pilots will help you to close the lid on the "box" that you opened because it is in our interest to do so, but we are not going to do that by eliminating ourselves for your exclusive benefit. I know you don't want to "share" but it is the only choice you have left. Either you reach an acommodation with us that shares the spoils or your position will continue to erode and ours will continue in turmoil.

Continued fighting among ourselves will not help you and it will not help us. It is in our mutual interest to reach an agreement. All you have to do is comprehend that you cannot dictate the terms of that agreement. Keep trying and you do so at your own peril.

I hope that's short enough for you to understand it.

 

[FDJ2]

Surplus, if you believe that the purchase of CMR was hostile or not supported by your management team at the time, please provide some proof. There is an abundance of public information that senior CMR officials viewed the CMR acquisition was as a "win-win" and a strengenthing of our relationship. I suggest that you study up on the meaning of a "hostile takeover", because the acquisition was anything but "hostile".

It is a fact that it can not be determined whether or not CMR is profitable for Delta Air Lines, it is also a fact that CMR does not cover all the expenses associated with putting passengers in CMR aircraft. If you can tell me how much CMR paid in selling costs, distributions and debt payment I'd be interested in hearing it. According to Michele Burns. Delta's CFO, Delta pays those costs. So effectively CMR's operations are subsidized by DAL. That by the way is not "operational integration", in case you were wondering, since Delta pays most of those costs for contract carriers also.

Wholly owned or not, CMR is outsourced flying since it falls under the same exemption as Chautauqua. Any flying not covered by section 1c is outsourced, the fact that you are a wholly owned subsidiary or contract carrier does not change that. Song is not outsourced since it is flown by Delta pilots. CMR is not Delta, CMR is simply owned by Delta, but it remains a separate company with its own headquarter, personnel department, dispatchers, flight crews etc. I'm sorry if that hurts your pride, but that just a fact of life, but if you want to go around pretending to be a Delta employee, we'll understand.

 

[CarjCapt]

Surplus, if you believe that the purchase of CMR was hostile or not supported by your management team at the time, please provide some proof. There is an abundance of public information that senior CMR officials viewed the CMR acquisition was as a "win-win" and a strengenthing of our relationship.

I've said this before the above is totally wrong. The public statements by then CMR officals was just that public. I personally talked to Sieb and he told me directly that the buyout was the only option amoung alot of bad options. The CMR board and officers negotiated their golden parachutes after the writing was on the wall. They didn't want to sell but selling was the lesser of all evils. It was hostle privately and "win win" publically.

By the way you weren't there and I was.

 

[General Lee]

Now Delta owns you. Nah nah nah. And we are both here now----enjoy!

Bye Bye--General Lee

 

[rjcap]

Now Delta owns you. Nah nah nah. And we are both here now----enjoy!

And Fred Reid has just jumped ship.

 

[XRMEFLYER]

if you want to go around pretending to be a Delta employee, we'll understand

You are a DELTA employee! Why didn't you say so. That is soooo cool!

CMR is simply owned by Delta, but it remains a separate company with its own headquarter, personnel department, dispatchers, flight crews etc.

If that is the prevailing way of thinking out there, then you guys should tone down the whining over the furlough hiring issue.

AMF

 

[surplus1]

Surplus, if you believe that the purchase of CMR was hostile or not supported by your management team at the time, please provide some proof. There is an abundance of public information that senior CMR officials viewed the CMR acquisition was as a "win-win" and a strengenthing of our relationship. I suggest that you study up on the meaning of a "hostile takeover", because the acquisition was anything but "hostile".

"A man convinced against his will is of the same opinion still." I know all about the "public information". The difference between you and I is that I also know the persons making the public statements, personally. I know what they said in public and I know what they thought in private. It is not necessary for you to belive anything and I cannot prove anything.

That doesn't change the fact that I know what happened, how it happened, what Delta did, how Comair tried to counter it, why Delta succeeded and why Comair didn't. The sale was forced upon Comair, whether you like it or not. I lived it. Where were you?

Wholly owned or not, CMR is outsourced flying since it falls under the same exemption as Chautauqua. Any flying not covered by section 1c is outsourced, the fact that you are a wholly owned subsidiary or contract carrier does not change that. Song is not outsourced since it is flown by Delta pilots.

You're a typical Delta pilot; arrogant and ill-informed. You believe that your opinion is fact and your contract supercedes all else. Neither is the case.

My opinions are not facts either, they are just opinions. The difference between us is that I know this and you apparently don't know that your own views a just opinions too. That's OK by me. However, it might do you well to comprehend that the Gospel is in the Bible, not the Delta PWA.

CMR is not Delta, I'm sorry if that hurts your pride, but that just a fact of life, but if you want to go around pretending to be a Delta employee, we'll understand.

I did not say that Comair was Delta. That's your idea, not mine. As for my pride being hurt you are so far in left field that I don't know how to express it. I have never pretended to be a Delta pilot and have never had any reason to do so. You're barking up the wrong tree. The truth is the "culture" of your pilot group is foreign to me and I don't like it. I never applied for work at your company, never had any desire to do so, and will not have that desire in the future. You don't have to believe that if you don't want to. "Frankly Scarlet, I don't give a dam*n."

Being a Delta pilot might one day be something that I could be forced to accept, just as I was forced to accept the purchase of my company by Delta. It is not a source of pride, it is acutally a source of regret.

Make you points about the issues as you see them. Get over the idea that being a Delta pilot is somehow the pinnacle of aviation success. It isn't, never has been, and will not ever be. Delta is just another airline like any other. There is nothing "special" about you folks other that you exaggerated concept of yourselves.

You are an airline pilot, nothing more. So am I. It is really that simple. Don't make a mountain out of a mole hill. Leave the crowing to the barnyard roosters, it is wasted on me.

 

[rjcap]

Delta to expect 400 million loss for the first quarter 2004 !!!

Alright, lets hear everybody spin this.

 

[Skygod]

Rumble?? $400 million so far this year

Delta Sees Higher-Than-Expected Loss
Friday March 12, 6:30 pm ET


NEW YORK (Reuters) - Delta Air Lines said on Friday it expects the loss for its March quarter to be higher than previously expected, citing pressure on passenger revenue, higher fuel prices and fuel hedge costs.

The company said that it expects its loss to be about $400 million, up from its previous expectation of $300 million to $350 million.

Fuel costs are expected to rise by 3 percent this year, the company added in a securities filing.

Delta, which has about $1 billion in debt maturities coming during 2004, also said it expected capital expenditures to be about $1.2 billion for the year.

"We do not expect significant improvement in the revenue environment in 2004 and expect significant cost pressures related to aircraft fuel, pension and interest expenses to continue," the company said in a 10-K securities filing.

Delta said it expects to meet its obligations through cash and cash equivalents, investments, and other sources. Still, it warned about threats to its liquidity.

"While new financing may be available to us, access to such financing cannot be assured given the existing business environment and the composition of our currently available unencumbered assets," the company said in its 10-K filing. "Failure to obtain new financing could have a material adverse effect on our liquidity."

Additionally, Delta told investors it had agreed to buy 32 Bombardier Inc. (Toronto:BBDb.TO - News) CRJ-200 aircraft, for delivery in 2005. The help finance the purchase, Delta entered into a facility with a third party. Payments will be due in installments for 15 years, the company said.

Delta shares closed up 32 cents, or 3.8 percent, at $8.84. They had not traded after hours on electronic brokerage Inet.

The company said earlier on Friday that its president, Frederick Reid, would leave Delta to become chief executive of Virgin Group's (VA.UL) soon-to be announced U.S. domestic airline.

 

[FDJ2]

"I know what they said in public and I know what they thought in private. It is not necessary for you to belive anything and I cannot prove anything.

O.k. surplus, so you can't back up your statements with anything other than your incredible ability to read their private thoughts, which happen to be the opposite of their public record and statements. We'll leave it at that.