Delta TA impact on Delta Connection...

[General Lee]

Gotta agree with 777 here. That's just an asinine statement. While I do share some of your apperhension with the new TA(assuming it passes....which it will) and how it will basically gut DCI, I don't think that the business plan for SkyW now is to go into BK. Of all the DCI carriers out there, I think they have the best shot of getting through this upcoming mess.

Assuming the 717's and MD90's make it to DL, along with the return of retirees in 2013, hopefully there will be a lot of hiring at DL. I know there will be a net loss of jobs at DCI, but hopefully that will be canceled out by jobs at Delta and the other majors that may be hiring soon. Let's face it. The 50's are money losers and there are probably to many RJ's out there anyways. Hopefully this creates higher paying jobs and balances out the Delta fleet to a more profitable balance for everyone.

According to Dalpa, the new reserve work rule changes (adding average line value plus 15 hours to reserves in the busy months, plus adding an additional reserve day, allowing reserves to sell a day off if they want, etc) could be a minus 250 pilots to the group. Add the 717s, and that is a plus 1100. So, that would mean 850 new hires right there. Then, there is an early out package for very senior pilots that includes 30 weeks of pay, plus a large chunk in a retirement medical account (maybe 2 years worth of medical insurance (?), that would carry some over to medicare). I have heard that 200-300 may take that. Then add some MD90s (25 this year?), and the DC9s leaving in 2014 now (17 of them), plus 2 new 737-900ERs a month starting in late Summer (replacing some older 757s though, could be a wash there), and hiring is a very good possibililty if this TA passes. Then add normal retirements in the next few years, with some years ballooning to 800 age 65 guys leaving in one year (probably leave before that, medical out), and there will be hiring for years most likely.



Bye Bye---General Lee

 

[Speedtape]

May interject a clarification re: RJs as money losers?

Delta does not lose money by operating RJs of any size. The way it was explained to me by a company beancounter, DL doesn't make AS MUCH as they would if the resources ($) allocated to RJs were allocated elsewhere.

RJs do not lose money for Delta.

I agree with this message! If they were losing money, they would already be gone!

 

[suupah]

The Delta TA involves a net reduction of approx 200RJs. It states that this is possible by being able to back out if current leases in exchange for new aircraft. I'm certain this is 50 seat CRJs vs ERJs. So the replacement aircraft will be CRJs 900s, not E175s. Now, the next question is who has about 200 50 seater leases. Well, pinnacle has, what, about 140(?) and Comair will have about 16, so the remainder have to come from Skywest/expressjet. We have already seen that skywest is willing to renegotiate 50 seat lift at a 2 for 1 deal for 900's (already was done to get the 900's at "ASA")...and since in chap 11, pinnacle can just blow off leases (essentially)...looks to me that the loss of 50 seat lift will be from Pinnacle, Skywest and ExpressJet...with a net reduction in pilot staffing at these companies.

here's the play. delta holds the leases for pinnacle's 200's. they'll swap them out for 900's then send these newly acquired 900's to skywest/asa in trade for their 200's. multiple birds killed with one move.

pinnacle pilots get completely screwed.

 

[ASApuppy]

I would like to offer a different perspective to what this TA is accomplishing. We are in for a serious pilot shortage, at least short term (5years). There are simple no pilots waiting in the shadows to match the upcoming retirements. ASA could not run a new hire class next week if wanted to.

So, the management needs to find a near term solution for their network that requires a sliding scale of fewer pilots. Unlike 10 years ago, airlines are going to be okay with letting a route go, because they know they will not be pounced on by a start-up or otherwise. Fares will go up for the fewer seats left. Airlines will become more profitable, IMO. You have to admit, that for any city pair there are so amny people that will pay $X, so many that will pay $X-10%, $X-20%, and so on. If you cut out seats, the passengers left in the terminal are the ones that paid the least. Happens today on every flight oversold. Do you think Delta is overselling a flight with $99 fares? No, they are overselling it with $1k last minute fares and knowing they have to spend $400 of it to buy off the guy that got his ticket at $250 a month ago. Cut capacity, and you never have to offer the $99 or $250 fare. Airlines for the first time have better control over supply. Much like the refineries have figured out that they can cut output 10% and the price goes up 25%. No other refineries step up and flood the market with gas and they all win.

Back on point. Delta will have not have a problem filling classes compared to their DCI carriers. If, however, UniCal and AA get their act together in the next couple of years and can come to equal contracts with Delta, then they will have the advantage in pilot hiring. While Delta does still have quite a few retirements coming, they pale in comparison to others. All the pre-bankrupcy retirements at Delta has pushed off career earnings for 5 years. Upgrades will be longer. This assumes that those carriers can match Delta's contract. They might not. Especially if they play the earlier upgrade card.

So, bottom line, I think that even if this TA does not pass, the DCI carriers will be parking 50's. Not because of their economics, but because there will be nobody sitting in the front 2 seats. Delta is just trying to spin it that they are uneconomical. They fail to mention that while the costs for regional routes are higher, but so too are the yields.

So, ask yourself this. If I was an airline tycoon and I knew I had no new pilots to cover my short term retirements and that I needed to modify my fleet and route structure. What would it look like?

 

[flyboyike]

So, ask yourself this. If I was an airline tycoon and I knew I had no new pilots to cover my short term retirements and that I needed to modify my fleet and route structure. What would it look like?

I would park more airplanes until staffing was no longer an issue. A bonus would be that such a move would give me even more control over the supply and thus enable me to raise fares. I've said this before and I'll say it again: Richard Anderson isn't paid to operate 600 airplanes, he's paid to run a profitable airline. If it's profitable at 150 airplanes, he's done his job.

 

[79%N1]

Eliminating a bunch of planes from XJET's fleet solves a couple of problems. Needing more staffing for the new rest regs, and needing to find qualified applicants from a dwindling pool of prospects. They will be able to right size the fleet to match the current labor pool as they disappear. When attrition comes, they can just keep pulling down the fleet to match it until they get to the magic number. The problem with this is if attritiondoes not outpace the devolution of the fleet, and FO will never get the chance to upgrade. I can see upgrade times reaching 10 years at the regionals that still exist in 5-10 years.

 

[flyboyike]

Eliminating a bunch of planes from XJET's fleet solves a couple of problems. Needing more staffing for the new rest regs, and needing to find qualified applicants from a dwindling pool of prospects. They will be able to right size the fleet to match the current labor pool as they disappear. When attrition comes, they can just keep pulling down the fleet to match it until they get to the magic number. The problem with this is if attritiondoes not outpace the devolution of the fleet, and FO will never get the chance to upgrade. I can see upgrade times reaching 10 years at the regionals that still exist in 5-10 years.

I'm at nearly six years already with no hope of upgrade in sight.

 

[McNugent]

Eliminating a bunch of planes from XJET's fleet solves a couple of problems. Needing more staffing for the new rest regs, and needing to find qualified applicants from a dwindling pool of prospects. They will be able to right size the fleet to match the current labor pool as they disappear. When attrition comes, they can just keep pulling down the fleet to match it until they get to the magic number. The problem with this is if attritiondoes not outpace the devolution of the fleet, and FO will never get the chance to upgrade. I can see upgrade times reaching 10 years at the regionals that still exist in 5-10 years.

Your doom and gloom is nauseating. You were preaching that the end was near back when we were bought by Skywest. Take some happy pills or something.

 

[79%N1]

How is that doom and gloom? ASA is GOING to lose planes and be smaller than today. If you can't see that......I also said that it will HELP the future staffing as the need for more pilots would be helped by that. They would have trouble finding 1500 hr ATP pilots going forward. I also said that most of the losses in positions would be mitigated by attrition as people move on to other jobs. So, all in all......it won't be so bad. Hopefully those that stay here will still be ableto move up, but since upgrades are currently over 6 years if it all goes slower (i.e bigger fleet losses, less attrition) then upgrades could take a while. Sorry for bumming you out. May I suggest Pepto!

 

[Redan]

Your doom and gloom is nauseating. You were preaching that the end was near back when we were bought by Skywest. Take some happy pills or something.

79% has some very insightful views on our dealio. I'm always interested in what he has to say...

 

[silver02ex]

here's the play. delta holds the leases for pinnacle's 200's. they'll swap them out for 900's then send these newly acquired 900's to skywest/asa in trade for their 200's. multiple birds killed with one move.

pinnacle pilots get completely screwed.

Why would Skywest gets it? why wouldn't it go to Pinnacle or Go Jets, since they will be cheaper than SW.

 

[JumpersAway]

Why would Skywest gets it? why wouldn't it go to Pinnacle or Go Jets, since they will be cheaper than SW.

GoJets can't manage the airframes they have now.......

 

[777forever]

Why would Skywest gets it? why wouldn't it go to Pinnacle or Go Jets, since they will be cheaper than SW.

Pinnacle and GoJet can get a multi billion dollar loan? Even if they can wonder what the interest rate will be....



Sent from my iPad using Tapatalk HD

 

[Flyer1015]

i would park more airplanes until staffing was no longer an issue. A bonus would be that such a move would give me even more control over the supply and thus enable me to raise fares. I've said this before and i'll say it again: Richard anderson isn't paid to operate 600 airplanes, he's paid to run a profitable airline. If it's profitable at 150 airplanes, he's done his job.

No, you're wrong! Richard Anderson does his job by sitting at CE Woolman's desk everyday!

 

[DX Rick]

I'm at nearly six years already with no hope of upgrade in sight.

Ike, this is true. But think of taking a pay cut, which would be like an insurance policy to your career. Maybe you could upgrade by 2030.

 

[suupah]

Why would Skywest gets it? why wouldn't it go to Pinnacle or Go Jets, since they will be cheaper than SW.

because it is a way to reduce 50 seat feed to the numbers in their ta. by getting the 900's in trade for the current pinnacle 50 seaters through bombardier they reduce pinnacles 50 seaters. then, delta, who is leasing the planes takes those 900's to skywest or asa and trades them 2 50 seaters for one 76 seater with a long term contract as the incentive for skywest. this now takes even more 50 seaters out of the system.

Getting rid of the 50 seaters is the name of the game and if Delta gets that done before their competitors it puts them at an advantage.

 

[Jar Jar]

Wow 35% of new hires will come from DCI ALPA carriers, so it would seem that if you are not ALPA you'll be in the 65% range (much better odds)! So how does this benefit an DCI ALPA group??? Thanks ALPA for helping us out, why do I pay dues again?

I bet if you run the numbers about 35% of the people who apply at DAL would be DCI ALPA pilots anyway.

 

[makersmarc]

Gone With the Wind

Getting rid of the 50 seaters is the name of the game and if Delta gets that done before their competitors it puts them at an advantage.

Not really. RJs are not a toxic asset per se; if DL had none they would be scrambling to acquire some to get a competitive advantage for untapped markets. Can Harrisburg, PA be served as well (that is, revenue reaped from) with two flights a day, one to DTW and one to ATL? Customers there would go to CLE, EWR, CLT, DCA, BWI, ORD and IAD instead.

I think that it would be interesting to see what Unicon does.

 

[jdubya]

Obviously the numbers aren't working with the 50 seat rj's, and keep in mind revenue is not profit necessarily, so that would lead to an advantage in not having them.
I wish it was for you guys, but yes it will be interesting to see what happens and how it plays out.

 

[i fly boxes]

My prediction is that 70 200's will come from pinnacle. Way back in 2007 in our agreement with nwa there is a prevision that says that 70 aircraft may be removed if there is a change of control of the company. So If delta purchases us to turn us into the next comair, they can remove 70 200's over a 3 year period. What a coincidence, delta wants the 200's down to 125 within 3 years! There is also a stipulation in that original asa that says they can extend our contract for 5 years with no rate resets, what a coincidence, they just did that! It also says they can exchange 200's for 900s on a one for one basis, so since pinnacle has 140 200's and 70 of them will probably be parked if delta purchases us, that leaves 70 left. How many more 900's does delta want? 70! SO, pinnacle may be an airline of aprox. 100-125 900's in 3 years.

 

[CRJ puppy]

My prediction is that 70 200's will come from pinnacle. Way back in 2007 in our agreement with nwa there is a prevision that says that 70 aircraft may be removed if there is a change of control of the company. So If delta purchases us to turn us into the next comair, they can remove 70 200's over a 3 year period. What a coincidence, delta wants the 200's down to 125 within 3 years! There is also a stipulation in that original asa that says they can extend our contract for 5 years with no rate resets, what a coincidence, they just did that! It also says they can exchange 200's for 900s on a one for one basis, so since pinnacle has 140 200's and 70 of them will probably be parked if delta purchases us, that leaves 70 left. How many more 900's does delta want? 70! SO, pinnacle may be an airline of aprox. 100-125 900's in 3 years.

Delta won't ever buy another regional. They have clearly stated this numerous times. It's not necessary to own that which you can easily contractually control without having the debt on your own books.

Lease agreements can be renegotiated or terminated as part of the chap 11 process. No "trade" necessary. The trades will be for leases that can not be broken so easily.

It's just simple business. You, your family, your QOL are not factors.

What's more likely is 125 of Pinnacle's 50 seaters leases will be renegotiated to half their current rates, the remainder returned to the lessors. Your pwa will be reworked and thru the chap 11 process, Pinnacle will become the lowest cost DCI carrier and the 50 seaters will continue to operate for some time.

Then the 16 900's that are being returned along with the 70 additional 900's that will be allowed over the next 3 yrs (assuming the Delta pilot's TA passes) will be used in 2 for 1 trades will other DCI carriers to divest the remainder of 50 seaters from the DCI fleet.

 

[bri5150]

I am not sure why people keep saying that Delta will purchase Pinnacle. If Delta wanted regionals they wouldn't have sold Mesaba and Compass, combined us and Comair and screwed us over that way. If they don't own the regional, they can just tell them what to do without worrying about how to pay for it. Especially when the carrier only flys for them. They have no choice.

 

[CRJ puppy]

i am not sure why people keep saying that delta will purchase pinnacle. If delta wanted regionals they wouldn't have sold mesaba and compass, combined us and comair and screwed us over that way. If they don't own the regional, they can just tell them what to do without worrying about how to pay for it. Especially when the carrier only flys for them. They have no choice.

exactly

 

[xjhawk]

I am not convinced Delta will buy Pinnacle but......

go back to 2005 I think the year was. Mesaba was just forced into bankruptcy by NWA when its parent company had millions in the bank. NWA just stopped their required payments to Mesaba. Just before that, Pinnacle was IPO'd for a huge profit and given a huge crj200 contract/delivery. For me, I saw the writing on the wall and said NWA would buy Mesaba. EVERYONE, Mesaba/Pinnacle NWA (people) etc said my prediction was crazy. After all NWA just unloaded Pinnacle and if they wanted to own a regional, they would have kept Pinnacle.

I am just saying. There are a lot of coincidental things occurring at just the right time. The Delta TA being negotiated while Delta forced Pinnacle to buy Mesaba knowing full well that Pinnacle was understaffed and unable to fulfill its contractual flying. Not to mention it was so mismanaged I am sure they knew it would be ran into bankruptcy. Especially since they refused to make the adjustment to the ATL ASA (crj 900) to make Pinnacle profitable. There is also talk that the Q flying for United could have been made profitable as Pinnacle's bid for that flying was lower than Republic. So why did Pinnacle not allow it to stay? I would think Delta had their dirty little fingers in that mess as well.

I am just saying....too many coincidences.

 

[xjhawk]

Yes Its a huge conspiracy theory. This is pretty much a theory based on the same premise of Roswell, bigfoot, and the Kennedy assassination.

 

[Inconceivable]

xjhawk,

The big difference is between that shamruptcy and this one is in the interim a Comair flight took a long takeoff roll on a short runway leaving DL exposed three ways - codeshare, owner of the regional partner, owner of the flight school one of the pilots trained at prior to hire. Bri5150 has it nailed; this way they have full control and no risk - or responsibility.

 

[Texx]

Delta won't ever buy another regional. They have clearly stated this numerous times. It's not necessary to own that which you can easily contractually control without having the debt on your own books.

Lease agreements can be renegotiated or terminated as part of the chap 11 process. No "trade" necessary. The trades will be for leases that can not be broken so easily.

It's just simple business. You, your family, your QOL are not factors.

What's more likely is 125 of Pinnacle's 50 seaters leases will be renegotiated to half their current rates, the remainder returned to the lessors. Your pwa will be reworked and thru the chap 11 process, Pinnacle will become the lowest cost DCI carrier and the 50 seaters will continue to operate for some time.

Then the 16 900's that are being returned along with the 70 additional 900's that will be allowed over the next 3 yrs (assuming the Delta pilot's TA passes) will be used in 2 for 1 trades will other DCI carriers to divest the remainder of 50 seaters from the DCI fleet.

That is as of today. Never say never. In 5 years things will be very, very different.

 

[CRJ puppy]

That is as of today. Never say never. In 5 years things will be very, very different.

"Welcome to Fantasy Island!"

 

[sinkrate]

What makes sense business wise does not neccessarily make sense financially.

If you read the BK filings closely if delta gets what they want out of PCL they will convert the DIP financing to longer term exit financing. In other words - rather than own PCL they saddle them with a big loan. There are numeous advantages to that plan versus out right ownership. That is why Delta provided financing to PCL to buy Mesaba rather than doing the transaction with stock. If Delta does not supply any exit financing the possibility of PCL coming out of BK is slim. The possibility of the rest of the creditiors accepting any exit plan that leaves PCL too small to be profitable is slim. My guess is PCL comes out of this roughly the same size revenue wise (not hulls) as its current delta operation or it shuts down.

Piecing together all the information from this and other boards Delta has an agreement in place with Bombardier/EDC to take PCL 50 seaters in a trade for new 900's. First DALPA has to ratify their TA for that to happen.

The new 900's don't have to go to PCL - they can go to any carrier.

This also presents DAL with an opportunity to do something with CMR. No one will buy them. Out of this DAL can force a shotgun marriage if they choose to. 'Here is CMR and a loan to go with it if you want any exit finanancing'. DAL finally gets something for CMR and the rest of the creditors will acept it because it increases the total enterprise value and stock value. It is possible CMR's 700's go to GO JETS and their 900's go to PCL.

All speculation but if you follow the money it is where 'the deal is'. Of course the PCL pilots could always screw the deal up for everyone.

 

[Flyer1015]

Of course the PCL pilots could always screw the deal up for everyone.

What do you mean? How?