Delta Terminates Mesa Contract!!!

[Eagle757shark]

UPDATE 1-Mesa Air says to fight Delta plan to quit contract

Tue Apr 1, 2008 9:27pm EDT
(Adds comment from Mesa, Delta, details, paragraphs 4-9)
NEW YORK, April 1 (Reuters) - Mesa Air Group Inc (MESA.O: Quote, Profile, Research) on Tuesday said it plans to contest Delta Air Lines Inc's (DAL.N: Quote, Profile, Research) plan to terminate a contract with its Freedom Airlines Inc unit.
Phoenix-based Mesa said Delta notified it on March 28 of its intent to terminate a connection agreement with Freedom dated May 3, 2005.
It said Delta alleged that Freedom failed to complete a specified number of flights on ERJ-145 jets during three months of the six-month period ending in February. Mesa said the notice would allow Freedom to provide connection services to Delta while the airlines work out a "transition agreement."
Mesa said it intends to defends its rights under the contract. "Delta's effort to terminate the agreement will not be upheld in a court of law," Mesa Chief Executive Jonathan Ornstein said in a statement.
Gina Laughlin, a spokeswoman for Atlanta-based Delta, said the carrier decided to terminate the contract "due to operational performance. We expect the operational pulldown to be orderly and have minimal impact to our customers."
Freedom's connection agreement with Delta governing larger CRJ-900 jets is not affected, both carriers said.
Embraer (EMBR3.SA: Quote, Profile, Research) builds ERJ-145 jets, while Bombardier Inc (BBDb.TO: Quote, Profile, Research) builds the CRJ-900 jets.
Delta on March 18 announced plans to cut 2,000 jobs and scale back flights, in the wake of rising fuel prices and a weakening economy. It said it plans to take 15 to 20 mainline aircraft and 20 to 25 regional jets temporarily out of service to reduce capacity.
Mesa said it operates 182 aircraft. Freedom operates mainly in the U.S. southeast, according to Mesa's Web site. (Reporting by Jonathan Stempel; Editing by Gary Hill)

 

[ACL65PILOT]

Awesome. I hope that it sticks

 

[AlbieF15]

Saw the PFN-MCO route done by Freedom/Mesa in the past is now ASA CRJ 100s in May/June.

'bout to get nasty in 50seaterville....

Good luck to all involved.

 

[Andy]

This is all part of trimming airline schedules. Delta looks like they're doing this VERY smart. They'll shift their RJ flying around and upguage some city pairs to mainline while reducing frequency (ie 1 MD80 for 2 RJs).
With the additional new aircraft that they've got coming online, this is one way to make room for them while cutting back on ASMs.

This will likely stick; if it does, we'll probably see other majors trim back regional partner flying.

 

[RiddleEagle18]

Delta currently has 9 connection carries and has made it know they intend to bring that number down to 4 or 5 to try and more closely control the overall delta product. Who goes next?

 

[Andy]

Delta currently has 9 connection carries and has made it know they intend to bring that number down to 4 or 5 to try and more closely control the overall delta product. Who goes next?

Whichever company fails to meet its contractual requirements.

 

[fly4surf]

Bye Bye Mesa.

 

[glasspilot1]

Delta, you get what you pay for! You put out the bid for your feed to the lowest common denominator and what do you get? Mesa.

 

[~~~^~~~]

Delta currently has 9 connection carries and has made it know they intend to bring that number down to 4 or 5 to try and more closely control the overall delta product. Who goes next?

There is a slight problem... We thought the Mesa contract was the easiest to walk away from. Now we learn that Mesa is going to fight this in Court and Mesa still operates the CRJ900's. Could something be negotiated? Mesa will sure try.

SkyWest (& alter ego, ASA) has Delta under a contract very favorable to SkyWest. That isn't going anywhere. Republic, Chautauqua, Shuttle likely have an strong deal as well. Big Sky, already gone. Comair wholly owned. Express Jet may be the only carrier with a shorter term deal.

IMHO it would be worth while to buy back ASA just to exit the SkyWest agreement.

I'm still thinking that Delta's excess RJ's are going to be used to backfill DC9's that will be parked very quickly. Even the CRJ200 has a lower CASM than a DC9.

Delta can not legally cancel the contracts mid term with these RJ lift providers and it is a problem. Delta was paying SkyWest around 2.5 Billion per year, plus fuel.

I'm telling you, we have to carefully watch the changes to Section 1 in whatever transition agreement is reached with management.

 

[Andy]

I'm still thinking that Delta's excess RJ's are going to be used to backfill DC9's that will be parked very quickly. Even the CRJ200 has a lower CASM than a DC9.

When did Delta get DC9s?
If you're still counting on a DAL/NWA merge, where do you expect the additional investment capital to come from? USAirways got a $1.5B capital injection on their merger; your merge would require a higher amount of new capital than USAirways required.

 

[~~~^~~~]

When did Delta get DC9s?
If you're still counting on a DAL/NWA merge, where do you expect the additional investment capital to come from? USAirways got a $1.5B capital injection on their merger; your merge would require a higher amount of new capital than USAirways required.

You are right. I'm thinking a Comair sale with a new flying award might inject somewhere around another half a billion or so. Just a guess.

 

[Jon Rivoli]

They'll shift their RJ flying around and upguage some city pairs to mainline while reducing frequency (ie 1 MD80 for 2 RJs).

You guys with Big Jet Syndrome are mathematically challenged (1 MD-80 = 145 seats / 2 CRJ200's = 100 seats ) A given city could be served by 2 MD's a day or 6 RJ's with the same number of seats. Which do you think the marketing types would prefer. Want to trim capacity, cut one or two flights and retain frequency. One flight per day won't cut it. No legecy has the domestic narrow body capacity to take back RJ flying if they wanted to and they don't want to. All the legacies are focusing on growing international, that is where they make their money and REDUCING domestic capacity. Delta is not going to buy any more MD's, more likely they will park the one's they have. Money is tight, they will spend it where they can make the most money i.e. 777's.

The future won't look like the past and my crystal ball says in the future of domestic narrow body flying will all be outsourced to the regionals. In ten years the legacies won't do any of it.

 

[slapstick]

Finally! Someone realizes the cheapest operator isn't necessarily the best for business. I had a Freedom CA in my jumpseat once - told me he wouldn't ever let his family ride on a Freedom airplane.

 

[Oakum_Boy]

I had a Freedom CA in my jumpseat once - told me he wouldn't ever let his family ride on a Freedom airplane.

A sensible guy.

 

[1st Rate]

I hope this deal knocks some sense into Mesa'a board of directors and shows J.O. the door. It would be a great day!!

 

[Andy]

You guys with Big Jet Syndrome are mathematically challenged (1 MD-80 = 145 seats / 2 CRJ200's = 100 seats ) A given city could be served by 2 MD's a day or 6 RJ's with the same number of seats. Which do you think the marketing types would prefer. Want to trim capacity, cut one or two flights and retain frequency. One flight per day won't cut it. No legecy has the domestic narrow body capacity to take back RJ flying if they wanted to and they don't want to. All the legacies are focusing on growing international, that is where they make their money and REDUCING domestic capacity. Delta is not going to buy any more MD's, more likely they will park the one's they have. Money is tight, they will spend it where they can make the most money i.e. 777's.

The future won't look like the past and my crystal ball says in the future of domestic narrow body flying will all be outsourced to the regionals. In ten years the legacies won't do any of it.

That was a generalized example, but thanks for taking the bait.
Does 1 MD80 ~ 2 CRJ-700s? How about 1 CRJ-700 and 1 CRJ-900?
Redeploy 1 CRJ-900 to cover 2 CRJ100s?

Which costs more, 1 MD80 or 1 CRJ-700 and 1 CRJ-900?
Which costs more, 1 CRJ-900 or 2 CRJ100s?

Stop thinking in narrow terms of a single guage swap for another guage; it's much more complex than that.

And I never mentioned buying new aircraft; I'm speaking in general terms of a systemwide downguaging of aircraft to reduce ASMs.


Your crystal ball's better than mine; I have NO idea what things will look like in five years, much less ten.

 

[~~~^~~~]

You guys with Big Jet Syndrome are mathematically challenged (1 MD-80 = 145 seats / 2 CRJ200's = 100 seats ) A given city could be served by 2 MD's a day or 6 RJ's with the same number of seats. Which do you think the marketing types would prefer. Want to trim capacity, cut one or two flights and retain frequency. One flight per day won't cut it. No legecy has the domestic narrow body capacity to take back RJ flying if they wanted to and they don't want to. All the legacies are focusing on growing international, that is where they make their money and REDUCING domestic capacity. Delta is not going to buy any more MD's, more likely they will park the one's they have. Money is tight, they will spend it where they can make the most money i.e. 777's.

The future won't look like the past and my crystal ball says in the future of domestic narrow body flying will all be outsourced to the regionals. In ten years the legacies won't do any of it.

John,

I think you are mostly correct. Sure you will have ATL/LAX markets flown by something large, but anything smaller than a 757 is subject to outsourcing until the next generation of 100 seat jets is built. The 737-700 is a special case due to performance limits on the RJ's.

ALPA is again asleep at the wheel, hoping jet fuel nullifies the issue, when in fact jet fuel as added incentives to outsource the DC9's and MD88's.

 

[regionalcap]

The future won't look like the past and my crystal ball says in the future of domestic narrow body flying will all be outsourced to the regionals. In ten years the legacies won't do any of it.

Might want to get another crystal ball.

 

[~~~^~~~]

And I never mentioned buying new aircraft; I'm speaking in general terms of a systemwide downguaging of aircraft to reduce ASMs.

...and at the same time increasing unit revenues. When you pull a MD88 out of a market and put a CRJ900 in, the cost of the ticket generally increases on decreased supply.

You will always have some business travellers that pay whatever it costs for last minute travel.

The retired folks and families of four on priceline.com tickets will most always fill up an airplane to sunny destinations, but rarely pay the costs to actually get them there.

The problem is half empty 50 seaters going to cities which are only a 30 minute drive to a major hub. Particularly those cities which have welched on their marketing agreements to pay for jet service.

I see the RJ's doing MD88 flying, the MD88's doing 757 flying, 757's doing 767 flying etc.... Eventually we will have agreed to outsource almost all domestic narrowbody flying and that really stinks. On the other side AirFrance / KLM and others are happy to do our International operations.

ALPA needs to get religion about scope!

 

[Jon Rivoli]

Might want to get another crystal ball.

Wishful thinking DAL newbie, but don't worry you'll be making the big bucks flying a 777 or a 787.

When scope finally does collapse completely the senior Captain sitting next to you who just voted himself a big pay raise will explain to you how you didn't really want to fly those little planes (MD-80, 737) any way. Too many legs in a day, crappy overnights, etc. No, one leg a day and GOOD beer in London or Frankfurt, that's the ticket.