Delta to drop four plane types

[BLUE BAYOU]

Delta CFO Wants To Take 'Fun' Out Of Competing With Co -2

.

Palumbo, Delta's chief financial officer, also said he is looking for opportunities to buy fuel hedges, as Delta doesn't have any hedges now. He said he expects Delta's average fuel price to rise this year.

"Hedging seems to be a zero-sum game," he said. "But if you are not proportionately competitively hedged... you are counting on getting lucky. And that is not a place to fiduciarily responsibly be, especially in this environment."

Palumbo said competitively hedged means having a comparable amount of fuel hedged relative to other airlines.

Palumbo said he plans to drop four airplane types from Delta's fleet in the next four years as part of the overall simplification process. He is targeting Delta's Boeing 737s that are out of production, the 737-200s and 737-300s, as well as the 767-200s. Palumbo said the fourth plane type will be either the MD-88 or MD-90.

-By Elizabeth Souder, Dow Jones Newswires; 201-938-4148; [email protected]


(END) Dow Jones Newswires

February 17, 2005 08:54 ET (13:54 GMT)- - 08 54 AM EST 02-17-05

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[lowecur]

They will probably dump the 88 as they have 112 of those as opposed to very few 90s. They need two a/c in the 100-145 seat arena. Probably the 190 & 737NG, since they will keep the 738.

 

[General Lee]

This is old news. This is supposed to take place within the next 4 years. The 737-200s will be eventually replaced, but actually some of them, which do not require heavy maintenence, will actually be re-signed for leases since they are so cheap as 100 seaters---lease wise. (not fuel wise) The other planes, the 737-300s in SLC will probably go, but the 737-300s on the Shuttle in NYC were just re-signed also for another two years. The Lessor actually came to us with a better deal on those. The 767-200s will probably go to ABX or someone in the freight business. And, the MD-90s or MD-88s will go too eventually---but the MD-88s are currently getting new interiors, so it may be awhile. I recently heard our VP of FLT OPS speak in the ATL lounge and he said our "foot print" will not change capacity wise, so any planes that will go will be replaced, and any new ones will be leased. He said he wants to eventually narrow the number of aircraft types to only a few, instead of the 6-7 we have now. That makes sense.



Bye Bye--General Lee

 

[P38JLightning]

fleet simplification

This is long overdue. Operating multipile fleet types in the same redundant seat/range/mission class of numerous other fleet types is and has always been stupid, but during the "glory days" they got away with it no problem because the billions were rolling in and no one bothered to care.

Does this mean the "Spirit of Delta" will be sold too? Boy what a can of worms that will be. I'm sure they will pay 20 million to a consulting/ad firm to come up with a press release saying something like "while we regret this decision, blah blah blah, necessary due to current operating enviroment, blah blah blah, current lift requirements, blah blah blah, like to thank the people of delta for all their blah blah blah," you know.

And why would they even imply they would get rid of the 88 but possibly keep the few 90s? No way. Then again we are talking about no talent hack Harvard mercenaries here.

And I wonder how this will affect the "pilot staffing footprint". Even if the equal number of AC are replaced, fleet simplification would seem to imply the need for less crews because you won't need seperate reserve groups in the same domicile for different equipment.

 

[MedFlyer]

I recently heard our VP of FLT OPS speak in the ATL lounge and he said our "foot print" will not change capacity wise, so any planes that will go will be replaced, and any new ones will be leased. He said he wants to eventually narrow the number of aircraft types to only a few, instead of the 6-7 we have now. That makes sense.

Bye Bye--General Lee

The question I have is what does he mean by footprint. Does DL's footprint include Delta Connection?

I find it hard to believe DL will have the money to replace almost 90 mainline planes in the next 4 years.

 

[General Lee]

This is long overdue. Operating multipile fleet types in the same redundant seat/range/mission class of numerous other fleet types is and has always been stupid, but during the "glory days" they got away with it no problem because the billions were rolling in and no one bothered to care.

Does this mean the "Spirit of Delta" will be sold too? Boy what a can of worms that will be. I'm sure they will pay 20 million to a consulting/ad firm to come up with a press release saying something like "while we regret this decision, blah blah blah, necessary due to current operating enviroment, blah blah blah, current lift requirements, blah blah blah, like to thank the people of delta for all their blah blah blah," you know.

And why would they even imply they would get rid of the 88 but possibly keep the few 90s? No way. Then again we are talking about no talent hack Harvard mercenaries here.

And I wonder how this will affect the "pilot staffing footprint". Even if the equal number of AC are replaced, fleet simplification would seem to imply the need for less crews because you won't need seperate reserve groups in the same domicile for different equipment.

When our VP of Flt Ops spoke he said we would need our recalls to continue because we are actually using our aircraft more, and we will be increasing our turn times even faster for our narrow body fleet since they could be turned faster at the hubs. (not so with the widebodies, so they would be left at 55 min turns) That would increase the need for more pilots.



Bye Bye--General Lee

 

[General Lee]

The question I have is what does he mean by footprint. Does DL's footprint include Delta Connection?

I find it hard to believe DL will have the money to replace almost 90 mainline planes in the next 4 years.

He stated the Mainline footprint will NOT change---in terms of seats or capacity. We are still getting more 738s and a couple 777s, and then the released airplanes would be exchanged for newly leased ones. The new turn time initiative has increased the net amount of planes anyway, and as I said he plans to decrease the turn times again for narrowbody aircraft.


Bye Bye--General Lee

 

[MedFlyer]

He stated the Mainline footprint will NOT change---in terms of seats or capacity. We are still getting more 738s and a couple 777s, and then the released airplanes would be exchanged for newly leased ones. The new turn time initiative has increased the net amount of planes anyway, and as I said he plans to decrease the turn times again for narrowbody aircraft.


Bye Bye--General Lee

The total capacity may not change, but if you increase utilization, you can offer the same capacity with fewer airframes. Bottomline, DL mainline will have fewer aircraft in the future.

 

[michael707767]

The total capacity may not change, but if you increase utilization, you can offer the same capacity with fewer airframes. Bottomline, DL mainline will have fewer aircraft in the future.

who cares? Its not airframe count the drives the number of pilots. Block hours drive the number of pilots. You can fly 100 aircraft 8 hours a day, or you can fly 67 aircraft 12 hours a day. You end up with the same need for pilots.


However, I do believe Delta fully intends to operate the EMB-190, and operate it at DCI. There is your 100 seater.

 

[General Lee]

The total capacity may not change, but if you increase utilization, you can offer the same capacity with fewer airframes. Bottomline, DL mainline will have fewer aircraft in the future.

You may be right, and I am sure we will have fewer types. But, listening to him in the lounge also talk about DCI and it's future was also interesting. No 90 seaters, and less frames (less 50 seaters). Looks like we will all have to deal with less.


Bye Bye--General Lee

 

[climbhappy]

P38JLightning:

you said "I'm sure they will pay 20 milllion to a consulting/ ad firm to come up with a press release saying.....yada yada yada!


Listen , they have people on staff making close to or over six figures to compose and publish an executive office approved statement. that's the way it is.

20 milllion comes into play when you go bankrupt or advertise your new all first airbus 380 during the superbowl.

I see your perspective but the Delta brand ,in no matter what configuration, will fly high , garner respect and survive....look at the facts....they were the last to take a paycut.

 

[Pickle]

I think that it is funny that General Lee said:

"737-300s on the Shuttle in NYC were just re-signed also for another two years. The Lessor actually came to us with a better deal on those."

Depending on what airline it is, lessors are either trying to take the planes away because they can "get better rates on them in China", or they are beating down your doors to re-fi so you will keep because the lessors are afraid of having to park them in the dessert if you decide not to keep them.

And you thought mgmt was the only ones capable of whipsawing....

 

[General Lee]

I think that it is funny that General Lee said:

"737-300s on the Shuttle in NYC were just re-signed also for another two years. The Lessor actually came to us with a better deal on those."

Depending on what airline it is, lessors are either trying to take the planes away because they can "get better rates on them in China", or they are beating down your doors to re-fi so you will keep because the lessors are afraid of having to park them in the dessert if you decide not to keep them.

And you thought mgmt was the only ones capable of whipsawing....

Funny, eh? Hmmmmm. Well, apparently we were going to get rid of these planes as soon as this Summer, and the Lessor actually shopped them around and couldn't find any takers. They are old Germania 737-300s with no gasper fans. Looks like we got a better deal, and it couldn't have come at a better time.....


Bye Bye--General Lee

 

[P38JLightning]

i'm not talking about the media relations people delta has on staff. every company has those. i'm talking about the ad agency hacks that come up with things like "good goes around" for XX million dollars and the XX million leo spent for the song idea (like 4 FA's are cheaper than 5...AC that fly more hours a day make more $$...shorter turns allow AC to fly more hours per day...to compete against JB's premium coach with TVs NY to FL and west coast service you need a premium coach service with TVs from NY to FL and the west coast...etc.

these morons should be coming up with these basic things by themselves, not "outsourcing" their most fundamental mission (running an airline) but then again they outsource so much of their flying now as it is they are 1/2 way towards their dream (running a virtual airline) its more like outsourcing goes around. (used to be we love to outsource and it shows) maybe their next 20 million dollar brainchild could be a hip/topical-retro mix like "we're ready to outsource when you are".

i'm not spelling doom and gloom for delta. their strong cash position for so long can be attributed to the people who for the most part did their jobs and ran their airline (almost everyone before mr. 7.5 that is) back in the glory days before their BOD got the bug up their @ss to outsource the fundamentals of company leadership to cold blooded ivy league mercenaries who care nothing about the employees, customers or shareholders and only their severance packages (occasionaly dressed up as "retention bonuses")

 

[climbhappy]

what's better? making 250 mil on 1 bil in sales, or 125 mil on 2 bil in sales.

one requires less employees, but pricing strategies and market segmentation allow for profit maximization.

 

[P38JLightning]

MBA material

>>>>what's better? making 250 mil on 1 bil in sales, or 125 mil on 2 bil in sales.

>>>>one requires less employees, but pricing strategies and market segmentation allow for profit maximization.


Okay, since when have they made 250M? Since when have they maximized profits? I agree with you in principal that its good to sometimes narrow your market coverage, draw back and concentrate on what you do best. But part of that includes running an airline coming up with the most basic marketing strategies. If you're outsourcing that then its clear you have no clue.

CE said put yourself on the other side of the counter. Well put yourself on the other side of the boardroom. While the brandy sniffing no talent hacks are jetting off with their "retention bonuses" and gorging on caviar and 19th century port at the country club, the people actualy behind the counter are losing motivation daily. Pricing isn't the only reason this industry is such a comodity.

Fear of losing one's job is not sufficient motivation to do your best. Its motivation enough to show up and do just enough to get by. GIGO my friend.

So now Delta is in love with outsourcing. The Delta employees are losing motivation because they see their jobs being eliminated to a certain extent no matter what they do. The outsourcing companies who get the work have no intrinsic motivation (beyond the vague fear of losing their jobs someday) to give a flip. Ironicaly the more you pressure them the less they care.

Meanwhile SWA, AT and Jet Blue, three profitable airlines that Delta is terrified of, and is losing business to, have all employees in the boat rowing together [OMG I just quoted Fred] so to speak and look at their profit maximization, pricing strategy and market segmentation. AT actually used outsourcing as a temporary solution, which was very smart, and they did it by cooperating with labor and actually quit the outsourcing sooner than promised. Teamwork In, Teamwork Out. Can't outsource that. No way.