Delta to hire in 12 to 18 months?

[FlyBoeingJets]

Cash on hand may provide an ability to avoid a cash crunch. Which would force unwanted sales of assets, very bad.

Wasn't the sale of ASA geared towards increasing cash on hand? I think its been artificially inflated the last year.

I like the debt to equity ratio much better. It doesn't stand alone, but it tells you how much they are leveraged. How far down does Delta have pilots' pay have to go so interest on that debt is covered enough to keep the CASM competitive???

 

[satpak77]

Here's a little trivia for you: what is Delta's current cash on hand? What was it a year ago? Two years ago?

The answers paint a much clearer picture about what Delta's financial shape really is. You are looking at earnings numbers, which are highly affected by accounting techniques. To get the real picture, you need to look at cash on hand and cash flow. It's been 4 QTRs since DAL had a negative cash flow, and it's been 2 years since their cash on hand has gone down year-over-year. Delta, along with the other legacies, are doing just fine even with ridiculously high oil prices coupled with ridiculously low fare prices.

PCL, not trying to get into a shoving match with you. Maybe I shoud tone it down. Just putting out the information as I know it regarding Delta's finances.

Delta, along with the other legacies, are doing just fine even with ridiculously high oil prices coupled with ridiculously low fare prices

We can twist the numbers and play Enron all day long, at the end of the day, DAL has a uphill battle in the current environment. I question if all the legacies are doing "just fine." I doubt it. Also note that Delta is doing so well that its stock trades at .75 cents and is a penny stock. So Wall Street has another opinion of just how "fine" Delta is doing.

 

[Benhuntn]

PCL 128 can you say "hire to fire" Eastern and Pan Am both hired right up to the door closing.

As for cash on hand..it isn't their cash its borrowed from GE financial. Better to look at debt to cash ratios. Their debt hasn't decreased but their cash on hand has.

 

[PCL_128]

Also note that Delta is doing so well that its stock trades at .75 cents and is a penny stock. So Wall Street has another opinion of just how "fine" Delta is doing.

Delta is a penny stock because the shares will be worthless as soon as the company exits bankruptcy. Companies almost always issue new shares when they exit BK, and that invalidates the old shares. Take a look at USAir shares. The "old" USAirways last traded at 16 cents a share last fall before the stock stopped trading. The "new" USAirways opened at just over 20 bucks a share and has shot skyward since then. Trying to determine the value of a company by it's share price while in BK is pointless. You have to look at the fundamentals.

The biggest fundamental to look for is cashflow from operations. This number will eliminate all of the accounting "tricks" and show what's really going on with the money. A look at last quarter shows that although DAL reported a loss of just over $2 billion, cash flow from operations was actually positive by $700 million. After losses from capital expenditures, investments, and loans, total cash flow was positive by over $400 million. The $2 billion reported loss is a result of accounting techniques used during the BK procedings. DAL only has $2.4 billion in cash, so they obviously could not have lost the reported $2 billion.

FlyBoeingJets, I agree about the debt issue. However, that's not just a DAL problem. That's an industry problem. When you look at DAL's competitors, the debt/equity figure isn't unusual at all. Also, that figure is going to drop considerably when DAL exits BK with restructured debt. UAL has already restructured debt and still has over $11 billion in total debt. I imagine that DAL will be able to drop their debt to well under $10 billion by the time they exit BK.

 

[PCL_128]

Their debt hasn't decreased but their cash on hand has.

No, actually, that's just the point. DAL's cash on hand has gone up by over $1 billion in the last 2 years. Much of that is certainly a result of the sale of ASA and of new loans from GE and AMEX, but a lot of it is also the result of positive cash flow from operations. When DAL exits BK with restructured debt they will have a very attractive debt/cash ratio compared to their competitors.

 

[Benhuntn]

From my brokers website:

DALRQ

Sales 16.26B
Income -4.83
Profit -2.2B
Rev. Per Share 93.07
Earnings Per Share -26.58
Book Value -59.10

Earnings per sharelast 3 yrs

04/ -40.63
05/ -23.53
06/ -26.58

You may want to go long on this company but I think there are a lot of jobs out there with brighter futures and less risk.

 

[PCL_128]

From my brokers website:

DALRQ

Sales 16.26B
Income -4.83
Profit -2.2B
Rev. Per Share 93.07
Earnings Per Share -26.58
Book Value -59.10

Earnings per sharelast 3 yrs

04/ -40.63
05/ -23.53
06/ -26.58

You may want to go long on this company but I think there are a lot of jobs out there with brighter futures and less risk.

Like I said, you're using the wrong figures to make your determination. Earnings figures are useless. Enron was reporting positive earnings numbers up until the end. If you looked at the cash flow number, though, you would have realized that Enron was in massive trouble. While Enron was reporting positive earnings, the cash flow was deep into the negative. It's easy to go the other way too, as in DAL's case. All you have to do is accelerate amortization and make a bunch of one-time purchases and you can instantly turn positive cash flow into negative earnings numbers. The cash flow never lies, though. Here's a website that discusses this by using Enron and Worldcom as case studies: http://hacks.oreilly.com/pub/h/1868

 

[ALGFLYR]

No, you do not have to accept the recall or resign. Our contract states that furloughs have ten years from their furlough date before they are no longer on the seniority list. Once Delta gets through the list, they may in fact make a second run through to see if people want to come back, but they do not have too. At that point, you would see new hires.

Well that is a great part of your contract. At US Air, there is no time limit on being furloughed. However, when they need pilots and start recalling, if nobody takes the recall and they get to the bottom, they go in reverse seniority order and while going backwards, pilots must accept recall or give up their number.

 

[FlyBoeingJets]

The biggest fundamental to look for is cashflow from operations. A look at last quarter shows that although DAL reported a loss of just over $2 billion, cash flow from operations was actually positive by $700 million. After losses from capital expenditures, investments, and loans, total cash flow was positive by over $400 million.

The $2 billion reported loss is a result of accounting techniques used during the BK procedings. DAL only has $2.4 billion in cash...

If cashflow can stay positive I would have to say I would become "positive" on Delta's future as a stand alone company. A change for me. I was also caught by surprise by the success of UAL and USAir.

First things first. We have to see Delta stop trimming the fleet.

 

[Benhuntn]

PCL it sounds to me like you are saying DAL is anothe Enron...if so then show the feds where they are cooking the books and they will be on them like a pit bull on a three year old...

 

[PCL_128]

PCL it sounds to me like you are saying DAL is anothe Enron.

No, not really. There are legal ways to modify earnings numbers, and there are illegal ways. Some things such as amortization schedules are flexible. JetBlue is a perfect example of using an unusual method for accounting for heavy maintenance checks. Virtually every airline amortizes the costs of heavy checks over several years. Jetblue hasn't amortized this cost at all, so when they do a heavy check it will be posted as an expense on a single quarterly report rather than spread out. That will drag earnings down for that quarter and year, even though their cash flow won't have changed. The money situation hasn't changed, it's just reported differently. Any airline (or other corporation, for that matter) can alter the way they account for expenses perfectly legally. That's why very few value investors pay any attention whatsoever to EPS numbers. They don't really give you any picture at all about how a company is really doing. You have to dig a little deeper to find meaningful numbers.

 

[ricj41]

I was in the hotel van with a delta crew two days ago and they told us there are virtually no pilots over 50 that are left. Looks like no upgrade or equipment movement for a very long time.

 

[ReportCanoa]

I was in the hotel van with a delta crew two days ago and they told us there are virtually no pilots over 50 that are left. Looks like no upgrade or equipment movement for a very long time.

Factor in PBS, the current pay scale, and economic viability and you're better off staying on with a large regional. Sad state of affairs, really.

 

[michael707767]

I was in the hotel van with a delta crew two days ago and they told us there are virtually no pilots over 50 that are left. Looks like no upgrade or equipment movement for a very long time.

retirements will be slow going forward, but to say virtually no pilots over 50 is a stretch.

here are the age 60 retirements for the next 10 years:
2007 29
2008 54
2009 60
2010 80
2011 109
2012 131
2013 171
2014 213
2015 287
2016 424

 

[vetteracer]

Ok guys, Pay attention to what SatPak said here.

"These are people who in other circumstances should be scrampling back to the DAL cockpit, ready to fly. But they are not."

This is important because Satpak is right. A few years ago (1999-2000) folks were falling all over each other to get a job at the legacy carriers. If pilots are electing NOT to go back to the airline they were furloughed from, we have to ask ourselves why?

And using that same logic, why would we want those jobs? Are we suffering from a form of SJS?

I'm furloughed from USAir. Look i'd love to go back to flying a Boeing as much as anybody (or anything with an APU or adjustable rudder pedals for that matter), but I have to ask myself whether leaving a stable job with good pay would really be a SMART thing to do... or if I would be going simply to satisfy my ego.

Good Advice -

 

[xpdriver]

look, bottom line is this......when Delta starts to hire, they will have thousands of applications within a month.[/qu

They dog the dal pilots for their last contract but then trip over themselves to mail an app..Great industry we're in ...

 

[GogglesPisano]

I'm curious about growth there. They have a lot of old, inefficient aircraft (vs CAL, let's say.) Before they grow, they're going to have to replace about half of their fleet (MD88's, and eventually the 767/757.)

This means more long-term debt.

Getting used aircraft from Iberia or AA is a short-term fix.

 

[PCL_128]

I'm curious about growth there. They have a lot of old, inefficient aircraft (vs CAL, let's say.) Before they grow, they're going to have to replace about half of their fleet (MD88's, and eventually the 767/757.)

This means more long-term debt.

Getting used aircraft from Iberia or AA is a short-term fix.

I used to think the same thing, but the new lease rates on those old planes make them cost-effective. Their lease payments for their MD-88s are less than most companies are paying for 50-seat RJs. The 737-200 rates are even lower. With rates as low as they negotiated, fuel isn't as big of a concern anymore.

 

[800Dog]

Factor in PBS, the current pay scale, and economic viability and you're better off staying on with a large regional. Sad state of affairs, really.

Very bad advice, really.

 

[coogebeachhotel]

Very bad advice, really.

Say that again!

 

[ReportCanoa]

Very bad advice, really.

Try telling that to the guys on the street for the last five years. Having that magic Delta number doesn't mean what it did ten years ago.

 

[GreatView]

I used to think the same thing, but the new lease rates on those old planes make them cost-effective. Their lease payments for their MD-88s are less than most companies are paying for 50-seat RJs. The 737-200 rates are even lower. With rates as low as they negotiated, fuel isn't as big of a concern anymore.

Not quite......Even though they WERE paying over $200,000/mo on some of their 88's, it still doesn't even come close to that of a CRJ monthly payment. They were able to negotiate most of them to "current" lease rates (or less) in the $80,000/mo range. But since all of the legacies have negotiated lower lease payments on their fleets, it does bring their yield up and lower the gap from the 50 seaters.

 

[michael707767]

retirements will be slow going forward, but to say virtually no pilots over 50 is a stretch.

here are the age 60 retirements for the next 10 years:
2007 29
2008 54
2009 60
2010 80
2011 109
2012 131
2013 171
2014 213
2015 287
2016 424

just a note. I messed up. The above numbers are age 60 retirements of pilots senior to me. The actual number is a bit higher each year.

 

[PCL_128]

Not quite......Even though they WERE paying over $200,000/mo on some of their 88's, it still doesn't even come close to that of a CRJ monthly payment. They were able to negotiate most of them to "current" lease rates (or less) in the $80,000/mo range. But since all of the legacies have negotiated lower lease payments on their fleets, it does bring their yield up and lower the gap from the 50 seaters.

I'm not sure what DAL is paying for their CRJ leases, but NWA is currently paying over $90,000 a month for each CRJ. The current market rate is about $60,000/mo for a CRJ, so getting an MD-88 down to $80,000 is pretty dang good.

 

[737 Pylt]

They dog the dal pilots for their last contract but then trip over themselves to mail an app..Great industry we're in ...

I agree completely. The same people dogging Sir Richard Branson. Yet I'll bet each and every one of them has an app in at Virgin US!
737

 

[ultrarunner]

...DAL has a uphill battle in the current environment.

Anyone paying 80 or 90 bucks a barrel on the open market has an uphill battle. Delta doesn't have the exclusive. Although it prly "thinks" it does. You know, being "DELTA" and all.....

 

[Truckdriver]

This whole discussion about the financial state of DAL is moot because it won't matter when they merge with someone. Mergers are coming and DAL will be in on it. We all thought UAIR was a gonner about three years ago and look at them now. DAL will be the same way about two years from now only it won't be the DAL we now know. I think we'll end up with three legacies and a bunch of LCC's in a couple of years.

 

[satpak77]

Anyone paying 80 or 90 bucks a barrel on the open market has an uphill battle. Delta doesn't have the exclusive. Although it prly "thinks" it does. You know, being "DELTA" and all.....

Agree. Ch.11 companies do not have credit to "hedge" fuel like SWA does. So the Ch.11 companies have more of a battle. SWA, JBLU, can take some hits to their armor before damage is critical. The others cannot.