storminpilot
Well-known member
- Joined
- Jul 6, 2003
- Posts
- 282
http://www.ajc.com/business/content/business/delta/0604/22delta.html
http://ad.doubleclick.net/jump/ajc....;sub=clickability;sz=120x240;ord=[timestamp]?
Jittery vendors add to woes as Delta revamps
By RUSSELL GRANTHAM
The Atlanta Journal-Constitution
Published on: 06/22/04
Some of Delta Air Lines' vendors want cash upfront because of the carrier's financial woes, but executives say they also see signs that pilots and suppliers are considering concessions to help revive the airline.
Delta Chief Executive Gerald Grinstein said Delta may also need to shed some hubs and pattern more of its operations after discount carriers as part of a broad-based restructuring.
"I think Delta will look very different a year from now," said Grinstein, speaking to The Atlanta Journal-Constitution's editorial board on Monday. Grinstein ordered a top-to-bottom strategic review when he became CEO Jan. 1.
Delta expects to complete the review this summer.
First, Delta must deal with some suppliers' growing jitters. Delta now has to prepay for use of air traffic control services in Canada, Grinstein said.
He also noted that Delta's declining credit rating has reduced its ability to cut hedging contracts to buffer high jet fuel costs. Grinstein said other vendors are cutting off credit but declined to provide details.
He said a spike in pilot retirements could crimp Delta's cash flow if it doesn't have enough trained replacements. Almost 290 Delta pilots retired this month because of the airline's financial condition and fears of rising interest rates, which lower the value of their nest eggs.
Still, in a hint of progress, Delta's pilots union last week said it will resume stalled concession talks. Grinstein said he expects to get an offer from the union next month.
Delta's new finance chief, Mike Palumbo, indicated that some of Delta's lenders, aircraft lessors and other backers are now listening to requests for relief.
Delta "should be able to communicate and negotiate" with key backers, said Palumbo, to craft a broad concession package concurrent with a pilot deal. That has been a long-standing demand of the Air Line Pilots Association.
More than a year ago, Delta asked its pilots, the highest-paid in the industry, for phased-in concessions and that would cut salaries about 30 percent and alter work rules. The union offered concessions worth about one-third as much.
Delta's demands have since risen as its financial condition has worsened, said Grinstein,who added it's "too late" for the union to accept Delta's earlier demands. Delta has warned it may have to restructure in a Chapter 11 bankruptcy if it cannot reduce pilot costs sufficiently.
A pilot union spokeswoman declined to discuss the union's coming offer.
Grinstein said Delta's survival also depends on cutting overall costs and devising more competitive products and operations.
"Not all of us are going to survive," he said. He believes only two or three major network carriers will survive the rise of Internet ticket shopping and low-cost carriers' growing market share.
One cost-saving move may include spreading flights at hubs more evenly across the day, reducing the time spent waiting between flights for Delta's employees and aircraft.
Grinstein said Delta may do more point-to-point flying, and may develop a portfolio of products aimed at different customers.
Grinstein said Song, Delta's low-fare unit flying mainly between Florida and the Northeast, has done better than he expected. As a board member when the unit was started 14 months ago, Grinstein said, he was skeptical.
He joked that he told the board, "If you put 'swan' in front of it, I'd be for it." He said he still thinks Song, with its lime green aircraft paint scheme, is "a bit garish" but added it has "turned out much better than I thought."
Find this article at:
http://www.ajc.com/business/content/business/delta/0604/22delta.html
http://ad.doubleclick.net/jump/ajc....;sub=clickability;sz=120x240;ord=[timestamp]?
Jittery vendors add to woes as Delta revamps
By RUSSELL GRANTHAM
The Atlanta Journal-Constitution
Published on: 06/22/04
Some of Delta Air Lines' vendors want cash upfront because of the carrier's financial woes, but executives say they also see signs that pilots and suppliers are considering concessions to help revive the airline.
Delta Chief Executive Gerald Grinstein said Delta may also need to shed some hubs and pattern more of its operations after discount carriers as part of a broad-based restructuring.
"I think Delta will look very different a year from now," said Grinstein, speaking to The Atlanta Journal-Constitution's editorial board on Monday. Grinstein ordered a top-to-bottom strategic review when he became CEO Jan. 1.
Delta expects to complete the review this summer.
First, Delta must deal with some suppliers' growing jitters. Delta now has to prepay for use of air traffic control services in Canada, Grinstein said.
He also noted that Delta's declining credit rating has reduced its ability to cut hedging contracts to buffer high jet fuel costs. Grinstein said other vendors are cutting off credit but declined to provide details.
He said a spike in pilot retirements could crimp Delta's cash flow if it doesn't have enough trained replacements. Almost 290 Delta pilots retired this month because of the airline's financial condition and fears of rising interest rates, which lower the value of their nest eggs.
Still, in a hint of progress, Delta's pilots union last week said it will resume stalled concession talks. Grinstein said he expects to get an offer from the union next month.
Delta's new finance chief, Mike Palumbo, indicated that some of Delta's lenders, aircraft lessors and other backers are now listening to requests for relief.
Delta "should be able to communicate and negotiate" with key backers, said Palumbo, to craft a broad concession package concurrent with a pilot deal. That has been a long-standing demand of the Air Line Pilots Association.
More than a year ago, Delta asked its pilots, the highest-paid in the industry, for phased-in concessions and that would cut salaries about 30 percent and alter work rules. The union offered concessions worth about one-third as much.
Delta's demands have since risen as its financial condition has worsened, said Grinstein,who added it's "too late" for the union to accept Delta's earlier demands. Delta has warned it may have to restructure in a Chapter 11 bankruptcy if it cannot reduce pilot costs sufficiently.
A pilot union spokeswoman declined to discuss the union's coming offer.
Grinstein said Delta's survival also depends on cutting overall costs and devising more competitive products and operations.
"Not all of us are going to survive," he said. He believes only two or three major network carriers will survive the rise of Internet ticket shopping and low-cost carriers' growing market share.
One cost-saving move may include spreading flights at hubs more evenly across the day, reducing the time spent waiting between flights for Delta's employees and aircraft.
Grinstein said Delta may do more point-to-point flying, and may develop a portfolio of products aimed at different customers.
Grinstein said Song, Delta's low-fare unit flying mainly between Florida and the Northeast, has done better than he expected. As a board member when the unit was started 14 months ago, Grinstein said, he was skeptical.
He joked that he told the board, "If you put 'swan' in front of it, I'd be for it." He said he still thinks Song, with its lime green aircraft paint scheme, is "a bit garish" but added it has "turned out much better than I thought."
Find this article at:
http://www.ajc.com/business/content/business/delta/0604/22delta.html
