Delta to use cash to outlast competitors

[General Lee]

Spinup,

Thanks for your concern over this matter, Leo will be calling you soon to ask you your opinion. One question for you: Why would Leo only ask the Unionized pilots for pay cuts, and leave out the other 50,000 Non unionized employees? AA is asking everyone for cuts--everyone. I am sure that a prolonged war would hurt everyone, in every industry. (except the oil industry) The Bush administration knows that every industry needs this war to be quick, and that is why Bush and his men are going to lob everything they can at Hussein in the first 3 or 4 days---and hopefully the outcome will result positive in about two weeks total. Then oil prices will fall, and the economy will start to grow again. If Delta really does get whacked because of the war and a bankruptcy from AA, think what will happen to the other carriers. Continental has no borrowing power and just took a "spare lightbulb" loan of $200 million, mortgaging their last spare parts--so they could be gone. UAL could go Chap 7. USAir could also fold, especially if this pension thing drags them down. The end result could be a lot less competition, meaning Delta could expand when this economic downturn is reversed after the war. IF UAL sells its Asian routes, the last I heard was that AMR was interested----but wait, how could they afford that? Hmmmm. Our CFO said that we were interested. Hmmmmm. Sounds like we really aren't in the same boat, especially since we didn't buy TWA and remove seats "for more space" in our planes during a down revenue environment. But what do I know, I am still dreaming...

Was that the snooze alarm, or Leo calling me up??

Spinup, have you answered my initial question about why only the pilots are asked to take cuts? We must not be doing that bad, eh?

Bye Bye---General Lee

 

[Ty Webb]

Re: Uh Huh!

Yeah, Delta ought to just roll over and let Airtran take over.

That's the dinosaur thinking I'm talking about. We're not trying to take over, not by a long shot. We can only fly so many people at a time. DAL has more airplanes in MX at any given time than we have in our whole fleet. There are many customers looking for DAL's product, and there are people looking for ours.

An airline seat is a time valued commodity

Uh, huh. That's why you have to maximize yields, instead of selling them at a loss in order to keep them off your competitor's flights.

I fail to see how matching Airtran's rates down to an empty seat will produce less revenue than flying empty seats.

Then you just plain "fail to see".

Why doesn't Airtran just raise it's rediculously low fares,


We can't raise our fares, because DAL is dumping seats in our markets at below cost. That is why DAL is losing money, that's my whole point.

. . . . . and give their employees a raise and then ya'll could move into peachtree city and enjoy the good life!

Because living next to you in PeachTree City isn't my idea of the "good life", but I do appreciate your offer. Maybe, instead, I'll come park my RV in your driveway next Xmas. I could still dump my holding tank in your storm drain, and my dog could still do "the wild thing" on your leg, there . . . . That way, all three of us would be happy.

I wonder if Leo is listening to Airtran for suggestions on how to correct the revenue problems dogging the industry?

I'm sure he's listening to what Joe is saying, and also to what the rest of the industry is saying, as well. Maybe you should follow his lead and listen up, too. . . . . . Neighbor?

 

[mad691]

New Business Fares Result in Significant Revenue Improvement for United Airlines
Monday March 3, 10:45 am ET


CHICAGO, March 3 /PRNewswire-FirstCall/ -- United Airlines (NYSE: UAL - News) announced today that business passengers have responded well to reductions in business fares introduced on January 6, 2003, positively impacting revenue by $20-$25 million per month.
"This is an excellent example of how United is responding to our customers' needs," said Doug Hacker, executive vice president-strategy. "Our new business fares are great for customers and good for United's bottom line. Contrary to some reports in the media, the increase in business passenger volume has more than offset the lower fares."

The airline initiated the sharply reduced one-way business fares to meet the pricing needs of increasingly cost-conscious business travelers. The new rules allow customers to get up to 40% off the unrestricted coach fares with no advance purchase. For customers able to purchase seven days in advance, the discount is even greater. There are no minimum or Saturday night stay requirements, though discounted tickets are not refundable.

"Passengers have reacted very favorably, because we gave them what they asked for -- more affordable fares on the strongest route network in the industry," said Chris Bowers, senior vice president-sales and reservations. "The new fares, coupled with other recent enhancements such as expanded flight availability through our marketing partnership with US Airways, are part of the formula that keeps passengers coming back to United."

United tested the new fare concept extensively on numerous Chicago and Denver routes.

The fares apply to travel in markets to and from Chicago and Denver -- the airline's top two hubs -- as well as over 11,500 markets reached through connecting service. Although these fares are non-refundable, confirmed changes can be made for a $100 service fee. Customers can also stand by for free on earlier or later flights on the same day they are ticketed to fly.

United Airlines was rated number one in on-time performance for 2002.

News releases and other information about United Airlines can be found at the company's website, www.united.com .

DOMESTIC U.S.: Fares above are listed for purchase each way on United Airlines® and United Express® carriers. Seats are limited and may not be available on all flights/dates. Purchase Requirements: Tickets must either be purchased at least 7 days in advance or do not require an advanced purchase. Tickets for both fares must be purchased within 24 hours of making reservations. Travel Days/Dates: Fares for the destinations listed above are valid for travel indefinitely. Fares are valid for travel all days of the week. Blackout Dates: There are no blackout dates. Min./Max. Stay: No minimum or maximum stay is required. Additional Taxes/Fees: Fares do not include the September 11th Security Fee of up to $10 maximum per roundtrip. Fares do not include a $3 per flight segment tax. A flight segment is defined as one takeoff and one landing. Fares do not include Passenger Facility Charges of up to $18, which may be collected depending on the itinerary. Itinerary Changes: Tickets are non-refundable. No changes can be made after ticketed departure date for any portion of the ticket. Changes made before departure are subject to fare rules and a service charge of $100, provided the new itinerary is within the parameters of this offer, minimum and maximum stay requirements are met, and the origin and destination are not changed. Other Conditions: Fares are subject to change without notice. Other restrictions may apply. Lower fares may be available to select destinations.

Worldwide Communications:
Media Relations Office: 847.700.5538
Evenings/Weekends: 847.700.4088


YA I GUESS RAISING THOSE FARES REALLY IS GOING TO WORK. GET REAL......

 

[FlyDeltasJets]

Ty,

Please post all the routes where we increased seats on routes you fly. You have mentioned one. One does not a trend make. Also, if we did as you suggest, our airplanes would be empty and you would be adding service on every route. Airline tickets are very inelastic, and even a dollar increase in fares over a competitor will usually result in a lost sale. Res computers print lowest price first on an identical route, and the first shown is more often than not the one purchased. Your suggestion to us ignores that reality. There are many other factors that you seem content to ignore in your oft-repeated theory.

#1. Every airline is suffering from fares being too low. Your thery seems to indicate that only fares on routes in direct competition to aai should suffer.

#2. There is too much capacity in the industry, causing airlines to lose their pricing ability. Most airlines recognize this and are cutting capacity. Some (yours included) are adding capacity, further harming the industry's price control ability. Do I blame them? Not really, if it makes sense for them. But it is pretty ironic to hear one of their pilots blame US for low fares!

#3. The ONLY airlines who are able to make a profit at current pricing levels are ones who pay their people below industy standard rates. I have mentioned this before, and people always argue that it doesn't have an effect on the profession. If that is the case, why is EVERY airline who does pay industry standard wages asking for concessions (major concessions)? LCC cost advantage lies primarily in wages and benefits. I think all of us, regardless of airline, should be pretty concerned about the future of this career. In most LCC examples, if the majors were to lower their wages and benefits to your level, your airline would die. Without low costs, you could not compete with our routes, schedules, size, international presence, ff program, alliances, cash reserves, marketing budget, etc. Your only choice would be to lower wages. Then we would be exactly where we are now, only making less money. LCC disciples can ignore it if they want, but their wage packages ARE having a devastating effect on this profession. MUCH worse than a few extra seats on a single route out of florida.

I await your response. I enjoy our discussions, but I think that you are WAAYY out in left field with this one. The very vast majority of industry analysts do too. In fact, I have never heard one propose what you are proposing.

As always, I could be wrong.

 

[mad691]

Sounds like the industry standard is about to change. Hold on for the ride!!!!

 

[Boeingman]

Continental has no borrowing power and just took a "spare lightbulb" loan of $200 million, mortgaging their last spare parts--so they could be gone.

No borrowing power?

This is really funny. Your CFO has also failed to mention that CAL wholly owns the Chelsea catering division and Air Micronesia, both worth I believe around 1.5 Billion. Plus there is over a billion and a half in cash.

The spare parts issue was a brilliant move to recover cash on unused parts which is due and payable at a below market premium. Perhaps you guys feel it is ok to have paid assets collecting dust on shelves in this environment.

Before you keep knocking our financial stats., might I suggest you review, among other issues, the underfunded pension obligation at DAL? Your financial picture although not as bad as CAL's is not that red hot either. And it will only get worse.

 

[FlyDeltasJets]

Re: Re: Uh Huh!

Yeah, Delta ought to just roll over and let Airtran take over.

That's the dinosaur thinking I'm talking about. We're not trying to take over, not by a long shot. We can only fly so many people at a time. DAL has more airplanes in MX at any given time than we have in our whole fleet.

Weren't you talking on another thread about aai getting larger airplanes. How long do you suggest we wait until we address your threat? You are trying to take over. You are desperately adding capacity to an idustry that has too much. You are growing every month while establised carriers shrink. If you aren't trying to take over, then you should replace your ceo, because I sure hope that mine is trying to rule the world! Unfortunately, it looks like his hands are full trying to compete with airlines who don't pay their people enough.

 

[mad691]

ya I thinks its 4.4 billion dollars. More than Usair and United. But, hey just raise those fares and everything will be just fine. We should have thought of this months ago.

 

[spinup]

I'm not sure what you mean by Leo needing my opinion; we (me and Mullin) are already in agreement. Your CBA is under fire. Did you not even read his comments regarding your labor agreement? Your statement, "I will give to "save" this company--but it will all have snapbacks." has got to be the weakest bargaining position I have ever heard. Save these comments until you look into their books and are better educated. The race for the bottom (contractually) has already begun. If you are still in doubt about being along for the ride, re-read the above post, and then call your LEC.

As to the other 50,000 employees at Delta entering this discussion, well, I thought this was a flight crew board. If you want to participate in Machinist, Flight Attendant, or Ramp agent discussions I suggest you visit those boards.

Best of luck,

 

[mad691]

FLYDELTAJET your socialist views are old. Germany and France think that way. Either you change or you die.

 

[FlyDeltasJets]

ya I thinks its 4.4 billion dollars. More than Usair and United. But, hey just raise those fares and everything will be just fine. We should have thought of this months ago.

Mad,

If the stock market recovers, that number will shrink drastically. If it doesn't, we have other things to worry about than just our pensions.

 

[FlyDeltasJets]

FLYDELTAJET your socialist views are old. Germany and France think that way. Either you change or you die.

Thanks for the help Mad,

I will take it under advisement.


P.S.

You're overpaid.

 

[mad691]

Mad,

If the stock market recovers, that number will shrink drastically. If it doesn't, we have other things to worry about than just our pensions.


I think your right on that one!!

 

[Ty Webb]

Re: Re: Re: Uh Huh!

Weren't you talking on another thread about aai getting larger airplanes. How long do you suggest we wait until we address your threat? You are trying to take over.

Easy there, Chief. Loosen up that double-breasted jacket . . . . we are talking about 50 737 or A319 aircraft . . . not widebodies, for cryin' out loud. We are hardly trying to "take over" anything.

You are desperately adding capacity to an idustry that has too much. You are growing every month while establised carriers shrink.

We're not "desperately" doing anything, we're making money by flying people at a ticket price above our cost. . . . it seems to be DAL that is dumping seats in markets we both serve, in an attempt to steal marketshare, and doing it a loss!

If you aren't trying to take over, then you should replace your ceo, because I sure hope that mine is trying to rule the world!

Again, there's that dinosaur dung again. We're not trying to take over the world- that's your business plan, not ours. That's also why you're losing money, and we're making money.

Unfortunately, it looks like his hands are full trying to compete with airlines who don't pay their people enough.

I guess we have similar problems then, because we're trying to compete against companies that dump seats in the marketplace at a loss.

And, since you decided to get judgemental with me- here's right back at ya, Pal. Maybe you ought to re-direct your anger at your company, not mine, because if your company abandoned their current "marketshare-at-all-costs" philosophy, you'd have your guys back at work.

Which brings me to another point- you've got a lot of **CENSORED****CENSORED****CENSORED****CENSORED** gall to point your finger at us "working for less" while your senior guys are making $250K plus while the junior guys are at Home Depot, loading their Escalades full of gardening supplies.

You have yourself a nice one, OK?

 

[mad691]

Senior guys always screw the junior guys. If I was making 250,00.00 a year I would have all those junior guys at Home Depot too.

 

[mad691]

[
Unfortunately, it looks like his hands are full trying to compete with airlines who don't pay their people enough.

There are the socialist views again. Are you French?

 

[FlyDeltasJets]

Mad,

I have allowed all sorts of insults to be directed towards me on this board, but if you call me french again, I will have to take drastic actions. There are some things that no one should have to endure, and I would suggest that you be very careful about whom you insult with a terrible label like "french." I can only be pushed so far.


Ty,

I have seen the error of our ways. I will therefore support all of your ideas. All of our pilots should immediately give back as much pay as necessary to undercut your prices, and on markets that we cannot undercut yours, we should cease operations. Your proposal that abandoning market share would put us back to work makes perfect sense. I don't know why no one thought of it sooner. Oh yeah, someone did. USair at BWI.

I would appreciate it if, rather than finding insult in my posts, you could address the points I made in my first response to you.

 

[General Lee]

Spinup,

Let's not talk about Leo Mullin either, that is on the CEO board!!!DUH! The other 50,000 non-union employees (Flt Attendants--18,000, Mechanics---10,000 etc) don't have to take any cuts?? What? Only the pilots will "save" this company, right? Also, the pension problem is definitely that, but our CFO (who should know something about money, right? More than you...) says we are complying with the minimum amount due. GM and Ford also have the same problem, and I guess they are going down in flames too, right? Wrong. We have enough money to cover the minimum amount due, and Delta execs haven't made it a big deal. A lot of that has to do with the price of our stock currently. When the stock goes back up after the War is over, a lot of that problem will vanish. The key thing here is that Delta is not full of unions, like AA and UAL, and that means that we are more flexible. The other employee groups could be given a pay cut and could do NOTHING about it. The management still has the ability to trim costs a lot, at the touch of a button. You see where I am coming from yet? Leo has the ability to cut costs at will. And another thing, we don't have to give them anything---at all. Leo and the CFO both agreed to that---it's called a contract. We are not on the brink of bankruptcy---and the management is managing the money well. Why would the CFO state that we were interested in the UAL Asain routes or LHR routes if we were on the brink? I know that we are in tough times, and I am sure that we will give in to some pay cuts and or productivity changes. But, when all of this is over, Delta will still be around and many others might not be.

Boeingman,

I knew that you guys owned Air Mike, but did not know about the Chelsea deal. I had read about the spare parts loan, and that you had only $350million worth of stock left in Expressjet. I am sorry about mixing that up, and I am glad that you have some extra cash reserves available through this rough time. We are code share partners, and for that I am glad.


Bye Bye---General Lee

 

[spinup]

General Lee,

Your theories are flawed as to what effect the industry will have on DALPA's CBA, and from my perspective you are not willing to accept statements from industry leaders. Your naiveté leads me to believe your are new to the airline biz, or have just refused assimilate all available information.

You continue to drift with comments regarding other employee groups, their concessions will NOT save your CBA. Yes! They too will take cuts. I never said they wouldn't. But if you think for one minute that Management can just pull the plug on their compensation package, union or not, you are sorely mistaken. Try that and you will see the quickest unionization of an employee group ever, or mass exodus. DAL management still has to work within boundaries.

If this is what you were fishing for, then here it is. OTHER EMPLOYEE GROUPS AT DAL WILL TAKE CUTS. Happy, I don't know what that accomplished but there it is. I never argued they wouldn't, nor does your management believe they cannot get concessions from them. Mullin knows this already but still makes comments concerning YOUR CBA. How can you not see this????? I don't understand your position. Your pilot group is most likely already preparing for this contingency. Do you attend LEC meetings? Have you actively tried to pursue their position?

We seem to be misconnecting. Here is my position in black and white. Your current CBA is going away, soon. Start looking for creative ways to keep the bar high. I can't offer more clarity than that.

As for the rest of your post, it was a drift and I'll let it keep drifting.

 

[rapidD]

Ty

Don't knock Peachtree City until you've tried it...great place to live. FlyDeltaJets, you are right on dude. I've been trying to carry that torch for years on this forum. Guys at the LCCs and regionals can't seem to grasp the concept that they have jobs because they are paid less than the rest of us. If the industry evolves to their standard of pay, we all suffer. It's simple supply and demand (and yes I have my degree in economics). If and when the economy picks up again, pay scales and ticket prices will rise. Until then, we are all captive to what the market bears. Right now, it bears what SWA and JB are charging and paying their pilots. It's not at all about hub-and-spoke. I guarantee you that when DAL gets the RPMS back up, thereby justifyng our pay scales, the guys and gals at SWA and JB will want their part of the pie. It's not necessarily customer service, its not DirectTV in the seat backs, its not peanuts, it the fare, stupid! This industry has proven time and time again: when the economy is up, the majors and business travelers rule the day; when the economy is in the lav, the cargo carriers and LCCs rule. US Air, UAL, AA and perhaps DAL will suck for awhile but most will survive in some form or fashion. Until that day, all of our livelihoods are constrained but the wages at the LCCs. When the "dinosaurs" rise out of the muck to live again, we will all benefit. Not just the guys at whatever's left of UAL, AA and DAL, but ALL of us. The JB guys and SWA guys will have leverage to negotiate. Until then, we're all sucking from the same trough...and it's getting low.

That's just my opinion, I could be wrong.