Don't tell us how to run our airline;
http://www.msn.com/en-us/money/tops...o-run-our-airline/ar-BBablgg?ocid=mailsignout
Fresh from hounding JetBlue CEO Dave Barger out of a job because the carrier provided too many luxuries to its coach-fare passengers, some Wall Street analysts have turned their sights on Delta .
Delta's transgression, they say, is adding too much capacity at a time when "capacity discipline," strongly encouraged by Wall Street, has been a key factor in the airline industry's transformation into a more profitable, less cyclical, investment-worthy business.
"When you add capacity, particularly into (other airline) hubs, it diminishes shareholder confidence, it suggests a lack of discipline, and in my opinion, it jeopardizes the likelihood of earning a multiple closer to that of high-quality industrial transport," he said. "So I know it may be difficult to quantify, but do you ever stop before you announce a route and just ask, or maybe run it past others: What if this destroys tens of millions of dollars of shareholder value by robbing me of a better earnings multiple?"
In response, Anderson declared, "I think you are in an area that is in some respects not appropriate for an earnings call. But I will just say this: Look at our results. I don't think there is a more disciplined approach to the deployment of capital in this industry anywhere in the world. And we will continue to make the right unilateral decisions. And we appreciate that you have a different opinion."
http://www.msn.com/en-us/money/tops...o-run-our-airline/ar-BBablgg?ocid=mailsignout
Fresh from hounding JetBlue CEO Dave Barger out of a job because the carrier provided too many luxuries to its coach-fare passengers, some Wall Street analysts have turned their sights on Delta .
Delta's transgression, they say, is adding too much capacity at a time when "capacity discipline," strongly encouraged by Wall Street, has been a key factor in the airline industry's transformation into a more profitable, less cyclical, investment-worthy business.
"When you add capacity, particularly into (other airline) hubs, it diminishes shareholder confidence, it suggests a lack of discipline, and in my opinion, it jeopardizes the likelihood of earning a multiple closer to that of high-quality industrial transport," he said. "So I know it may be difficult to quantify, but do you ever stop before you announce a route and just ask, or maybe run it past others: What if this destroys tens of millions of dollars of shareholder value by robbing me of a better earnings multiple?"
In response, Anderson declared, "I think you are in an area that is in some respects not appropriate for an earnings call. But I will just say this: Look at our results. I don't think there is a more disciplined approach to the deployment of capital in this industry anywhere in the world. And we will continue to make the right unilateral decisions. And we appreciate that you have a different opinion."
