DL goes on offensive at JFK

[MedFlyer]

DL will be adding a bunch of flights at JFK. Even better, many of them will actually be mainline, though the RJ carriers will get their share too.

http://biz.yahoo.com/prnews/040128/nyw056_1.html

Obviously a large part of this is aimed at JBLU. I have a feeling 2004 is going to turn into a real slugfest at JFK between JBLU, DL and AMR. Not sure if DL will make any money from this expansion, but its bound to make life a little tougher for JBLU.

It could help speed up the start of recalls for pilots which is good news. DL has already said they will have to recall FA's in order to handle the expansion.

 

[Flying Freddie]

Sounds like the same old thing AA tried a few years ago.

 

[zonker]

Reminds me of a line in The Fugitive.


"You're getting pretty desperate, aren't you Mr. Gerard?"

 

[UpNDownGuy]

Really????

"You're getting pretty desperate, aren't you Mr. Gerard?"

While I admire the bravado, I don't think my reaction would be quite as cavalier as yours. If Delta basically announced war against my carrier, I'd be concerned, especially in light of JP Morgan's press release. Here's part of that release, as sent by ALPA:


Citing competitive measures from competing legacy carriers, J.P. Morgan cut 2004 earnings estimates for JetBlue in half. The new 2004 estimate is 99 cents per share. JP Morgan also downgraded the discount carrier's stock to "underweight" and forecast negative growth over the next ten months. Analyst Jamie Baker wrote in a recent note that he expects JetBlue's growth run will slow dramatically. "Problem is, the industry is unsheathing its own capacity dagger to a greater extent than even we previously imagined, and we expect a pronounced negative impact on JetBlue earnings both this year and next," said Baker.


As someone else said...it's going to be interesting if nothing else...

 

[zonker]

Re: Really????

"You're getting pretty desperate, aren't you Mr. Gerard?"

While I admire the bravado, I don't think my reaction would be quite as cavalier as yours. If Delta basically announced war against my carrier, I'd be concerned, especially in light of JP Morgan's press release. Here's part of that release, as sent by ALPA:


Citing competitive measures from competing legacy carriers, J.P. Morgan cut 2004 earnings estimates for JetBlue in half. The new 2004 estimate is 99 cents per share. JP Morgan also downgraded the discount carrier's stock to "underweight" and forecast negative growth over the next ten months. Analyst Jamie Baker wrote in a recent note that he expects JetBlue's growth run will slow dramatically. "Problem is, the industry is unsheathing its own capacity dagger to a greater extent than even we previously imagined, and we expect a pronounced negative impact on JetBlue earnings both this year and next," said Baker.


As someone else said...it's going to be interesting if nothing else...

There has been competition aimed at B6 from day one. This is more of the same. And if this "war" involves Delta losing another 300 million for the quarter, I'd respectfully submit that this strategy won't sit well with its shareholders for very long.

Every single market analyst, critic, and B6 naysayer is chomping at the bit to say, "See. I told you so." And yet there are more Airbuses, more routes, more passengers, increased profits...will it continue indefinitely? No, but it's going to go on for quite awhile. Is it going to be easy? Not likely.

Pardon me for thinking that my company and the product it delivers is good enough to withstand the competition. Call it what you wish.


From Time Magazine:

Nor is it clear how Ted and Song can make money. The staff at both airlines work at the same high-wage rates as their mainline colleagues, yet the fares are much cheaper. One airport executive is skeptical: "Ted calls itself a low-cost operation, but it will also be a low-revenue producer." Song filled less than one of every two seats in September, the most recent month for which figures are available. And aviation sources told TIME that Song has postponed plans to add more airplanes to its fleet, raising questions about how well its business model is working.

From Delta:

Delta expects to record a loss of up to $350 million in the first quarter of 2004, said Michele Burns, Delta's chief financial officer.

It is going to be interesting.

 

[SWA/FO]

Funny business we are a part of. I'm still trying to figure out why AMR stock is higher then LUV?

 

[General Lee]

Zonker,

Come on man, that stupid Time article is outdated. They showed the SEP traffic, which is the slowest month of the year (right after Summer break). And, with the pension relief this year, we at Delta should save $250 million this year alone, and the JFK expansion is over 6 years($300 million over 6 years). We will probably accept paycuts now that we are fighting, and then the company will cut more pay from the other non-union people, which will give us more money to get better financing to repay the debt. And, the economy is getting stronger to top it off. I hope it all works out.

Bye Bye--General Lee

 

[V2+10]

Wow...did you see the list of restrictions at the end of the above mentioned linked article about Delta! I'd need an attorney to figure out when I could or could not go and how much it's REALLY going to cost! Maybe it's just my Alzheimers again...

V2

 

[side stick-n]

General,

I was told today that factual information indicates Delta has stopped reconfiguring the 757's for Song. This sounds like Song will not be growing any more in the near future. Comments?

 

[no_land_3]

Rumor is that GG is not impressed with Song. Take that for what it's worth.

land_on_3

 

[General Lee]

Side stick-n,

I have heard some rumors along the same lines, but I saw in the article that they will add two Song flights to Ft Meyers. I don't think our new CEO likes Song, not because it doesn't do well, but because he doesn't like the two seperate brands. (That is just a rumor) I think he wants a strategic review done by July, and he will see by then how it is doing overall. This latest expansion news has a lot of MAINLINE flights on the 757 out of JFK, not SONG. Maybe he will scrap the Song idea (for a nice loss), and go back to all mainline, and maybe the 757s will all have the IFE. I don't know, but it sounds like our new CEO has a plan, which is good I guess?? I also heard that he doesn't really like all of the RJ expansion, he wants to fight more out West (he is from Seattle), and he is looking at less INTL codeshares and maybe more Asia flights eventually. But, we will need to cut our pay a lot.... He maybe getting us ready for a merger too. I don't know. We shall see.

Bye Bye--General Lee

 

[Mugs]

Funny business we are a part of. I'm still trying to figure out why AMR stock is higher then LUV?

Well for one take a look at the shares outstanding. About 160 million right now for AMR and 787 million for SWA. That gives SWA a market cap of about 11.9 billion vs. 2.6 billion for AMR. Compare those numbers instead of the price per share.

 

[JungleJetFO]

Funny business we are a part of. I'm still trying to figure out why AMR stock is higher then LUV?

Stay out of the market knucklehead, you'll just lose your shorts with comments like that. LUV market cap is over $11 Billion, AMR is over $2 Billion. Hmmm, wonder who's stock is worth more?

 

[JungleJetFO]

Song

Song was created for one reason and one reason only, to put JetBlue out of business. Yeah, Delta would love to make money from it but trust me, they've already written off the expense as the price of going to war with LCC's. As long as they believe they can rid themselves of JB, Song will exist.

 

[SpeedBird]

"As long as they believe they can rid themselves of JB, Song will exist."

Well according to David Neeleman in today's jetBlue CC. He said that Song has had a "minimal" effect on jetBlue's NY-FL market. He mentioned that jetBlue's trip costs are 40% less than Song's, and depsite comparable fares, service, and schedules jetBlue is still carrying more passengers than Song.

Perhaps the rumors of DAL's new CEO reconsidering Song's future role has some validity.

 

[~~~^~~~]

I wondered how long it would take for Delta's folks to realize borrowing a dollar to reduce JBlue's profits by .50 cents was not a good long term strategy. The RJ's have their niche, but that too has passed as a "future" plan since the 50 seat market is saturated.

Passengers are tired of schlemping down dark, dirty, stairways to cross a cold, wet, windy, loud, ramp area to board an RJ. If the community can not support a mainline aircraft they understand, otherwise, they want their jetway.

The problem with Delta's focus on their core product is that unless they get costs in line with American and Continental, they will go the way of US Air. Delta's core business is not viable - that is the reason Delta's focus has been outside mainline in the past. DALPA's idea that all the "non-union" employees can take further cuts simply will not work, as I imagine several of the "non-union" groups will unionize at their next opportunity.

The damage Contract 2000 did to Delta is amazing. From 1.8 to 20.4 Billion in loans and leases in four years, WOW

~~~^~~~

 

[General Lee]

Fins for Management! Fins for Management!

Come on man, let me guess, it is all our fault....? Right? We are a fixed cost. They have our contract, and they know exactly how much we cost--no surprises. I guess the $2.3 billion stock buy back pre-9-11 was our fault too? I guess buying all of the RJs that business passengers hate was our fault too? Yeah, I remember telling Leo that we should fly RJs from DCA to DFW, and DFW to ONT and SNA. I guess I told them to park most of the MD-11s right after the War, not thinking that we could have actually made more money (from our VP of Marketings mouth) had we kept them flying......That is all our fault.

Well, what should we do now? I think we are in agreement that we should take some paycuts. But, this is an investment---that we would be making. We know the deal, we saw the books. We also know that we haven't seen other cuts that would be easy for Delta to make, only the REQUEST that the pilots take huge cuts....Hmmmmmm. What about the others? the Flight Attendants took a small paycut, some medical cuts, and some small productivity cuts (now they want to recall 200 for JFK), and that is all we have heard. I think our CFO took an 8% paycut, and our new CEO started his salary at $500,000 a year, which is less than Leo's but not impressive since we know he is a multi-millionaire and has been on the board since 89'. Everyone must participate---and that would happen--even you guys---if we ever did go to Chap 11. Quit slamming the Delta pilots and let this process work---we are meeting today infact---and hopefully they will negotiate---not request. If they want a longer contract, it will be for less. We are a fixed cost fins. Everyone else at mainline is NOT.


Bye Bye--General Lee

 

[Pez D. Spencer]

Originally posted by General Lee
I guess buying all of the RJs that business passengers hate was our fault too?

General,
I've seen this posted numerous times... So, I asked one of the VP's in the know -- "Does Comair account for it's own RJ purchases, gate fees, concourse improvements, the GO's electric bill, lawnmowers, etc... or is that profit we report just a paper number with no real measure of our costs?" The answer was YES, we pay those bills - the operating profit we make accounts for all of our costs. Of course, reservations and passengers do come from Delta. I don't know how ASA's books are handled, but Comair's jets are bought with Comair profits - we're still making a profit. I realize this won't put this issue to bed, but I wanted to know - so, I asked. Delta is not taking a loss on Comair planes.

Good luck in the negotiations. I know the mainline pilots are interested in building a strong and competitive mainline - I have some friends over there that are furloughed, hope they get back soon.

 

[General Lee]

PEZ,

You are incorrect on a lot of that. We actually pay for a lot more than you think. We pay for all of ASA/Comair terminal fees, upgrades, etc--and we do not charge you for it. And, does Delta buy your RJs in cash? Nope. That is added to our debt. Also, our CFO admitted in CVG a couple months ago that we actually pay for a lot more---in adverstising (which really is lacking anyway), and other key items that I will have to go look up and then I will repost.



Fins,

You also really screwed up the numbers (another managment ploy) about our debt. You said it was our fault that our debt from loans and leasezs went from $1.8 bil to $20 billion in four years. Well, $8 billion of that is long term debt that has been there since pre-9-11. Then the rest of it is "short term debt"--mostly due to buying YOUR RJs (atleast $1 billion a year for the last 4), the building of the BOS terminal (about $1 billion), financing other CAP EX--probably $3 billion, and a $1 billion line of credit. That sure does seem like it was from our contract....What? Your RJ's contributed quite a bit too....Oh yeah, they are "self financing...."

Whatever. We are negotiating, and hopefully they will come to the table and do just that.

Bye Bye--General Lee

 

[Pez D. Spencer]

You are incorrect on a lot of that.

Could be... but I did ask - and that was the answer I got. It was one of the folks that knows with absolute certainty how to answer that question. Until proven otherwise, I have no reason not to believe him. As for how the planes are paid for - I realize planes are financed - as the focal point of my question, I was assured that cost was accounted for in our profit.