Dl Makes $137m

[maxblast72]

What some pilots are overlooking is that around half of Delta's fuel is hedged at $90 a barrell and those hedges start to run out in the next couple of quarters. Like SWA, DAL is still selling tickets for less than they cost. Also like SWA, DAL would be losing big money without the hedges.

While the performance at the top of its peer group is great, with nearly 100% load factors (EVERY seat has been taken on my flights lately) this business should be raking in the money if the market would bear the appropriate price level.

Most of the fix will require airlines like AirTran, Spirit, SWA and the others to either go the heck out of business, or price their product at a realistic level. A family friend got a round trip ticket on Spirit for $1 and was bragging about it and AirTran is still running $49 sales. The regulators need to realize that suicide is not competition.

When looking at the big 3 airlines, Delta, American, and United, it definitely looks like Delta is doing the best. Delta operating income was about $300 million better than American's for the quarter. Also, looks like Delta is better hedged for the rest of the year than American.

Don't forget Airtran has about 1/2 of their fuel hedged the rest of year at an equivalent of about $2.90 a gallon. I think they said the value of our hedges was about $100 million. Not worried about selling 5 seats on a 117 seat airplane for $49 if that what it takes to get more traffic on website. If Delta was doing that great domestically, they wouldn't be reducing their capacity 10-15% domestically and removing the equivalent of 100 RJ from their fleet this fall.

Delta knows they have to shift to international, and have done a good job they moving the bigger airframes out of the domestic market. Their press release said they acheived their industry PRASM goal 1 year ahead of schedule (reaching 102% of industry PRASM). Thats why they are doing better than United or American.

 

[Minimaniac]

Good for Delta in being able to minimize the damage incurred by today's environment. But, a loss is a loss, cash related or value related. If my house loses 200,00 in value then sure, I agree my bank account is unchanged, but I am still out of luck when I go to buy a more expensive house. The gist of it is Delta is worth 1 billion less than it was last quarter. Call it what it is.

 

[maxblast72]

Pilots will be much better off as a group if we can get the entire industry turned around.

Pilots will be better off as a group if the weak airlines go out of business allowing better pricing power by the survivors. Then management can go after the passengers for revenue instead of employees for concessions.

 

[lowecur]

Spinproof:


What some pilots are overlooking is that around half of Delta's fuel is hedged at $90 a barrell and those hedges start to run out in the next couple of quarters. Like SWA, DAL is still selling tickets for less than they cost. Also like SWA, DAL would be losing big money without the hedges.

If oil swings to $100 bbl after Oct 15th (my cutoff date for major hurricane damage in Gulf), then some of the hedges may be under water or a wash. In either case, oil at $100 bbl will help the industry at the end of 08 and all through 09. The key will be each airlines ability to coordinate a steep reduction in capacity and still keep their head above water.

It's amazing that a US billionaire like Wilbur Ross invests $80M in India LCC - SpiceJet, but turns his nose up at airlines in this country. I think he wants to invest where labor is cheap. His reasoning is that oil is way overpriced and he sees little oil upside in this world financial environment.

If you want to invest in this industry here in the US, just wait until after 10/15/08, and place your bets on the probable survivors.....the ones that won't need a bailout.....as the Fed may just may not be able to help the airline industry and instead let foreigner's in the hen house.

imp: ​

 

[AA717driver]

Come on, guys! At least let's talk about something relevant that we UNDERSTAND. (Like chicks and beer...ok, at least beer. )

Even those who have MBA's among us and know the intricacies of corp. fin. don't REALLY know what's going on at a given carrier. It's a big shell game and you don't really know how a company is doing until they go bust or can't hide the cash anymore.

Plus, Delta has to put a smiley-face on their balance sheet or the regulators and BOD will sh!tcan the whole NWA deal and cost the management their bonuses.

I'm predicting AMR's Q2 report will look like the Nevada Test Site after the first above ground H-bomb test. Why? Because they NEED it to look that way. They're in Sec. 6 with a union they despise.

Now, maybe AB will put out a decent beer since the Belgians own them... TC

 

[lowecur]

Good for Delta in being able to minimize the damage incurred by today's environment. But, a loss is a loss, cash related or value related. If my house loses 200,00 in value then sure, I agree my bank account is unchanged, but I am still out of luck when I go to buy a more expensive house. The gist of it is Delta is worth 1 billion less than it was last quarter. Call it what it is.

It's a paper loss, like depreciation and goodwill. It's all accounting and used on their tax returns. They'd be stupid not to take advantage of the rules. All the airline's will do the same thing as they need it.

imp:​

 

[spinproof]

If oil swings to $100 bbl after Oct 15th (my cutoff date for major hurricane damage in Gulf), then some of the hedges may be under water or a wash. In either case, oil at $100 bbl will help the industry at the end of 08 and all through 09. The key will be each airlines ability to coordinate a steep reduction in capacity and still keep their head above water.

It's amazing that a billionaire like Wilbur Ross invests $80M in India LCC - SpiceJet, but turns his nose up at airlines in this country. I think he wants to invest where labor is cheap. His reasoning is that oil is way overpriced and he sees little oil upside in this world financial environment.

If you want to invest in this industry here in the US, just wait until after 10/15/08, and place your bets on the probable survivors.....the ones that won't need a bailout.....as the Fed may just may not be able to help the airline industry and instead let foreigner's in the hen house.

imp: ​

Funny you mention Wilbur Ross I was thinking along similar lines yesterday. Wilbur is a very conservative investor and I was shocked by this event.

My only conclusion is he sees oil stabilizing soon. Thats big! Please may it be so.

 

[Copydat]

Pilots will be better off as a group if the weak airlines go out of business allowing better pricing power by the survivors. Then management can go after the passengers for revenue instead of employees for concessions.

Wow - If you find it so easy to dismiss your fellow pilots it makes me hope that your airline does fold so that I can keep my job.

 

[~~~^~~~]

Good luck to all of us. Karma's a bitch and I wouldn't wish a layoff or shutdown on anyone.

I did not wish a shutdown on anyone. Can't you read? I have good friends at AirTran and seriously considered going there myself.

I was much more sympathetic to AirTran until they fired their new hires. When that happened, I sent the memo to the partners in my side business and we made the decision corporately that our Company will no longer fly AirTran.

Would you feel better if I found quotes from Spirit and AirTran's management to post? The reality is that they have to raise fares to survive. SWA is so well hedged that they intend to continue to sell tickets for less than they would realistically cost and I admitted Delta is only posting an operating profit due to hedges.

We are all flying on one engine with the flaps stuck at 40 and the gear down.

$1 fares on Spirit. How can you defend that?

 

[PCL_128]

Congrats to DAL! Very impressive in this current environment.