DL warns on losses and liquidity

[XRMEFLYER]

How long before the whiz kids at the puzzle palace burn the money they raise by selling CMR and ASA? At the current pace that should buy them another 6-12 months. Then what?

 

[Dizel8]

Just reporting what Comairs top executive said. I am not privy to the internals, maybe you are!

 

[lowecur]

HA. It sure isn't helping your bottomline. And, that INTL flying is saving our a$$. We will sell off some of DCI to make up the difference. It is all about who can outlast the other right now.


Bye Bye--General Lee

You don't actually believe DCI is worth anything do you? DCI is tied at the hip with DL, and there is no one that is gonna pay anything for DCI ($200M tops), unless DL gets a cash infusion of at least a billion. Investors keep throwing bits and pieces at these carriers hoping someone else will blink and fold. The best thing that could happen to DL would be for UAIR and UAL to go out of business. It will be interesting on 3/15 to see who steps to the plate for the UAIR exit financing. My guess is the price of oil will scare off potential investors, plus the Feds were clearly upset with the X-mass fiasco. The investment community is in charge of who lives or dies in the next 9 months.

 

[chperplt]

That is bull because we need the money and Comair isn't done taking cuts from the mechanics and stews, so the deal isn't ready yet

Dude..get your facts straight. The Mechs aren't taking a cut. They are being offered a raise.

 

[General Lee]

First of all, the word COULD does not mean will or can. Secondly, Delta couldn't sell ASA, CMR, and their stake in Republic for a total of 1 Billion in today's market place.

General.. How do you kknow what the plan was? Did GG discuss with you the "plan" to sell a portion of DCI? Are you taking his comments that they were looking into the possibility of a sale as fact?

Do you actually think that a sale will generate enough cash to outlast anyone else?

Well, I did hear a probable plan from someone in a lounge meeting, that gave a general idea of what could happen. (They couldn't tell us exactly, you know that) But, so far it has been close to what was said.

Also, I have a feeling we could get a good price, maybe not the purchase price, but a fair price. I am glad you know your market worth. I think Delta wrote the two of you off for $1.9 billion? I bet we could get half or more of that. That would tide us over for a while and the others would still struggle. That appears to be the plan....


Bye Bye--General Lee

 

[MedFlyer]

Also, I have a feeling we could get a good price, maybe not the purchase price, but a fair price. I am glad you know your market worth. I think Delta wrote the two of you off for $1.9 billion? I bet we could get half or more of that. That would tide us over for a while and the others would still struggle. That appears to be the plan....

Bye Bye--General Lee

A year ago, you were predicting that DL pilots would only take a 13.5% pay cut because the whiz kids at DALPA said that was all DL needed. Of course, we all know how far off you were on that prediction.

You really think DL can get a Billion for Comair/ASA....considering that both Comair/ASA are contracted to a failing parent company?

Even if somehow miraculously DL got that much, with fuel prices being what they are, it'll be gone in a year. Then what? Keep praying someone else dies first....not much of a business plan.

 

[General Lee]

Dude..get your facts straight. The Mechs aren't taking a cut. They are being offered a raise.

The fact is that there are things that still need to be take care of at Comair before a smooth sale. How about the stews? You guys already took the bait. There is no reason for Delta to hold on to the DCI carriers, a deal could be made to "rent" your services and Delta could use the cash. It will happen, if Delta's needs are dire, they will sell and use the cash to survive. It makes sense.


Bye Bye--General Lee

 

[General Lee]

How long before the whiz kids at the puzzle palace burn the money they raise by selling CMR and ASA? At the current pace that should buy them another 6-12 months. Then what?

Then everyone else (USAir and UAL, maybe others) could be in Chap 7 or worse. It is all about outlasting the others right now.


Bye bye--General Lee

 

[General Lee]

A year ago, you were predicting that DL pilots would only take a 13.5% pay cut because the whiz kids at DALPA said that was all DL needed. Of course, we all know how far off you were on that prediction.

You really think DL can get a Billion for Comair/ASA....considering that both Comair/ASA are contracted to a failing parent company?

Even if somehow miraculously DL got that much, with fuel prices being what they are, it'll be gone in a year. Then what? Keep praying someone else dies first....not much of a business plan.

A year ago I wasn't in the negotations, and I predicted Delta needed more than 13.5%. I always thought it would be higher than that, come on now.

Do I think DL could get more than $1 billion? Yeah. It is worth at least twice that. Other things would be tied into that, like a 10 year deal for SkyWest etc. Even at $1 billion, SkyWest would be getting a smoking deal, and a concrete DL deal as a part of that, which provides some security---as much as you can give these days. SkyWest would like to know for sure what they are doing too, because they are anchored to 2 unstable airlines. They saw the Indy experiment, and they own a bunch of RJs.


Bye Bye--General Lee

 

[Dizel8]

"Neidl speculated Delta was holding off on a sale to get a better price, but predicted the airline could get only "a few hundred million for each" regional airline.

That would be a far cry from the $700 million Delta bought ASA for in 1999 and the $1.8 billion it spent for Comair in 2000.

Neidl predicted Comair would be a tougher sell because its costs are higher than its sister regional ASA.

Delta has sold other assets to raise cash. Last summer it raised $285 million from selling its 40 percent stake in Worldspan, a computer reservation system."

Not looking like a lot to be made on selling ASA or Comair!

 

[zonker]

A year ago I wasn't in the negotations, and I predicted Delta needed more than 13.5%. I always thought it would be higher than that, come on now.

Do I think DL could get more than $1 billion? Yeah. It is worth at least twice that. Other things would be tied into that, like a 10 year deal for SkyWest etc. Even at $1 billion, SkyWest would be getting a smoking deal, and a concrete DL deal as a part of that, which provides some security---as much as you can give these days. SkyWest would like to know for sure what they are doing too, because they are anchored to 2 unstable airlines. They saw the Indy experiment, and they own a bunch of RJs.


Bye Bye--General Lee

It's worth what someone is willing to pay for it, which is nowhere close to a billion.

Smoking deal? Yea, don't bogart what you're smoking.

 

[lowecur]

the key statment by mgt

"A restructuring under Chapter 11 of the U.S. Bankruptcy Code may be particularly difficult because we pledged substantially all of our remaining unencumbered collateral in connection with transactions we completed in the December 2004 quarter as part of our out-of-court restructuring," Delta said in the filing."

In other words, if UAIR finds investors on 3/15, you can bet DL will file BK protection in the not too distant future. Reason: they need to enter BK with as much cash as possible because of the above statement. It's the only chance they have to exit.

 

[chperplt]

It will happen, if Delta's needs are dire, they will sell and use the cash to survive. It makes sense.

You're right... It probably will happen. For your sake, I hope that's not the crux of the plan. If it is, you and your buddies will be flying for US Air wages before long.

Selling DCI is nothing more than a very small band aid being put on a gapping hole.

Surly your not so single minded to think this is the savior.

 

[Dizel8]

"Surly your not so single minded to think this is the savior".

Of course he isn't, he also counts on Song, Int'l and simplifares.

Who knows, he may be right!

 

[USCtrojan]

How long before the whiz kids at the puzzle palace burn the money they raise by selling CMR and ASA? At the current pace that should buy them another 6-12 months. Then what?

Unless oil hits higher than $60 a barrel....Then it will be faster than that. Some analysts are speculating $80 a barrel may happen....

Trojan

 

[General Lee]

A year ago, you were predicting that DL pilots would only take a 13.5% pay cut because the whiz kids at DALPA said that was all DL needed. Of course, we all know how far off you were on that prediction.

You really think DL can get a Billion for Comair/ASA....considering that both Comair/ASA are contracted to a failing parent company?

Even if somehow miraculously DL got that much, with fuel prices being what they are, it'll be gone in a year. Then what? Keep praying someone else dies first....not much of a business plan.

Medflyer,

I love the part where you have turned into an "ANALCYST" and now know the worth of Comair/ASA. I guess Susan Donofrio has it wrong compared to you....

"Overall, this is pretty much in line with what they've been saying," said Susan Donofrio, an analyst at Fulcrum Global Partners who has a "buy" recommendation on Delta shares.

Delta could raise some $1 billion by selling its regional airline subsidiaries, she said.

"That will help them weather the revenue storm in the coming months and maintain sufficient liquidity," she said.



Bye Bye--General Lee

 

[General Lee]

You're right... It probably will happen. For your sake, I hope that's not the crux of the plan. If it is, you and your buddies will be flying for US Air wages before long.

Selling DCI is nothing more than a very small band aid being put on a gapping hole.

Surly your not so single minded to think this is the savior.

What, again? It has been known that we have a plan in place, to eventually save $5 billion a year, but that supposedly won't come into play until the end of 2006. So, what do we do in the mean time???? Hmmmmm. Well, we do whatever we can to make it to that date. We have some assets that we can sell that are not vital to our core business, since we can rent their services at the same time. So, we sell off some and use that cash to survive. Sound like a plan? Do you have a better one? Maybe when it is all over, we will still be standing and others will not, increasing our chances to survive even longer. If you think the guys at the G.O. don't have a plan, then you have your head up your arse. They are trying to figure out how to keep all of those options they were awarded----they could be very rich if we eventually succeed. Make sense yet? A Chap 11 wouldn't help them out. I am sure that is in the back of their minds too.


Selling DCI gives us cash and takes away some debt. Sounds like a plan that could help us out....


Bye Bye--General Lee

 

[Dizel8]

"Neidl speculated Delta was holding off on a sale to get a better price, but predicted the airline could get only "a few hundred million for each" regional airline"

Maybe his head is up his arse too?

Come on General, spin it baby, spin it!

 

[General Lee]

"Neidl speculated Delta was holding off on a sale to get a better price, but predicted the airline could get only "a few hundred million for each" regional airline"

Maybe his head is up his arse too?

Well, now we have different analcysts battling it out. It depends on what type of a deal could be made after the sale---like a 10 year contract etc. If we bought them for $2.9 billion originally, and then wrote them down for $1.9 billion, I would guess (only a guess) that we could possibly get $1 billion, which would help us out. And, what about the debt payments that would go over to SkyWest? How much would that be worth a year to us? Could that cost us less in the long run?


Bye Bye--General Lee

 

[Dizel8]

Do you think, that SKYW wants to take all the debt? I personally doubt it!

Maybe 2.9B was too much to pay and certainly now it is not worth anywhere that much. Plenty of talk about to many 50 seaters flying around and that larger a/c are needed, perhaps that is part of the reason AWA invested in U, to have some place to place them.

Even if DAL signs a deal with SKYW and manages to off load a DCI, it will more than likely be under a cost plus plan similar to Mesa and U. Well, Mesa is making money on that, U is losing. So DAL could potentially see an increase in cost for feed, then what? It may work for short term gain and long term pain for DAL.

 

[chperplt]

General,

IF those guys in the GO knew what they were doing, Delta wouldn't be in the situation they are in.

I never said a plan wasn't in place. What I did say was that I hope there was more to the immanent plan than selling off DCI.

You seen to have a one track mind. You're like a little kid who wants to go to McDonalds. All you can talk about is McDonalds until you get to go.

There has to be more to the short term survival than sell DCI. Yes, selling DCI will generate some much needed cash while preserving the feed. It will not however give Delta the cash that you think it will.

Look at the last few IPOs.. what they sold for and what they are worth today.

 

[MedFlyer]

Neidl says Comair/ASA aren't worth much. Isn't he your favorite analyst, General? You're always quoting him in the past....except now when he says something you don't like.

What I don't understand is why you think Comair/ASA are worth so much? You're always complaining that customers don't like RJ's, RJ's have too high costs, RJ's are uncomfortable, RJ's can't compete in this low-fare environment,etc.

So if you really believe all this, then how could Comair/ASA be worth so much?

Your saying Comair/ASA are worth almost a billion when DL's own market valuation is less than that? Do you really believe Comair/ASA are worth more than DL mainline?

 

[General Lee]

Neidl says Comair/ASA aren't worth much. Isn't he your favorite analyst, General? You're always quoting him in the past....except now when he says something you don't like.

What I don't understand is why you think Comair/ASA are worth so much? You're always complaining that customers don't like RJ's, RJ's have too high costs, RJ's are uncomfortable, RJ's can't compete in this low-fare environment,etc.

So if you really believe all this, then how could Comair/ASA be worth so much?

Your saying Comair/ASA are worth almost a billion when DL's own market valuation is less than that? Do you really believe Comair/ASA are worth more than DL mainline?

I'll start with you. First, that Neidl quote Dizel8 brought up was older than his latest quote, in which he stated his confidence in DL. He then added an upgrade, and he does talk to the powers at be. As far as DCI being worth so much, I think they are worth at least half of their write down price, but that is just a guess, and what Susan Donofrio thinks, and she talks to the management people. I think that would still be ahuge loss compared to what we purchased them for, but probably reasonable with the assets that Comair and ASA own. With a guaranteed 10 year agreement on top of that, it probably warrents a certain amount. I don't really have the facts in front of me, though. And, I didn't come up with that $1 billion---Delta's write down showed their perceived worth, and even Donofrio came up with that price---I didn't pull that out of nowhere. How can you say otherwise? We are paying $1 billion for our new BOS terminal.....Since we are worth less with the current stock price, does that mean the terminal isn't worth that much? How much are our 777s worth now that our stock price is so low? Could you buy a 777 for $20 million? Can you see where I am coming from here? Can you see where you are wrong?

Bye Bye---General Lee

 

[General Lee]

General,

IF those guys in the GO knew what they were doing, Delta wouldn't be in the situation they are in.

I never said a plan wasn't in place. What I did say was that I hope there was more to the immanent plan than selling off DCI.

You seen to have a one track mind. You're like a little kid who wants to go to McDonalds. All you can talk about is McDonalds until you get to go.

There has to be more to the short term survival than sell DCI. Yes, selling DCI will generate some much needed cash while preserving the feed. It will not however give Delta the cash that you think it will.

Look at the last few IPOs.. what they sold for and what they are worth today.

First off, I am a Wendy's freak....


Second, there is a huge plan in place, and that selling parts of or all of DCI was in the plan. Here are some highlights:

1. labor concessions---$1 billion a year from pilots, another $1 billion from everyone else.

2. Airplane lease concessions----somewhere around $300 million a year so far

3. Closing unprofitable bases---DFW

4. Concessions from suppliers, banks, etc.

5. Maybe selling DCI

6. Simplifares, Operation Clockwork, new advertising campaign

7. Ousting the old management, bringing in the new, giving them options to give them a large incentive (lack of bonuses available--lack of $$)

8. Achieving a $5 billion a year savings plan BY 2006

9. Getting to 2006 without going to court......


Got it?


Bye Bye--General Lee

 

[General Lee]

Do you think, that SKYW wants to take all the debt? I personally doubt it!

Maybe 2.9B was too much to pay and certainly now it is not worth anywhere that much. Plenty of talk about to many 50 seaters flying around and that larger a/c are needed, perhaps that is part of the reason AWA invested in U, to have some place to place them.

Even if DAL signs a deal with SKYW and manages to off load a DCI, it will more than likely be under a cost plus plan similar to Mesa and U. Well, Mesa is making money on that, U is losing. So DAL could potentially see an increase in cost for feed, then what? It may work for short term gain and long term pain for DAL.

Well, if you get the planes you get the debt. We don't keep the debt, that is crazy. SkyWest said they are in the best position to take advantage of this situation, and Delta wants the cash. Something will happen, and when it does it will help our situation out somehow. As far as a money losing proposition, you and I don't know that. We will probably get needed cash to stay afloat, and they will get size and a future agreement. Was $2.9 billion too much to pay in the late 90's? Maybe. But, we had the cash then. Now, we need the cash and we will get it. If we went into Chap 11 we could try to trim down the current SkyWest agreement with pay for departure, and that would hurt them too. It is a better deal for them to keep us around and keep us giving them guaranteed revenue---and they get a smokin deal.


Bye Bye--General Lee

 

[av8tor4239]

Wonder how much old Leo Mullins and his elite team of managers is taking from Delta on an anual basis?

 

[~~~^~~~]

General:

Someone very smart wrote that "selling ASA and Comair is like burning the furniture to keep the house warm through the winter." None the less, 1 Billion ( which nobody has & the value is intrinsically linked to Delta's well being ) would fund less than three quarters' losses if oil hits the numbers anticipated.

I fully expect another round of mainline barganing, probably the loss of all pensions - not that it will make enough difference to significantly delay the outcome.

If oil hits $80, we can expect airlines to cease operations simply because the revenue from operating the flights will not even cover the variable cost of operating the airplane.

No airline can survive this, except Southwest in the short term. Delta has around 5.5Bn in obligations this year - a miracle is required.

 

[DaveGriffin]

First off, I am a Wendy's freak....


Second, there is a huge plan in place, and that selling parts of or all of DCI was in the plan. Here are some highlights:

1. labor concessions---$1 billion a year from pilots, another $1 billion from everyone else.

2. Airplane lease concessions----somewhere around $300 million a year so far

3. Closing unprofitable bases---DFW

4. Concessions from suppliers, banks, etc.

5. Maybe selling DCI

6. Simplifares, Operation Clockwork, new advertising campaign

7. Ousting the old management, bringing in the new, giving them options to give them a large incentive (lack of bonuses available--lack of $$)

8. Achieving a $5 billion a year savings plan BY 2006

9. Getting to 2006 without going to court......


Got it?


Bye Bye--General Lee

GL;

You forgot to add:

10. Enriching our senior top-third pilots for 3 years after 9/11 by scr*wing the bottom-third.

11. Piss our funds away on legal bills to the losing campaign to grieve FM

12. Allowing our most senior pilots to take early retirement AND continue flying, at the expense of furlough recalls.

13. Continue to blame CMR pilots for not doing enough for our furloughs while DALPA went all out on COBRA and secret Santa.

14. Keep bashing all the airlines who are kicking our *ss.

These are huge components of the survival/recovery plan

 

[DDpaysoff]

Well, she sounded about 90 so she is probably stuck in the PAA flying boat days!

She is probably a delta flight attendant that took the recent "early retirement offer."

 

[General Lee]

General:

Someone very smart wrote that "selling ASA and Comair is like burning the furniture to keep the house warm through the winter." None the less, 1 Billion ( which nobody has & the value is intrinsically linked to Delta's well being ) would fund less than three quarters' losses if oil hits the numbers anticipated.

I fully expect another round of mainline barganing, probably the loss of all pensions - not that it will make enough difference to significantly delay the outcome.

If oil hits $80, we can expect airlines to cease operations simply because the revenue from operating the flights will not even cover the variable cost of operating the airplane.

No airline can survive this, except Southwest in the short term. Delta has around 5.5Bn in obligations this year - a miracle is required.

IF oil hits $80, we are all $crewed, except SW. That is true. I doubt and hope it won't hit that high, but who knows. ANWAR is looking better and better everyday. Think of the airlines that will be gone if that happens? USAir, United, and INDY will cease. Then Chap 11s will be DL, CO, NW, AA, Frontier, AWA, Spirit, and maybe some other of the LCCs like Airtran, Jetblue, etc.

As far as ASA/Comair being furniture, you may be right. IF we need time, then we will sell them and use the cash for time. We will probably outlast some other airlines in the mean time. That is the point. We still have furniture to burn. We are getting the rest of the house in order---you and some of the others think we haven't made large changes. Those are underway, but it does take awhile to see the results, and we need the cash to get to that point.

Selling ASA and Comair would help shrink some of that debt load, and at this point anything is better than the status quo. I think Ray Neidl and Susan Donofrio have talked with our management and both have stood by Delta. That has to tell you that there is some sort of method to their madness...


Bye Bye--General Lee