DL warns on losses and liquidity

[doh]

If Delta sells CMR and ASA to SKYW and Delta then declares bk anyway, I see a big problem for Delta. They will want to renegotiate the feeder contract. What if SKYW tells them to pound sand? If Mesa is stil tied to it's contracts with U and UAL there isn't anyone to come to Delta's rescue for feed. All the feed belongs to one player. It sort of violates the portfolio concept. I think Delta will ipo us rather than take the risk. But I do believe they will try to raise funds with us.

 

[spinproof]

An IPO would certainly(at this time) make more sense, when you consider the new crew bases announced by Comair. I would hardly think DAL would "muddy" the water of selling an asset by such a move. The more likely move would be to spread the resources for growth.

Then again the "General" would vehemently disagree and would rather have the cash. What is lost in all this is the possibillity of an asset like Comairs suddenly being used as a "PTP"" carrier in certain markets....Hmmmm...oh well SWA not to worry...acccording to the general the cost would be prohibitve to a long term position....or would it?

 

[Ty Webb]

A chapter 11 filing isn't all that bad. Look at UAL and US Airways.

Hmmm, you really are an idiot, aren't you? Mommy drop you on your head when you were little?

I don't know who you expect to believe that you are actually a SWA guy.What a freak.

Do me a favor, though, and quit sending me the PM's with the homosexual invitations, or I will start forwarding them to the Webmaster.

 

[737 Pylt]

Hey General,

Why don't you get management to sell the shuttle as well as ASA/CMR? You could raise a few more bucks there.

Also I was thinking, since GG reportedly didn't like Song you could sell that too. A ready made LCC. That should raise a lot of bucks, don't you think?

Actually, we were hoping to get rid of just you surplus!
737

 

[sleepy]

We do own quite a few of the planes, like all CR7s and over 100 CRJ50s. We also own facilities (gates, huffers, etc.) All of that would be counted. I am still looking for the exact number I read, and I will get that to you as soon as I can. I am off on a 4 day early tomorrow (today).


Bye Bye--General Lee

General,

I could say that after the obvious glee you showed last week at the prospect of the ASA pilots being sold to non-union Skywest and stapled to the bottom of the list, you are getting your just dues, but I won't.

I am a bit puzzled by your reasoning that all DAL has to do is sell ASA and/or Comair, and everything will be ok. In the first place, ASA doesn't own any ground equipment that actually works. The majority of their aircraft are leased: DAL bought them, then sold them to a leasing company, and leases them back. ASA doesn't own anything any longer, all of their services come from DAL. I am willing to bet that even the office furniture is leased.

The real problem for you is that DAL can't borrow any money, fuel prices are going up, you can't hedge, you don't have enough cash to keep operating until simplifares works (if it ever will?), and you labour costs are still too high.

 

[doh]

Hmm, don't know about the labor cost thingy. If labor was such a big deal, U would be making a pile of dough. The rest of your post sounds like ugly reality though. Good luck to the Delta folks.

 

[Tim47SIP]

Michaels right!

Personally, I would rather restructure the retirement than take another pay cut. I can fund my own retirement, but I don't want to take pay cut after pay cut trying to save a pension which is toast no matter what we do.

This is the most realistic statement I have read here in a long time. The problem is that DALPA will not instigate this as they will not only want to keep their pension, but also their pay (I would do the same). So they wont make the first move to save their buts in this deal. Delta will eventually go for another pay decrease and then file BK, wipe out the pension funds, reduce their monitary obligations dramatically, and then emerge from BK. My guess is a 10-15% across the board (everyone) reduction in pay and benefits.

I really cant see Delta selling off one or both of their WO's as it would be a short time before they reached the break even point. They put themselves at risk for increased costs and possible manipulation by the contract carrier. But if one will go, my bet is ASA.

 

[General Lee]

General,

I could say that after the obvious glee you showed last week at the prospect of the ASA pilots being sold to non-union Skywest and stapled to the bottom of the list, you are getting your just dues, but I won't.

I am a bit puzzled by your reasoning that all DAL has to do is sell ASA and/or Comair, and everything will be ok. In the first place, ASA doesn't own any ground equipment that actually works. The majority of their aircraft are leased: DAL bought them, then sold them to a leasing company, and leases them back. ASA doesn't own anything any longer, all of their services come from DAL. I am willing to bet that even the office furniture is leased.

The real problem for you is that DAL can't borrow any money, fuel prices are going up, you can't hedge, you don't have enough cash to keep operating until simplifares works (if it ever will?), and you labour costs are still too high.

Sleepy,

Not everyone flies corporate for Lowes.......

Anyway, I was not gleeful about ASA going to Skywest, and still said we hopefully will hire many ASA pilots in the future. I wondered how the ALPA ---non ALPA thing would work...


And, as far as not borrowing any money or the ability to do so, there are still plenty of ways to get money, namely from Skyteam members if we needed to. We still have the strongest network out there, and we make a lot of money for our partners. We are the biggest airline at the busiest airport in the world. I have a feeling we could get some help if we had to. Did you ever think Mesa would invest another large sum into USAir? How many people have been saying it would be dead right now? I think I did. Amazing. We aren't even to that point yet. We will probably sell ASA and Comair and make some money to tide us over through this year, and then our cost savings measures (which are many) will hopefully kick in. Here are some more people that agree with me from a CBS Marketwatch article:


"This is not new news because high oil prices put the whole industry at risk, but we believe Delta shares are oversold," Calyon Securities analyst Ray Neidl told clients. "We believe a springtime rally in airline stocks is possible (depending on the price of oil), in which we would expect DAL to participate."

Susan Donofrio, analyst at Fulcrum Global Partners, also downplayed reports. She cut her price target from $16 to $13 a share, but maintained a "buy" rating, claiming that "none of the news headlines are new pieces of information."

She said that she feels "comfortable with the estimated future level of liquidity at Delta and would take the current weakness in the airline's stock price as a buying opportunity."



We shall see. Have fun at Lowes, they are my favorite home hardware store.


Bye Bye--General Lee

 

[zonker]

We will probably sell ASA and Comair and make some money to tide us over through this year, and then our cost savings measures (which are many) will hopefully kick in.

Tell me again who's buying?

 

[General Lee]

Tell me again who's buying?

I would say there are probably a few buyers that may be interested. Someone who wants a good deal. I would think SkyWest is very interested (after Comair gets its union situations irons out---Pilots already bought it) and maybe Mesa. Delta wants to sell obviously, and will attach 10 year agreements to the buy probably.


Bye Bye--General Lee

 

[chperplt]

(after Comair gets its union situations irons out---Pilots already bought

What situation(s) would that be, private?

 

[General Lee]

What situation(s) would that be, private?

Stews and mechanics ironing out their agreements to make a sale smoother.


Bye Bye--General Lee

 

[chperplt]

The Mechs are just about done, so Freddy says. The stews aren't going to budge.

 

[General Lee]

The Mechs are just about done, so Freddy says. The stews aren't going to budge.

Hence, no sale YET.


Bye Bye--General Lee

 

[cl65capt]

I always knew those stew's were a smart bunch.

 

[DDpaysoff]

An IPO would certainly(at this time) make more sense, when you consider the new crew bases announced by Comair. I would hardly think DAL would "muddy" the water of selling an asset by such a move. The more likely move would be to spread the resources for growth.

There is no way Skywest could afford to buy Comair AND ASA. In fact, they probably couldn't even buy comair OR ASA as whole units. They could however, hedge their future by attaining certain assets that are currently on the wholly owned property.

Delta can pressure asa pilots by selling a/c to skywest and a long term contract for say, I don't know 17 CRJ-700's. Thus, scaring ASA pilots into a substandard contract. Why would Skywest invest EVERYTHING they have in 70% of ASA? They would have to finance the rest. This goes against everything they have done. Shareholders would be appalled. That defies the purpose of hedging. Comair will be an IPO or wholly owned. There is no other way. DCI was working, Butrell is at Comair for a reason.

Here is SKYW balance sheet. All nunbers are in thousands.

AssetsCurrent AssetsCash And Cash Equivalents53,566 79,645 70,842 121,567 Short Term Investments444,191 397,590 385,243 358,827 Net Receivables94,401 84,768 81,640 75,100 Inventory33,244 31,122 27,266 26,080 Other Current Assets91,065 92,842 109,347 88,794 Total Current Assets716,467 685,967 674,338 670,368 Long Term Investments- - - - Property Plant and Equipment898,951 909,300 900,406 843,918 Goodwill- - - - Intangible Assets- - - - Accumulated Amortization- - - - Other Assets16,464 16,519 16,527 14,924 Deferred Long Term Asset Charges- - - - Total Assets1,631,882 1,611,786 1,591,271 1,529,210 LiabilitiesCurrent LiabilitiesAccounts Payable118,976 113,633 101,986 107,572 Short/Current Long Term Debt33,371 32,587 33,151 30,877 Other Current Liabilities17,478 14,954 17,005 13,510 Total Current Liabilities169,825 161,174 152,142 151,959 Long Term Debt474,286 479,857 490,924 462,773 Other Liabilities- - - - Deferred Long Term Liability Charges230,832 222,191 220,802 205,415 Minority Interest- - - - Negative Goodwill- - - - Total Liabilities874,943 863,222 863,868 820,147 Stockholders' Equity Misc Stocks Options Warrants- - - - Redeemable Preferred Stock- - - - Preferred Stock- - - - Common Stock332,025 331,990 327,357 327,028 Retained Earnings457,932 438,403 420,099 402,469 Treasury Stock(32,551)(20,285)(20,285)(20,285)Capital Surplus- - - - Other Stockholder Equity(467)(1,544)232 (149)Total Stockholder Equity756,939 748,564 727,403 709,063 Net Tangible Assets$756,939 $748,564 $727,403 $709,063

 

[DDpaysoff]

That didn't come out like I wanted it too. Here is a link:

http://finance.yahoo.com/q/bs?s=SKYW

Very healthy company, but in no position to invest 500 million in a company that feeds exclusively to one carrier. I have a feeling this is about CRJ-700's. I hope I am wrong. How are those skyest -700 rates looking anyway?

I KNOW THAT WHOLE 18 MONTH ANYTHING LESS THAN 100 SEATS WILL BE FLOWN AT 50 SEAT RATES THING WAS REALLY ONLY GOING TO LAST 18 MONTHS, RIGHT?

 

[General Lee]

That didn't come out like I wanted it too. Here is a link:

http://finance.yahoo.com/q/bs?s=SKYW

Very healthy company, but in no position to invest 500 million in a company that feeds exclusively to one carrier. I have a feeling this is about CRJ-700's. I hope I am wrong. How are those skyest -700 rates looking anyway?

I KNOW THAT WHOLE 18 MONTH ANYTHING LESS THAN 100 SEATS WILL BE FLOWN AT 50 SEAT RATES THING WAS REALLY ONLY GOING TO LAST 18 MONTHS, RIGHT?

They have over $500 million in cash and a $1 billion line of credit. I bet they can afford it......


Bye Bye--General Lee

 

[DDpaysoff]

They have over $500 million in cash and a $1 billion line of credit. I bet they can afford it......


Bye Bye--General Lee

But, they can't afford the risk? They have a very conservative approach regarding growth. I don't see that changing overnight. But, I suppose if DAL, ''gives them an offer they can't refuse"....

Don't worry, if need be, you can get 450 million from Comair via an IPO. 325 million before pay freeze and a/c. Do you think butrell will get a bonus?

Nice move today on DAL. Crude diving later this week/early next, usair bad news later this week, GA fuel tax limt, Jet Blue raising fares. Nice move coming. Penny to be made.

 

[Dave Siegel]

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

Except for SWA, JB, AAI, Am West, and Frontier, who actually try to treat the passengers well. I guess that's "beneath" AA, DL, and UAL.

 

[Dave Siegel]

Seems to me you Delta boys took Value Jet way to lightly. To let a scumb carrier like that kick your a** in your own backyard (ATL) is a shame. Delta will pull through this and will crush Air Trash, I mean Air Trans in the end. A chapter 11 filing isn't all that bad. Look at UAL and US Airways. From what my sources tell me, Value Jet is struggling much more than they are letting be known. Good Luck Delta. The rest of us are pulling for you.

Delta should be glad that Air Tran (not Air Trans, you uneducated fool) is in ATL, because SWA would have taken over the joint by now.

So why are you so bitter, Snake? Did you get fired by Air Tran? Seems like sour grapes. You should try being happier, like I am. By the way, it's way TOO lightly.

Who are your sources? Larry, Curly, and Moe? They're no Southwest, but it looks like JB and Air Tran are serious, and neither is going away any time soon.

 

[michael707767]

Butrell is at Comair for a reason.

Make no mistake, Buttrell is a Delta boy. He will be back at Delta one day. He could be there for any number of reasons. Could just as easily be there to get you to take pay cuts and sell you as being there to grow the company. But I would not read anything into the fact that Buttrell is there.

 

[MetroSheriff]

The Mechs are just about done, so Freddy says. The stews aren't going to budge.

Who'd a thunk it? The FAs up there in CVG are swingin' bigger stones than the Comair pilots.

Anyone else remember the news footage of the FAs driving around the airport with signs and balloons in support of the comair girls strike? Bet they wish they could have a do over on that.

Give 'em Hell Teamsters!!!

 

[dtfl]

hmm

not Air Trans, you uneducated fool

My FA friend there calls is AIR TRANS. Why? The Transvestite FA It's a joke.

 

[General Lee]

Except for SWA, JB, AAI, Am West, and Frontier, who actually try to treat the passengers well. I guess that's "beneath" AA, DL, and UAL.

Dave,

You didn't see that Delta (mainline) got a respectable third place in the last passenger survey about customer service? (Behind Jetblue and Southwest). Song wasn't even included for some reason. Get your facts straight. And, Southwest never wanted to go into ATL because of the traffic delays. They thought about going into Fulton County Airport, on the NW side of town, but that wasn't allowed. They also thought about Macon, GA, a town 50 SE, but that too was shot down.


Bye Bye--General Lee

 

[DDpaysoff]

Make no mistake, Buttrell is a Delta boy. He will be back at Delta one day. He could be there for any number of reasons. Could just as easily be there to get you to take pay cuts and sell you as being there to grow the company. But I would not read anything into the fact that Buttrell is there.

I should have elaborated. He is not at comair to hand over a well oiled machine to skywest in six months. He is at comair to ensure the operation is strong on its own or efficient as an entity for DAL. Which one, your guess is as good as mine, but looking at DAL cash position 450million in CASH, is a pretty good size bandaid. But, if they sell comair it will leave one heck of a scar.
Which tells me if DAL is FORCED TO SELL COMAIR AND ASA, then comair and asa would not want to be owned by DAL anyway, because they would truly be in their last days out of ch. 11.

If they do keep one of the DCI wholly owneds you can bet the operation would have to be super-competitive and lean. Much like what butrell is trying to transition comair into.
Sure, Buttrell is probably doing his DAL CEO internship at Comair, I agree with you on that.

 

[michael707767]

I should have elaborated. He is not at comair to hand over a well oiled machine to skywest in six months. He is at comair to ensure the operation is strong on its own or efficient as an entity for DAL.

Sure, Buttrell is probably doing his DAL CEO internship at Comair, I agree with you on that.

Buttrell is there to do whatever Grinstein wants him to do. If thats means sell CMR to Skywest, he will do it. If that means make CMR stronger, same thing. But have no doubts as to who is really calling the shots.

 

[FDJ2]

But, if they sell comair it will leave one heck of a scar.

DAL already has that scar in the form of a $1.4B write down of ASA/CMR last quarter. It appears as if DAL has already come to the conclusion that owning ASA/CMR has resulted in a huge loss. As Grinstein has acknowledged in the past, DAL can still enjoy the economic benefit of ASA/CMR small jet lift without owning the equity in the companies.

 

[KingAirKiddo]

Who'd a thunk it? The FAs up there in CVG are swingin' bigger stones than the Comair pilots.

Anyone else remember the news footage of the FAs driving around the airport with signs and balloons in support of the comair girls strike? Bet they wish they could have a do over on that.

Give 'em Hell AFA!!!

They're actually Teamsters. Feel free to carry on in your Comair bashing now.

KAK

 

[MetroSheriff]

They're actually Teamsters. Feel free to carry on in your Comair bashing now.

KAK

Thanks. I edited my post to reflect the proper bargaining agent.

It's not bashing. Just a sad statement of fact.