Experts predict Comair may be sold

[Publishers]

Shiddriver

I totally agree --- sell the mainline and keep Song, Comair, and ASA.

The points are well taken, however, i do not think in the case of Pinnacle or Express that the time of contract for services was that long.

Secondly if you want a wild senario, Jetblue buys Comair and overnight has a world class route system.

For all of you thread watchers from old, this is why you do not allow common scope with mainline pilots. If Comair was part of the Delta pilot group, there would not even be this possibility.

 

[FlyComAirJets]

Max pay (& scope) to the last day!

And yet, they are completely ready to fly this whole operation right into the ground just like the USAirways pilots are. Unbelievable.

Nice to hear from you Publishers, sometimes only those who have been there can see where we are headed.

 

[standaman]

Re: Shiddriver

Secondly if you want a wild senario, Jetblue buys Comair and overnight has a world class route system.
.

Know that is some wild scenario. I would love to see an airline like that. We also may get that opportunity soon. The Atlantic Coast Airlines/Independence Air could look exactly like that. All else said I don't think it would be in either companies interest to do something quite as crazy as that.

 

[On Your Six]

Isn't COEX Doing Fine?

How many people a couple years back thought COEX would be spun off from Continental? I think Heavy Set is not too off base. Bethune saw a financial opportunity to get some quick cash (it had very low cash at the time) and it still maintains full operational benefits to this day...

Everyone here has responded emotionally because of the unknown job implications of a spin off. That is understandable. However, COEX has done just fine without full Continental ownership. Hasn't it? Are people concerned that without "Mother Delta's" full financial suport, ASA and Comair won't do as well? Help me understand the cause of this apparent separation anxiety....

The quality argument doesn't fly. Skywest and CHQ provide great quality and they are not owned by Delta. There is no reason to assume that Comair/ASA quality would decline after a spin off - that hasn't been the case with COEX. Plus, there would be quality metrics (on-time performance, customer complaint limits, etc.) built into any feed contract with Delta - just like there are now with ACA, Skywest and CHQ.

I don't think Delta mainline pilots are your enemies here - I think Mesa, Skywest, USAirways (MDA) and other pilots who continue to bring down average industry wages (and make Comair/ASA wage levels stick out like a sore thumb) are the people you should be directing your anger to. Growing ASA and Comair at current wage levels will be more expensive than expanding CHQ and Skywest given their lower operating costs - that's a fact. Anything on this board expressed by Heavy and General are merely statements made by most airline analysts.

I think COEX has proven that a WO regional CAN be spun off to the public successfully - and Continental wins by collecting a lot of cash and maintaining the same operational benefits.

What are the benefits to Delta of full ownership of ASA and Comair when CHQ and Skywest partnerships are working quite well without ownership? Simple question...

 

[ATR-DRIVR]

All of the money ASA/CMR makes goes directly to DAL. DAL pays a fee for SKY/CHQ. Simple answer.

 

[bvt1151]

Remember that Coex doesn't have to compete with the "portfolio concept" that Comair and ASA have to deal with. I believe that XJT is the only operator of RJ's for the Contintental name. That is definately not the case for Comair and ASA.

Frankly put, Comair and ASA could not compete with their current cost structure in a fee per departure environment with the current competition (key word). Coex does not have the internal competition CMR and ASA have.

 

[MedFlyer]

Re: Isn't COEX Doing Fine?

What are the benefits to Delta of full ownership of ASA and Comair when CHQ and Skywest partnerships are working quite well without ownership? Simple question...

Two big benefits:

1) DL keeps all the revenue generated by ASA/Comair...they don't keep all the revenue with SKYW/CHQ.

2) DL has control of ASA/Comair. UA is learning the hard way what happens when you can't control your RJ feed.

I don't think most ASA/Comair pilots are afraid of being spun off. In fact, I think many would rather be spun off, so that when/if DL goes BK, ASA/Comair would be better positioned to pick up new work from other carriers.

I think what most pilots at ASA/Comair don't like (and why they are responding on this thread) is that they don't like being vilified by DL mainline. The ONLY reason that General Lee and others want ASA/Comair to be sold is for their own self-interest (not for the health of DL).

DALPA sold mainline flying away years ago and it has come back to haunt them. Now, the flying is gone and mainline pay is heading for a nosedive. So guys like General Lee are desperate to find someone to blame and find some way to preserve what little is left. They think that selling Comair/ASA might save them from the big concessions that are coming. Notice how the General only quotes the analysts that say sell Comair/ASA, while he selectively forgets to quote the analysts that say selling Comair/ASA won't do DL any good.

 

[On Your Six]

This seems to be a recurring point of contention....

Not a simple answer given that Delta carries all of the RJ debt and would need to finance any future RJ orders. Delta does not pay for Skywest or CHQ fleet additions. Delta does not pay for CHQ or Skywest employee benefits. Fee for departure (like CHQ or Skywest) still allows for incremental profit per flight as well as lower RJ operating costs. IF RJs are deployed to the proper markets (lack of LCC competition with lower fares), there should be a great opportunity to charge premium fares and see some good incremental profit over any fee-for-departure.

Clearly we can agree to disagree on this one. I just think COEX serves as a good model for both sides of this debate....

 

[ATR-DRIVR]

Delta does NOT PAY for the ASA airplanes. I asked this very question to the VP last week and the answer was 'ASA pays for the airplanes from the profits it generates. DL acts as 'middle man' between ASA and the finance people.' So should I call him up and say sorry, mainline says THEY pay for them, do you have another answer?

 

[FlyComAirJets]

Hey Six, ya keep on coming up with compelling arguments to sell ASA/CMR. Using your stellar logic, what keeps DAL management from selling off your division of ma Delta? Seems like it would be a great way to get out from under those ruinous pension liabilities.

BTW, which liability is larger, a bunch of leased RJs (which can always be renegotiated and have some earnings potential) or those huge pension obligations (kinda like what sank ole Pan Am)?

Certainly you wouldn't want to saddle us with that debt, oh mighty sky god of industry.

 

[standaman]

It is so interesting to see that this particular subject has gone on so long. Delta simply is not going to sell either ASA or Comair they are the only components of the company making any money. Stop right there. The only way they would sell either of them would be if the airline was in a life or death struggle. They are not there yet. And let's hope it stays that way.

 

[On Your Six]

FCJ,

I have never worked for Delta. I am a furloughed UAL pilot.

Let's assume that you and ATR are correct and that ASA/Comair covers the debt fully. Well, who guarantees the debt? Delta. Who pays for the reservations or the airport kiosks? Are there specific ASA and Comair reservationists? Do you think that ALL of ASA's and Comair's costs are paid independently from Delta? This argument goes around and around and around.

I wish I had a copy of the Sam Buttrick or Ray Niedl quotes that spell out what I am saying - DAL does not NEED to own Comair and ASA. Continental does not NEED to own COEX. I don't have the quote on me - otherwise I would post it.

 

[FDJ2]

So should I call him up and say sorry, mainline says THEY pay for them, do you have another answer?

DAL pays the debt on the RJs. It's in the SEC filing. The total payments for 2004 will be approximately $500M. Have your VP show you how much they paid DAL for the RJs, because it certainly does not show up in any SEC filing, such as income from aircraft leases.

 

[FDJ2]

I wish I had a copy of the Sam Buttrick or Ray Niedl quotes that spell out what I am saying - DAL does not NEED to own Comair and ASA. Continental does not NEED to own COEX. I don't have the quote on me - otherwise I would post it.

"UBS analyst Sam Buttrick pointed out Delta doesn't need to own the airlines to continue using them to connect to points around the country. Delta could contract with Atlantic Southeast and Comair as it did before buying them. "

"The economic benefit could be maintained without maintaining the equity position," he said.

 

[surplus1]

Re: Re: Shiddriver

All else said I don't think it would be in either companies interest to do something quite as crazy as that.

Which companies are you talking about when you say you don't think it would be in their interest? Are you talking about JBlue/CMR or DAL/CMR?