Experts predict Comair may be sold

[9rj9]

and if...

Selling a WO doesn't solve all the problems. Delta would have to set a long term contract and future growth for the stock to have any value. Wall street would be very skeptical if they thought the WO would become obsolete. Delta would have to own a large chunk of shares to retain control, then killing us off would be a even bigger loss. Selling Comair or ASA would be the best thing to happen to the WOs.

 

[wms]

After they spin off the WOs they could file ch 11 and contract the international, LCC and domestic flying. They could be an airline in name only and really just be an air travel broker like in the charter industry.

 

[Heavy Set]

Sleepy,

Sounds like a great concept - a virtual airline.

With COEX as a model working well for Continental, I think it is highly probable that Delta would at least seriously consider spinning off ASA and Comair to the public (like COEX). With the operational relationship staying the same (with contracts), Delta really does not HAVE to own its regionals. CHQ and ACA do a great job and they are not wholly owned. Why can't ASA and Comair do the same great job and not be owned? If Delta could spin off ASA and Comair and make some money out of it and yet maintain operational continuity, then it probably should... The business case is there for it and the airline analysts (who don't know everything) agree with it.

On the plus side for Comair/ASA, you guys would likely have fewer growth constraints so long as you could win contracts with multiple carriers (like Skywest and CHQ).

9rj9,

There is no reason why Delta needs to maintain control (or 51% equity). Delta has plenty of low-cost feed alternatives from which to choose. All of the regionals would like to secure contracts with Delta - especially a healthy Delta. CHQ and Skywest do a great job despite zero ownership link. All Delta would have to do is hold the carrot out for the regional partners and future contracts would rely upon quality and dependability (contract performance). Sure, there would need to be a contract in place for the IPO valuation - but it would be for 3-5 years max (it could offer a longer contract period if the cost of business declined - to cover any risk that it could find a cheaper partner in the future). There is no reason for Delta to maintain any equity because CHQ, Skywest and ACA have proven that they can provide great feed and good service despite zero ownership link.

 

[MedFlyer]

Re: What is the benefit of full ownership???

Playing devil's advocate - why should Delta be responsible for all of those regional airplanes and employees when it doesn't have to be? Why shouldn't Delta outsource to lower bidders like Skywest, CHQ and Skyway given that they do provide good and dependable service like ASA and Comair? The LCC environment has changed ALL OF THE RULES and lower cost will be the name of the game.... Never say never. I am sure DAL management is already considering these sobering facts...

You know...you're right. DL really shouldn't own anything....they should just become one big holding company.

Why not spin off the international operations to Air France? Look at the list of benefits.

1) You get cash from the initial offering (considering how profitable the General says international is, DL should easily recoup 1-2 billion)
2) You can maintain the same operational benefits as DL currently gets the codeshare with AF....only more.
3) DL can shift debt to the new "Delta International (operated by Air France)" spinoff
4) Reduce future debt by not having to buy any of those expensive 777s
5) You could force Air France to compete for the work with any other international carriers
6) The French may be a bit rude, but AF's service has to be better than DL's current piss-poor international service.
7) Fewer HR headaches...if AF strikes (and being French you know they will) increase Alitalia feed

Why should DL be in charge of all these complex international operations? Why shouldn't DL outsource all international flying to the lowest bidder (like Air France, Alitalia or Virgin) given they already provide dependable service which is superior to DL's existing service?

You know Heavy Set, if you can't make a living flying, I'm sure there would be room for you in Management. You'd make your big papa, Frank Lorenzo, proud.

I'm sure DL will probably sell Comair or ASA off eventually and it will probably blow up in their face...just like every other move DL management has made.

 

[Heavy Set]

Medflyer,

Don't get me wrong, I am a realist - I do not support DAL management because I don't trust them at all (I don't trust most airline managements). Leo and his team were snakes - nice "secret" retirement plans. The LCC environment has changed everything and all bets are off when costs are concerned as Delta approaches bankruptcy. I know a lot about bankruptcy from my job experience - so now I am a realist.

Don't shoot the messenger. You have to agree that COEX serves as a good model for spinning off ASA and Comair - that's the truth. Now AirTran is severing its CRJ relationship with Air Whiskey. Airlines like Jet Blue are ordering 100 seaters and redefining low-cost/low-fare flying in small-to-midsize markets. Airports like ORD are becoming slot constrained and the role of the CRJ/ERJ is under scrutiny from many angles (including Mike Boyd and Grinstein) - not just me. These are trends that I am sure DAL management are acutely aware of - not just me. We'll have to see what Grinstein plans to do in August...

 

[9rj9]

Heavy Set

I disagree, and think Delta would have to keep a large chunck of stock. If not someone could come in and take the company away from Delta, just like Mesa tried with ACA. Also the IPO would be worth much less if mother Delta was unwilling to tie her own hands to the company. I still think it would be the best thing for the WOs.

 

[General Lee]

9rj9,

Not if you sign a 10 year contract with certain provisions stating a certain amount of time before cancelling a contract. Just remember---"A contract is a contract......" (Thanks Leo--enjoy the $16 million)

Bye Bye--General Lee

 

[sleepy]

Sleepy,

Sounds like a great concept - a virtual airline.

With COEX as a model working well for Continental, I think it is highly probable that Delta would at least seriously consider spinning off ASA and Comair to the public (like COEX). With the operational relationship staying the same (with contracts), Delta really does not HAVE to own its regionals. CHQ and ACA do a great job and they are not wholly owned. Why can't ASA and Comair do the same great job and not be owned? If Delta could spin off ASA and Comair and make some money out of it and yet maintain operational continuity, then it probably should... The business case is there for it and the airline analysts (who don't know everything) agree with it.

On the plus side for Comair/ASA, you guys would likely have fewer growth constraints so long as you could win contracts with multiple carriers (like Skywest and CHQ).

I agree Heavyset. I just wonder why the same thing would not work for mainline as well?

DAL could contract everthing out. DAL Global Services could work on a contract basis providing ground support, gate support and FA's to DAL and other carriers. They could contract maintenance to DAL Technical Services, or to someone else if they ever unionize. They could contract the international flying to DALPA or some other member of the SkyTeam. They could do the same thing for all domestic flying as well (a company like Ryan that AirTran uses could probably do it doe less than DALPA).

Of course they would have to use bankruptcy to gut your PWA, and I don't wish this on you. Think of the flexability they would have to compete with the LLCs. Everything contracted out to the lowest bidder. The ability to quickly adjust to market forces. The ability to provide contract services to other airlines and industries.

 

[FlyComAirJets]

Clearly, a nerve has been struck, and Heavy and Gee Lee are exploiting it. What, insults and intimidation aren't working for ya? Trying to play up regional pilots' fears is thier latest ploy. When Heavy shrugs and says, "I am a realist ... don't shoot the messenger," he is clumsily doing just that.

Gee Lee tips his hand when he balances the benefits of an IPO (money for Mother Delta and the maintenance of their disproportionate contract) with the onerous burden of a ten year contract to keep the W.O.s under their thumb. Can't blame you for wanting your cake (and our cake) and eating it too.

Which is why it aint ever gonna happen. There is no way Delta is going to give the mainline pilots another couple hundred million dollars to blow through like drunken sailors.

Post pay cut and/or BK will have unintended consequences for you, Heavy and the General. Sleepy got it right (hey, I said the same thing a week ago at the beginning of this thread). If Delta reinvents itself as a virtual airline, we will ALL be spun off into the utilmate free for all. No longer will it be a ten thousand pilot behemoth stomping on thousand pilot subsidiaries, we'll all be similar sized entities competing head to head in the ultimate capitalist arena. I like our chances, you should be the one's sweatin' now.

 

[surplus1]

I like our chances, you should be the one's sweatin' now.

They are the one's sweating and that is why you're getting all the anti-CMR/ASA rhetoric.

They think that if they can "get rid" of us, their world will improve. Stress often causes delusions and that's what your seeing.