Experts predict Comair may be sold

[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?