It's not a question of if it's only a question of when and how DAL will spinoff it's wholly owned.
Institutional ownership at DAL exceeds the average. 81% of DAL is owned by institutions, that's 10% greater than the average airline and 17% more than the average S&P 500 company. When the institutions talk, the BOD and CEO listen, and the institutions are beginning to question why DAL owns the equity in some of its regional feed, when it can get the same service from others without owning the equity.
"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
"Analyst Raymond Neidl of Blaylock & Partners thinks Delta will ultimately sell one or both of the regional carriers to raise money. He noted rivals Northwest and Continental airlines have done the same. "
"I think they're going to do that at the end of the day," he said. "There's no reason for them to hold on to them."
The only real questions are which goes first, ASA or CMR, and will DAL sell off all the equity or part of the equity.
Certainly, small jet lift is important, but there are a host of vendors available to provide that lift, there really is no need for DAL to own ASA/CMR, when it can get the same service without owning the companies. There is no expectation that DAL will ever recoup the billions spent to own ASA/CMR, just another poor business decision, but the liquidity the sale would bring, without the loss of small jet lift, makes sense.
Institutional ownership at DAL exceeds the average. 81% of DAL is owned by institutions, that's 10% greater than the average airline and 17% more than the average S&P 500 company. When the institutions talk, the BOD and CEO listen, and the institutions are beginning to question why DAL owns the equity in some of its regional feed, when it can get the same service from others without owning the equity.
"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
"Analyst Raymond Neidl of Blaylock & Partners thinks Delta will ultimately sell one or both of the regional carriers to raise money. He noted rivals Northwest and Continental airlines have done the same. "
"I think they're going to do that at the end of the day," he said. "There's no reason for them to hold on to them."
The only real questions are which goes first, ASA or CMR, and will DAL sell off all the equity or part of the equity.
Certainly, small jet lift is important, but there are a host of vendors available to provide that lift, there really is no need for DAL to own ASA/CMR, when it can get the same service without owning the companies. There is no expectation that DAL will ever recoup the billions spent to own ASA/CMR, just another poor business decision, but the liquidity the sale would bring, without the loss of small jet lift, makes sense.
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