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?

 

[surplus1]

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,

We all know that Delta has a "consolidated" financial statement with its subsidiaries ASA and Comair. Therefore, it will show in the SEC filing that the debt is "paid by Delta" simply because there is no other financial statement. ASA and Comair have no independent financial statements.

You are playing a game of smoke and mirrors. The question isn't who does the paying, it is where they get the money to pay. It is generated by the revenue produced by ASA and Comair and not only that, there is some left over to help pay the parent Company's bills.

It's an exercise in accounting and you know it. Over the last couple of years Delta has lost billions, and right now Delta doesn't generate enough revenue to pay its own expenses, let alone to pay anything for ASA and Comair. The source of the revenue for payment of ASA/CMR expenses comes from ASA/CMR operations.

Before ASA and CMR became subsidiaries of Delta both were highly profitable for extended periods and both paid their own bills, including the leases of aircraft, which both "purchased" with their own money. Unless Delta management did something to convert them into losing enterprises, their is no logical reason to assume that they can't pay for themselves without Delta's help, just as they did before. Your arguements are specious.

"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.

These self appointed "experts" on whose every word you are willing to hang your hat have a reason for advocating what they do. They have an agenda and it is called self-interest. Should DAL sell ASA and CMR, it will give them new accounts to analyze and draw charts, and make pronouncements about, which in turn will enhance their own exchequers. If analysts were right more often than wrong, we would all be wealthy investors.

You and the other DL advocates of sale have a self-interest as well. You think the money from a sale will somehow improve your own position.

What logical reason would Delta use to justify the sale of ASA and CMR, both of which produce profits for Delta, so that it can pay the money it gets to Delta pilots who currently are not generating any profit? It makes no sense.

When the company has successfully reorganized its overall operations and returned the DAL unit to profitability, that will be the time to consider the spin off of profitable subsidiaries.

When you're in financial crisis you retain assets and reduce liabilities, not the other way around. I understand you guys have your agenda and that's fine. Nevertheless a little more objectivity wouldn't hurt when trying to make your point.

 

[standaman]

Re: Re: Re: Shiddriver

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?

The Jetblue -Comair thing. Just don't see how that would benefit anybody.

 

[Publishers]

Regional Jets

Well is not Jetblue going to employ a bunch of regional jets in the future. This would give them an instant workforce, etc.

Now I do not think it would happen but was trying to point out that someone like Airtran or Jetblue or the new Virgin offering could in fact purchase one of the regionals and have an instant feed etc.

 

[ATR-DRIVR]

Jet Blue is NOT going to employ "regional jets". They are taking the Emb 190/195 airframe. It is not a RJ. It is a coast to coast, .82 airplane with 100 seats. It is not an RJ. As far as the Pilot group, it is just another type at the company. Same pilot list.
Would be just like if you flew a 757 at UAL and bid over to the A-320. Different pay is all.

 

[DDpaysoff]

Surplus, regarding your last post. That is exactly what what I am thinking/saying. I just used less words. This is not even an issue worth talking about.

 

[sleepy]

I would love for ASA and Comair to be sold to JB. Oh please, oh please, oh please!

I won't ever happen, but we would be better off under their management rather than DAL's mismanagement.

 

[JetPilot_Mike]

....and we would get those cool laptops!

 

[JI Gone OH]

NO COMAIR/ASA SELLOFF, ENOUGH ALREADY!!!

Excerpt: Delta CEO resolute on pilot wage cuts (No spin-offs)
The Cincinnati Enquirer 4-24-04

After the meeting, Grinstein shot down the possibility of spinning off regional subsidiaries Comair (based in Erlanger) or Atlantic Southeast Airlines to raise more cash.

"Comair and ASA are valuable assets," Grinstein said. "The price you would sell them for would be what kind of contract you would give for service ... and you would be tying yourself into a long-term obligation.

"It would seem to me to be counterproductive, so we would rather keep them in the role they are in - providing feed for the network."
View complete article at http://www.enquirer.com/editions/20...iz_delta24.html

 

[Heavy Set]

Sure, Grinstein is also willing to run the company into bankruptcy to change the mainline pilot contract... Is he related to Lorenzo?

I guess Bethune was a BUFFOON for spinning off Continental Express...

 

[FDJ2]

FDJ2,

We all know that Delta has a "consolidated" financial statement with its subsidiaries ASA and Comair. Therefore, it will show in the SEC filing that the debt is "paid by Delta" simply because there is no other financial statement. ASA and Comair have no independent financial statements.

You are playing a game of smoke and mirrors. The question isn't who does the paying, it is where they get the money to pay. It is generated by the revenue produced by ASA and Comair and not only that, there is some left over to help pay the parent Company's bills.

How do you know? If as you say our financial statements are consolidated, which I agree they are to a large extent, how do you know how much revenue ASA and CMR produced and how do you know what ASA and CMR's costs are? Exactly how much revenue did CMR produce last quarter and exactly what did CMR pay in costs?

Delta chief financial officer Michele Burns said Delta pays for all but operational costs for a Comair passenger, with such costs including the debt for new airplanes, marketing and distribution and other costs.