"If Delta does not take delivery of CRJ jets"

[ekuflyer]

UPDATE 1-Bombardier Aerospace to cut 2,000 jobs, may cut more
Thu Oct 7, 2004 09:54 AM ET
(Updates with details, paragraphs 4-9. In U.S. dollars unless noted)



TORONTO, Oct 7 (Reuters) - Bombardier Aerospace said on Thursday it will cut about 2,000 jobs at its Montreal-area and Belfast operations and the severance costs linked to the layoffs will affect current year results.

The unit of plane and train maker Bombardier Inc. (BBDb.TO: Quote, Profile, Research) said the move comes as it attempts to align its production levels with anticipated market demand.

The jobs will be cut over a nine month period beginning in November and cost about $26 million in severance costs which it will expense over the fiscal year ending Jan. 31, 2005.

"As a consequence, Bombardier Aerospace cannot maintain its previous guidance of break-even at the earnings before income taxes level for the current fiscal year," the company said in a release.

The company said it will change production rates for its CRJ200 Series planes next year to one every four days compared with one every three days previously. Bombardier said aircraft deliveries for this fiscal year will not be affected.

However, the company noted the financial difficulties facing one of its major customers, Delta Air Lines (DAL.N: Quote, Profile, Research) , and said it could be forced to cut the production rate further if Delta does not take delivery of CRJ jets.

Bombardier also said it could cut an additional 1,200 jobs under that scenario.

Delta, the No. 3 U.S. airline, has warned of bankruptcy within weeks unless it obtains major cost cuts.

Bombardier class B shares fell 13 Canadian cents to C$2.85 on the Toronto Stock Exchange where it was the most actively traded stock in early trade. ($1=$1.26 Canadian)

 

[MedFlyer]

Nothing surprising about this. If DL goes BK, it's likely the RJ deliveries will be at least delayed, if not cancelled altogether.

 

[General Lee]

We really don't know what will happen if we go Chap 11. They may sell off one or both of the DCI units, and then some new corporation would be responsible for any new CRJ orders, and the debt associated with them. I think the current "plan" is still the plan--with expansion of ATL, SLC and CVG---but I don't know about any future expansion. We may have enough RJs right now, or maybe too many. It will be interesting......



Bye Bye--General Lee

 

[spinproof]

We really don't know what will happen if we go Chap 11. They may sell off one or both of the DCI units, and then some new corporation would be responsible for any new CRJ orders, and the debt associated with them. I think the current "plan" is still the plan--with expansion of ATL, SLC and CVG---but I don't know about any future expansion. We may have enough RJs right now, or maybe too many. It will be interesting......



Bye Bye--General Lee

zzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzz.........
.....uh...huh...whatdid he say....?....zzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzz

 

[General Lee]

Spinproof is the man! He know's it all! Ah Yeah! ZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZ

 

[Tomct]

General Lee, I see what your saying, but why cut off your nose to spite your face. It does not seem to make much sense to sell off ASA/COMAIR when they are generating so much money for the company...I know that our management here at ASA is trying to tell us that we are not doing to well, due to the fact that we are in negotiations, but talking with our chief pilots, I am hearing a whole different story... Of course you know how mgt. is, they never want to call the glass half full...It is always half empty!! Who knows, only time will tell...God Bless


....Johnny, what can you make of this? Well, I can make a broach, a teradacle...
...Do you like gladiator movies...
http://forums.flightinfo.com/images/icons/icon21.gif

 

[spinproof]

Spinproof is the man! He know's it all! Ah Yeah! ZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZ

"....I think the current "plan" is still the plan--with expansion of ATL, SLC and CVG---but I don't know about any future expansion. "

Sorry it's just that your replies are so deep and thoughtful ...I..sometimes..nod...zzzzzzzzzzzzzzzzzzzz

 

[bvt1151]

General Lee, I see what your saying, but why cut off your nose to spite your face. It does not seem to make much sense to sell off ASA/COMAIR when they are generating so much money for the company...I know that our management here at ASA is trying to tell us that we are not doing to well, due to the fact that we are in negotiations, but talking with our chief pilots, I am hearing a whole different story... Of course you know how mgt. is, they never want to call the glass half full...It is always half empty!! Who knows, only time will tell...God Bless

ASA and Comair are only marginally profitable for Delta when you consider their high asset value. If DCI makes 16 million for Delta, its still very feasible to sell them for $750 million, especially if it means they go, or its chapter 7. Remember, that ASA and Comair would still be profitable for Delta as seperate companies, which makes the decision even easier. That $16 million in revenue for Delta would probably turn into about $5 million per quarter, but they'd have a whole lotta cash to jumpstart negotiations with the creditors or pilots.
I understand how Comair and ASA fit in with a healthy long term Delta, but what good is long term if you can make it through the short term? Sometimes you have to lose a battle in order to win the war.

 

[Heavy Set]

"....I think the current "plan" is still the plan--with expansion of ATL, SLC and CVG---but I don't know about any future expansion. "

Sorry it's just that your replies are so deep and thoughtful ...I..sometimes..nod...zzzzzzzzzzzzzzzzzzzz

It made sense to me. Perhaps you should play less X-box.

 

[Tooslow]

Blah blah blah blah blah blah blah blah blah blahBlah blah blah blah blah blah blah blah blah blahBlah blah blah blah blah blah blah blah blah blah Blah blah blah blah blah blah blah blah blah blahBlah blah blah blBlaBlah blah blah blah blah blah blah blah blah blahBlah blah blah blah blah blah blah blah blah blahh blah blah blah blah blah blah blah blah blahah blah blah blah blah blah blah Blah blah blah blah blah blah blah blah blah blah. hello!

 

[PHXFLYR]

I don't know General...... I think Spinproof might be on to something.You're starting to sound more like Lowercu in your old age!

PHXFLYR

 

[spinproof]

It made sense to me. Perhaps you should play less X-box.

Well there's a revelation for you!!!

 

[N2264J]

Re: "If Delta does not take delivery..."

Remember, that ASA and Comair would still be profitable for Delta as seperate companies, which makes the decision even easier.

Why do you say that?

Personally, I can't imagine any investor putting money toward Comair or ASA if they still had to be tied to that albatross in Atlanta.

 

[Heavy Set]

Why do you say that?

Personally, I can't imagine any investor putting money toward Comair or ASA if they still had to be tied to that albatross in Atlanta.

Ok, do you have any suggestions on who to tie Comair and ASA to if not Delta? Albatross?

The fact is that Delta, despite all of its bankruptcy posturing, is still in better shape than many others in terms of cash. Sure, bankruptcy might ultimately be used as a tool to deal with the looming pension and debt problems (and they are big problems), but Delta is still operationally pretty strong. The international side is very strong (just added Berlin back to the fold) and the Song experiment has fared pretty well (even Grinstein admitted that).

The pilot group is getting nearer to an agreement that could save the airline close to $1 billion - and that alone (excluding all other cuts) will positively impact the bottom line. Delta has evolved better than any of the other majors in terms of incorporating LCC ideas that work. What has AA done beside cutting costs to the bone? Now AA is replacing the "extra space" between seats created for business people with more seats. Gee, that's a novel idea... Once the debt and pension issues are addressed (either in bankruptcy or outside), Delta will continue to evolve and be in better shape than any major out there. Don't count them out yet.

 

[bvt1151]

Why do you say that?

Personally, I can't imagine any investor putting money toward Comair or ASA if they still had to be tied to that albatross in Atlanta.

You're missinterpreting what I said. ASA and Comair may or may not be profitable as their own company. I'd venture to say they would because that is the only way Delta would get any cash out of the sale...but thats for another thread. What I said was, Comair and ASA would be profitable for DCI. They already are, and after the inevitible rate cuts that both Fred and Randy talked about, Comair and ASA would be even more profitable for DCI, even though they are separate companies.

 

[~~~^~~~]

The fact is that Delta, despite all of its bankruptcy posturing, is still in better shape than many others in terms of cash. Sure, bankruptcy might ultimately be used as a tool to deal with the looming pension and debt problems (and they are big problems), but Delta is still operationally pretty strong.

A loss of $3.58 per share is expected to be announced October 20th. Delta is losing its entire market capitalization every quarter - just amazing.

Bankruptcy posturing., WTF over? How is it that intelligent, highly trained pilots, can be so ignorant when it comes to business?

But it does not matter. I'm standing by my prognostication made four years ago that bankruptcy will be declared Third QTR 04 to First QTR 05. Regardless of whether an agreement is made to gut C2K, the game is almost over. And that probably does mean that DAL will either cancel its 50 seat order, or try some method to secure financing to acquire CRJ700's ( if the money is anywhere to be found ). A likely scenario is that these airplanes are operated by a company with the cash to acquire them, like CHQ.

~~~^~~~

 

[General Lee]

If Delta has to go into Chap 11, it probably wouldn't be in very long(wake up Spinproof). Management only has one union to deal with, and I think (hey Spinproof, wake up please) we already have a deal with management. There are other things now, besides our costs, that are hurting almost every airline---high fuel costs being one of them. We also own more than USAir and United (ASA, Comair, almost all of their RJs, new terminals like BOS) and we would go into Chap 11 with more cash. I also think a sale of ASA and or Comair might be forthcoming (Spinproof--wake up--next time try to contribute something, anything).


Fins,

You need to come down on the dramatics. Grinstein and company will do what they can with their cards, and then if the creditors don't pony up, then they will get it from them in the courts, for even more money.(10 cents on the dollar vs 50 cents on the dollar now)



Bye Bye--General Lee

 

[Heavy Set]

A loss of $3.58 per share is expected to be announced October 20th. Delta is losing its entire market capitalization every quarter - just amazing.

Bankruptcy posturing., WTF over? How is it that intelligent, highly trained pilots, can be so ignorant when it comes to business?

But it does not matter. I'm standing by my prognostication made four years ago that bankruptcy will be declared Third QTR 04 to First QTR 05. Regardless of whether an agreement is made to gut C2K, the game is almost over. And that probably does mean that DAL will either cancel its 50 seat order, or try some method to secure financing to acquire CRJ700's ( if the money is anywhere to be found ). A likely scenario is that these airplanes are operated by a company with the cash to acquire them, like CHQ.

~~~^~~~

Dude, notice that I said bankruptcy might be used as a TOOL to address the pension and debt issues... Get it? I am not saying that Delta won't declare bankruptcy... I think it is quite possible because nobody wants a huge debt load or pension liability hanging over them. Delta will use this threat of bankruptcy to extract more concessions from creditors and labor groups knowing that the creditors will get less and less in bankruptcy (everyone knows that the secured creditors would get some while unsecured would get the remains...). In the end, bankrupcty may still be used - even after the concessions - to wipe the slate clean. Thank God you got your MBA from Harvard and understand everything about business...

 

[sweptback]

We also own more than USAir and United (ASA, Comair, almost all of their RJs, new terminals like BOS) and we would go into Chap 11 with more cash.

I'm pretty sure about half of ASA's RJs are leased. Everything from 870AS down is, at least. That's 50 right there.

 

[General Lee]

So, how many does that make? And didn't we spend $700 million this year alone on RJs? I am not making that up. I guess Comair got those. What about the 70 seaters?



Bye Bye--General Lee