Comair and specifically ASA probably represent more cash value to Delta right now than long-term value. Grinstein is of the opinion (and rightly so) that $240 million a year isn't worth it if you need $1 billion
right now.
Comair has been a very lucky airline, this doesn't mean that within the year we won't find ourselves in a hopeless position. Let it be known, Comair cannot compete against low-ball carriers like CHQ in a fee for departure environment. If the standard profit margin for contract carriers is 7%, you can bet CHQ is close to that number. That means that right now, ASA and CMR have a 7% advantage over CHQ and SKYW. That advantage will evaporate should (when?) Delta IPO the W/O's.
So what happens if CMR or ASA are spun off?
- Merger talks would be all but silenced. We would no longer be owned by the same company and a successful petition to the NMB would be much less likely.
- Growth would stop...at least until CMR/ASA pilots took a pay cut down to CHQ rates (not likely), or until CHQ pilots got a pay raise to CMR/ASA rates (even less likely). Thus growth at Comair/ASA would come to a grinding halt with the endless proposals of pay cuts. Hopefully a halt in growth is as far as it would go, without the jets being reassigned to SKYW or even CHQ.
- Downward pressure on everybody's (especially mainline) wages would be the new norm with no end in sight. Concessions would be a monthly headline at all current Delta-owned pilot groups. The portfolio concept could then be unstoppable at all ALPA carriers.
- RJ's would still arrive at DCI (CHQ) and Delta would still shrink in ranks, this time faster due to the lower labor costs.
- Code-shares for Comair and ASA with other airlines would be out of the question. Firstly, we can't compete. Secondly, Delta will, either by maintaining a controlling interest in the companies, or by force-feeding a long-term contract, not allow another DCI carrier to join ranks with a competitor, or like ACA, become a new competitor.
Explain to me again why the Delta pilots are so interested in seeing ASA/CMR IPO'd when it will mean lower wages and less pilots. What happened to the policy of bringing RJ rates proportionally up to mainline wages as a means of limiting RJ growth? Or is it that some DAL pilots (like the ones posting on this board) have more interest in seeing Comair/ASA fail than Delta succeed?
The writing is on the wall. The fact that ASA was awarded as many jets as they were through the RFP is attractive to future investors. Comair has had a track performance before the buyout that could propell it to a substantial IPO. It doesn't matter if these are really true or not, but whether or not DAL management believe they're true or not. Grinstein has stopped denying the sale of assests and is now replying with "anything is possible."
Comair and ASA leadership (all pilots for that matter) need to stop arguing with the DCI-hating Delta pilots and start asking, "what if they're right? Do we have a plan to prevent what they are suggesting?" Unfortunately our only defense to an IPO seems to be, "they'll never do that." That is insufficient for me. They most certainly could do that, and I don't want to know why they won't, but what we'll do if they do. I will not go down with the ship explaining why it theoretically never should have started leaking.
Delta pilots, stop poking holes in our boat! Don't you realize the answer to the RJ "threat" is higher RJ wages? The trend is going the wrong way and yet you are in favor of that trend?!?! Unbelievable! Why would you possibly demand Comair/ASA pilots "share" in the pay cuts when the difference between mainline and connection pay rates is the problem, not the actual values. RJ's are so attractive to mgmt because they are so much cheaper to operate in proportion to mainline aircraft than they should be. Don't you realize that, according to DOT Form 41 reports and Eclat, the MD-80 costs over 12 cents per ASM (12.6) while the most expensive 50-seater is at 10.3 CASM? 70-seaters are even better at an industry average of 6.5 CASM. To put that into perspective, Southwest operates their 737's at 4.3 CASM. This is a reverse economy of scale. How can a 142-seat aircraft be more expensive per unit than a 50-seat aircraft, and how will lowering the 50-seat costs help bring those numbers back into proportion? The only reason airlines fly larger aircraft is because they cost less per unit to fly. You have made it cheaper to use a smaller aircraft per seat/mile than a larger aircraft, and yet you blame the pilots who are trying to perserve their wages and shrink the difference. Don't you understand that the inevitable Comair/ASA concessions after an IPO would make the situation so much worse for you?
But at least Comair suffers, right?
If DALPA saw past their own current pay check, they'd see that, even though the sale of CMR/ASA means they would have to take fewer cuts
now to save the company, the downward pressure on their pay, and specifically the growth of the ever-hated RJ, only this time at non-ALPA carriers, would mean a much much smaller paycheck in the
long-run. An IPO of Comair/ASA is an unacceptable situation for all ALPA carriers (except of course Mesa). Who would benefit? CHQ, SKYW, MESA, Teamsters, and all managements.
Delta,Comair, and ASA leadership must be willing to use all available power to prevent an IPO.
