Latest ASA INFO????

[atrdriver]

We could all speculate on the ASA/CMR unaudited numbers, but if they were to branch out from the protected umbrella of a contract carrier, I doubt they would do any better then Independence.

Which is my point exactly.

atrdriver

 

[bvt1151]

DOT numbers are audited and by the DOT and fines are levied if incorrect data is reported. Its in CFR 241. Look at the DOT dockets sometime to see what kind of penalties are levied.

Comair and ASA's numbers are very accurate. They do not come from Delta HQ, but rather their own respective HQ's. The argument that low advertising expenses means numbers aren't accurate is moot. The advertising expenses are so low because they are accurate. I can't believe you're pointing at numbers that make up less than 1% an airlines operating expenses, and saying all numbers are innaccurate. Even if Comair and ASA were required to pay there "share" of advertising, whatever that is, it would still be well below $1 million. Comair and ASA are profitable after all expenses are included. period. Those expenses include all depreciation, landing fees, fuel, interest, leases, and rental fees from use of "outside equipment" (DAL facilities). These are not "free", like so many have tried to claim.

Its like trying to explain accounting to kindergarteners.

 

[atrdriver]

Even if Comair and ASA were required to pay there "share" of advertising, whatever that is, it would still be well below $1 million. Comair and ASA are profitable after all expenses are included. period. Those expenses include all depreciation, landing fees, fuel, interest, leases, and rental fees from use of "outside equipment" (DAL facilities). These are not "free", like so many have tried to claim.

Its like trying to explain accounting to kindergarteners.

Do you really believe that DAL only spends $3 million on marketing? And what about all the expenses of using DAL's baggage system in ATL? I don't know about CVG, but in ATL all connecting bags are handled by DAL employees. I am not saying that ASA and CMR aren't profitable, because I believe that they are...I am saying that DAL doesn't pass along all the costs that we incur from using their reservations, marketing, baggage handling, and all the other resources that they provide.

And as far as providing false numbers to DOT, how do you explain that ASA reports "out" times as when the door closes, not when the aircraft moves? The plane can leave the gate area 3 hours late, but as long as the door closes on time that's how it's reported, and the DOT is fine with it...real accurate...

BTW, I got all A's in college accounting classes

atrdriver

 

[bvt1151]

And audits are performed and when those numbers are considered innaccurate the airline is heavily fined.

But Comair does all of their own sorting in CVG, does DAL pay for that? I do know that DCI pays for each DAL outstation they use. Whenever they need to call DL Mx, the DCI carrier gets billed.

IndyAir is a perfect example of where costs would be if there was no code-share. Unfortunately for Indy the problem isn't expenses, its revenues. Even with Indy's cost structure (which both Comair and ASA have proven to be well under) CMR and ASA would be well into the black.

The point is, even if you add in all the numbers you claim makes all the difference in the world, Comair and ASA would still be making money hand-over-fist. Basic economics explains why they don't add those numbers.

 

[FDJ2]

DOT numbers are audited and by the DOT and fines are levied if incorrect data is reported. Its in CFR 241. Look at the DOT dockets sometime to see what kind of penalties are levied.

Comair and ASA's numbers are very accurate. They do not come from Delta HQ, but rather their own respective HQ's. The argument that low advertising expenses means numbers aren't accurate is moot. The advertising expenses are so low because they are accurate. I can't believe you're pointing at numbers that make up less than 1% an airlines operating expenses, and saying all numbers are innaccurate. Even if Comair and ASA were required to pay there "share" of advertising, whatever that is, it would still be well below $1 million. Comair and ASA are profitable after all expenses are included. period. Those expenses include all depreciation, landing fees, fuel, interest, leases, and rental fees from use of "outside equipment" (DAL facilities). These are not "free", like so many have tried to claim.

Its like trying to explain accounting to kindergarteners.

BVT, the DOT numbers are unaudited and do not include the real costs of doing business. Delta can allocate costs and revenue as it sees fit and charge as little or as much as it wants for its rentals and still be in complete compliance. In the real world, Independence had an increase in sales and marketing for the quarter of $12.8M, that's significantly more than the 1% of total costs you wrongly claim. You don't even know what ASA and CMR's advertising burden is. I wonder why? Independence also is now responsible for its own fuel costs. From the Independence SEC filing: "Under the terms of the Company's agreements with United and Delta, those parties had the risks and benefits of changes in fuel prices, and the Company (ACA) was not exposed to fluctuations in fuel prices. " As a result of no longer operating under the mainline umbrella Indepence fuel costs skyrocketted 26.9%. What do your DOT numbers tell you about ASA/CMRs fuel costs? Fuel costs for DAL will cost an extra $650M this year. With about 1/3rd of DAL block hours flown by DCI how much of that cost will show up in your useless DOT numbers you are hanging your hat on. We can also talk about maintenance costs at Independence which increased 22.2% per ASM now that it is an independent carrier. Combine that with a precipitous drop in revenue and it's not a pretty picture.

Once you graduate from kindergarten perhaps you'll understand.

 

[FDJ2]

Unfortunately for Indy the problem isn't expenses, its revenues.

BVT, you have no clue what you are talking about. Indy's CASM balooned to 22.0 from 13.2 after going independent. OTOH, their RASM dropped 8.6%. While a drop in RASM of 8.6% is not good, an increase in CASM of 66.7% is crushing.

"Even with Indy's cost structure (which both Comair and ASA have proven to be well under) CMR and ASA would be well into the black."

Do you really think that ASA/CMR would be profitable if your CASM went up about 66.7% to 22 cents? But then again, who knows what your true CASM is.

 

[ATR-DRIVR]

FDJ2,
you said your fuel cost are going to be 680 million this year, would it have been that much if the fuel hedging contracts had not been sold? If so, then why the F--k is the person who sold them still at Delta??? Is he one of the "57"? Those are the reasons why Delta is where it is now, not because of your contract or DCI. All those bastages should be hung, shot, mutilated and then fired. Your post on the other thread about management was dead on. Your MEC should be asking THOSE questions first, and then talk about your contract.
IMHO.

 

[FDJ2]

ATR, I couldn't agree more. It's not one pilot group or the other that is to blame for the DAL situation, it's management.

 

[bvt1151]

BVT, you have no clue what you are talking about. Indy's CASM balooned to 22.0 from 13.2 after going independent. OTOH, their RASM dropped 8.6%. While a drop in RASM of 8.6% is not good, an increase in CASM of 66.7% is crushing.

Frankly CASM increased so much because so many aircraft were pulled offline. Remember how we calculate CASM? cost/available seat miles. In my kindergarten class I apparently didn't graduate we learned that if you make the denominator smaller faster than the numerator, your total number goes up. Simply put, ACA's CASM rise was not due to so much to rising costs, as it was to much lower utilization. Even with the retirement of the J-41's, daily utilization fell from 7.9 hours per day to 7.5 hours per day(both paltry numbers), and total ASM's fell 7.4%.

Besides, ACA's Q2003 CASM was not 13.2 cents. Try reading the footnotes at the bottom of the 10Q statement. ACA's CASM 2Q2003 was 16.3 cents. ACA's CASM 2Q2004 was 19.9 cents, not 22. Did you not think I did my homework?

Then what exactly caused the CASM rise?
This directly from the 10-Q statement: (Don't worry I'll highlight the important areas for you)

Total operating expenses increased 54.4% to $231.5 million for the quarter ended June 30, 2004 compared to $149.9 million for the quarter ended June 30, 2003. The primary[font='TIMES NEW ROMAN',TIMES,SERIF]

cause of the increase in operating expenses was an aircraft early retirement charge of $21.9 million in the second quarter 2004 compared to a $34.6 million reversal of charges in the second quarter 2003, a substantial increase in the average cost per gallon for fuel, an impairment charge of $3.2 million included in deprecation and amortization, and implementation and sales and marketing costs for Independence Air.

​

The transition of CRJs out of the United Express program and the removal of 17 J-41s during the second quarter resulted in a 7.4% decrease in available seat miles (“ASMs”) for the second quarter. Changes in relative costs per ASM that are not primarily attributable to the changes in capacity are as follows:
​

The cost per ASM of aircraft fuel increased to 3.7 cents in the second quarter of 2004 compared to 2.9 cents in the second quarter of 2003. The increase is primarily a result of a 26.9% increase in the average cost per gallon of fuel to $1.32 in the second quarter of 2004 from $1.04 in the second quarter of 2003. Under the terms of the Company’s agreements with United and Delta, those parties had the risks and benefits of changes in fuel prices, and the Company was not exposed to fluctuations in fuel prices. The Company bears the exposure to increases in fuel prices in its Independence Air operations, and during the second quarter 2004 had no fuel hedges in place to mitigate that exposure.

​

Even with a whopping 26.9% increase in fuel from the loss of United and Delta's "hedges" it sill only increased the casm by eight tenths of a cent​

The cost per ASM of maintenance increased 22.2% due primarily to the expiration of warranties on the CRJ fleet, painting costs of $1.0 million that were expensed for livery changes to Independence Air on the CRJ aircraft, and a reduction in the value of the J-41 expendable parts of approximately $0.4 million.
​

The increased cost per ASM of aircraft rental resulting from the decrease in ASMs was offset in part by the decrease of rental expense for J-41s which have been included in the aircraft early retirement charge.
​

The cost per ASM of sales and marketing increased 240.0% due primarily to initiation of a marketing program to advertise the launch of Independence Air. The costs include $12.1 million for direct advertising via print, television, and radio media and strategic partnerships with local companies in the Washington D.C. metropolitan area. Additional costs incurred that were not incurred in the previous year included implementation of a web-based reservation center and implementation of an in-house and outsourced call center for reservations and customer assistance. The increase in costs related to the marketing of the Independence Air brand is partially offset by decreases in computer reservation fees, which are expensed as incurred, for future flights related to United passengers since the Company will no longer provide services as a United Express code share partner after August 3, 2004.
​

​

Looks like United required them to pay for the reservations fees. But I thought you said that was subsidized. Hmm...

Cost per ASM of facility rents and landing fees increased slightly to 1.2 cents in the second quarter of 2004 from 1.1 cents for the second quarter of 2003. The increase is primarily the result of increases in landing fees charged by airports in the current year and an increase in the number of CRJs used in the United and Independence Air program as CRJs have a higher landing fee rate than J-41s.

​

[/font]

The cost per ASM of depreciation and amortization increased 66.7% due primarily to a $3.2 million impairment loss recognized by the Company in conjunction with the one owned 328JET operated in the Delta Connection program due to Delta’s notice in April 2004 that it will end the Delta Connection agreement, therefore, triggering an assessment of owned assets related to the Delta program in accordance with SFAS 144. An impairment loss to adjust the basis of the owned aircraft to its estimated fair market value was recorded as the carrying value exceeded the undiscounted cash flows of the owned aircraft.

The cost per ASM of other operating expenses increased to 2.1 cents in the second quarter of 2004 from 1.8 cents in the second quarter of 2003. In absolute dollars, other operating expenses increased 9.3% to $22.0 million in the second quarter of 2004 from $20.1 million in the second quarter of 2003. The increased costs were primarily the result of Independence Air implementation costs for consulting and legal fees and, to a lesser extent, the increase in the contingency accrual for a potential FAA fine proposed in June 2004 and a grievance filed under one of the Company’s labor agreements.
​

The cost per ASM of aircraft early retirement charges increased to 2.0 cents in the second quarter of 2004. This increase was due to the retirement of ten leased J-41 aircrafts from the United Express program in second quarter 2004 compared to a reversal of $34.6 million of aircraft early retirement charges recorded in second quarter 2003. The reversal was due to the delay in the retirement plan of the J-41 aircrafts from the United Express program for charges recognized in fiscal years 2001 and 2002.​

Wow, it looks like that huge fuel benefit you're talking about ended up only being an increase of .8 cents in casm when it was taken away. To put this into perspective, Salaries increased .4 cents and Mx increased .4 cents. That makes .8 cents, the same impact as the fuel increase, and this doesn't even take into account the .1 cent increase in aircraft rentals, .1 cent increase in landing fees, .4 cent increase in depreciation, and the whopping 5.1 cent increase in Aircraft Early Retirement charges. If you want to use your 22 CASM number, you'd better be prepared to explain it.

Even the extra reservations fees were attributed to "implementation" rather than "operating". Those will undoubtedly go down.

So lets say we apply these increases to Comair if Delta immediately stopped paying these huge unaudited costs you're talking about. Remember, Comair would not be inventing their own brand, so we wouldn't be including any one-time costs ACA incurred for switching to Indy. In Q4 2003, Comair had a CASM of 10.9 cents. There would be no immediate rise in salary costs since we're not comparing numbers over time. Mx wouldn't increase since there would be no painting, and no extra expirations of warrantees since, once again, we're only taking a snapshot. Fuel would increase casm .8 cents (once again Comairs higher ASM's would dilute this, but we'll use ACA's to be conservative). Ok, so now we're up to 11.7 CASM. Sales and Marketing wouldn't increase near as much as ACA since there would be no implementations of a new brand, which Indy has attributed as the "primary" reason for the casm increase of 1.2 cents. So we'll be conservative again and say "primary" meant exactly 51%, so we'll increase Comair's CASM by .6 cents. 12.3 CASM now. Landing fees nor depreciation would change (nor are they subsidized by Delta). Without all of your excessive subsidies you swear Delta is paying, Comair would still only be at 12.3 casm, and this doesn't take into account the reduction in marketing costs and reservations fees Delta charges. (see marketing section of Indy 10-Q above).

​

 

[bvt1151]

How much is 12.3 CASM? ASA's was at 12.0 and the third-lowest was Express Jet at 12.9. Obviously ASA's CASM would increase if we adjusted it the same way as we did Comair's, as would the rest of the DCI carriers, CHQ and Skywest. There would be no relative increase or decrease between them.

In Q4 2003, Comair's RASM was 13.0 cents. Even with your huge increases from the loss of Delta's subsidies, Comair would still be profitable.

Comair may not be developing a new brand like Indy, but that's not the argument. The argument is whether or not Comair and ASA are profitable for Delta. Obviously they are.

 

[FDJ2]

Frankly CASM increased so much because so many aircraft were pulled offline. Remember how we calculate CASM? cost/available seat miles.

If the aircraft is off line, it does not produce an ASM.

Simply put, ACA's CASM rise was not due to so much to rising costs, as it was to much lower utilization. Even with the retirement of the J-41's, daily utilization fell from 7.9 hours per day to 7.5 hours per day(both paltry numbers), and total ASM's fell 7.4%.

So you explanation for a 67% rise in CASM is a less than 8% drop in utilization. That must be some kindergarten class you went to.

Besides, ACA's Q2003 CASM was not 13.2 cents. Try reading the footnotes at the bottom of the 10Q statement. ACA's CASM 2Q2003 was 16.3 cents. ACA's CASM 2Q2004 was 19.9 cents, not 22. Did you not think I did my homework?

Look close BVT next time you do your homework. You are pointing out ACA's ADJUSTED CASM. ACA's CASM was 13.2 last year and it balooned to 22.0 this year, an increase of 66.7.

The rest of your rambling assume you are still protected by the Delta umbrella and would continue to operate as a small jet provider instead of an independent carrier. If you truly think that you could operate for less than half Indy's CASM, enjoy your life in fantasy land.

 

[bvt1151]

If the aircraft is off line, it does not produce an ASM.

No, but the airplane is still incurring costs, in the form of ownership expenses, plus the painting expense, all of which were figured into the Cost per Available Seat Mile. Aircraft ownership expenses are substantial numbers (average of 2.4 casm industry-wide in the CRJ).

So you explanation for a 67% rise in CASM is a less than 8% drop in utilization. That must be some kindergarten class you went to.

Once again there was no actual 67% rise in CASM. The 13.2 cents and 22 cents were all due to one-time extraordinary items which were in ACA's favor in 2003 (Thereby lowering CASM) and weren't in 2004 (thereby raising CASM). None of these would apply to Comair or ASA, hence your comparison is moot. Actual numbers were 16.3 and 19.9 cents respectively.Apples to apples.
You'd be suprised how much utilization plays in factoring casm. All aircraft ownership casms are directly affected by daily utilization since they are daily fixed costs, rather than an operating cost (like fuel or crew pay). This means the higher the utilization, the more available seat miles you're getting for the same cost...hence lower cost per available seat mile. To illustrate just how much of an effect daily utilization has on casm's, take Delta's MD80's for example. In Q4 2003, they were operating their MD80's at only 5.6 hours per day. This lead to aircraft ownership casm of 2.5 cents and a total casm of 12.6 cents. Compare that with Q1 2004 when MD80 daily utilization jumped to 8.9 hours per day. Aircraft ownership costs fell per seat mile to 1.2 cents, and total casm's were cut in half to a much more respectible (but still the industry's highest) 6.4 cents. Maintenance and crew costs reacted similarly.
In Delta's MD80 costs, there were no advertising fees included, nor any reservations fees, or airport infrustructure requirements, such as baggage handling and gate and terminal expenses. According to your arguments this should put the MD80 on an even keel with Comair and ASA's aircraft. The CRJ-700 was still lower than the twice as big MD-80 at 5.5 operating casm. The 50-seater rang-in at 8.0 operating casm.

Look close BVT next time you do your homework. You are pointing out ACA's ADJUSTED CASM. ACA's CASM was 13.2 last year and it balooned to 22.0 this year, an increase of 66.7.

Once again you need to compare apples to apples and oranges to oranges. If you're trying to use ACA as an indicator to Comair or ASA's profitability, you can't factor in costs exclusive to ACA and apply them to the DCI family. Especially when there is such a clear explaination of why those extra costs were incurred, like a whopping 5.1 cent swing in casm that would have never been incurred had ACA stayed in the United program, much like CMR and ASA will with Delta. There is a reason ACA published the so-called "adjusted" casm, because they were more of an idicator to their real health. Outside of those one-time extraordinary items (which were not operationally oriented) ACA's CASM was 19.9 cents. Not even Delta is incurring the kind of implementation costs as Indy.

The rest of your rambling assume you are still protected by the Delta umbrella and would continue to operate as a small jet provider instead of an independent carrier. If you truly think that you could operate for less than half Indy's CASM, enjoy your life in fantasy land.

I think you may be forgetting your whole initial argument. Remember, you said there was no way to determine whether Comair or ASA were profitable or not. So you wanted to use ACA as an indicator to a regionals true costs, but if you're going to do that, you can't factor in all of the upstart costs Independence has. Comair is not trying to separate from the Delta system, nor is that the argument. There are no upstart costs associated with Comair or ASA, so if we want to find a true representation of all of the "subsidies" you claim are not reported, then you can't look at Indy's "implementation" costs and say Comair and ASA are incurring them. Plain and simple, they're not. One major thing to note from the 10-Q statement, however, is that Indy was required to pay reservations fees, just like Comair and ASA do. This proves that not only are all interest, depreciation, leases, and insurance payments made by the regional, but also fees for other services, such as reservations.

Numbers are easy to twist, and fortunatly there are those of us who can tell when you're twisting them.

 

[Heavy Set]

BVT1151,

You can argue all you want, but business travelers prefer mainline aircraft over RJs - that's a fact. Business people want to stow their bags in bigger bins and pull out their laptops during flight so that they can bill their clients. RJs are business people unfriendly and business people pay the bills....

At the end of the day, comfort matters for a lot of the premium passengers - that's why the EMB-190 will be such a hit for DAL...

 

[bvt1151]

BVT1151,

You can argue all you want, but business travelers prefer mainline aircraft over RJs - that's a fact. Business people want to stow their bags in bigger bins and pull out their laptops during flight so that they can bill their clients. RJs are business people unfriendly and business people pay the bills....

At the end of the day, comfort matters for a lot of the premium passengers - that's why the EMB-190 will be such a hit for DAL...

So we've conceded now that costs aren't Comair's problem, but comfort is? Somebody better tell 'ol Kelleher down in Dallas to pimp them 73's out, quick! Nobody will want to ride on them.

 

[cosmotheassman]

Wasn't the original question about ASA hiring info?? Start a new thread...

 

[FDJ2]

Once again there was no actual 67% rise in CASM. The 13.2 cents and 22 cents were all due to one-time extraordinary items which were in ACA's favor in 2003 (Thereby lowering CASM) and weren't in 2004 (thereby raising CASM).

How much you wanna bet the INdy CASM will be around 22cents next quarter?

 

[sweptback]

You can argue all you want, but business travelers prefer mainline aircraft over RJs - that's a fact. Business people want to stow their bags in bigger bins and pull out their laptops during flight so that they can bill their clients. RJs are business people unfriendly and business people pay the bills....

No, that's not a fact. I think you'll find as many people prefer the extra frequency generated by an RJ over the extra headroom or overhead bin space.

 

[Heavy Set]

Most passengers dread long flights on RJs

sweptback,

I doubt that. Most business travelers go out of their way to avoid RJs if they can. Have you ever heard a passenger deplane and say to you "Thank you for the frequency of your flights"? How many passengers cuss you out due to the lack of space and comfort on long flights? I bet more on the latter. You know it's true......You can take that to the bank, it's a fact ---Jack. What about Airtran and their dropping of RJs? Do they know something you don't? Are they wrong?

 

[bvt1151]

sweptback,

Have you ever heard a passenger deplane and say to you "Thank you for the frequency of your flights"?

Believe it or not (probably not, knowing you), I have heard many passengers say this. I hear "I love these little things" actually quite often. But I'm sure you'll say I'm fibbing, seeing as how many times you greet passengers as they get of an RJ.

How many passengers cuss you out due to the lack of space and comfort on long flights?

Actually I had that happen once. The guy was well over 300 lbs, and he thought he'd get more room in the exit row, which unfortunately has immovable armrests so he was worse off. I can't believe Delta is willing to sacrifice all of their 300-lb and greater passenger business.
On the other hand, I had some very large passengers say they were pleasantly suprised with how much room they had in comparison to the larger aircraft. Say they feel like they've been packed in like sardines to get every last possible seat in. I guess the "no middle seat" concept attracts some passengers.

What about Airtran and their dropping of RJs? Do they know something you don't? Are they wrong?

That argument's getting old, quickly. How many airlines are using, and hoarding, RJ's? Compare that to the only airline that has gotten rid of them.

Delta got rid of their 747's pretty quickly, too. Good thing too, because that airframe will never make it.

 

[Heavy Set]

There also isn't any money in Cargo.... Having recently flown as a pax on the E170, we need to add more of those to the system - they are so much more comfortable than the CRJ/ERJ and retain that "big airplane feel" vs. the CRJ/ERJ "tube" or "submarine" feel.