Leave SWA for AA or Delta?

[General Lee]

I would suggest taking a bigger picture view to your decision. That is, financial stability. Southwest has never been sexy in the good times, but it is built for bad times. Delta, AA - they do really well when times are good; and times are very good right now. Regardless, Delta still has a negative 12.5 Billion dollars in liabilities. SWA has a positive 6 Billion in assets. That's a total balance difference of over 18 Billion dollars. As we have learned over the past decade, things can change quickly in this industry. SWA work rules and pay are nothing to shake a stick at. While the future at Delta and AA looks bright, and I hope they stay that way - you are trading a known quantity for an unknown quantity. My .02

Uhhhh, not really. DL's debt is down below $10 billion (down from $18 billion just 5 years ago), and so much money is being generated that the new target is $7 Billion by the end of next year. I don't think the World economy is all that great, but DL still made a $1.37 BILLION profit in one quarter! That is called a revenue and profit machine. DL management has out played almost every other airline team out there, had a smooth merger, and even thought "outside the box" and bought a refinery, which now is producing a profit.

SWA on the other hand doesn't really know what kind of carrier it is. LCC? Not like Spirit or Frontier coming up here. A legacy? The fares seem like it, but it doesn't want to charge for bags, even though AT still does... The latest growth spurt increased seats, but not planes, substituting larger 738s for outgoing 733s and 735s. More seats, fewer planes, that equals stagnation.

You are right about known quantity vs unknown. It is known that the 3 legacies will retire 15,000 pilots vs SWA retiring maybe 1000 over the next 10 years. What is unknown is how long it will take an FO to upgrade at SWA in the future. AT pilots will rightfully take bids to get that left seat again, and overall they are a young group. The bottom third at SWA may stay that way for years.

So, the choice is out there. 3 legacies that are making money, and growing stronger thanks to Consolidation, or staying put, waiting for years, hoping for a better next contract.


Bye Bye---General Lee

 

[EngineThunder]

Its easy to reduce billions in debt when you stop paying bills and force the pilots to take a 40% paycut. Are the Delta pilots back to pre BK wages yet?

 

[learherkjay]

Your talking about pure debt. I'm including total liabilities which is a higher number. Regardless, I'm happy Delta is making money despite all of the people that got screwed in the bankruptcy process (must be nice to not have to pay all of your bills). Regardless, it will take will take Delta 18 or more consecutive record quarters to match the overall financial position SWA is in presently. With the cyclical nature of this industry. It's a stretch.

Uhhhh, not really. DL's debt is down below $10 billion (down from $18 billion just 5 years ago), and so much money is being generated that the new target is $7 Billion by the end of next year. I don't think the World economy is all that great, but DL still made a $1.37 BILLION profit in one quarter! That is called a revenue and profit machine. DL management has out played almost every other airline team out there, had a smooth merger, and even thought "outside the box" and bought a refinery, which now is producing a profit.

SWA on the other hand doesn't really know what kind of carrier it is. LCC? Not like Spirit or Frontier coming up here. A legacy? The fares seem like it, but it doesn't want to charge for bags, even though AT still does... The latest growth spurt increased seats, but not planes, substituting larger 738s for outgoing 733s and 735s. More seats, fewer planes, that equals stagnation.

You are right about known quantity vs unknown. It is known that the 3 legacies will retire 15,000 pilots vs SWA retiring maybe 1000 over the next 10 years. What is unknown is how long it will take an FO to upgrade at SWA in the future. AT pilots will rightfully take bids to get that left seat again, and overall they are a young group. The bottom third at SWA may stay that way for years.

So, the choice is out there. 3 legacies that are making money, and growing stronger thanks to Consolidation, or staying put, waiting for years, hoping for a better next contract.


Bye Bye---General Lee

 

[redflyer65]

I would suggest taking a bigger picture view to your decision. That is, financial stability. Southwest has never been sexy in the good times, but it is built for bad times. Delta, AA - they do really well when times are good; and times are very good right now. Regardless, Delta still has a negative 12.5 Billion dollars in liabilities. SWA has a positive 6 Billion in assets. That's a total balance difference of over 18 Billion dollars. As we have learned over the past decade, things can change quickly in this industry. SWA work rules and pay are nothing to shake a stick at. While the future at Delta and AA looks bright, and I hope they stay that way - you are trading a known quantity for an unknown quantity. My .02

12.5 Billion with a B? That's a lot of debt to carry. Hopefully that won't send them back into bankruptcy. I guess there's a lot of pension obligations.

 

[vixin]

3 legacies that are making money, and growing stronger thanks to BANKRUPTCY

I fixed it for you.

 

[General Lee]

12.5 Billion with a B? That's a lot of debt to carry. Hopefully that won't send them back into bankruptcy. I guess there's a lot of pension obligations.

Red,

As Avi Saltzman stated in a Barron's article last year:

"Because of federal legislation, the pension doesn't need to be fully funded until 2031; Delta's obligation in the next five years is about $700 million annually. The value of its obligation depends on interest rates. If they rise, it could fall considerably."

So Red, when you make $1.37 Billion IN ONE QUARTER, it seems like you can handle payments like that. Bringing the overall debt below $10 Billion already saved DL $500 million per year in interest payments alone. And cutting the overall debt in half since 2009 is impressive.

Hey, since you guys are so financially sound, I bet you will get a huge raise in the next contract talks, probably the first day of negotiations..... Yeah, that's the ticket.....


Bye Bye---General Lee

 

[redflyer65]

General,

I'm not sure what our negotiations have to due with Delta's huge debt, but I hope you guys can service it. The interest payment alone must be huge. I was thinking about investing in Delta, but that kind of debt is questionable. Similar to GM's debt out of bankruptcy vs. Ford who has a strong balance sheet and never filed for bankruptcy.

How do you go thru bankruptcy and come out with Billions in debt? Interesting.

 

[General Lee]

General,

I'm not sure what our negotiations have to due with Delta's huge debt, but I hope you guys can service it. The interest payment alone must be huge. I was thinking about investing in Delta, but that kind of debt is questionable. Similar to GM's debt out of bankruptcy vs. Ford who has a strong balance sheet and never filed for bankruptcy.

How do you go thru bankruptcy and come out with Billions in debt? Interesting.

I fixed my post above to answer all your questions. The debt service was reduced by $500 million alone per year going below $10 Billion. And, here is the quote again from the Barron's Magazine about the pension obligations, just so you'll finally understand:


"Because of federal legislation, the pension doesn't need to be fully funded until 2031; Delta's obligation in the next five years is about $700 million annually. The value of its obligation depends on interest rates. If they rise, it could fall considerably."


So, 18 more years to service the pensions, and this is probably the start of many very profitable years (this year over $2.5 billion likely, which you make in 4 years), and rumor has it it's getting better and better...

I can see you like to dodge new contract questions. It's gonna get rough for you guys---remember, you're a LCC, right? GK probably wants to see that again. Good luck, we're all counting on you... I hope your union didn't promise anything during the SLI stuff???


Bye Bye---General Lee

 

[redflyer65]

I can see you like to dodge new contract questions. It's gonna get rough for you guys---remember, you're a LCC, right? GK probably wants to see that again. Good luck, we're all counting on you... I hope your union didn't promise anything during the SLI stuff???


Bye Bye---General Lee

I didn't dodge anything. We were talking about the huge Delta debt. I'm not sure why YOU decided to talk about our negotiations (which has nothing to do with Delta). I know your concerned but I promise all will turn out well General. I'd worry more about Billions in debt vs. standard pilot negotiations. Ones a little bigger than the other but thanks for trying to spin it off the subject.

Gary also knows we have 41+ years of profits and 42 is right around the corner with big profit sharing. I'm sorry you guys had to go through bankruptcy with billions of debt on the other side of that. Good luck, maybe you could put together a couple of years of consecutive profits. I'm pulling of you!

 

[General Lee]

I didn't dodge anything. We were talking about the huge Delta debt. I'm not sure why YOU decided to talk about our negotiations (which has nothing to do with Delta). I know your concerned but I promise all will turn out well General. I'd worry more about Billions in debt vs. standard pilot negotiations. Ones a little bigger than the other but thanks for trying to spin it off the subject.

Gary also knows we have 41+ years of profits and 42 is right around the corner with big profit sharing. I'm sorry you guys had to go through bankruptcy with billions of debt on the other side of that. Good luck, maybe you could put together a couple of years of consecutive profits. I'm pulling of you!

Red, this thread is about a SWA guy thinking about leaving for AA or DL. I think talking about your upcoming contract talks is appropriate.

I like that you state there was debt on the other side of BK. Many Corndogs think you shed everything in BK, and obviously that is not totally true. Sure, some creditors lose out, and the credit rating goes down the toilet. Since then though, DL's performance has been stellar, cutting capacity, adding ancillary fees, having a smooth merger, and cutting debt quickly. $17 billion in 2009 to less than $10 Billion 4 years later, with $3 Billion more scheduled to be paid down by next year. To do all that and remain profitable is very impressive, and something that should be noted. Consolidation only helps the big 3, and you guys downsizing ATL after buying AT really helps.

Just making $1.37 billion in one quarter shows the revenue strength DL has. I'm glad you're pulling for us, but I'd be more concerned about maintaining your status quo this next contract, I think your boss is gunning for cuts. I think he wants more profits, not just consistent profits, larger profits. Good luck pal, fingers crossed for you guys!


Bye Bye---General Lee