high interest loan
>>>Sounds like a good sales pitch. Delta needs then $$$, and while there is no illussion that DAL could ever recoup the $$$ poured into CMR, Delta could improve it's equity position and still retain the lift by spinning off CMR and/or ASA. It's really not a matter of if, but when.<<<
you are correct that Delta would improve (temporarily) its cash equity position and still of course "retain the feed". but one look at the economics shows just how desperate a move this would be for Delta in the long run.
I'm just ballparking the numbers so all you C.P.A.'s give me a break, but if i recall correctly, 1/2 of CoEx spun off for about 300M. They are similar to us in size and lift and profitability. so that puts the whole around 600M. But that was a couple years ago, when things were more rozy for "regionals". Heck, every regional with a pulse was taking deliveries as fast as production lines would allow. CoEx had exclusivity too, with 100% jet growth guaranteed.
Now look at Comair for example. They would be hard pressed to get 600M IMHO. We have no exclusivity, have lost every RFP recently, Delta is a lot closer to Bankruptsy now than CAL was then, and there is a glut of RJ's and prostitute airlines more than willing to low ball anyone and everyone to get growth airframes.
So Delta gets 300-500M (max) and in exchange loses that 150-200M per year profit it now "pays itself". That ammounts to a 500M loan once that you have to pay back at 150-200M a year for life! Of course, Delta could always pay an independant Comair way less for its lift, but in doing so they would get even less for any IPO.
Of course they could always find a single buyer, like SKYW, but would they really vaporize 2/3 or more of their sacred cash position to take on a rabid unionized, highest paid pilot and FA airline so they could get a bunch of 20-30,000 hour RJ's at a reduced profit margin?
Hey, either could happen. Delta knows it will never see 2B it originally invested in Comair (more like 5B when you include the cost of massive RJ expansion and that near 1B ivy league labor stand off that saved them 50M)
So you may be right, they could easily sell Comair/ASA. But it would clearly be classified as burning the furniture to heat the house. And I just don't see that happening until Jerry has come back to DALPA for giveback rounds 2, 3, 4 and 5 first. Should it come to that in the first place that is.
