More Delta comments....

[General Lee]

From "The Street":


But not all the news is terrible. While Delta's first quarter loss of $3.12 a share was bad, an accounting change makes it look worse than analysts' estimates. Unlike last year, Delta included a $23 million charge related to its fuel hedging activities in its first quarter results. Without it, the company would have lost $3.00 a share, said Michele Burns, company CFO, on a conference call discussing results.

Ultimately, the bad results have a silver lining; they could force employees to cut their pay earlier and deeper than they originally wanted to. A year ago, union groups at AMR (AMR:NYSE - commentary - research), parent of American Airlines, vowed to veto pay cuts before agreeing to last-minute concessions as the company weighed a bankruptcy filing.

"The March quarter results should once and for all convince employees that Delta needs to be restructured -- sooner rather than later," said Linenberg, one of the only analysts to correctly predict Delta's loss. "The extent of the company's deteriorating financials plus growing low cost carrier competition adds to the sense of urgency."


And from the S&P:


Standard & Poor's does not expect that Delta's unrestricted cash balance will continue to decline as it did in the first quarter, when the company made a $400 million debt payment, because revenues (and thus operating cash flow) should strengthen in the second and third quarters and remaining 2004 pension and debt commitments are less onerous. Still, Grinstein's comments indicate that the company is prepared to allow its liquidity to erode further as it pursues concessions from its pilots. Standard & Poor's expects that Delta will eventually achieve a cost-saving pilot contract, but that may not occur until 2005 and may not incorporate all of management's goals.


Bye Bye--General Lee

 

[Medeco]

PR war

Man I wish your MEC would issue a statement today telling the people who care that they are ready to negotiate.

Grinstein continued on the webcast to put 99% blame on the pilots cost and makes a good argument.

He even said that they remain "fully engaged" with the pilots with regard to negotiations. If that is not true, the union should rebut this with a list of times and dates they have proposed to sit down and truely negotiate, and was refused or ignored.


The question of ASA and CMR being sold was touched on twice in which the first time Grinstein laughed it off as though he had not thought this to be an option they have considered, but later went on to say ANYTHING is on the table for discussion. I dont see it happening.

Judgement day will be sometime at the end of the summer, with regard to the "plan" for the company as a whole.

The pension thing was a Strategic option they had planned on regardless of reform. It was also questioned as to ,did they have to do it now.Legally no.

This boils down to a PR war and the pilots will lose if they dont fight back with their own facts and make Grinsein look bad.

As i said before the train is gaining speed and your about to be crushed.


I dont like it anymore than you do!

Medeco

 

[FL000]

Re: PR war

The question of ASA and CMR being sold was touched on twice in which the first time Grinstein laughed it off as though he had not thought this to be an option they have considered

Hopefully he doth not protest too much.

 

[lowecur]

It's interesting to look at the yields posted on the 8K. The North America Yield is (1.5%), Atlantic 3.1%, Latin America 1.5%, and the Pacific (6.6%).

The RASM system-wide is 9.58, and CASM is 10.71. These are both improvements over last year, although the RASM is basically flat. They don't have the breakdown for the RASM for each area, but the Yield gives a good indication of where the company is losing money.

Yields should hover between 10-15% for any airline to have long term stability and be able to survive another down-turn. Delta has it's hands full. Good luck!

 

[~~~^~~~]

Re: PR war

The question of ASA and CMR being sold was touched on twice in which the first time Grinstein laughed it off as though he had not thought this to be an option they have considered, but later went on to say ANYTHING is on the table for discussion. I dont see it happening.

Why not sell off mainline? Or simply replace them with codeshare? How is SwissAir doing these days? Oopsie, I meant to say CrossAir.

You guys need to stop worrying about RJ's and start focusing on the Delta brand. You guys have let the codeshare cat out of the bag and Delta Connection could connect to Delta codeshare without your participation if you don't get your MEC's head out of its collective effluvia accumulator.

 

[MedFlyer]

It's interesting to look at the yields posted on the 8K. The North America Yield is (1.5%), Atlantic 3.1%, Latin America 1.5%, and the Pacific (6.6%).

The RASM system-wide is 9.58, and CASM is 10.71. These are both improvements over last year, although the RASM is basically flat. They don't have the breakdown for the RASM for each area, but the Yield gives a good indication of where the company is losing money.

Yields should hover between 10-15% for any airline to have long term stability and be able to survive another down-turn. Delta has it's hands full. Good luck!

You do realize that those numbers reflect the CHANGE in yield...not the actual yield itself. DL's system wide yield was 12.58 cents.

 

[f9driver]

Delta

General,
You are in denial.... Real bad denial! Your crusade to to convince the world that you are not fat, over-paid prima donnas is not flying. Factual articles and reports are all over the place showing that Delta wages are at a preposterous 47% of REVENUES! Jetblue and Airtran are 27% and AMR is at 40%. It is not only the pilots.... but you are the biggest offenders. Delta is bleeding it's lifeblood out and in this new changed airline enviornment it is not at all certain it can every fully recover. The 21 Billion debt with 3 billion due this year is an almost impossible load for any company. Wake up and smell the roses or you will wind up like we did. JMHO

 

[Delta Po Boy]

Hey F9Driver,

Don't forget to log off when you use a public computer. It looks like Jerry Grinstein posted a message using your user name...

 

[FDJ2]

Revenue increased 4.3%

Capacity increased 3.5%

Unit Costs decreased 3.3%

Operating Margin increased 5%

RPMs increased 6%

ASM increased 3.5%

RASM increased .8%

CASM decreased 3.6%

Passenger unit revenue in Latin America and Atlantic increased 10.9%

So what does management do to make the numbers look as bad as possible?

Answer: Make a $325M voluntary pension contribution to the non contract employees pension fund in March.

 

[Heavy Set]

F9driver,

Were you ever turned down by Delta? Just curious.

I don't think General Lee ever said anything about NOT taking pay cuts. If you don't think there is some sort of shell game going on you are fooling yourself. I guess you ALWAYS take management's word... What about Leo and his secret offshore retirement packages for his lieutenants? I guess you never heard about that?

Perhaps you should read this latest Delta quarterly report given that you have a lot of time on your hands in retirement. Read the section about liquidity - had management not VOLUNTARILY paid the pensions early (pension reform passed last week), Delta would have had a $116 million operating profit last quarter. Is that denial? Everyone agrees that pilot pay at DAL will have to decrease to better compete with the LCCs - no question about that. The pilots have already shown their interest in negotiating pay cuts. General Lee has stated that over and over and over. Would you let management set the pay cuts if you were a Delta pilot or would you negotiate? Again, why should the mainline pilots at Delta be the target for all of Delta's problems all of the time? What about a revenue generation plan going forward? Sounds like Delta is not doing soooooo bad given the potential for operating profit excluding the early pension payment.

You're obviously jealous of Delta pilots and already bored in retirement.... Nice to hear that you relish the bar being lowered for everyone now that you have no skin in the game...

 

[MedFlyer]

So what does management do to make the numbers look as bad as possible?

Answer: Make a $325M voluntary pension contribution to the non contract employees pension fund in March.

It's sad that it has to be this way, but this is how negotiations work. DALPA will NOT get serious about meaningful concessions until the barrel of the gun is pressed against their head. In this case, that barrel is BK. DL management has to drain down the cash in order for that to happen.

It works in reverse, too. When times are good and raises are due, management doesn't negotiate seriously until the threat of a strike looms and they are forced into it. Or in the case of Comair, a strike actually happens.

That's the way the game is played.

 

[lowecur]

You do realize that those numbers reflect the CHANGE in yield...not the actual yield itself. DL's system wide yield was 12.58 cents.

Senility strikes again. Should have looked at it closer. Thanks for the correction.

Correction should read margins should hover between 10-15% between CASM & RASM.

 

[storminpilot]

It's sad that it has to be this way, but this is how negotiations work. DALPA will NOT get serious about meaningful concessions until the barrel of the gun is pressed against their head. In this case, that barrel is BK. DL management has to drain down the cash in order for that to happen.

It works in reverse, too. When times are good and raises are due, management doesn't negotiate seriously until the threat of a strike looms and they are forced into it. Or in the case of Comair, a strike actually happens.

That's the way the game is played.

You are very correct and to add to that I would say Delta management has learned from the USAirways bankruptcy of "get as much as you can". That way you don't have to keep going back every three months to ask for more from the employees.

As stated before on this board, the longer the Delta pilots hold out the more painful the cuts unless someone big takes a dive.

 

[General Lee]

Look at the economy rising. Management can see that, and they are getting nervous. The Wall St. Journal ONline said yesterday that airfares will be on the increase this Summer due to full flights. The only stickler is fuel, and we used to Hedge 50% of our fuel, but for some reason the hedge contract was sold. Why? Good question, and one that will be brought up at the stock holders meeting in 8 days. Management can have immediate savings RIGHT NOW--and a pretty good chunk too if they just sat down and talked---but that doesn't seem to be happening for some reason. Grinstein seems to want to "go for it all"---and I wonder how the stock holders will react to that---since he serves them, right?

Bye Bye--General Lee

 

[f9driver]

Delta

Heavyset
Actually I was hired by Delta in 1963 but decided to ship over in the Navy for two more years and then hired on with Pan Am.

My tone may seem a little harsh or demeaning and that is not my intent. While covering the airline news for my son, who has been called up to go to Iraq, I became interested in this site. While reading it, it reminded me so much of the attitudes of a lot of my group 25 yrs. ago: We will give back when THEY do, when management has a plan we will donate, we are keeping up the standards of the industry, our MEC knows and sees the real books, we have hired "x" to protect our interests and many, many more. It is amazing how the arguments remain the same.

Let's face it you probably never will get a "miracle" management. Your givebacks DO make a difference. It IS dangerous to be paying top wages with borrowed money. Despite many other causes debt was Pan Am's biggest problem and may be yours too. At some point it becomes fatal. I was just trying to say I see many parallels. Pilots are often to proud to get down, get humble and get realistic.
I don't know Grinstein but I am sure I have met his clone. Sometimes those guys are right though.

 

[Mu2Driver]

Hey General,

This article from Yahoo states that Delta's cash position is now down to 2.18 billion at the end of March from 2.71 billion at the end of December.

http://biz.yahoo.com/ap/040414/earns_delta_88.html

I thought you have been saying that Delta's cash position was going to remain steady. That is a decrease of $530 million. How low before Ch. 11 is a necessity?

 

[MedFlyer]

Look at the economy rising. Management can see that, and they are getting nervous. The Wall St. Journal ONline said yesterday that airfares will be on the increase this Summer due to full flights. The only stickler is fuel, and we used to Hedge 50% of our fuel, but for some reason the hedge contract was sold. Why? Good question, and one that will be brought up at the stock holders meeting in 8 days. Management can have immediate savings RIGHT NOW--and a pretty good chunk too if they just sat down and talked---but that doesn't seem to be happening for some reason. Grinstein seems to want to "go for it all"---and I wonder how the stock holders will react to that---since he serves them, right?

Bye Bye--General Lee

So General, do you only want DL to just survive? Do you want DL to be paralyzed by having the highest costs in the industry like USAirways was in the 90's? If DL just takes what DALPA is currently offering, that is exactly what will happen.

Not matter how strong the economy rebounds, if DL has the highest costs in the industry, DL will stagnate and slowly die. A strong economy might buy you a little more time, but the end result will be the same.

 

[General Lee]

Mu2,

That is correct, the cash on hand was $2.71 billion on Dec 31st, and now $2.2 billion. Well, $325 million was voluntarily used to pre-pay the employee pension fund (not pilots') EARLY, even though because of pension reform--we didn't have to for two years. The other amount may be due to higher fuel costs? We did make $83 million due to that sale of the fuel hedges too---so I don't know where that falls in...... As far as keeping the same amount of money----please read my "Other Delta comments" thread and read the comments from the S&P---which states that there should be no further erosion of the current cash---primarily due to the next two quarters which are expected to be strong. Fitch, who assigns bond ratings, also stated the same thing last week. The economy is getting better, fares on on the rise (according to the Wall St Journal), and the passengers are back. And, everything else is our fault---the pilots'.


Medflyer,

No, I don't want Delta to die, and I suggest management look at our offer and maybe come back to the table and see if they can get a little more. I bet they could. Do you want to give up 40% of your contract when nobody else is contributing the same? I know they might be paying more in medical premiums, and I bet we would also do that, along with 30% pay cuts. (the other 10% is QOL payoffs) What would you be willing to give up? Not much? Oh, that's right---you guys are profitable. You guys are also getting $102 million worth of RJs this quarter, and $500 million more next year......How about we all just cancel those orders and save some money? You guys would be up for that, right? We all want this team to succeed, right?


Bye Bye--General Lee

 

[Heavy Set]

Why is it that most people don't recognize that the DAL mainline pilots are willing to negotiate? Hasn't that been made clear? My DAL pilot friends understand that the environment has changed with the LCCs - the current salary levels will need to be reduced. But ---- how much they will be reduced will be negotiated. That's the point that NOBODY SEEMS TO UNDERSTAND ON THIS FORUM.... Not if but HOW MUCH... If you were a Delta pilot, would you let management set the wage reductions without negotiations? Would you?

My understanding is that Grinstein and his team are NOT engaging and instead are allowing things to "go to pot"... The management team wants more LEVERAGE in their negotiations. They are hoping to portray the situation as BEYOND DIRE - like Siegel.

It is clear that the DAL pilots will need to reduce their wages to more competitive levels - General Lee and others have stated that many times. But, all DAL employees, including those from Comair and ASA, will need to be a part of the overall solution - no labor group should be targeted without others contributing. Regardless, until Grinstein reveals the secret new strategy in July, nobody is safe and "all bets" are on the table....

Let's hope McKinsey was paid a HECK of a lot more this time to craft an INGENIOUS strategy going forward.... I wonder if Leo will get another commission this time?

 

[XRMEFLYER]

But, all DAL employees, including those from Comair and ASA, will need to be a part of the overall solution

We already are part of the solution. Are you more concerned with the notion of shared misery than you are with the long term implications of lowering DCI costs and perpetuating the outsourcing of "your" flying?