No Comair/asa Spin-off

[JECKEL]

Excerpt: Delta CEO resolute on pilot wage cuts (No spin-offs)
The Cincinnati Enquirer 4-24-04

After the meeting, Grinstein shot down the possibility of spinning off regional subsidiaries Comair (based in Erlanger) or Atlantic Southeast Airlines to raise more cash.

"Comair and ASA are valuable assets," Grinstein said. "The price you would sell them for would be what kind of contract you would give for service ... and you would be tying yourself into a long-term obligation.

"It would seem to me to be counterproductive, so we would rather keep them in the role they are in - providing feed for the network."
View complete article at http://www.enquirer.com/editions/20...iz_delta24.html

 

[FDJ2]

. "The price you would sell them for would be what kind of contract you would give for service ... and you would be tying yourself into a long-term obligation. [/url]

?????. I'm not sure I understand that quote. It sounds like he doesn't want to sell ASA/CMR because in order to get a good price it would be tying DAL into a long-term obligation. Does that mean DAL does not want to commit to a long term obligation for ASA/CMR?

 

[skiddriver]

It means that the share price for an IPO will depend on the level of profitability that Delta assures the new independent company through it's service agreement. To get a good sale price at the IPO, Delta will have to guarantee a steady profit at ASA/Comair if they are spunoff.

The goal with an IPO is to raise money. To raise a good amount of money at the IPO, Delta would have to tie itself to an independent ASA/Comair with a disadvantageous service agreement over an extended period of time. Not what Delta wants to do in a long term plan to regain long term profitability.

Doesn't mean they won't sell us, just that Delta management has to weigh short term gain from an IPO against a long term loss from a disadvantageous contract.

 

[JI Gone OH]

As much as some character's on this board would love it, Delta is not going to sell off the WO's. Enough already, next subject........

 

[Ganja60Heavy]

Welcome to the New World

The rules have changed so fast only the LCC's seem to be keeping up. And unless the ole' big Daddy's adapt QUICKLY, they'll be dead legacies.

Old rules:

1) Start-ups can be undercut until they're out of business.

2) Assets can be sold in a pinch for cash to ride out the downturns.

3) The pay-full-price businessmen will subsidize the cheap seats.

4) People will pay more for the big-brand.

New rules:

1) We're still waiting for SWA, AT, JB to cry. Who's going-out-of-business now?

2) This downturn is permanent. If you sell an ASSET now(so-called because it is a profit- and not a loss-center), you're ignoring the liabilities. They'll still be there long after that cash is spent. Delta made 1 Billion in '98 not because they were efficient, but because they were foolish: they'da made 2 billion if they weren't so wasteful.

3) They finally realized they were getting scammed.

4) Why?