OCT 8th DL announcement

[Bad-Andy]

Lowecur,

Had an interesting dinner tonight with the Embraer guys, including a few too many drinks. We were talking about the Oct 8th deal (actually I was badgering them to tell me the truth), when one of the very senior PR guys walked up, and asked what we were talking about. We told him "the Delta deal" and he said, (this is a direct qoute) "Oh, you'll hear the details in a couple of days". He then got kind of pissed at my continuing to badger him for details and told me "his eniglish isnn't so gooodd..." So, who the heck knows what these guys are doing... Hmmmm..... And, now, just to mix it up a little, Air Asia (the Malaysian LCC) is being swooned to buy the 190's and 195's as well.... It will definately be an interesting week for Embraer...

 

[Redtails]

And to think, to pay for all of this they're asking Comair to open talks about renegotiating pilot/flight attendant contracts. Can they do that???!!!

 

[lowecur]

ba

So there is definitely some light on the DL deal? I sure hope ERJ gets the nod. DL needs this a/c to compete with WN, B6, and FL.

I've been talking with a DL pilot on another board, and he said DL has mentioned talking with Boeing on the Russian RRJ 95 (100 seater). When you mentioned the Boeing guys giving you a smile on a possible DL deal, the 717 or 736 just didn't make sense. I think if Boeing has any inside tract, it's for the RRJ 95. But time will tell.

Hopefully, EMJ has fattened their order book this weekend and will make some great announcements. Even if the DL is on hold till Dec 1, I still think ERJ has the inside track.

BA, thanks for all the inside. It's nice to have someone half way around the world listening to all this wheeling and dealing. Looking for a great week.

 

[lowecur]

Redtails

Giving the DL pilots more mainline seats and security is what the renegotiations will hinge on. They know they need to get in line pay wise with the rest of the industry. If they don't do a 100 seater deal soon, I look for them to buy ACA's CRJ's, and start another wholly owned regional. These a/c could be staffed by mainline furloughs.

As far as cash, DL has more than enough to get by. Heck, B6 ordered the 190's with around $250M in the bank. DL sure has a heck of alot more unstricted cash than that. With the economy picking up, I look for DL to do fine in 2004. Which means only losing 200-300M.

 

[FlyBoeingJets]

Re: Redtails

Giving the DL pilots more mainline seats and security is what the renegotiations will hinge on. They know they need to get in line pay wise with the rest of the industry. If they don't do a 100 seater deal soon, I look for them to buy ACA's CRJ's, and start another wholly owned regional. These a/c could be staffed by mainline furloughs.

Why would Delta buy a 100 seater and staff it with highly paid furloughees vs. buying more RJ's and staffing them with relatively low paid folks?

Delta has two wholly owned regionals already, ASA and Comair.

 

[General Lee]

Lowecur,

Well, I just got off a 4 day trip and heard bits and pieces, but no exact new airplane order yet. I don't think any Russian airplane would be considered, but maybe the A318 or EMB-190. We do have $3 billion in the bank, and $2.8 Billion of that is unrestricted. A piece of that could put a small down payment on some planes, but the lower payscales associated with that, along with getting rid of the more expensive 737-200s---might help pay them off in the long run. I don't know about buying more CRJ-50s and staffing them with our furloughs, but I would like to see that happen---doubt it will though.

Redtails,

First off, I don't think Comair will give up any pay, unless there is some expansion tied with it (getting ACA's Dorniers.....)---then they might accept it--but I don't know. I think Dalpa is ready to talk to management about our own paycuts, but management doesn't seem to want to give in to their demands--like a contract extension. I think we all know that we might want to help the company with some sort of cuts, but what about when times eventually get better? Can we have it back? No? That is not right---and they know it. I think we will eventually give about 15%, but that is my guess.

Bye Bye--General Lee

 

[FLB717]

Ok my bet is the announcment has NOTHING to do with Rj's from Emb or Canadair or Boeing or Airbus. Im quessing it is corporate structure. Why because Uncle Leo is all about splitting the baby. Time will tell but thats my guess.

 

[lowecur]

FlyBoeingjets

It's called give and take. Believe it or not management does understand economics and psychology. The 100 seater (provided it's the EMB 190) is by far the more economically sensible a/c vs the 50 seater. Mgt knows that DALPA wants jobs and security (contract extension), plus a fair paycheck. The 100 seater plus the contract extension, fits the bill on the give part of the equation. The take is the reduction of the existing hourly wage, plus a change in work rules.

The 3rd wholly owned would be insurance. Get 60 add'l CRJ's under a separate cover, and start staffing them with DL furloughees, and watch how quick Comair pilots & FA's come to the table.

They may do both, or they may elect to do one.

 

[lowecur]

General

The Oct 8th thing really is going to be touch and go. If ERJ announces any new orders before the 8th, it's going to skew the stock price/volume. That was one of my green lights prior to the B6 announcement.

The RRJ 95 is really an interesting possibility. The nice thing about it is of course the price (2/3 of the 190), but it could be ready for service 18 months after the first 190 goes to B6. I believe Boeing is making a hefty investment in this a/c, although the exact amount is unknown.

The retirement of the 732's down through the MD88's could start as soon as 8/05, and last until 2012. If DL purchased 250 EMB's over this time period, that's about 40 per yr (or $900M). I think with pay/work rule changes and economics of the 100 seater, that would be more than enough to warrant the purchase.

 

[General Lee]

Lowecur,

You come up with some good points. I think they will absolutely get lower rates with a new airplane, but doubtful about the productivity changes. I was told to my face by a member of the MEC that there would be no productivity changes until the last furlough, TBKANE, comes back. Now, that could have been told to me so I would get out of his face---I don't know. The extra RJs thing you have come up with could possibly happen, but it would surprise me. You must be good at "Battleship"---it seems like you can think ahead really well. I hope what you're thinking actually comes true. (I would bet on the A318 or EMB-190)

FLB717,

I don't think it would be a management change up---they have it too good right now. Who knows? We shall see---and it wouldn't surprise me if there isn't an anouncement after all.......

Bye Bye--General Lee

 

[lowecur]

General

Never played "Battleship", but it sounds like a fun strategy game. I love "what if's", and like looking at all possibilities. I only try to look at logical possibilities. What may be logical to me, maybe off the wall to someone else.

If makes for interesting conversation, as long as everyone keeps their hat on straight.

 

[FlyBoeingJets]

Re: FlyBoeingjets

It's called give and take. Believe it or not management does understand economics and psychology. The 100 seater (provided it's the EMB 190) is by far the more economically sensible a/c vs the 50 seater. Mgt knows that DALPA wants jobs and security (contract extension), plus a fair paycheck. The 100 seater plus the contract extension, fits the bill on the give part of the equation. The take is the reduction of the existing hourly wage, plus a change in work rules.

The 3rd wholly owned would be insurance. Get 60 add'l CRJ's under a separate cover, and start staffing them with DL furloughees, and watch how quick Comair pilots & FA's come to the table.

They may do both, or they may elect to do one.

Thanks for the reply! I'm starting to see the logic of this option. It could be a good way to increase capacity and keep labor costs lower over the long run (I'm not in favor of the labor cost thing but thinking up news ways to keep costs low is a high management priority).

The proposed Mesa/ACA merger highlight the change that is occuring in the regional world.
Capital is being shifted to it monthly...Hmmm...

 

[lowecur]

Flyboeingjets

The MESA/ACA proposed deal will never fly with just MESA. They need a sugardaddy to pump in some cash. That may be possible. Institutions own over 80% of the stock, and many are in the stock at much higher than what MESA is offering. Since Institutions generally are long term investors, MESA + sugardaddy would have to anny up quite a few bucks to make it worth their while. I don't see that happening. I also don't see any other bidders entering the frey, unless Richard Branson wants to put together a consortium.

This is a distraction that Kerry Skeen at ACA didn't need. He is trying to focus on putting a viable package together for the LCC, and this just muddies the waters. Hopefully, J. Ornstein is not just a puppet of UAL mgt.

 

[lowecur]

ERJ up over 5%

But volume is light. My guess it's probably the Malaysia Airlines deal, but tomorrow is the 8th, so we'll see what kind of announcement DL has (if any).