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Should Delta Spin Off Comair and ASA?
- Thread starter Heavy Set
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AMANSWORLD
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General Lee
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First of all---I am just suggesting what COULD happen. Grinstein might do it---or he might not. It is interesting to think about this senario----since every other senario has been presented.
When it comes to DCI being profitable, I think that could be true. But what about this: After 9-11 we parked many many planes--and a couple fleets---including the remaining 727s and L1011's, and then the MD-11s after the IRAQ war. We needed then RJs after 9-11 to save market share, and they did a great job. Now, after 3000 less pilots at mainline and probably an extra 1000 at DCI, the passengers are coming back. They are--but there is one big change--the fares. The fares are probably half what they used to be. So, now we have 50-60 less mainline planes (20 727s, 14 MD-11s, and 20 or so L1011s) and they were replaced with quite a few more RJs---70 seaters now also included. The passengers are back, but the fares are lower---and what we really need is MORE PASSENGERS to fill seats to try to MAKE UP FOR the lower fares. We need more feed to bring in more passengers to ensure our hubs are full to the max---trying to squeeze out as much revenue as we can out of the lower fares. But, we have problems---more RJs which clog up the system(ORD)--costing more for fuel due to holding and congo takeoff lines---but still result in less seats than if we still had those larger planes. One 727 could carry more than 3 50 seat RJ loads---but equal one blip on the radar screen. So what are the other airlines doing? Airtran is dumping it's Airwisky contract in favor of only mainline airplanes. Jetblue's smallest plane will have 100 seats. Southwest doesn't want any RJs. What can we do? Well, we have now pulled out every plane from the desert (except the MD-11s) that we planned to come back, and then we are stuck. We are stuck with too many RJs that clog the system, and not enough mainline aircraft to make up the difference for the lower fares. We could make more revenue with the lower fares if we had more seats. Look at the stats---they say this summer will be as busy or busier than the Summer of 2000. We will have unbelievable holding at ATL--even on VFR days, and ORD is limiting the number of departures and arrivals---and most of the flights that will be cut will be RJ flights.
This problem, IMO, is not the pilots' fault at DCI or mainline, but a planning problem. Yes, we need some pay cuts also to help cut costs--and I really hope they come to an agreement on that soon---but we really need larger airplanes and more seats to compete with the LCCs. Song is doing better,(it's now been around almost 1 year---and with a name like Song---it needed time for people to get used to it) and the Delta Shuttle is still a prized asset that does well with the 737-300Gs. (the 738s were moved to other markets that needed more seats than MD88s)
As far as the POSSIBLITY of selling of ASA/Comair---I really don't know if that is an option, but there would absolutely be investors---especially if Delta tagged on a guaranteed 10 year contract onto it and allowed other carriers to bid for their services too. Investors would know that the money from the IPO would help Delta and make it even a little bit financailly better, helping it try to weather this storm. As soon as fuel prices become more realistic (in the $25-28 per barrel range), the airlines will become a lot more healthy.
Bye Bye--General Lee
When it comes to DCI being profitable, I think that could be true. But what about this: After 9-11 we parked many many planes--and a couple fleets---including the remaining 727s and L1011's, and then the MD-11s after the IRAQ war. We needed then RJs after 9-11 to save market share, and they did a great job. Now, after 3000 less pilots at mainline and probably an extra 1000 at DCI, the passengers are coming back. They are--but there is one big change--the fares. The fares are probably half what they used to be. So, now we have 50-60 less mainline planes (20 727s, 14 MD-11s, and 20 or so L1011s) and they were replaced with quite a few more RJs---70 seaters now also included. The passengers are back, but the fares are lower---and what we really need is MORE PASSENGERS to fill seats to try to MAKE UP FOR the lower fares. We need more feed to bring in more passengers to ensure our hubs are full to the max---trying to squeeze out as much revenue as we can out of the lower fares. But, we have problems---more RJs which clog up the system(ORD)--costing more for fuel due to holding and congo takeoff lines---but still result in less seats than if we still had those larger planes. One 727 could carry more than 3 50 seat RJ loads---but equal one blip on the radar screen. So what are the other airlines doing? Airtran is dumping it's Airwisky contract in favor of only mainline airplanes. Jetblue's smallest plane will have 100 seats. Southwest doesn't want any RJs. What can we do? Well, we have now pulled out every plane from the desert (except the MD-11s) that we planned to come back, and then we are stuck. We are stuck with too many RJs that clog the system, and not enough mainline aircraft to make up the difference for the lower fares. We could make more revenue with the lower fares if we had more seats. Look at the stats---they say this summer will be as busy or busier than the Summer of 2000. We will have unbelievable holding at ATL--even on VFR days, and ORD is limiting the number of departures and arrivals---and most of the flights that will be cut will be RJ flights.
This problem, IMO, is not the pilots' fault at DCI or mainline, but a planning problem. Yes, we need some pay cuts also to help cut costs--and I really hope they come to an agreement on that soon---but we really need larger airplanes and more seats to compete with the LCCs. Song is doing better,(it's now been around almost 1 year---and with a name like Song---it needed time for people to get used to it) and the Delta Shuttle is still a prized asset that does well with the 737-300Gs. (the 738s were moved to other markets that needed more seats than MD88s)
As far as the POSSIBLITY of selling of ASA/Comair---I really don't know if that is an option, but there would absolutely be investors---especially if Delta tagged on a guaranteed 10 year contract onto it and allowed other carriers to bid for their services too. Investors would know that the money from the IPO would help Delta and make it even a little bit financailly better, helping it try to weather this storm. As soon as fuel prices become more realistic (in the $25-28 per barrel range), the airlines will become a lot more healthy.
Bye Bye--General Lee
General Lee
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- 20,442
Just to clarify, spinning off an entity does not necessarily mean selling it to another company. Spinning off to the public means selling shares in the entity to the public. Continental spun off COEX to the public (sold shares to the public) but kept a slice of the equity for itself.
You don't need corporate buyers to spin off a division or subsidiary...
You don't need corporate buyers to spin off a division or subsidiary...
Ugh ... "General" ... I don't feel the love here...
Ouch ... that really hurt. You are truly a wit and God's gift to aviation. Thank you so much for your advice, I'm a much better person now by far.
This humble servant has been put back in his place ... his "D" scale place.
(... you gotta love it ...)
Ouch ... that really hurt. You are truly a wit and God's gift to aviation. Thank you so much for your advice, I'm a much better person now by far.
This humble servant has been put back in his place ... his "D" scale place.
(... you gotta love it ...)
General Lee
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anon,
I personally don't want the future 100 seaters to go to D scale, I would rather have some of the 1060 Delta furloughs fly them, and then as they eventually go back to larger planes, have ASA or Chataqua pilots get hired to move right into them---for mainline. I am sure the wages on the 100 seaters would be negotiated to be lower than the other mainline planes---but that was also the case at Delta Express on the 737s.
As far as my tone to you---I got the impression from your post that you guys at DCI would want the 100 seaters----over looking our 1060 furloughs---which should have first rights. The rates, as I said, would be reduced for a new aircraft anyways---but we should get them back into a cockpit. If I misread your tone or point, I apologize.
Bye Bye--General Lee
I personally don't want the future 100 seaters to go to D scale, I would rather have some of the 1060 Delta furloughs fly them, and then as they eventually go back to larger planes, have ASA or Chataqua pilots get hired to move right into them---for mainline. I am sure the wages on the 100 seaters would be negotiated to be lower than the other mainline planes---but that was also the case at Delta Express on the 737s.
As far as my tone to you---I got the impression from your post that you guys at DCI would want the 100 seaters----over looking our 1060 furloughs---which should have first rights. The rates, as I said, would be reduced for a new aircraft anyways---but we should get them back into a cockpit. If I misread your tone or point, I apologize.
Bye Bye--General Lee
Noted... and accepted... likewise, if I took offense too early, I also apologise.
(I was merely repeating something I had heard from some GO Mgmt types recently.)
I don't want to see any pilots furloughed. I was on strike with Eastern and furloughed by Pan Am and it's not fun.
I've had the chance to work with some of the DAL, UAL, and USAir furloughs that ASA has hired. They have been, without a doubt, great folks and deserve the best. They work hard and have good attitudes considering what they have been through.
Most of the ASA guys are in favor of hiring DAL furloughs. In my opinion, I love to hire in the following order...
DAL/DCI furloughs
OAL furloughs
... all others...
When Eastern went on strike, 9000 of us were on the street. Many other airlines came to our aid, offering preferential interviews and such. I'd love to see that happen again.
Good luck to all to furloughed guys ... may you get back to work quickly.
(I was merely repeating something I had heard from some GO Mgmt types recently.)
I don't want to see any pilots furloughed. I was on strike with Eastern and furloughed by Pan Am and it's not fun.
I've had the chance to work with some of the DAL, UAL, and USAir furloughs that ASA has hired. They have been, without a doubt, great folks and deserve the best. They work hard and have good attitudes considering what they have been through.
Most of the ASA guys are in favor of hiring DAL furloughs. In my opinion, I love to hire in the following order...
DAL/DCI furloughs
OAL furloughs
... all others...
When Eastern went on strike, 9000 of us were on the street. Many other airlines came to our aid, offering preferential interviews and such. I'd love to see that happen again.
Good luck to all to furloughed guys ... may you get back to work quickly.
GogglesPisano
Pawn, in game of life
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General Lee
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Anon,
I am sorry if I sounded rude, I am getting tired of the whipsaw just like everyone else. I just hope some of the DCI carriers don't bid for the 100 seat flying WHILE we still have furloughs. As soon as they are back, I hope Delta hires a lot of you guys.
Snoopy,
Those numbers you gave are very close, but we have very few 777s--so not many guys ever see that money. We have had and will have a lot more retirements due to rising Gatt rate, so more people will pass through the 777 on the way out. I know it sounds like a lot---but it is a limited number.... Take care.
Bye Bye--General Lee
I am sorry if I sounded rude, I am getting tired of the whipsaw just like everyone else. I just hope some of the DCI carriers don't bid for the 100 seat flying WHILE we still have furloughs. As soon as they are back, I hope Delta hires a lot of you guys.
Snoopy,
Those numbers you gave are very close, but we have very few 777s--so not many guys ever see that money. We have had and will have a lot more retirements due to rising Gatt rate, so more people will pass through the 777 on the way out. I know it sounds like a lot---but it is a limited number.... Take care.
Bye Bye--General Lee
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ASA and Comair are great assets for DAL. We were both worth a lot of money when we were purchased. I DAL needs to sell us off to raise cash, then they will nedd to find somebody who has the cash (around $2 billion) to buy us. Who whould that be? I doubt there would be much interest in a ASA or Comair IPO. Who would want to but two airlines tied to a soon to be bankrupt airline that has never made any money?
The bankruptcy will likely involve the selling-off of many DAL assets. It will also involve the furloughs of at least 1000 more mainline pilots, maybe more. having seen how the J4J things all worked out at USAir and their WO's, I would rather be an independent company than a DAL WO when that happens.
An independent ASA or Comair could obtain larger aircraft (kiss the part of your DAL CBA that restricts that good-bye in Ch 11), fly for other code share partners, or eve go it alone a la ACA.
Be careful what you wish for Heavy Set. Without the ability to control ASA and Comair in our upcoming DAL bankruptcy, there will be no place for a J4J program to work. Where will your furloughed pilots go?
The bankruptcy will likely involve the selling-off of many DAL assets. It will also involve the furloughs of at least 1000 more mainline pilots, maybe more. having seen how the J4J things all worked out at USAir and their WO's, I would rather be an independent company than a DAL WO when that happens.
An independent ASA or Comair could obtain larger aircraft (kiss the part of your DAL CBA that restricts that good-bye in Ch 11), fly for other code share partners, or eve go it alone a la ACA.
Be careful what you wish for Heavy Set. Without the ability to control ASA and Comair in our upcoming DAL bankruptcy, there will be no place for a J4J program to work. Where will your furloughed pilots go?
On Your Six
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Sleepy,
Are you a financial analyst too? COEX was a smash hit when it sold to the public a year or so ago. Continetal was in dire straits at the time. If Comair and ASA are so profitable, then potential shareholders would be nuts NOT to invest in it, right? You guys claim Comair and ASA are doing so well - that's great. I am sure that strong financial performance will be appealing to the investment bankers who set up the public offerings...
As far as J4J, perhaps regionals who COMPETE for DAL contracts in the future will have to employ any DAL furloughees - kinda like UAL and USAirways... Then everyone wins - you guys get autonomy and the ability to grow your fleets more, Delta gets the cash it needs and the furloughees finally get back in the cockpit....
Are you a financial analyst too? COEX was a smash hit when it sold to the public a year or so ago. Continetal was in dire straits at the time. If Comair and ASA are so profitable, then potential shareholders would be nuts NOT to invest in it, right? You guys claim Comair and ASA are doing so well - that's great. I am sure that strong financial performance will be appealing to the investment bankers who set up the public offerings...
As far as J4J, perhaps regionals who COMPETE for DAL contracts in the future will have to employ any DAL furloughees - kinda like UAL and USAirways... Then everyone wins - you guys get autonomy and the ability to grow your fleets more, Delta gets the cash it needs and the furloughees finally get back in the cockpit....
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FlyComAirJets
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Yep, let's split up Delta entirely "so perhaps regionals who COMPETE for DAL contracts in the future will have to employ any DAL furloughees." Song could COMPETE with Express (kind of like JetBlue versus Southwest) and Shuttle could COMPETE with DCI (like mainline American versus Eagle).
Oh wait, it's been done, they called it Celebrity Death Match.
Oh wait, it's been done, they called it Celebrity Death Match.
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FlyComAirJets
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Express Jet IPO'd at about 15 bucks per share a couple years ago. It promptly went down to a low in the 7 to 8 dollar range. Today it quotes at less than 13 1/2 dollars a share.
"Smash hit"? Hee hee hee.
----------------------------
Financial analyst, me? No, but I did sleep in a Holiday Inn Express last night.
"Smash hit"? Hee hee hee.
----------------------------
Financial analyst, me? No, but I did sleep in a Holiday Inn Express last night.
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Actually, you can spinoff without _anyone_ buying what's being spun off. You can dividend the new company shares to existing shareholders.
So, for instance, Delta could give every Delta shareholder shares in Comair (for instance, for every 10 shares of Delta stock, a Delta shareholder might get a share of Comair) which they would then be free to trade as they pleased.
If all Comair shares were dividended that way, then once the spinoff was accomplished, Comair would be a freestanding company independent of Delta. Initially, Comair shareholders would be the same as Delta shareholders, but that would quickly change as some people traded one while keeping the other.
In this way, Comair could be spun off of Delta without another company buying it and without and IPO.
JI Gone OH
Scope is NOT for Sale
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- Apr 12, 2002
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General,
You said "I am sorry if I sounded rude, I am getting tired of the whipsaw just like everyone else. I just hope some of the DCI carriers don't bid for the 100 seat flying WHILE we still have furloughs. As soon as they are back, I hope Delta hires a lot of you guys. "
Is it fair to say you meant that you hope that Delta hires a lot of DCI guys, excluding Comair, right?
You said "I am sorry if I sounded rude, I am getting tired of the whipsaw just like everyone else. I just hope some of the DCI carriers don't bid for the 100 seat flying WHILE we still have furloughs. As soon as they are back, I hope Delta hires a lot of you guys. "
Is it fair to say you meant that you hope that Delta hires a lot of DCI guys, excluding Comair, right?
General Lee
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JI Gone OH
Scope is NOT for Sale
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General...
My last reply to you was not meant to be disrespectful, it's just that your comments in the past with respect to filling future Delta pilot slots with anyone BUT Comair Pilots doesn't make everyone feel all bubbly... It just adds fuel to a fire that should have been put out long ago. Those kinds of statements make you guilty of the "whipsawing" you claim that you are so tired of.
Everyone within Delta/DCI should be tired of the "whipsaw," but management continues to win by all of us wasting time and energy bickering amongst ourselves. The only way to make progess is if everyone works together, and that includes working with all DCI carriers, including Comair. We make up a large part of the DCI network, and its time to put the issue of Comair not hiring Delta's furloughs behind us and look ahead. I, for the record, was in support of bringing the furloughs on board ( I was furloughed from JI back in 2001, I know what it's like to be unemployed). Our leadership decided otherwise, they had their reasons, and whether you or I agreed with them is now irrelevant and it's time we look ahead. If you still harbor bad feelings towards this Pilot group or any other within the DCI network, let it go and we'll be able to accomplish a lot more.
I have enjoyed your input to this forum over the past few years. Hope that you had a nice holiday.
My last reply to you was not meant to be disrespectful, it's just that your comments in the past with respect to filling future Delta pilot slots with anyone BUT Comair Pilots doesn't make everyone feel all bubbly... It just adds fuel to a fire that should have been put out long ago. Those kinds of statements make you guilty of the "whipsawing" you claim that you are so tired of.
Everyone within Delta/DCI should be tired of the "whipsaw," but management continues to win by all of us wasting time and energy bickering amongst ourselves. The only way to make progess is if everyone works together, and that includes working with all DCI carriers, including Comair. We make up a large part of the DCI network, and its time to put the issue of Comair not hiring Delta's furloughs behind us and look ahead. I, for the record, was in support of bringing the furloughs on board ( I was furloughed from JI back in 2001, I know what it's like to be unemployed). Our leadership decided otherwise, they had their reasons, and whether you or I agreed with them is now irrelevant and it's time we look ahead. If you still harbor bad feelings towards this Pilot group or any other within the DCI network, let it go and we'll be able to accomplish a lot more.
I have enjoyed your input to this forum over the past few years. Hope that you had a nice holiday.
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