Should Delta Spin Off Comair and ASA?

[sleepy]

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.

I thought Heavy Set was suggesting that DAL sell ASA and Comair to raise cash? How does giving shares of ASA and Comair to DAL shareholders do that?

 

[vc10]

I thought Heavy Set was suggesting that DAL sell ASA and Comair to raise cash? How does giving shares of ASA and Comair to DAL shareholders do that?

Clearly dividending Comair shares (or ASA shares) to Delta shareholders does nothing to raise cash.

But there are other reasons to spin off one or the other. For instance, if Delta wants to lay to rest, forever, the idea of merging ASA and Comair, all it needs to do is spin one off. If its bankers tell it that an IPO would be unpopular, then dividending stock would be one way to go.

Buttrell has said that they'll sell one before they allow the pilots to force a merger. An ASA/Comair merger will just never happen.

 

[sleepy]

Never say never! United and TWA will never go bankrupt, right. Eastern won't go bankrupt? Right?

Phil will never win a major golf tournament, right?

Before it is all over, ASA and Comair might be the major (LCC), and DAL might be just flying international only.

Bring on the spin-off of ASA and Comair, it can't get any worse for us, only for the mainline guys.

Go to AJC.Com an read all of the comments about DAL pilots in the Editorial Section this Sunday. Nobody in Atlanta cares what happens to DAL pilots. Other DAL employees hate DAL pilots. No sympathy, period!

 

[Sam Fisher]

Once again....we see that pilots should run airlines. Clearly, airline management teams aren't seeing where they are screwing up. They should run these companies solely for pilots because the corporations are in fact, "pilot welfare outfits." I mean, why shouldn't they put a bigger airplane on a route when in fact, they might see a greater yield with a smaller plane? They should make this loser move simply to appease and protect the larger airplane pilot. Makes sense, right?

Some of you might view this post as harsh, but it is so funny to watch how brilliant some of these posters think they are when it comes to the world of airline economics. The sheer amount of inaccurate information on this thread alone is staggering to me. Those of you advocating the spin-off of CMR/ASA should do some more homework so you can truly understand how/why CAL spun off XJT and what the effects were to both entities. There is more than meets the eye. Many of the posters advocating this transaction are doing so from a position of selfishness and naivete.

Perhaps you guys should let the airline executives run the airline and you guys should stick to flying the airplanes. If you think you can do a better job, go get an MBA and apply for their jobs. What looks obvious to you is probably not the case in actuality. There is always "the big picture" and it isn't always "black and white." I know it is easy to slam the CEO's and that will always occur, but some of the absolute ridiculousness I see spewed on this thread is entertaining.

Some will flame me for this post, and that is fine, but it is really funny to see how many armchair airline CEO's we have on here.

Sam

 

[Pez D. Spencer]

It's easy to feel bullied by mainline pilots, on this board, at work when you deal with scope limitatons affecting your career, and when considering the future of your airlines... but, the views in those editorials, while real, are just part of the game that is being played. Are Delta pilots being villified... yeah. But, I don't think it my place to decide how much a cut they should take. I expect that they would give me the same consideration.

Corner an angry animal, and you're gonna get bitten.

Unfortunately, the opinions of mainline pilots expressed here reveal an attitude of, not only indifference, but continued hard feelings -- not only participating, but encouraging whipsaw tactics.

But, they are being villified by their company. I don't know if I blame them for fighting back. They're human.

 

[rgd]

Sam, I think that is the single best post I have ever read on this board. It was insightful, honest, and objective. I couldn't agree with you more. Nothing like listening to a bunch of guys who have no practical business experience talk about how to run a billion dollar company. Most of them have never done anything other than fly airplanes. I would love to hear these guys tune if they owned a company that had employees.

 

[Tim47SIP]

Now this is funny!

careful what u wish for.. sell off comair and asa.. while they keep making money while mainline loses it.. next thing u know comair and asa will be buying delta.. stapling them to the bottom and the wronged mainline pilots forming a MLDC for fair and equal representation =)~

Don't hope it happens, but you have to admit, it was comical.

 

[surplus1]

Sam,

Nice post. See my similar spoof in the same thread on the "majors" board.

 

[General Lee]

Sam,

Believe it or not, but most people can see that some CEOs are doing a terrible job, and profiting in the process. Should we not question that? We should just let them continue without our questioning the results, just because they have an MBA from Harvard? These last 3 years at Delta will make a great case study at Harvard---on how employees and pilots lack trust with the leadership(management). Look at Siegel at USAirways. He has been a terrible motivator and has no real plan--except taking from the once loyal employees. I can see that, and I am just a DUMB pilot. No monday morning quarterbacking there. Can you explain some of the things over there at the GO in ATL? I guess we shouldn't try to question it. We all have a stake in this thing going well, and I personally think Dalpa wants to give some help---but I don't understand what they other side (too bad there are other sides here) wants--except 40% and really not much form the other groups. It bothers me and I question it. But all can do is talk to my union leaders, do the best job I can at work, and come home and look on this forum. (I also pay attention to my wife)


Pez,

Sometimes I do feel like I am backed into a corner, but I actually would like to help the company out and I am not above pay cuts at all. I just think that more than one group should contribute, since we all have a stake in this. Management would love for us to make peer wages, and would love for you to make peer level wages also. The reason I may have stated that analogy was to show the same feelings we are faced with daily. But, I have a feeling we will see that fact well before you will.

Bye Bye--General Lee

 

[OH_PILOT]

Who has enough money to buy Comair? If COnair spun-off on its own it will have enough money in no time to buy Delta.

 

[General Lee]

Who bought Expressjet? There was an IPO, and with a guaranteed 10 year contract attached to it---some investors may go for it.....Who knows? We got Morgan Stanley to buy $325 million worth of bonds 3 months ago....

Bye Bye--General Lee

 

[Sam Fisher]

Who bought Expressjet? There was an IPO, and with a guaranteed 10 year contract attached to it---some investors may go for it.....Who knows? We got Morgan Stanley to buy $325 million worth of bonds 3 months ago....

Bye Bye--General Lee

Apples to Oranges General.

Bond offerings are attractive to investors because there is a guaranteed yield on their investment. Investors know exactly what their return on investment will be, as well as the risk.

With an IPO, it is a totally different ball game, despite the 10 year "cost plus" deals so rampant in today's industry.

At XJT, our IPO provided for 5 years of jet feed hub exclusivity for CAL. Hardly a 10 year deal. Actually, it is a 10 year deal but since the hub exclusivity goes away in 5 years, it is for all practical purposes, a 5 year deal.

The XJT IPO was successful for one party only - CAL Inc. They generated hundreds of millions of dollars in cash for their coffers. Beyond that, the investor got screwed. Our opening price was $16/share. It is now at $12.52. It has only once gone above $16, and that was for a brief period of time. No dividends have been paid out to date.

Sam

 

[Propsync]

In a word, yes.

But too late to benefit from it. On paper they are worth much less from the 11th. I think the same at SYX, but as I said, too late now. Much more to lose as a result. It's better for MGMT to have control. That's just the way it is right now.