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Skyway 10-25-04 Class
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Propsfullfwd
Well-known member
- Joined
- Dec 21, 2003
- Posts
- 139
I don't want to rain on anyone's parade here but If you have a pending Skyway class or are currently a pilot at Skyway in the last 120 numbers or so I would strongly advise you to continue your job search and keep your options open. Right now, Skyway is highly overstaffed in preparation to assume a Delta Express agreement out of CVG with additonal D328's that will come from ACA when their DAL Express agreement termintaes after Nov. 1. Skyway is in a difficult position here, through no fault of their own, in that they need to prepare for a deal that is not yet signed and is increasingly less likely to happen. If the DAL contract fails to materialize Skyway will likely have a significant number of furloughs and downgrades. Keep in mind that the hiring and upgrading that's been happening for months now is largely dependend on the DAL deal. A DAL Chapter 11 filing will likely be the end to all of this and Skyway will be forced to undo all of the movement.
Delta is in deep financial trouble and every analyst in the industry has pretty much agreed that a DAL bankruptcy is all but certain. If you look at the 3Q financial results just released DAL is low on cash with massive losses, debts and very high costs. They have been largely unsuccessful obtaining debt refinancing and union concessions out of court and it looks like bankruptcy is their only option. They have declined to hold a 3Q analyst Q&A and have said publically that even WITH concessions a bankruptcy is an option. To make matters worse, fuel prices keep escalating and we are nearing the weakest revenue period of the year. The current cash burn rate will force Delta to make a decision very soon. I would urge everyone to closely follow the news regarding Delta and Independence Air (formerly ACA) because the delta/328 situation is mentioned regularly as a catalyst for a potential Independence Air bankruptcy in 2005. It turns out that Independence Air may not be able to transfer the 328 leases back to Delta afterall. Also keep in mind that that the Skyway/Delta deal was supposed to begin on November 1st when the ACA agreement was terminated. It has been pushed back so Delta will need to find additional Comair/ASA/Chautauqua capacity to cover the routes that they choose to keep. If they can do this why would they need a deal with Skyway? The answer is that they are stuck with the 328 leases and need to do something with the planes. What if Delta is NOT stuck with the 328 leases either through ACA having to keep them or a Delta Ch. 11 filing where a judge lets them reject the leases? I'll let you draw your own conclusions.
I'm not trying to be an alarmist here but I think that everyone needs to stay informed about this situation so they realize the risk here and are not caught off guard. As I mentioned before, the management is in a tough spot here and has to remain positive about the potential for this deal to happen. They need to insure that IF the deal happens they are ready for it. Unfortunately, this means remaining positive in front of the employees with full knowledge that many of the pilots and other people being hired and upgraded will need to be cut loose and downgraded if Delta files chapter 11. There's always the chance that if the DAL deal doesn't happen Skyway will be able to lease some additional 328's at very attractive rates and utilize all or some of the extra pilots in their current system but this is just speculation. Anyway, hope for the best but prepare for the worst....go into this with your eyes wide open.
Delta is in deep financial trouble and every analyst in the industry has pretty much agreed that a DAL bankruptcy is all but certain. If you look at the 3Q financial results just released DAL is low on cash with massive losses, debts and very high costs. They have been largely unsuccessful obtaining debt refinancing and union concessions out of court and it looks like bankruptcy is their only option. They have declined to hold a 3Q analyst Q&A and have said publically that even WITH concessions a bankruptcy is an option. To make matters worse, fuel prices keep escalating and we are nearing the weakest revenue period of the year. The current cash burn rate will force Delta to make a decision very soon. I would urge everyone to closely follow the news regarding Delta and Independence Air (formerly ACA) because the delta/328 situation is mentioned regularly as a catalyst for a potential Independence Air bankruptcy in 2005. It turns out that Independence Air may not be able to transfer the 328 leases back to Delta afterall. Also keep in mind that that the Skyway/Delta deal was supposed to begin on November 1st when the ACA agreement was terminated. It has been pushed back so Delta will need to find additional Comair/ASA/Chautauqua capacity to cover the routes that they choose to keep. If they can do this why would they need a deal with Skyway? The answer is that they are stuck with the 328 leases and need to do something with the planes. What if Delta is NOT stuck with the 328 leases either through ACA having to keep them or a Delta Ch. 11 filing where a judge lets them reject the leases? I'll let you draw your own conclusions.
I'm not trying to be an alarmist here but I think that everyone needs to stay informed about this situation so they realize the risk here and are not caught off guard. As I mentioned before, the management is in a tough spot here and has to remain positive about the potential for this deal to happen. They need to insure that IF the deal happens they are ready for it. Unfortunately, this means remaining positive in front of the employees with full knowledge that many of the pilots and other people being hired and upgraded will need to be cut loose and downgraded if Delta files chapter 11. There's always the chance that if the DAL deal doesn't happen Skyway will be able to lease some additional 328's at very attractive rates and utilize all or some of the extra pilots in their current system but this is just speculation. Anyway, hope for the best but prepare for the worst....go into this with your eyes wide open.
General Lee
Well-known member
- Joined
- Aug 24, 2002
- Posts
- 20,442
You would have THOUGHT that DL would have already pulled the trigger right now, since we supposedly are below the comfort cushion of $1.5 billion. Why haven't they done it yet? Maybe something is going on.......Nobody knows. There is probably a lot of negotiating going on in the shadows.
Bye Bye--General Lee
Bye Bye--General Lee
General:
There is no doubt that there is a lot of negotiating going on behind the scenes. Unfortunately, Delta would need to get VERY favorable aggreements with aircraft leaseholders, lenders, bankers and the pilots to really have a chance to make it without a filing. Don't get me wrong, I hope they pull it off but I think it's a long-shot at this point. I hope I'm wrong. I think that management views Ch.11 as their only chance to eliminate things they feel need to go including DB pension plans, scope clauses and work rules they may view as overly restrictive. Also, aircraft lease holders may be willing to reduce lease rates outside of BK, but BK allows wholesale rejection of leases and elimination of unwanted airplanes. Depending on how things pan out with ACA the 328 fleet would be an example of this. Also, if you look at UAL and USAir the BK judges will agree to pretty much anything the management teams ask of them. This is very attractive to a management team......the ability to "get their own way" without any resistance. USAir got an emergency 21% pay cut for the unionized workers (this is AFTER the employees gave back a lot in the first reorganization) and now UAL is looking at eliminating the DB plans as well as rejecting the union labor agreements (also after the unions have agreed to previous concessions). It's getting to the point that all the management teams need to do is point to SWA, JetBlue or AirTran's CASM's and tell the judge what they think they need to be competitive and the judge signs off on it.
I think that odds of DAL remaining out of bankruptcy would be a lot better if fuel prices were declining and we were entering the historically strong quarters of the year, but this is not the case. Look at the DAL 3Q numbers and try to imagine how 4Q and 1Q will look without drastic cost reductions. A USAirways liquidation would also help DAL but I think that US will be able to limp along for a few months yet. Like it or not, the airline industry is caught in "the perfect storm" right now. All the ingredients for troubled times are upon us: sky-high fuel prices that continue to escalate coupled with overcapacity which prevents the fuel costs from being passed on to the consumers. For the majors you can add relentless, aggressive competition from discounters with much lower costs. I hope Delta manages to avoid a BK filing but I will be amazed if they do. I'm convinced that it will come sooner rather than later. At some point the cash will get to a point that the company can't AFFORD bankruptcy anymore and the risk of liquidation becomes much more real. I would think that for a company the size of DAL the cash balance must be getting near that point.
There is no doubt that there is a lot of negotiating going on behind the scenes. Unfortunately, Delta would need to get VERY favorable aggreements with aircraft leaseholders, lenders, bankers and the pilots to really have a chance to make it without a filing. Don't get me wrong, I hope they pull it off but I think it's a long-shot at this point. I hope I'm wrong. I think that management views Ch.11 as their only chance to eliminate things they feel need to go including DB pension plans, scope clauses and work rules they may view as overly restrictive. Also, aircraft lease holders may be willing to reduce lease rates outside of BK, but BK allows wholesale rejection of leases and elimination of unwanted airplanes. Depending on how things pan out with ACA the 328 fleet would be an example of this. Also, if you look at UAL and USAir the BK judges will agree to pretty much anything the management teams ask of them. This is very attractive to a management team......the ability to "get their own way" without any resistance. USAir got an emergency 21% pay cut for the unionized workers (this is AFTER the employees gave back a lot in the first reorganization) and now UAL is looking at eliminating the DB plans as well as rejecting the union labor agreements (also after the unions have agreed to previous concessions). It's getting to the point that all the management teams need to do is point to SWA, JetBlue or AirTran's CASM's and tell the judge what they think they need to be competitive and the judge signs off on it.
I think that odds of DAL remaining out of bankruptcy would be a lot better if fuel prices were declining and we were entering the historically strong quarters of the year, but this is not the case. Look at the DAL 3Q numbers and try to imagine how 4Q and 1Q will look without drastic cost reductions. A USAirways liquidation would also help DAL but I think that US will be able to limp along for a few months yet. Like it or not, the airline industry is caught in "the perfect storm" right now. All the ingredients for troubled times are upon us: sky-high fuel prices that continue to escalate coupled with overcapacity which prevents the fuel costs from being passed on to the consumers. For the majors you can add relentless, aggressive competition from discounters with much lower costs. I hope Delta manages to avoid a BK filing but I will be amazed if they do. I'm convinced that it will come sooner rather than later. At some point the cash will get to a point that the company can't AFFORD bankruptcy anymore and the risk of liquidation becomes much more real. I would think that for a company the size of DAL the cash balance must be getting near that point.
General Lee
Well-known member
- Joined
- Aug 24, 2002
- Posts
- 20,442
fam62,
You and I can speculate all we want, but you and I really don't know what is going on back there. The analysts have repeated that we would file this week, next week, last week, etc. If they knew about this quarter loss, why wouldn't they have filed yet? That is the part that doesn't make sense. This is all just speculation.
Bye Bye--General Lee
You and I can speculate all we want, but you and I really don't know what is going on back there. The analysts have repeated that we would file this week, next week, last week, etc. If they knew about this quarter loss, why wouldn't they have filed yet? That is the part that doesn't make sense. This is all just speculation.
Bye Bye--General Lee
ShadowFlight
Momentary lapse of reason
- Joined
- Dec 12, 2003
- Posts
- 180
Question is, if this scenario becomes reality, how long would it take us (if ever) to negotiate favorable leases on additional planes that become available? No one, except Skyway management, knows the answer.fam62c said:
Very true words. Let's hope Skyway finalizes the Delta deal and if not, somehow finds a way to obtain additional planes.
Peace
SF
J
Justino
I wish the airlines would have bought fuel on the futures market! They could have saved themselves alot of trouble.....
I am with General Lee, who knows whats going on behind closed doors! Anyhow, who would fly the jets from ACA if DAL gets out of the agreement? No one. Right. What would the bank do? park them, I think not. Someone will be flying those things and I hope its Skyway or its the highway for me!
Both the General and fam6sC bring up great points, lets just hope for the best and the go with the flow. Who knows whats going to happen.
Take care
Justino
PS. I am calm, I am Calm, I am relaxed, breath .... breath!!!!
JK
I am with General Lee, who knows whats going on behind closed doors! Anyhow, who would fly the jets from ACA if DAL gets out of the agreement? No one. Right. What would the bank do? park them, I think not. Someone will be flying those things and I hope its Skyway or its the highway for me!
Both the General and fam6sC bring up great points, lets just hope for the best and the go with the flow. Who knows whats going to happen.
Take care
Justino
PS. I am calm, I am Calm, I am relaxed, breath .... breath!!!!
JK
ShadowFlight
Momentary lapse of reason
- Joined
- Dec 12, 2003
- Posts
- 180
If Delta manages to force the leases back onto ACA, I would presume those lease payments ($22 million a year?) would not be beneficial to ACA/Independence's long-term financial survivability. But then again, ACA/Independence may have factored those lease payments into their start-up capital. If they didn't make allowances for the possibility of being "stuck" with the leases, does that mean ACA/Independence may face Chapter 11 bankruptcy? And, if they do file BK, would those lease payments would be voided by the court?
Which leads me to this thought. Keep in mind that AvCraft has started manufacturing the 328's again and I doubt AvCraft would be pleased to see 30+ used 328's dumped on the market. I've heard they already have several airplanes (prop and jet) sitting on the MYR ramp. Another 30+ would put a serious damper on their marketing of newly built 328's.
Delta's financial position and need for restructuring with employees, vendors, and creditors is a high-stakes endeavor. Everything is on the table for negotiation because Delta's long-term survivability is on the line.
I'm only speculating and time will tell what happens next. I wish the best to all involved.
Peace
SF
Which leads me to this thought. Keep in mind that AvCraft has started manufacturing the 328's again and I doubt AvCraft would be pleased to see 30+ used 328's dumped on the market. I've heard they already have several airplanes (prop and jet) sitting on the MYR ramp. Another 30+ would put a serious damper on their marketing of newly built 328's.
Delta's financial position and need for restructuring with employees, vendors, and creditors is a high-stakes endeavor. Everything is on the table for negotiation because Delta's long-term survivability is on the line.
I'm only speculating and time will tell what happens next. I wish the best to all involved.
Peace
SF
WillFlyFoCookie
On Wisconsin
- Joined
- Jun 23, 2004
- Posts
- 104
This really is a tuff spot for everyone involved. If things were only a little better at Delta (or really the entire industry) I think this deal would be no problem. Skyway is such a "no brainer" to take this over but Delta is just barely hanging on and it certainly seems to me that this deal would have gone through a long time ago if they weren't waiting to see if they can get the pilot concessions they want and stay out of Chap. 11.
The thing is that I'm almost certain there are agreements signed between Delta and Skyway already and have been for quite a while. Things like Delta paying for all the training of ramping up to take the planes. All the upgrades and all the new hires have costed millions out of Delta's pocket. A huge investment already on Delta's part.
I was talking to a Skyway check airman and he said that either way he is going to be very busy for a very long time. Either he's going to be training Upgrades and new hires like crazy for the Delta deal or he's going to be retraining all the people displaced if the deal doesn't go through or we simply don't get any more planes.
It just tuff not knowing right now but we just have to keep the Faith and just see how things pan out. I think the months of not knowing what's going to happen day-to-day is starting to take a toll on people.
What's interesting is that in airline financial articles about either Delta or FLYI the 30 328s are mentioned as possibily being the straw that finally brakes the camel's back and will send whichever airline gets stuck with them into bankrupcy.
Crazy times. The thing is that we just feel so powerless about the whole thing. Everybody just needs to keep holding on and wither the storm. Somethings got to happen soon right?
The thing is that I'm almost certain there are agreements signed between Delta and Skyway already and have been for quite a while. Things like Delta paying for all the training of ramping up to take the planes. All the upgrades and all the new hires have costed millions out of Delta's pocket. A huge investment already on Delta's part.
I was talking to a Skyway check airman and he said that either way he is going to be very busy for a very long time. Either he's going to be training Upgrades and new hires like crazy for the Delta deal or he's going to be retraining all the people displaced if the deal doesn't go through or we simply don't get any more planes.
It just tuff not knowing right now but we just have to keep the Faith and just see how things pan out. I think the months of not knowing what's going to happen day-to-day is starting to take a toll on people.
What's interesting is that in airline financial articles about either Delta or FLYI the 30 328s are mentioned as possibily being the straw that finally brakes the camel's back and will send whichever airline gets stuck with them into bankrupcy.
Crazy times. The thing is that we just feel so powerless about the whole thing. Everybody just needs to keep holding on and wither the storm. Somethings got to happen soon right?
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