Skywest/ASA merger

[spinup]

General,

United, your buddy, doesn't have a real plan after 3 years in Chap 11.

(Song, ditching DFW, Simplifares, Operation Clockwork in ATL, some pay cuts, stopping the Defined benefit plans, etc)

Not looking for a drawn out argument here as I find myself agreeing with you at times. However, many business plans you cited exist at both carriers: Delta has Song and UAL has Ted, Simplifares are a marketing technique not unlike others at UAL, Operation Clockwork in ATL (if I understand it correctly) is fancy speak for UAL's de-peaking at LAX and ORD, and pay cuts and benefit reductions speak for themselves in comparison. My point here is that this industry is simply not that imaginative, continually referencing of one another’s play-book.



I agree, you or I have yet to see UAL's business plan. Yet, I have no doubt there is one as is evident through investing community interest.



My personal opinion; DAL NEEDS to remain CLEAR of BK. I truly hope they do. What this industry needs is not more LCC's. What the industry needs is a strong DAL, AMR, NWAC, CAL, USA and yes UAL. If a SKYW investment in DAL can keep them on the good side of BK, its importance shouldn't be minimized.



BTW, the most uneducated quote on this thread goes to the individual thinking TED will be sold to a regional. I think even General will agree this is absurd.

 

[spinup]

duplicate

 

[Bluto]

If a SKYW investment in DAL can keep them on the good side of BK, its importance shouldn't be minimized.

I think any investment SkyWest could make in DAL would be a drop in the bucket compared to what they'd need to stay out of BK. If DAL can't fix itself, neither can SkyW.

 

[Socalplt]

I'm not sure on the revenue, but SkyWest operates considerably more aircraft for United than Delta. There are 69 aircraft in Delta colors (56 RJs and 13 EMB), and nearly 150 on the UA side.

I beleive that if the Delta ever cancels the contract they are responsible for the aircraft. I think SkyWest has first say but if they don't want them they go to Delta.

 

[Russ]

"From the way your post is worded, it sounds like you would really like Delta to go tango uniform"

Thay would be like hoping I get cancer.


No, I don't wish unemployment upon anyone. That said the SkyWest business plan hopefully has plans should it happen. I'd rather not wait till the music stops to look for a seat if its inevitable.

 

[chperplt]

I beleive that if the Delta ever cancels the contract they are responsible for the aircraft. I think SkyWest has first say but if they don't want them they go to Delta.

Who's talking about Delta canceling the contract??? The above posts mention Skywest bailing on Delta....

You may only have 69 out of 210 or so aircraft on the Delta side, but those 69 aircraft probably make up close to 30% of your revenue. I find it very unlikely that you'll be able to find a new home for them with all the undercutting that MESA can and will do.

At this point, I think the long term health of Skywest is directly linked to it's business with Delta. I'm not saying it's survivability, but it's health.

 

[spinup]

I think any investment SkyWest could make in DAL would be a drop in the bucket compared to what they'd need to stay out of BK. If DAL can't fix itself, neither can SkyW.

Bluto, I honestly don't know bro. In BK and out, large "paper losses" magically seem to have little effect on cash-on-hand. Any additional cash in DAL's coffers may be of greater importance than you or I can imagine. I think it would be remiss to assume that the five hundred million cash (or whatever amount) SKYW offers is the same thing as "paper losses." On the UAL side, they have lost Billions over the last few years; however, their cash on hand has increased throughout BK.

For example, UAL just posted a 1.4B loss last quarter. Still, they added to their DIP financing by borrowing an additional 310m. A comparatively small amount, but important none the less. In DAL's case, this would have an even greater effect because it's not a loan, its income.

What I'm poorly trying to say is that a cash infusion and filed losses are apples and oranges.

 

[Socalplt]

Who's talking about Delta canceling the contract??? The above posts mention Skywest bailing on Delta....

You may only have 69 out of 210 or so aircraft on the Delta side, but those 69 aircraft probably make up close to 30% of your revenue. I find it very unlikely that you'll be able to find a new home for them with all the undercutting that MESA can and will do.

At this point, I think the long term health of Skywest is directly linked to it's business with Delta. I'm not saying it's survivability, but it's health.

The way SkyWest would wind up out of the contract would be if Delta goes into BK and then tries to renegotiate for a rate that wouldn't make it worthwhile. SkyWest would say no and then Delta would give the flying to someone else. Manangement here has no interest in the 50 seater, their eyes are on 90+ seat aircraft.

 

[propjockey]

Cashflow is King -- a brief review of corporate financial statements

And on a related note, cashflow, cashflow, cashflow!

Everything else in accounting is at best, historical data, and at worst, pure fiction. Balance sheets read like a fairy tale unless you really understand what you're looking at and read all the notes in the annual report. The income statement is almost as meaningless as the balance sheet for determining the relative health of a company because of all the magical things you can do in accounting that are perfectly within the bounds of the law and GAAP (generally accepted accounting practices) to paint almost any picture you want. Sometimes you have to read the income statement with a really big grain of salt.

BUT -- If a company has positive cash flow, they ARE making money regardless of what the income statement says. It's a been a while since I looked at UAL's cashflow statement, and I honestly haven't looked at DAL's at all. Last time I looked at UAL, I recall they were still bleeding, but it was more of a pinprick or an oozing cut compared to the gushing severed artery that the income statement (and the media) makes it out to be. But the general public thinks only at the household level of accounting because that's all they understand. There's a lot more to it than simply profit or loss.

(Not tooting my horn, but lest any of you think I'm talking out of my rear, my qualifications: Int'l MBA, Univ of Denver Daniels College of Business 1997, specialization in finance. Worked in corporate finance before preparing to jump ship during the golden years before Sept 11.)

 

[chperplt]

But....if Delta files BK and Skywest rejects the new terms, Delta wouldn't be on the hook for the airplanes..

Skywest would be stuck with 60+ 50 seaters they would need to find a home for....