Song Cuts Back

[Flying Freddie]

Reuters
Delta to Suspend Some Song Flights - WSJ
Tuesday June 15, 4:46 am ET

NEW YORK (Reuters) - Delta Air Lines (NYSE:DAL - News), struggling to cut costs and avert filing for bankruptcy protection, plans to suspend nearly one third of the flights at its low-fare carrier Song in September, The Wall Street Journal reported on Tuesday.

The airline will drop 41 of Song's 140 daily flights in September, the newspaper said.

The newspaper quoted a Delta spokeswoman as saying the changes in Song's flight schedule were "nothing unusual" and the planes would undergo routine maintenance during September, considered a slow month for the airline industry.

Delta officials said they plan to restore the flights in October, the Journal reported.

Among the routes losing flights are Los Angeles to Tampa, Florida, and Los Angeles to Orlando, Florida, the newspaper said.

Atlanta-based Delta, the No. 3 U.S. airline, has warned it could seek bankruptcy protection if it cannot cut costs. Last year, it created the Song unit in an effort to fend off competition from discount rivals. Delta was not immediately available for comment on the report to Reuters.

 

[MedFlyer]

This highlights the biggest problem with Song...the planes are too big for most routes. DL struggles to fill the planes even at peak times and then during low times, its a total disaster. The reason DL is pulling down flights is because last September Song's loadfactors were in the 40's and 50's and DL lost a lot of cash.

Instead of truly fixing a bloated cost structure, DL attempted to lower CASM by just using higher density aircraft. As I've tried to tell the General a million times before, you can't solve all your problems with bigger planes and tons of extra seats.

 

[side stick-n]

This is odd, but in Delta's defense reducing flight during September and October is not out of the ordinary. They aren't the only ones that will pull aircraft off line to perform scheduled maintenance.

 

[Skygod]

AP says it's a Quarter, but temporary . . .

Tuesday June 15, 10:25 am ET Delta to Trim a Quarter of Song Flights, Raising Questions About Airline's Success



ATLANTA (AP) -- Delta Air Lines will cut a fourth of flights on its low-cost Song carrier this September, raising questions about how well the budget airline is doing.

Delta officials say the cutback is just temporary, with the full 144 daily flights returning in October.


"September is a particularly low travel time for all carriers," said Song spokeswoman Katie Connell.

Song, launched last April to give Delta an answer to low-fare alternatives such as JetBlue Airways and AirTran, relies on leisure travel, which drops off at the end of summer, Connell said.

Analysts conceded that Song will have a more cyclical passenger load than Delta because it doesn't have a core of business fliers. But they warned the cutback in daily flights hints that Song isn't as strong as Delta hoped.

"Traditionally it has not been successful for a major airline to operate a low-cost carrier within the bigger company," said Joel Denney, an airline analyst for Piper Jaffray & Co. in Minneapolis.

Delta, the nation's third-largest airline, lost $1.3 billion last year and has been looking for Song to help return it to profitability. But in the first quarter of this year, Delta posted a $387 million loss.

Song uses Delta pilots and provides such perks as leather seats and in-flight entertainment. It cuts costs with shorter aircraft turnaround times at airports. Connell said Delta remains upbeat about the budget line's chances.

"Actually, its performance continues to improve," she said.

In morning trading on the New York Stock Exchange, Delta shares were up 7 cents at $5.96.

http://www.flysong.com

 

[General Lee]

Medflyer,


Ok, one more time for you, where do you get your info? Have you ever been on a Song flight? Tell me the truth! I bet you haven't. I fly them all of the time, and we are full. I have flown them from JFK to LAS and BOS to LAS--and they were both full. Too big of an airplane? What? The 737-200 was too small for the routes, and now the 757 with 199 seats is too big---in your view. Have you talked to John Salvaggio--personally? I have. He says Song is doing great, and remember when Grinstein was ready to pull the plug on Song? He did an about face---and this from a guy who doesn't really do that. Why would he do that? He saw the numbers and liked what he saw obviously. Last Septemeber was a really bad month for Song--and that was really due to natural monthly cycle and the type of people that fly Song---a lot of the kids go back to school that month etc... If you look in the new timetable for Delta you will see that this was planned---with a lot of Song flights showing except Tues and Wednesday for SEP. That is probably a good idea if the flights will be not profitable---wouldn't you say so? No? Whatever. All of the flights will return in October---and that should tell you something. You are grasping for straws again....

And, I have told you that with the lower fares---more seats are needed. Look at the passenger numbers for this Summer and this year--the people are returning. We, unfortunately, have too many 50 seaters now--and not enough larger planes to compete with the new LCCs. 50 seaters and low fares do not match----and INDY Air will have problems if they cannot fly that much frequency (14 daily flights to everywhere---including 8 to Lansing...?) due to weather problems, ATC problems, etc.....


Bye Bye--General Lee

 

[MedFlyer]

Medflyer,


Ok, one more time for you, where do you get your info? Have you ever been on a Song flight? Tell me the truth! I bet you haven't. I fly them all of the time, and we are full. I have flown them from JFK to LAS and BOS to LAS--and they were both full. Too big of an airplane? What? The 737-200 was too small for the routes, and now the 757 with 199 seats is too big---in your view. Have you talked to John Salvaggio--personally? I have. He says Song is doing great, and remember when Grinstein was ready to pull the plug on Song? He did an about face---and this from a guy who doesn't really do that. Why would he do that? He saw the numbers and liked what he saw obviously. Last Septemeber was a really bad month for Song--and that was really due to natural monthly cycle and the type of people that fly Song---a lot of the kids go back to school that month etc... If you look in the new timetable for Delta you will see that this was planned---with a lot of Song flights showing except Tues and Wednesday for SEP. That is probably a good idea if the flights will be not profitable---wouldn't you say so? No? Whatever. All of the flights will return in October---and that should tell you something. You are grasping for straws again....

And, I have told you that with the lower fares---more seats are needed. Look at the passenger numbers for this Summer and this year--the people are returning. We, unfortunately, have too many 50 seaters now--and not enough larger planes to compete with the new LCCs. 50 seaters and low fares do not match----and INDY Air will have problems if they cannot fly that much frequency (14 daily flights to everywhere---including 8 to Lansing...?) due to weather problems, ATC problems, etc.....


Bye Bye--General Lee

You say every flight is full...no matter what. There could be five people on a 777 and you'd say the flight was full.

Here are some facts for you:
Mainline domestic loadfactors for DL fell in May...despite how full you say they were.
Transatlantic loadfactors for DL fell in May....despite how full you say they were.

If people are returning, why are DL's loadfactors falling? Could it be DL is adding too much capacity?

Yes, the 757 is too big and the 732 was too small. Guess what? There are planes in between. They're called 737-800's.

I don't really care what Selvaggio said...he's just trying to save his job. Selvaggio used to brag about how great Midway was doing and we all know where that went. Grinstein might still pull the plug on Song...a final decision hasn't been made.

Come on General, name me one successful airline that grounds 30% of its flights during a low month? JetBlue flies many of the same routes and they aren't cutting flights back 30%? I don't see WN grounding 30% of their flights on Tuesdays and Wednesdays? Why is that?

Grounding planes may save DL some money, but it also reduces revenues. Planes sitting on the ground don't make any money. The goal with Song was to increase aircraft utilization and bring in more revenue, how can the planes do that if they are on the ground???

 

[General Lee]

Medflyer,


Take a look at the loads right now for INTL and domestic. They are huge. Guess what? Some months have less passengers. Our April INTL load factor jumped 41% compared to last year--but you were looking for a month that had a slight decline. Now our Summer loads are packed. We learned something at Song last September, and that was that it is our slowest month. We are trying to resolve that--by giving 5,000 free tickets out for travel only in SEP to get people on during that slow month---and they will see that Song is great and will try it again during the rest of the year. (Jetblue is also giving away 5,000 free tickets) You keep saying that the 757 is too big and the 738 is just right. The 738 carries 154 seats with a first class section. (Actually it is now 148 seats after removing six seats in the back so they don't have to have a fourth stew on board) I bet without the first class section we could have 165 or 170 seats on the 738---and that is only 29 or so less seats than the Song 757. So, that is the breakeven in your opinion? Well, if you say so.....

And "grounding planes" doesn't create revenue. Well, how about flying empty ones? This is only for one month. Which would you rather do? If you knew that Song has one historically very slow month--would you--as CEO--take away 1/4 of the flights and give vacations out to employees during that slower month? Or, would you fly the planes on the empty side? Come on Harvard man---pick one. That is actually "forward thinking." We also don't fly all of the same flights on the INTL side after Summer is over(from daily to maybe 4 or 5 times a week)--like daily flights from JFK to Istanbul, Athens, and Barcelona actually becomes a one stopper thru Madrid, etc....That is due to cyclical traffic during the Summertime. But, to you, that is a disaster.....It is common---we are also adding some weekly flights to MUC and ATH this Summer too....

Bye Bye--General Lee

 

[Flying the Line]

When capacity is high fares tend to be low. Delta has other flights from NY to Florida that are not branded as Song.

This will actually drive the price of tickets higher and with B6 at high booking levels, the glut of the pax will turn to DAL Mainline and pay higher fares. Actually this technique should be able to be done with much success.

 

[MedFlyer]

Medflyer,

And "grounding planes" doesn't create revenue. Well, how about flying empty ones? This is only for one month. Which would you rather do? If you knew that Song has one historically very slow month--would you--as CEO--take away 1/4 of the flights and give vacations out to employees during that slower month? Or, would you fly the planes on the empty side? Come on Harvard man---pick one. That is actually "forward thinking." We also don't fly all of the same flights on the INTL side after Summer is over(from daily to maybe 4 or 5 times a week)--like daily flights from JFK to Istanbul, Athens, and Barcelona actually becomes a one stopper thru Madrid, etc....That is due to cyclical traffic during the Summertime. But, to you, that is a disaster.....It is common---we are also adding some weekly flights to MUC and ATH this Summer too....

Bye Bye--General Lee

If DL were smart, instead of grounding the planes, they would substitute in smaller planes and put the 757's on other routes. DL has all these planes of various sizes designed to match capacity with demand. However, because DL "created" a separate brand, they can't substitute since the smaller planes aren't Song. That's one of the problems with creating an airline within an airline. DL has made it more difficult to match capacity with demand by creating a subfleet.

Your international example isn't comparable. DL does pull down European capacity, but they don't just ground all the 763ER's that are pulled. They shift them to other routes where demand is higher in the winter....that's smart.

I'll ask again General, if grounding 30% of your fleet is common, why don't other carriers do it? Why isn't JetBlue grounding 30% of their fleet? They fly many of the same leisure routes that Song does.

 

[General Lee]

Medflyer,


September is our slowest month----probably everyone's slowest month---the kids all go back to school. Where do we put the 767ER's again after the busy Summer season? We don't put them anywhere else--we probably do yearly maintenence work on them. Please give me an example of where we "add" capacity with the INTL 7676ERs in September.....We don't. If your were incharge, and you knew that one month of the year is probably going to be your slowest---would you cancel 1/4 of the flights to save some money? They are not parking any airplanes for the month, they are just parking some of them for a couple days per week. Maybe some will go to have maintenence work. Not all of them will be "grounded." You make it sound a lot worse than it is. It is probably smart business wise.
Again, we aren't "grounding" 30% of our fleet at Song. Nope. You are really making it a lot more "exciting" than it really is. Look at the timetable---the changes are already in there. There will be some less flights on Tues and Weds-----watch out! Relax----if the numbers aren't great as of yet on those days---then we should have less flights---eventually they will grow---and October will return to normal.

Bye Bye--General Lee

 

[AlbieF15]

This reminds me of a sign I saw on the door at the Shaw AFB CBPO (personnel office) back around 1991:

"CLOSED TO SERVE YOU BETTER".

General...all I want is a PM from you 36 hours prior to you guys renegotiating so I can buy up some stock.

 

[NYRANGERS]

Perspective

Just a little perspective........Jetblue is cutting it's schedule for September. Take a look at their daily departures to various cities in August then look at September. All airlines do this.

I am not sure why something that was announced in February (Song Sched for Sept.) is making news now........Maybe it's Delta's new advertising team strategy...make a big deal out of old and cyclical news....that way we don't have to spend money on advertising.

NYR

 

[General Lee]

Albie,


I have no doubt that we will come to a successful conclusion with these negotiations, but my pay check will undoubtably be smaller. Hopefully you guys at Fedex will carry the torch and keep those rates higher. I probably can't give you any insider info due to the fact that I really am not privy to that type of info. But, I have faith that Dalpa will get a deal that is fair to everyone and will help the company.....


Medflyer,

Here is another blurb for you about the reduction in SEP of Song:

Delta To Suspend Some Song Flights -- WSJ (Washington Post)
Delta Air Lines , struggling to cut costs and avert filing for bankruptcy protection, plans to suspend nearly one third of the flights at its low-fare carrier Song in September, The Wall Street Journal reported on Tuesday. The airline will drop 41 of Song's 140 daily flights in September, the newspaper said. The newspaper quoted a Delta spokeswoman as saying the changes in Song's flight schedule were "nothing unusual" and the planes would undergo routine maintenance during September, considered a slow month for the airline industry.


Enough? Say UNCLE!!!!

Bye Bye--General Lee

 

[MedFlyer]

If it was just a 10-15% cut back, I would think nothing of it...just a seasonal adjustment.

But a 30% cut is a lot and points to a weakness in the business model. If Song is really an LCC, large cuts like this shouldn't be necessary. DL's PR people can sugar coat it any way they want, but something's not right.

I'll ask again General, if this is just normal business, why isn't JetBlue cutting September capacity by 30%? You've avoided this question multiple times which tells me you don't have an explanation.

 

[General Lee]

Medflyer,


I will ask you one more time----if you knew that a particular month was ALWAYS a slow one, would you run a full load of flights that month? If you would, I think you had better go back to college and take Business 101. We learned last September that Song wasn't very full----and before they used 737-200s at Express--that might have been the right aircraft for September. So, now we have 199 seat 757s that are full most months---but not Septembers. What should you do? The answer: fly less during that month and do needed maintenence. How can you say this is a weakness in the business model? LESS PEOPLE FLY IN SEPTEMBER. Can you understand that? Every airline experiences this. We actually learned this last Spetember---and we are using that intel wisely. That is also why we cut back on flights to Europe after the Summer ends. Can you see that? It is the same thing. I have faith that you are starting to understand this now.

Is Jetblue cancelling 30% of their flights in September? I don't really have access to that info, but they are giving away 5,000 free tickets to Florida just like we are, so I would think they might be having the same September problem as most airlines. Have I answered your question yet? I think I have.

Bye Bye--General Lee