SONG Out of Business?

[J3CubCapt]

I'm hearing rumor down in MCO of Song going Out Of business as of May 1st. Anyone else hear about this? We have tickets on them for a vacation coming back May 3rd. Wonder if I will need to make other travel plans?


Thanks

J3

 

[acarpe3448]

I have not heard anything about this. I was just in Atlanta on Wednesday and meet with the ATL Chief Pilot and he did not even mention this was a possibility. Of course management does not call me up and ask my opinion on things. I find it unlikely. Nevertheless, Song is a part of Delta Airlines and if they did shut down they will give the customers notice and would probably just substitute a mainline aircraft to cover Song's flights. I sure hope this in fact is just a rumor.

 

[On Your Six]

Wrong. Song just posted a profit - check out the post by General Lee last week. Any shut-down would be phased in over time I would imagine anyway (you can't just ground 30 Song-colored airplanes that could be generating needed revenue).

Who the he!! is spreading this rumor? As far as I know, the status of Song in the future is not fully known. Grinstein will discuss the future DAL strategy in July - until then, Song should be operating as normal.

Another lame rumor...

 

[a320drivr]

Show me the numbers that said Song turned a profit. Oh yeah, thats right DAL doesnt release those.

 

[J3CubCapt]

Good enough, Thanks for the info about DAL covering the flights if SONG did go TU.

Just wanted to do some additional planning if there was a possiblity, although you never know in this industry!

J3

 

[Heavy Set]

Hey a320driver,

Check out the post (conduct a search) that General Lee posted a few days ago. Song actually reported a profit (to everyone's surprise) and Grinstein actually talked about it... No joke.

Conduct a search and you'll find it - clearly nobody will misreport financial data in this ENRON (go to jail) environment....

 

[BLUE BAYOU]

I think every plane, green or blue flew to FL full in the months of Feb and Mar... the big picture is how much of an impact did Song have on mother Delta; still losing mucho dineros.

 

[Heavy Set]

Let's hope for lower fuel prices and strong tourism to/from Europe to provide Delta some cushion... Regardless, wages will need to come down to better compete with the LCCs - but the level will need to be negotiated...

Song appears to be building some steam (slowly but surely).

 

[General Lee]

J3cubCapt,

What? Wrong. Song did make a profit (I posted the Dow Jones article) and John Salvaggio and Grinstein stated that Song would probably grow again. Grinstein said that at our recent CVG meeting---said 17 more 757 would go to Song. Salvaggio (the Pres of Song) also stated that at a recent recurrent training meeting with Song flight attendants and a couple Delta pilots thrown in there. He stated that Song was doing very well and was taking market share away from Jetblue. 17 more 757s will continue to do just that. Enjoy your trip.


Blue Bayou,

I know that mother D hasn't done well in awhile, but without the last extra pension payment ($325 million) that was paid early and really didn't have to be paid for 2 years (due to pension reform), we would have made an operating profit of $113 million--and that is supposedly our worst quarter historically. I know we have a debt problem, and that is our main concern now. The reason we are willing to negotiate for new pay rates is for the upcoming debt payments---but our operations are now turning a profit. The next two quarters are supposed to be really good for us---especially in the INTL arena.

A320driver,

I posted two different articles stating that Song did make a profit--and verified by Salvaggio. You are right though, those numbers are kept secret for some reason--but a "high source" stated it was true. I'd like to see the numbers too....

Bye Bye--General Lee

 

[Mu2Driver]

Is Song profitable the same way ASA/ComAir are profitable?

 

[J3CubCapt]

I was at Selvaggios last closing.....Midway 3, or was it Midway 4, Hell I'm not sure how many throws of death we went through.

Yeah I know ferguson was the real culprit!

J3

 

[dgs]

What? Wrong. Song did make a profit (I posted the Dow Jones article) and John Salvaggio and Grinstein stated that Song would probably grow again. ... He stated that Song was doing very well and was taking market share away from Jetblue.

I posted two different articles stating that Song did make a profit--and verified by Salvaggio. You are right though, those numbers are kept secret for some reason--but a "high source" stated it was true. I'd like to see the numbers too....

Two questions:
1. If the numbers are secret, how would Dow Jones or any news source know if Song made a profit? Aren't they just taking somebody's word for it? Who knows what the real numbers are, but with the ability to shift capital expenses to mainline, I wouldn't expect Song's books to show anything but a profit!

2. If all the JB flights to FL markets are full, how are we losing market share? His inaccurate statement about taking market share away from JetBlue makes everything else he says suspect.

I find Delta's attempt to compete with JetBlue somewhat misguided. We don't serve anywhere near the market Delta covers. If Delta focused those same principles to mainline service in other markets, instead of trying to compete directly with us, they might actually make some money and the entire flying public would benefit. The Delta and AA tactic of trying to squeeze out the upstart airline a) isn't going to work in this market, and b) will just hurt the legacy carriers at a time when they really need to be focusing on their market and their customers.

Just for the record, I think there is room for all the airlines to do well if they stay focused on the customer and what the customer wants. As long as legacy carriers ignore their customer's needs, there will always be a market for expanding JetBlue!

 

[General Lee]

These days you have to be really careful what you say to the media--thanks to Enron etc.... Salvaggio was quoted that Song was profitable. Grinstein, who really didn't like the idea of Song in the first place---has made an "about face" and now likes it---probably after seeing the "numbers" himself. That is the truth. Do I know what the numbers are? No. Don't go after me--I just posted the two articles.....(why woud Grinstein say he will put 17 more 757s onto Song?)

MU2driver,

Think about it. There will be as many or more passengers flying this upcoming summer than the summer of 2000 supposedly, and we have parked all of our 727s, L1011s, and MD-11s. We have less big planes, and more small ones that are equal on the radar scope. We now have less seats available, fares are half, and fuel is more expensive. So, it looks like the only real way to bring in more revenue when the fares are so low is to have more seats on larger planes. RJs don't help that way--and now there are so many that we take delays (holds) in VFR weather or wait forever on taxiways waiting for takeoff with less seats available--and the same number of passengers. We are not bringing in enough revenue---or we could bring in MORE if we still had those larger planes. Everyone says the RJs are profitable---but that is because they are jammed full---but we could probably fill even larger planes and bring in even more revenue if we still had some of those larger planes. But instead, Fred Reid thought the RJs were the answer......Not when there are low fares and lots of passengers....This is primarily the fault of "Marketing" since they decide which airplanes fly where at our company. I don't blame the RJ pilots for this, and there are still some great markets for RJs, just not the ones directly competing with the LCCs....

Bye Bye--General Lee

 

[General Lee]

Here you go DGS,



By Elizabeth Souder
Of DOW JONES NEWSWIRES
NEW YORK -- Delta Air Lines Inc.'s (DAL) low-cost airline unit, Song, turned a profit in the first quarter, with operating costs 20% below that of similar operations at Delta's main airline.

"We had very strong financial results in the first quarter," said Song President John Selvaggio in an interview with Dow Jones Newswires. "April thus far is very strong, and May bookings are above last year."

Delta doesn't provide financial results for Song, which does about 10% of the airline's total flying. But a source at the airline confirmed that Song was in the black last quarter.

Song flies a fleet of 36 Boeing 757 airplanes on routes that primarily serve leisure passengers, mostly between the Northeast and Florida. Delta started the unit one year ago as a way to compete with low-cost carriers.

The unit's strong performance comes at a time when Delta executives are reviewing the company's entire operations to find ways to return to profitability. On Wednesday, Delta said losses for the whole company during the first quarter narrowed to $383 million from $426 million in the same period last year. Executives complained high pilot labor costs and reduced pricing power due to stiff low-cost competition kept the airline in the red.

Executives have said everything is on the table, and it isn't certain whether Song will survive the review as a distinct unit and brand. Song's profit would be an argument for keeping the unit intact.

At the same time, the first quarter is normally a good one for airlines that fly between the chilly Northeast and sunny Florida. Even though Song's load factors have been stronger than those of the main airline, President Selvaggio said the question of what to do with all those seats on the 757s during the off-season hasn't been solved. He is planning some special promotions for September, Song's toughest month.

"I'm confident that Song is going to fare well in that review," he said. "I'm very confident that Song will survive. I think we've established that a separate brand is accretive."

In a letter congratulating Song employees on their first anniversary of operations, Delta Chief Executive Jerry Grinstein on Thursday pointed out that Song has come up with some innovations that were adopted by the main airline. Delta has cut some costs by incorporating such Song ideas as boarding passengers according to zones rather than seats, selling food on board, and preparing planes more quickly for take-off.

"Song's leadership team has shared with me the positive first quarter results you have helped achieve, including operating costs that are approximately 20% below those for mainline 757's," Grinstein said in the letter.

Still, Delta has halted the growth it planned for Song, and Selvaggio doesn't expect the unit to expand again until after the review is completed in late summer.

 

[General Lee]

And DGS---Here's the original article. If you have questions--please call or Email the reporter.....


Delta's Song Unit Turns Profit In 1Q -Source

DOW JONES NEWSWIRES
April 15, 2004 10:44 a.m.

(Adds company source in the fourth paragraph confirming that Song was profitable in the first quarter.)

By Elizabeth Souder
Of DOW JONES NEWSWIRES
NEW YORK -- Delta Air Lines Inc.'s (DAL) low-cost airline unit, Song, turned a profit in the first quarter, with operating costs 20% below that of similar operations at Delta's main airline.

Delta Chief Executive Jerry Grinstein pointed out the "positive" first-quarter results in a letter on Thursday to Song employees congratulating them on their first anniversary.

"Song's leadership team has shared with me the positive first-quarter results you have helped achieve, including operating costs that are approximately 20 percent below those for mainline 757s," Grinstein said in the letter. Delta doesn't break out Song's financial results or operating statistics.

An inside source at the airline confirmed that Song was profitable in the first quarter, going into the black in both February and March.

Song flies a fleet of 36 Boeing 757 airplanes on routes that primarily serve leisure passengers.

Grinstein said Song has come up with some innovations that were adopted by the main airline to cut costs, such as boarding passengers according to zones rather than seats, selling food on board and preparing planes more quickly for takeoff.

Grinstein is reviewing all of Delta's operations to find ways to return the airline to profitability. It's not clear whether Song will survive the possible changes as a distinct unit and brand.

Delta has halted some of the growth it had planned for Song. In March, Grinstein said of Song during a presentation: "I understand fully what a fighter brand is, and that sometimes you have to make an economic investment in order to hold off competition; that makes a lot of sense to me. But there's always a question of the price you're willing to pay, and I think we have to understand that more fully before we're willing to expand."

On Tuesday, Grinstein said he will present the results of his review to the board in late summer, and that he hasn't reached any conclusions yet.

-By Elizabeth Souder, Dow Jones Newswires; 201-938-4148; [email protected]

 

[General Lee]

DGS,

If we can see that a large portion of passengers want lower fares only and entertainment at the same time, why can't we try to compete for those passengers too? If the low fare market is growing, then the high fare market is decreasing......We have to go after everything and try to make revenue. Our pay rates will probably go down, and Song's own flight attendants and gate people already make less. And, Grinstein did say 17 more 757s--and possibly West Coast expansion.....It might get really interesting if we can get our cost down----and I think we will eventually....

Bye Bye--General Lee

 

[AA717driver]

Ok, now that I'm a customer instead of a non-rev, I'll comment on Delta.

I've done three trips on DL this month. IND-SAV-IND-SAV. I can't even buy a beer. They have their abbreviated beverage service on all these legs so it's coke, diet-coke, blah, blah, blah.

There is no such thing as a "full service airline" anymore. It's all the same.

They've been on time but it's been good weather.

If AirTran flew from IND to SAV, I've no doubt they would do it cheaper and with the same service. IMO.TC

 

[On Your Six]

Hutcha and DGS,

Because of new financial disclosure rules (called Sarbanes-Oxley), executives cannot financially mislead shareholders - if they do they go straight to the slammer.... So, whatever Salveggio and Grinstein say in public about Song - it's probably correct regardless of your own negative opinion...

 

[blahshmah]

The technical term used, since Song doesn't report their own financials is... FUZZY MATH.

Do I think Ch. 11 or 7 is in the future at big D... NO, unless management manipulates their way there just to shred the contracts. I think they are doing fine and will be well positioned as the economy heats up. It is funny that this report says Song is making money but I bet the financial news will be bleak when management comes to the pilots for cuts. Good luck to the pilots with negotiations.

 

[MedFlyer]

This is primarily the fault of "Marketing" since they decide which airplanes fly where at our company. I don't blame the RJ pilots for this, and there are still some great markets for RJs, just not the ones directly competing with the LCCs....

Bye Bye--General Lee

No, this is primarily the fault of DL's high-cost, poor quality mainline product. DL was hemorraghing money at mainline, so they shrunk down to RJ's to reduce the hemorraghing. If mainline had reasonable costs and a good product, the reduction of mainline would not have been so extreme.

The sad thing about Song is that it actually makes mainline DL look even worse. Imagine flying Song from MCO-JFK, then connecting to a DL flight from JFK-NCE. What would you think of an airline that gives all the amenities to the low-yield customer on a 2-3 hour flight, while giving crap to the customer on an 8 hour int'l flight??

As DL converts more planes to Song and reduces the number of first class seats available, what happens to all of DL's business travelers who chose DL because of first class? Many will take their business to Airtran, American,etc and leave DL with the low-yield trash travelers.

It's going to be pretty hard for DL to sustain industry leading pay, if the only group of passengers they chase after is the low-yield tourist.

I think I've already got the new advertising slogan for Song,

"Fly Song, because you don't want to fly Delta."