Song

[Ty Webb]

Ty,

What would you do if you were Leo?

That's easy . . . . . new rug, cap those teeth, loose the bifocals, get a different trainer, and start hanging out at Malone's.

Heh-heh.

No, I would:

1. Focus on Delta's core competencies (to use a tired euphemism).

2) Hire people from successful LCC's, not stagnant VP's from Same Ol', Same Ol' Airways. I would involve the empoyees at all levels and get them invested in changing to a brighter, quicker, faster animal.

3) Develop a new focus. "Everything else is just a bus" with the play on words showing the difference in quality while exploiting support for American-made Boeings. I would emphasize, service, quality, efficiency and economy. I woud re-vamp the pricing ala AWA. I would have examined selling gourmet food (these are things that I was advocating long before any of them were adopted, if you care to do a search from last year!). I would continue to invest in technology, as they are doing.

4) I would cede some of the bottom-tier customers to AirTran, JB and SWA. It is not worth it to hemmorhage money to try to keep the bottom customers. Face it- leave the bottom tier to them, and focus on the other 2/3's. Give thm a superior product, treat them like customers, not patients. Earn their business.

There are some customers that will never ride on AirTran. There are some customers that will never ride on Delta, and it is not worth it to match LCC prices at huge losses, not when you don't have to.

5) Many other things, invented by other employees far more talented than myself. I would do my **CENSORED****CENSORED****CENSORED****CENSORED**dest to put forth an atmosphere that encourages people to think, to find better ways to do their jobs, and reward them for their successes.

 

[Ty Webb]

For the General:

I think you've lost it, Pal.

Your insults and taunts show that you aren;t approaching the situation with much logic or discipline/.

Trying to compare Delta in it's 70th year (or whatever) to AirTran in its fifth year (or tenth, however you want to look at it) is pretty ridiculous. That's like me saying, "Well, in our tenth year, we had 73 jet airplanes doing 500 flights a day, when you guys only had 12 Stearman cropdusters". I mean, give me a break. You used to have some logical, well-reasoned posts, but not today, my friend.

If you want to compare where we are right now, you could compare our growth with SWA. We are quite a bit larger at this point in our history than they were in theirs.

I think we're doing just fine. You keep on spending your money trying to hurt us, and we'll keep on making money and growing. Eventually, they'll get rid of Leo after the OSng boondoggle, and you guy's will get back on track. Then, we can both raise our prices and make so0me real money.



We'll see how you fare in the second quarter

 

[General Lee]

Ty,

Sounds good. We already know that we will be up $422 million due to the Gov't money, so I have a feeling we will show a better result. Then the next quarter will show the results of our Summertime flying. The better financial picture is on the way, and it can only get better from this last winter with the War looming etc.

I have not lost my logic or discipline, I have just lost my patience with some people who like to gloat and throw stones in a bad period in our mutual industry. Nobody could have predicted 9-11 and the aftermath. Then the tech bubble bursted. Then came Iraq and the high fuel prices. Hopefully we have overcome some of these problems. Now labor is being racked. We are coming to terms with that and taking necessary steps, but I am sure we will survive and eventually thrive as Leo states it. We have a good market share and a good product, and we are just tweeking it to make sure we thrive.

As far as comparing yourself to Southwest, I wouldn't go that far. In the beginning Southwest operated from Dallas Love Field and didn't have that much competition in the intra-Texas market. They were allowed to thrive and then expanded. They then started to operate out of Houston Hobby, another airport that wasn't utilized much by other airlines. From there they went on to Phoenix, and eventually Chicago Midway, yet another under utilized airport. Airtran has always had to deal with limited growth potential at ATL. Delta has 80% of the gates, and they aren't giving any up. Delta would love to have more, along with Airtran. Airtran has not made the big move yet to find another major hub. Yes, you have some mini-hubs, but nothing more than 20 or 30 flights total at those airports. If 20 or 30 flights make a mini-hub, then we have 30 or so mini-hubs. It will be interesting to watch Airtran try to expand elsewhere, since ATL is limited. Where will you guys try another hub? COS? Where? How long will it be when the next terminal is built and is ready in ATL? I know they are building another runway, but what about another terminal? I know Jetblue is starting to fly to ATL, and they probably want some gates too. I guess you can try to expand in MCO, but Southwest has expanded there recently, and Delta Express 737's are leaving for CVG and ATL, and Song 757's are moving in. I am not trying to put your airline down necessarily, I am just trying to show you the size of ours and our resolve to make sure we succeed.

Bye Bye--General Lee

 

[Palerider957]

General:

Not to quibble, but "one time charges," are often an accounting scheme to hide real losses. I really hope Momma D returns to profitiability in the near future, but who knows. There was a rumor that Delta was trying to get rid of the 777's...any inside info. on that?

 

[General Lee]

Palerider957,


I know they tried to get rid of them about 1 year ago, trying to sell them to South African, when--unfortunately during a test run in Johanassburg, we blew an engine on takeoff---and they then bought A340's. I don't think they are trying to sell them now, because they are trying to get a common type rating on the 777, 764, 757, 767, and 738. When times are good, which they are returning, the 777 does really well for us.

As far as the one time charges, an MBA friend of mine said it was a common practice to, in bad times, make sure everything looked really bad---that way in good times everything was good. We have 19 daily 767-300ER's to Europe each day from JFK alone, and during the War we had to cancel a lot of them. The gas prices were really high even though we hedged a lot, but not all. We have reinstated almost all of the Europe flights (except JFK--to Milan) on June 1st, and the loads seem great on the computer. SARS has not affected us at all---airlines like UA and NW are still hurting. Things are turning around, slowly. But, we will it turns out take some sort of pay cut--which will help them too.

Good luck with your contract negotiations at ASA---we will remember you when we start hiring again after the furloughs come back in 3-4 years. We appreciate your help.

Bye Bye--General Lee

 

[Palerider957]

General:

Thanks for clarifying the 777 issue, there have been a lot of rumors on that (and the fate of the MD's).

As for contract talks, they seem to be going well, although I don't have an inside track.

When we actually do start to hire again (probably in the late fall, early spring), I'm hoping we take on a bunch more of the furloughees--as long as Momma D recalled them at a rate that woudn't leave us in smoking hole. I think that would be an all around good thing for ASA/Delta and there is some talk of it.

Good luck!

P.S. I took the jump seat to SRQ on a DAL MD-80 yesterday, the crew were very welcoming (and perverts at heart--like an airline pilot should be!!). Anyway, a postive experience.

 

[FlyDeltasJets]

That's easy . . . . . new rug, cap those teeth, loose the bifocals, get a different trainer, and start hanging out at Malone's.

Heh-heh.


I agree, but with a 13 million dollar compensation package, I'll bet he's doing ok with the ladies!


Some of your post is kind of fluffy, but I will respond to those with substance.


No, I would:

3) Develop a new focus. "Everything else is just a bus" with the play on words showing the difference in quality while exploiting support for American-made Boeings. I would emphasize, service, quality, efficiency and economy.

Well, my slogan would be "Don't fly anything built by the cheese eating surrender monkeys", but your point still stands!




I woud re-vamp the pricing ala AWA.

I am not ready to concede that revamping pricing is a good idea. We made billions before 9/11 using the old pricing model. I spoke the other day at length to our VP of network mgt and route planning (I can be a pest!) and came away very impressed with the man and with the technology we are using for yeild management. Our RASM is among the idustry leaders, and it continues to improve. Would it improve more with a simplified fare stucture? To be honest, I don't know. But I am reassured that real experts are studying this as we speak.


I would have examined selling gourmet food (these are things that I was advocating long before any of them were adopted, if you care to do a search from last year!). I would continue to invest in technology, as they are doing.

It would not surprise me to see some cnanges to mainline service (food, etc) like you suggest. I believe that whatever works on Song will eventually be implemented at mainline.



4) I would cede some of the bottom-tier customers to AirTran, JB and SWA. It is not worth it to hemmorhage money to try to keep the bottom customers. Face it- leave the bottom tier to them, and focus on the other 2/3's. Give thm a superior product, treat them like customers, not patients. Earn their business.

You were doing ok up until here. I don't mean to be rude, but I'm afraid this idea displays a lack of knowledge of industry economics. Study after study have shown that price is BY FAR the number one purchase driver for airline tickets. If your price is higher than the competition, you will lose too much of your business to remain profitable. More room? Ask AMR and TWA (with their "comfort class") how well that works. Better food, seats, and service? How's that working for Midwest? The airline graveyard is littered with airlines who thought that people would pay extra for better service. They don't. Unless service is glaringly bad, people will still flock to the lowest price. The bottom tier that you mention is not the 1/3 of the travellers, it is 99% of them.

It has been shown time and time again throughout airline history that, although an airline may "hemmorhage" money by matching ticket prices, they will lose FAR more money if they don't.

There are some customers that will never ride on AirTran. There are some customers that will never ride on Delta, and it is not worth it to match LCC prices at huge losses, not when you don't have to.

That's just the point. They do have to, or they will lose far more.



5) Many other things, invented by other employees far more talented than myself. I would do my **CENSORED****CENSORED****CENSORED****CENSORED**dest to put forth an atmosphere that encourages people to think, to find better ways to do their jobs, and reward them for their successes.

Again, this is a little fluffy. If it makes you feel better, I agree with you on some of those points, but they were more wishes than strategies, and not really worth a big discussion.


What was worth discussing is your idea that Delta (and other airlines) are accepting these losses simply to "protect market share." That is incorrect. They are doing so to minimize their losses. If market share were their motivation, the desert would not have any parked airplanes, and Delta would not be 15% smaller.

Price is king. Right now, a variety of factors (including the growth of lcc's) have set prices below that at which established carriers with mature costs can profit. However, they have no choice but to match those prices, or watch ALL of their revenue drop off. In the meantime, they must reduce costs, which is where we are today. And unfortunately for all of us, the largest cost and easiest one to address is employee wages and benefits.

I wish I had the General's optimism. I'm afraid that if things don't change, it will get worse. For all of us. The lcc's are not immune to the market forces, even though they are currently benefitting from them.

 

[Cardinal]

Losing money with no end in sight, in an attempt to regain marketshare is a dinosaur tactic . . . a holdover from the early days of deregulation. It doesn;t work against LCC's that are making money.[/B]

It seemed to work against Legend. You can still snag some china of theirs on eBay once in a while...

 

[NYRANGERS]

Durring bad times Major airlines loose big money. In up swings they can make big money.............


Delta on average flys around 300,000 pax a day, give or take 50,000. A $10 fare increase is a gain of around $3,000,000 a day or $1.095 billion a year. A few dollars one way or the other can make or break a major airline. Airlines like Air Tran who fly much much less pax only realize small gains or losses. Durring bad times they can show profits (ie. $2 million a quarter). Durring good times they cannot make up much of a difference.

Durring good times Delta can profit the same $ value that Air Tran nets in a year.

Looks like the up turn is comming...................

 

[Skank]

Heck, no airline is perfect. As long as you can be proud to put on that blue (or green or whatever) uniform and go to work, then who cares what the other guy thinks?

 

[Ty Webb]

It seemed to work against Legend. You can still snag some china of theirs on eBay once in a while...

I said against LCC's that are making money, Champ.

 

[Ty Webb]

Durring bad times Major airlines loose big money. In up swings they can make big money.............[/i]


The problem is the downswings can put them down, for good. The history books has a lot more failed airlines than successful ones. UAL is still pretty likely to be liquidated, and USAirways may not be out of the woods yet, either. Only time will tell.

You yourself said it best:

A few dollars one way or the other can make or break a major airline. .

But you erred here:

Airlines like Air Tran who fly much much less pax only realize small gains or losses.

Your entire post leaves me wondering if you have any understanding of the most basic business principles. . . . sure, we're not going to show profits in the billions, but we don;t have billions of shares outstanding, either! Smaller profits divided over a smaller pool of investors.

In terms of relative size, Delta would have to show profits in the hundreds of billions, if AirTran were to make a billion dollars. In terms of relative size (or the number of shares outstanding) AirTran can do equally well or better. Look at the charts for SWA and DAL and you tell me which one would have made you more money as an investor.

Durring bad times they can show profits (ie. $2 million a quarter). Durring good times they cannot make up much of a difference.

You have got to be kidding, right? When DAL charges more, we get more pax paying more money, not less! Why don't you read our 10-Q from the second quarter of 2001 and see for yourself?

Here's a suggestion- use this down time to educate yourself about how the industry works. Read some quarterly and annual reports cover to cover. Make some comparisons. You'll see that the stuff you have posted here is clearly just wishful thinking posted as fact.

Looks like the up turn is comming...................

Hope you're right, but I think it's still wishful thinking on your part.

 

[Flying Freddie]

Associated Press
Delta Pilots Balk at Pay Cut Request
Wednesday May 14, 9:37 am ET
By Harry R. Weber, AP Business Writer
Delta Airline Pilots Union Balks at Company's 22 Percent Pay Cut Request


ATLANTA (AP) -- The Delta Air Lines pilots union is balking at a 22 percent wage-reduction proposal that is part of a companywide cost-cutting campaign.
In a memo distributed to pilots Tuesday night, the union's economic and financial analysis committee said the nation's third-largest airline needs to cut costs to survive but noted employees have already made sacrifices.

"Labor did not create this problem, and the E&FA team does not endorse management's specific proposal," the memo said. "The team has concluded, however, that all stakeholders, including labor, need to be part of the solution."

The union's financial team linked Delta's problems to a drop in revenue and new debts -- not to what it pays its pilots. The union leaders stopped short of calling for the proposal to be rejected, but said their data should be considered when members make a decision.

"Labor costs as a percentage of total expenses have been fairly flat," the memo said. "Expenses have not changed very much. Although it appears there has been a recent spike in labor expenses relative to total revenue, the main cause of the relative percentage increase in labor expenses is the reduction in revenue, not the increase in expenses."

The union said it is still gathering input from pilots before deciding on a course of action.

Last month, Delta told pilots it wants to cut their hourly wages by 22 percent, cancel pay raises due over the next year and reduce some benefits.

In addition to the pay cut for pilots, Delta wants to reduce the company contribution to a family savings plan for pilots from 3 percent to 2 percent. It also is proposing comprehensive negotiations focusing on work rules, benefits and further discussion on pay rates in the fall of 2004 or sooner, depending on the financial condition of the company.

Chief executive Leo Mullin has said Delta will use deep salary concessions agreed to at American Airlines as context for its talks with its own pilots.

Delta lost $466 million in the first quarter on top of $1.3 billion it lost last year.

Atlanta-based Delta has laid off 16,000 employees since the Sept. 11 attacks. It has also furloughed more than 1,000 pilots and said earlier this month it would furlough an additional 200 pilots this year because of a drop-off in travel due to the war in Iraq. It also plans to reduce capacity by 10 percent and will remove 12 MD-11 aircraft from service.

The pilots' union represents 9,000 Delta pilots.

 

[General Lee]

Posted from TY Webb:

"Here's a suggestion- use this down time to educate yourself about how the industry works. Read some quarterly and annual reports cover to cover. Make some comparisons. You'll see that the stuff you have posted here is clearly just wishful thinking posted as fact."

Jeez, this guy is ruthless. He sure is cocky, telling a furloughed pilot what to do on his downtime. His new name should be "Ty Almighty."

Come on Ty, you cannot be serious? You have all of the answers. You are in all of the boardrooms. You know exactly what you are talking about, right? Wrong. I haven't seen any major profits or major losses for Airtran because you fly for a smaller carrier. I am not making fun of your company, I am just stating the facts. The problem with Delta during bad times is that we have many fixed costs with huge hubs that need to be paid in good times and in bad. During bad times, we tend to lose more because of those costs. In good time, like the late '90's, we were making billions and those costs were easily covered. We just had a major fuel spike before and during the war that added on to those costs. We also had to pay a lot more than you did for security costs because we had to install 798 new cockpit doors on all of the mainline planes plus all of the ASA and Comair planes. Our costs are a lot more than yours, but then again we are a lot bigger than your airline. To say that economic recovery is no where to be seen is being overly pessimistic. Maybe you should sit down in your down time between your continuous duty overnights to Ft. lauderdale and review the history of airlines and the economic cycles they go through. Every ten years or so there is a huge downside, and then it climbs again. Some airlines make it, and some don't. The economy is starting to show signs of recovery, and the war being over will help. To deny that is closed minded, and I think you like being closed minded when it comes to your biggest competition---Delta. We are in better shape than every other Major, and times can only get better, which will speed our recovery along. I never said we were going to be 100% tomorrow, but we are starting to rise again. It may take a while, but it will happen again. Your airline, on the otherhand, better start looking for new areas to start hubs, because ATL is already capped for you. And another thing, lay off our furloughed pilots---give them a break, won't you? Do you like throwing rocks at people when they are down? Are you insecure? Sounds like it. I bet you drive a P.T. Cruiser.

Bye Bye---General Lee

 

[SWA/FO]

Go Ty...let 'em have it!! jetBlue is going to rock song's World.