Susan Donofrio downgrades Delta!

[Dizel8]

Looks like she is worried about cash on hand and Ch.11.

http://biz.yahoo.com/ap/050412/airlines_stocks.html?.v=1

 

[General Lee]

Looks like she is worried about cash on hand and Ch.11.

http://biz.yahoo.com/ap/050412/airlines_stocks.html?.v=1

Thank you Dizel8, I was just waiting for you to post it. Yeah, she downgraded us, stating the same thing we have known for awhile, and that is that we will need some more cash by the end of the year. Expect a sale of DCI and probably pension reform again to help out. She did not take that into account it seems, since there is no immenent sale pending for DCI.

I like the part about Delta's "limited" overseas network--even though we fly more people to Europe than anyone else from the US.


Bye Bye--General Lee

 

[skykid]

I like the part about Delta's "limited" overseas network--even though we fly more people to Europe than anyone else from the US.

She's right. Delta needs to decrease its domestic flying and increase international. Gen, what does Delta having going across the Pacific? That's where the economies are booming.

 

[MedFlyer]

I like the part about Delta's "limited" overseas network--even though we fly more people to Europe than anyone else from the US.

Bye Bye--General Lee

Compared to other carriers, DL does have a more limited overseas network. DL relies more heavily on domestic revenue than most other legacies. That's just a fact. The bulk of DL's business is still low-yield connecting traffic.

Asia has lots of opportunities, but it will be hard for DL to capitalize on them. DL's route network is not very conducive to large Asian operations. SLC and CVG are too small. JFK is too competitive. ATL has some potential, but DL lacks the adequate aircraft.

 

[General Lee]

Compared to other carriers, DL does have a more limited overseas network. DL relies more heavily on domestic revenue than most other legacies. That's just a fact. The bulk of DL's business is still low-yield connecting traffic.

Asia has lots of opportunities, but it will be hard for DL to capitalize on them. DL's route network is not very conducive to large Asian operations. SLC and CVG are too small. JFK is too competitive. ATL has some potential, but DL lacks the adequate aircraft.

I think she was saying compared with all of DL's traffic, and that probably includes all of the RJ traffic. And, how can our bulk business be "low-yeild connecting traffic" when we have more RJ's than anyone else? I thought RJs were "profitable?" Hmmmmm.

We used to fly to a lot more Asian cities, but Leo squashed that. We could have flown to China, but Ron Allen refused to meet with one of the Chinease Ambassador's people in the mid-90s, instead pawning it off to someone with less stature, and that offended the Chinease. (typical Southern Red-kneck response....) We could use our JFK facilities(too much competition? One of the largest cities in the world?) or maybe BOS (probably not) to connect more with China in the future. I don't see much Asia flying from CVG or SLC. ATL could support a daily Beijing or Shanghai with a 777 I would bet---with a good funnel down to South America or Latin America for connections. But, we will need to fix our current financial picture first.......


Bye Bye--General Lee

 

[lowecur]

I read an article this morning in the AJC that DL thinks they can collect $600M to $1.2B for DCI. LOL! Where? Are there some investment bankers that are willing to pay that kind of money to buy a chain that is attached to a 10,000lb anchor? Certainly SKYW is not willing to dangle that kind of money for two union carriers. I'm dying to see who is dumb enough to strike a deal.

 

[General Lee]

I read an article this morning in the AJC that DL thinks they can collect $600M to $1.2B for DCI. LOL! Where? Are there some investment bankers that are willing to pay that kind of money to buy a chain that is attached to a 10,000lb anchor? Certainly SKYW is not willing to dangle that kind of money for two union carriers. I'm dying to see who is dumb enough to strike a deal.

Well, the combination originally cost us about $2.9 billion. DCI consists of 37 70 seat RJs plus 105 or so 50 seaters.(owned)(plus many options etc) Skywest just bought 20 CR7s and options for around $500 million new. I would think $600 million to $1.2 billion would be a steal. Sounds like they know something that YOU DO NOT. Maybe it would come with a 10 year agreement or something like that..... We shall see.


Bye Bye--General Lee

 

[FDJ2]

She's right. Delta needs to decrease its domestic flying and increase international. Gen, what does Delta having going across the Pacific? That's where the economies are booming.

You're right DAL is very weak across the Pacific, hopefully DAL will expand in that market. Dispite that weakness across the Pacific Delta is expanding its international flying at a much higher rate then its domestic flying.

"Domestic traffic in March 2005 increased 11.9 percent year over year, while capacity increased 4.2 percent. Domestic load factor in March 2005 was 79.8 percent, up 5.6 points from the same period a year ago. International traffic in March 2005 increased 23.7 percent year over year on a 23.1 percent increase in capacity. International load factor was 81.4 percent, up 0.3 points from March 2004."

With DAL's disproportionate investment in the largest RJ network in the industry DAL probably has no plans to decrease its domestic exposure. My guess is you will continue to see international capacity increases outstripping domestic capacity increases.

 

[FDJ2]

I'm dying to see who is dumb enough to strike a deal.

Didn't Chq just strike a deal with DAL to assume $100s of millions of dollars in E jet debt to deploy 16 E-170s on the DCI network?

 

[General Lee]

She's right. Delta needs to decrease its domestic flying and increase international. Gen, what does Delta having going across the Pacific? That's where the economies are booming.

Hey, it is tough to get slots in China and elsewhere in ASIA. We would love to add new routes, and it would be nice to get some more 777s if we could. We are adding flights to Chennai (Madras) in India, which is a high tech center in India----where things are booming. We are also trying to find airplanes right now to use newly aquired rights to fly nonstop to Rio De Jinero form ATL-----and Brasil's economy is coming back to life. We are trying to expand in the right places, but we don't have enough airplanes. Word is currently that we are going to switch our domestic 767ERs out of domestic only service and outfit them with Business Elite seats and fly them INTL. We are trying supposedly....


Bye Bye--General Lee

 

[FDJ2]

Word is currently that we are going to switch our domestic 767ERs out of domestic only service and outfit them with Business Elite seats and fly them INTL. We are trying supposedly....
Bye Bye--General Lee

General, just to add to that, I've heard that the 767-400 will start doing more international flying, possibly Europe, and that Song may start flying to Europe from BOS.

 

[General Lee]

General, just to add to that, I've heard that the 767-400 will start doing more international flying, possibly Europe, and that Song may start flying to Europe from BOS.

The Song planes(757s) would have to be ER's, and I think we only have a few that were ex Am-trans..... I have heard that those 764s would be crossing the pond too---they can fly from ATL---HNL nonstop in the Winter.....


Bye Bye--General Lee

 

[lowecur]

Didn't Chq just strike a deal with DAL to assume $100s of millions of dollars in E jet debt to deploy 16 E-170s on the DCI network?

Yo, I think Chq has a few options if DL folds as far as redeploying the 170s. What kind of options does anyone have with the DCI fleet if that happens? It's an investment frought with little upside and a big downside. Hey, but stranger things have happened. I still think the state of GA is going to bail out DL.

 

[FDJ2]

Yo, I think Chq has a few options if DL folds as far as redeploying the 170s. What kind of options does anyone have with the DCI fleet if that happens?

A few options, with who? UAL? CAL? AMR? AWA? Those E170s will be part of DCI, just like all the other DCI jets. If DL folds there sure will be quite a few small jets looking for a home at rock bottom prices with few takers, including Chq's 170s. JMO but my hunch is Chq was betting on DAL and DCI when it financed those E170s, otherwise they would never have bought them.

 

[lowecur]

A few options, with who? UAL? CAL? AMR? AWA? Those E170s will be part of DCI, just like all the other DCI jets. If DL folds there sure will be quite a few small jets looking for a home at rock bottom prices with few takers, including Chq's 170s. JMO but my hunch is Chq was betting on DAL and DCI when it financed those E170s, otherwise they would never have bought them.

That's a laugh. It will all boil down to who finds a long term large investor first. If UAIR does not find an investor to stake them at least $1.5B, then they are history by the 1st Q of 2006(even if they get the $350M). Once capacity is reduced substantially from todays levels on the East Coast, then investment bankers will be more likely to step forward to finance deals to consolidate the remaining legacys. My choices are AMR/UAL and NWA/CAL/DL. The 170s will always find a home in any one of those consolidations. If for some reason most of the legacys are hung out to dry and fold, then Chq/RJET has lots of slots at LGA/DCA and many 170s to hang out their own shingle. They are a very cagey group.

 

[General Lee]

Hmmm. Well, I don't see DL/NW/CO, I think that would be too much. I could maybe see DL/NW/Alaska, CO/UA, US/AWA, and AMR/Spirit/Sun Country/ATA/Frontier. Those four against Airtran, JB, and Southwest. Then, we'll have a party. Hey, where's Virgin America? Also, I don't see Chataqua or Skywest etc going out on their own. Nope, they would be crushed by the LCCs right off the bat.



Bye Bye--General Lee

 

[FDJ2]

That's a laugh. It will all boil down to who finds a long term large investor first. If UAIR does not find an investor to stake them at least $1.5B, then they are history by the 1st Q of 2006(even if they get the $350M). Once capacity is reduced substantially from todays levels on the East Coast, then investment bankers will be more likely to step forward to finance deals to consolidate the remaining legacys. My choices are AMR/UAL and NWA/CAL/DL. The 170s will always find a home in any one of those consolidations. If for some reason most of the legacys are hung out to dry and fold, then Chq/RJET has lots of slots at LGA/DCA and many 170s to hang out their own shingle. They are a very cagey group.

Well I'm glad you had a good laugh, but you still don't have a good answer on who would take on the additional regional feed. The E170 might find a home, but that doesn't mean they will be Chq E170s. AMR/UAL would have their own regional feed in the form of Eagle as does NWA/DAL/CAL, whose E170s could be bought by their own inhouse feeders, so where does CHQ go with their DAL Connection E-170s if DCI and DAL go under? No, my guess is that CHQ realizes that there is glut of small jet providers out there and unless they play ball they will be left behind. It's for that reason that they took on the debt of financing their own E jets and offered them at rock bottom prices to DAL. The regionals are much more dependent on their mainline partners, even the ones in BK, then the mainline partners are dependent on their regionals. How long did it take UAL to replace ACA? How much are regionals paying to prop up UAIR?

 

[lowecur]

Also, I don't see Chataqua or Skywest etc going out on their own. Nope, they would be crushed by the LCCs right off the bat.



Bye Bye--General Lee

The only chance either of those will go out on their own is if no investment bankers step forward to finance consolidation, and most of the legacys are left to die on the vine. Just FLYi and UAIR going Chapt 7 would not leave a large enough gap to go out on their own.

 

[lowecur]

Well I'm glad you had a good laugh, but you still don't have a good answer on who would take on the additional regional feed. The E170 might find a home, but that doesn't mean they will be Chq E170s. AMR/UAL would have their own regional feed in the form of Eagle as does NWA/DAL/CAL, whose E170s could be bought by their own inhouse feeders, so where does CHQ go with their DAL Connection E-170s if DCI and DAL go under? No, my guess is that CHQ realizes that there is glut of small jet providers out there and unless they play ball they will be left behind. It's for that reason that they took on the debt of financing their own E jets and offered them at rock bottom prices to DAL. The regionals are much more dependent on their mainline partners, even the ones in BK, then the mainline partners are dependent on their regionals. How long did it take UAL to replace ACA? How much are regionals paying to prop up UAIR?

The way I see the AMR/UAL consolidation playing out would be similar to AMR/TWA. First the pensions would be jettisoned, then AMR would offer their union full furlough recalls for concessions (adding the 170/190 to Eagle). UAL pilots would be stapled to the bottom of the list, and anti-trust would raise it's ugly head forcing elimination of much duplication of service at ORD and other airports. Investment Bankers would love this deal.

NWA/CAL/DL would happen only after DL enter Chapt 11. My guess is they would have a very difficult time with exit financing unless they took the consolidation under similar terms as the UAL deal with AMR. Investment bankers will be ruthless with demands to finance such deals.

If you really believe that RJET will be left out of the equation with Jetblue growing it's 190 fleet you are mistaken.

 

[FDJ2]

The way I see the AMR/UAL consolidation playing out would be similar to AMR/TWA. First the pensions would be jettisoned, then AMR would offer their union full furlough recalls for concessions (adding the 170/190 to Eagle). UAL pilots would be stapled to the bottom of the list, and anti-trust would raise it's ugly head forcing elimination of much duplication of service at ORD and other airports. Investment Bankers would love this deal.

NWA/CAL/DL would happen only after DL enter Chapt 11. My guess is they would have a very difficult time with exit financing unless they took the consolidation under similar terms as the UAL deal with AMR. Investment bankers will be ruthless with demands to finance such deals.

If you really believe that RJET will be left out of the equation with Jetblue growing it's 190 fleet you are mistaken.

So where does CHQ's DCI E-Jets they financed fit into this?