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?

 

[lowecur]

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

So are you saying if DL goes 7 that the jets get returned to the ERJ? Care to show me where it says that in the purchase agreement.

RJET already has a relationship with both AMR/UAL. I would bet those planes would find a home there very quickly in that consolidation. If not, it wouldn't surprise me to see them at NWA/CAL with the DCA slots they will have. Both consolidations have scope problems to solve, but the investment bankers would do that for them if they wanted the financial package for the mergers.

The wild card is always a sugar daddy stepping to the plate for UAIR to the tune of $1.5B. That would send everybody scrambling to find dance partners by the end of the year. I still believe this scenerio is highly unlikely.

 

[FDJ2]

So are you saying if DL goes 7 that the jets get returned to the ERJ? Care to show me where it says that in the purchase agreement.

I never said they would go back to ERJ. I simply stated the obvious, that CHQ was willing to invest huge sums of dollars by purchasing E Jets for DCI operations. Contrary to your statement that no one would "pay that kind of money to buy a chain that is attached to a 10,000lb anchor."

Lowecur: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.


FDJ: 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?

So it appears that CHQ was willing to put some money up front in order to provide small jet lift to DCI.

You also seem to think that with consolidation or a DAL CH7 liquidation there would be many opportunities to redeploy those excess E Jets. To who? With a DAL liquidation there will be a huge glut of small jets looking for a home and CHQ certainly isn't guaranteed a network partner for its new DCI E Jets as a matter of fact CHQ would be awash in excess small jets and so would Skywest, ASA, CMR, you get the picture.

You also seem to think that with consolidation there's a need for extra capacity, (more jets). Nothing could be further from the truth. Consolidation normally gets rid of the extra jets.

So we know that CHQ is willing to invest huge sums of $$$ in DAL/DCI, I'm sure there are others. The next question is where will CHQ be guaranteed to put all those excess E Jets if DAL/DCI fails? Hmmm.

 

[MedFlyer]

I
With a DAL liquidation there will be a huge glut of small jets looking for a home and CHQ certainly isn't guaranteed a network partner for its new DCI E Jets as a matter of fact CHQ would be awash in excess small jets and so would Skywest, ASA, CMR, you get the picture.

Lets say DL fails, what do you think will happen in a market like TLH where DL currently controls 75% of the capacity? Do you think all those people in TLH will just stop flying because DL is no longer around? Of course not. It's likely that carriers like NW and US would want to increase capacity into those markets (right now they only fly 50 seaters). So hmmmm....what's the next step up from a 50 seater? The E170.

You're probably right that the industry would be awash in 50 seaters (since everyone has plenty of those). But the larger 70 seaters are still in short supply. CO has no 70 seaters, NW only has a handful of AVRO RJ's (which are far from new) and AA only has a small number as well. With DL gone, those carriers would want to steal some of DL's former customers and the E170's would be prime for the job.

CHQ might have a hard time placing the ERJ's (37/50 seats) it operates for DCI, but I don't think it would be hard to find a home for the E170. Keep in mind, we're only talking about 16 planes right now.

 

[FDJ2]

Lets say DL fails, what do you think will happen in a market like TLH where DL currently controls 75% of the capacity? Do you think all those people in TLH will just stop flying because DL is no longer around? Of course not. It's likely that carriers like NW and US would want to increase capacity into those markets (right now they only fly 50 seaters). So hmmmm....what's the next step up from a 50 seater? The E170.

Or perhaps the 717, or reduced frequency in larger aircraft, it could be quite a few things. All of this hypothetical of course. But what is not hypothetical is that Chq did invest in DCI through their purchase of 16 E Jets for starters. That's at least $300M- $400M. Could those E jets find a home without DCI? Maybe, maybe not. If Chq were confident that their was a huge growing market for E-Jets, the build them and they will come philosophy, then why don't they go ahead and put in an order for 100 E Jets? After all, there are plenty of customers out there looking for 70 seaters.

 

[MedFlyer]

Or perhaps the 717, or reduced frequency in larger aircraft, it could be quite a few things. All of this hypothetical of course. But what is not hypothetical is that Chq did invest in DCI through their purchase of 16 E Jets for starters. That's at least $300M- $400M. Could those E jets find a home without DCI? Maybe, maybe not. If Chq were confident that their was a huge growing market for E-Jets, the build them and they will come philosophy, then why don't they go ahead and put in an order for 100 E Jets? After all, there are plenty of customers out there looking for 70 seaters.

The 717 is going out of production. The 736 and the A318 aren't exactly selling well either.

Reduced frequency....NW and US each only fly 3x daily to TLH with 50 seaters. You propose they only fly 1x daily with a mainline plane....thats not going to work.

CHQ has quite a few E170's on order, but there are factors that limit how many they can order. Despite the demand for 70 seaters, some carriers are still limited by scope (NW). The market for 70 seaters may be there, but there's nothing CHQ can do about scope. Even at DL, CHQ can't possibly operate 100 E170's. DL's scope won't allow it given that ASA/Comair also have 70 seaters (and will be getting more). Not to mention that CHQ certainly isn't the only provider of 70 seaters in the market....CHQ can't possibly capture the entire market.

Plus, it's just smart business not to grow too fast. Unlike DL, some companies are smart enough not to bury themselves in debt. Steady, rational growth is a far better business model than wildly adding and dumping capacity like many of the legacies have done.

 

[lowecur]

Thank you MedFlyer

Sometimes I think I'm talking to R2D2.

 

[FDJ2]

You propose they only fly 1x daily with a mainline plane....thats not going to work.

Well multiple flights a day certainly aren't working, so perhaps TLH can't support daily high frequency, low lift flights, but only a couple of larger flights a day. As for the 717, Airtran could always redeploy some of their existing 717s. Maybe JBLU will come in with some 190s. Tons of other options besides a E170. Just a thought.

MedFler: "CHQ has quite a few E170's on order, but there are factors that limit how many they can order. Despite the demand for 70 seaters, some carriers are still limited by scope (NW). The market for 70 seaters may be there, but there's nothing CHQ can do about scope. Even at DL, CHQ can't possibly operate 100 E170's. DL's scope won't allow it given that ASA/Comair also have 70 seaters (and will be getting more). Not to mention that CHQ certainly isn't the only provider of 70 seaters in the market....CHQ can't possibly capture the entire market."

But according to Lowcur, scope will be gone, there will be massive consolidation and E Jets will be in high demand, so why doesn't Chq just get a jump on the game, get a head start and finance 100 E-Jets. It's a done deal.

Nope, it just doesn't work that way. Chq will only finance $100s millions of E jet debt when they have what they feel is a solid contract to operate them, otherwise they'd be buying more.

 

[FDJ2]

Sometimes I think I'm talking to R2D2.

No, you were just all over the place with your logic. Shooting from the hip if you will. A little more consistency would help.

I'll leave you and Medflyer the last word, because the discussion involves an improbable hypothetic. DAL isn't going Ch7, there are simply too many interests involved that would stand to lose $$$ if it did, and CHQ wouldn't have bought a several hundred million dollar chain attached to a 10,000lb anchor if they thought DAL were to liquidate.

 

[lowecur]

No, you were just all over the place with your logic. Shooting from the hip if you will. A little more consistency would help. Thank you, those thoughts are very soothing.

I'll leave you and Medflyer the last word, because the discussion involves an improbable hypothetic. DAL isn't going Ch7, there are simply too many interests involved that would stand to lose $$$ if it did, and CHQ wouldn't have bought a several hundred million dollar chain attached to a 10,000lb anchor if they thought DAL were to liquidate.

Click your heals three times and repeat after me, "there's no place like home, there's no place like home." AAAAAAAAAAAAHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHH!!!!!!!!!!!!!!!!!!!!!

Okay my Kraut-Mick friend, Johnny
will never get that part because I
hate that pinko punk and I'm going
to run him out of the Movies. And
I'll tell you why. He ruined one of
Woltz Brothers' most valuable
proteges. For five years I had this
girl under training; singing lessons!
Acting lessons! Dancing lessons! We
spent hundreds of thousands of dollars--
I was going to make her a star. I'll
be even more frank, just to show you
that I'm not a hard-hearted man,
that it wasn't all dollars and cents.
That girl was beautiful and young
and innocent and she was the greatest
piece of ass I've ever had and I've
had them all over the world. Then
Johnny comes along with that olive
oil voice and guinea charm and she
runs off. She threw it all away to
make me look ridiculous. A MAN IN MY
POSITION CANNOT AFFORD TO BE MADE TO
LOOK RIDICULOUS!

 

[737 Pylt]

oh brother!

Click your heals three times and repeat after me, "there's no place like home, there's no place like home." AAAAAAAAAAAAHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHH!!!!!!!!!!!!!!!!!!!!!

Okay my Kraut-Mick friend, Johnny
will never get that part because I
hate that pinko punk and I'm going
to run him out of the Movies. And
I'll tell you why. He ruined one of
Woltz Brothers' most valuable
proteges. For five years I had this
girl under training; singing lessons!
Acting lessons! Dancing lessons! We
spent hundreds of thousands of dollars--
I was going to make her a star. I'll
be even more frank, just to show you
that I'm not a hard-hearted man,
that it wasn't all dollars and cents.
That girl was beautiful and young
and innocent and she was the greatest
piece of ass I've ever had and I've
had them all over the world. Then
Johnny comes along with that olive
oil voice and guinea charm and she
runs off. She threw it all away to
make me look ridiculous. A MAN IN MY
POSITION CANNOT AFFORD TO BE MADE TO
LOOK RIDICULOUS!

Hey lowIQr:
Did your parents have any children that lived??
737