The future of Comair? Shut down???

[PA44Jockey]

Decision expected next week from Delta merger. Speculated this morning during the closing bell.

"Ladies and Gentlemen, Please remain seated with your seatbelts securely fastened until Delta has turned off the Free to Jump light. Thank You."

 

[~~~^~~~]

There are other ways this can play out.

Typically Delta' planners have backfilled mainline operations with RJ's. To the extent that Comair can depend on CVG's orgin and destination traffic, they will continue & grow operations. Remember that when mainline retreated from DFW, Connection grew there rapidly. CVG, unlike DFW, doesn't have a huge competitor like American and can support higher higher revenue sales.

The branded carriers will likely return to a "at risk" flying model. If Delta mainline retreats from the CVG hub it will have an effect similar to turning back the clock to a model more like Comair's business before the Delta purchase.

I expect a DAL/NWA tie up to put more pressure on Delta to outsource (relieving pressure that they have contracted for too many RJ's already). The two forces might cancel each other out, but neither NWA, or Delta, wants to buy a 100 seat jet until the next generation of these aircraft are built. CRJ700/900's are popular in the interim.

Parking airplanes that you have to make payments on anyway is a very difficult decision. Remember how these airplanes were "self financing?" Well. they have to fly to finance themselves....

I would not consider the regionals truly in trouble until Boeing rolls out a 100 seat jet with the new geared turbofans AND ALPA finds its way on scope. Those events are still at least 5 years down the road.

---- and Delta has been hiring Comair pilots (and ASA pilots, and CAL, Jet Blue, Air Force, Navy, Marine, Army too...when you hire 800 in two years all good applicants are getting consideration)

 

[~~~^~~~]

I see four possibilities, one is the operation is shut down, two is spun off(sold/ipo),three is merged and four is status quo with fewer 50s and more 70/76 seaters.

Shutting it down doesn't make much sense to me...

Spinning off the airline in a sale ...

Merger is another possibility. ....The new operation could also fetch a healthy price if it were sold off.

Status quo, is also a possibility. It might just make more sense to keep it as a WO feeder and adjust the fleet mix. .....

I just don't see much value from shutting CMR down versus the other three options. JMHO

Yep, he wrote it a week ago.

 

[John Pennekamp]

Like PIT when USAir moved out? Did Southwest add a lot of flights there? How about Jetblue? CVG has no O&D traffic, and is only used as a connections hub. Do you think a lot of people ask "hey honey, do you want to spend the weekend in Cincinatti? We could get NASTY..?" Doubtful anyone would go in there and add a large hub even close to the number of current departures. Sad, but true. At least they built that new runway, and that new DHL sorting facility......


Bye Bye--General Lee

So how do you explain SWA hubs like BNA? Oh, and lol on gettin' nasty in Cincinnati.

 

[John Pennekamp]

I hate to see bad things happen up at Comair as well. I do believe that somewhere in this garbage, this arrogant windbag has a poiint........ Why the hell did Comair refuse to let furloughed DAL pilots work there? What was the harm in that idea? I think Comair's union did a huge disservice to themselves and their pilots by refusing to hire these guys in thier time of need. We had tons of them working at ASA, and were very happy to help.

FWIW, the MEC made that decision because they felt there was a quid pro quo. They saw an opportunity to get something they'd wanted for a long time now that the Mighty Delta Pilots finally needed something from them. Essentially, they took the furloughees hostage.

I agree it was a stupid idea. I distinctly recall the meeting and dinner when we on the ASA MEC tried to convince them to give the DAL pilots jobs with no strings attached. They claimed CMR management didn't want to do it, and they would have to "waste capitol" negotiating to get it.
Unfortunately, they had a couple of young cocky firebrands on the MEC (remember BV), and two apathetic captain reps that went along. And of course JC , who had no love for the Delta boys to begin with. So the CMR MEC decided to not fight CMR management on the issue.

 

[~~~^~~~]

The question was asked during this morning's 4th QTR DAL conference call at 44:50

"Comair will remain an important part of the Delta family no matter how that contract gets structured"

 

[John Pennekamp]

The question was asked during this morning's 4th QTR DAL conference call at 44:50

"Comair will remain an important part of the Delta family no matter how that contract gets structured"

And Anderson said just a few months ago that no mergers were in the works.

 

[Otto]

Should''ve had those 70's

Loving it? I don't think so. It has been a huge fall since the days when Comair thought it was invincible, though. Lawson really thought he was large and incharge when asking for more 70 seaters when our furloughed pilots needed help. Regardless, it will be interesting to see what happens.

Bye Bye--General Lee

Lawson wasn't asking for more 70's...Comair and DELTA wanted more 70 seaters because there was a legitimate market need. The number was capped by scope so Delta settled for more 50 seaters because it was the best they could do. Fast forward five years and Delta has wasted millions on airplanes they don't need and never really wanted in the first place. On top of that, bankruptcy loosened scope and now all of those 70 AND 90 seaters are here anyway, being flown mostly by contract carriers. Scope neither protected jobs (as DCI is now bigger then ever) and caused a huge hit to YOUR balance sheet. You shot yourself in the foot and don't even know it.
I understand trying to protect your job but manipulating the market is ALWAYS ineffective. I don't even know why I waste my time here...I'm sure you'll say something to the effect that if Delta had just put a 777 between CVG and Grand Rapids, everything would be just peachy.

 

[russtgol]

Obviously Comair would not immediately shut down with a merger, but unless some miracle plan evolved like escaping Delta or being able to bid on other flying not involving 50s, Comair will close the doors within a few years. Delta and the Kremlin have completely ruined what was once a proud and upstanding company.

In addition, I would be very wary of what comes out of S.B.'s mouth. Probably gearing up for another round of concessions to save the company. Fortunately this time, the words are bouncing off a deaf wall.

Don't blame Delta and the Kremlin, blame ALPA and ASA for flying there routes....

 

[IronCityBlue]

I think CVG is gone with United or Northwest. Either way ORD and DTW are the trumps. Good news for everyone in the tristate area wishing for their low-cost alternative. Southwest, JetBlue or whoever will enjoy a very uncongested airport.

If that happened, I doubt it would be JB who goes in. SWA needs to grow desperately and this would be their opening. They would poach some pax from SDF, IND and CMH, but they are running out of markets in this country. They are already the largest domestic airline in the nation (world?) and desperately need ATL and CVG to continue to force growth into their system. No airline stagnates or shrinks it way to prosperity. Airlines almost always either grow or die.

JB is absolutely terrified of any mid sized midwestern market and will likely NOT even attempt it for years. Once we feel ready to, it will be too late, as SWA, AT and others will have already established themselves there and we will be too afraid of stepping on their toes.

ALl that said, I don't think its necessarilly a given that CVG will close for Delta if they merge. CVG is the nation's golden yield machine and Delta owns it from head to toe. They would likely divert some connection traffic to other hubs, but CVG would stay. We all like to look at dots on a map from a mission oriented perspective and act like hubs have to be far apart from eachother. That is not true. The best hub/focus city/whatever JB ever added was BOS, almost driveable from NYC. But it has the traffic to support it so who cares about dots on a map? If DAL/UAL goes down, JFK and IAD would both survive and thrive as they are close dots on a map but entirely different markets with massive O&D and that's the key.

The distance from ATL to CVG is similar to DTW to MSP, and both DAL and NWA operated their own "geographically redundant" hubs for decades. SWA has many focus cities/hubs where they are very big out of, all near eachother. Just because airlines merge does not mean all hub dots need to be a certain distance away from each other. That kind of "logic" may be good enough for an Aviation Management 101 term paper, but has little impact on real world operations.

 

[IronCityBlue]

Delta has wasted millions on airplanes they don't need and never really wanted in the first place.

While this is true, I blame that on horrible, disgusting, unskilled and untalented management at the time. If Delta truly needed 70 or 90 seaters and not 50 seaters, they could have always flown as many as they wanted. They still can.

 

[On Your Six]

The fact remains that 50-seat jets won't work with high oil prices on competitive routes. That's a fact and we all need to accept it... 70+ seaters are the future for RJs. Unfortunately, the writing is on the wall...

 

[IronCityBlue]

The fact remains that 50-seat jets won't work with high oil prices on competitive routes. That's a fact and we all need to accept it... 70+ seaters are the future for RJs. Unfortunately, the writing is on the wall...

All the more reason for mainline pilots to fly them then.

 

[Beetle007]

I'm not entirely sure that Comair would be dead though. Comair is still the leanest DCI carrier.

Comairs cost per seat mile is 18.1
ASAs cost per seat mils is 14.1
Sky West's cost per seat mile is 12.0
Pinnacle's cost per seat mile is 8.6

Why is comairs costs so high? How are they more than double the cost of Pinnacle? They are the highest cost regional according to the most recent statistics http://www.dot.gov/affairs/bts5807.htm

 

[MINIME]

Even if CVG goes out the window as a hub for DAL, I don't see Comair closing doors. Remember what happened in STL when AA bought TWA? After 911 they pulled 80% of mainline traffic out of STL, making it the ghost town that it still is. The biggest carrier out of STL was Trans States. And I believe it still is.

Yes, 50 seat RJs aren't economical but DAL will want to maintain a presence there. I doubt they want to just give up Comair and not get anything in return. In some cases the other Regional partners may not be in a position to fill the gap either. Heck, I wouldn't doubt DAL giving or returning Comair its 70 seaters to be able to better compete. The overall flying might be reduced but I doubt they will close the doors.

 

[JoeMerchant]

Comairs cost per seat mile is 18.1
ASAs cost per seat mils is 14.1
Sky West's cost per seat mile is 12.0
Pinnacle's cost per seat mile is 8.6

Why is comairs costs so high? How are they more than double the cost of Pinnacle? They are the highest cost regional according to the most recent statistics http://www.dot.gov/affairs/bts5807.htm

.....Longevity....This why regionals fight pay increases.....Longevity is more of a factor than the actual payrates themselves.....

This is why the Compass/MidAtlantics are popular.... They start the longevity clock back at year one....

Comair is a far more senior group than Pinnacle.....

 

[1013dot25hPa]

I agree with JoeMerchant.

CMR is not expensive because of a lack of efficiency, etc. Our cost per seat mile is high due to the fact that nearly 1/3rd of our captains have been here 20+ years and are getting max pay.

We are more "top heavy" then any other regional carrier out there today.

 

[KingAirKiddo]

Yeah, and it's kind of hard to get the "juniority" effect when we keep losing airplanes. Stagnation/shrinking with a senior labor group is not real conducive to sustained profitability.

174 jets pre-bankruptcy down to 115-ish today and every other DCI carrier growing or at least stable. F'cking disgusting.

 

[John Pennekamp]

The fact remains that 50-seat jets won't work with high oil prices on competitive routes. That's a fact and we all need to accept it... 70+ seaters are the future for RJs. Unfortunately, the writing is on the wall...

What's better: 50 people on a CRJ or 50 people on a Mad dog/737/DC-9?

There are still a lot of routes flown by DCI that can't support mainline equipment with acceptable frequency. Shall we drop to 1 or 2 flights a day? Not good for connecting with mainline.

Unless Delta wants to abandon these markets and lose the feed to Airtran, they were going to have to maintain the lift and frequency. 50 seaters aren't going anywhere, they will just be returning to a commuter role on long thin routes... as they were built to do.

 

[FDJ2]

50 seaters aren't going anywhere, they will just be returning to a commuter role on long thin routes... as they were built to do.

You just go on and keep telling yourself that.

 

[John Pennekamp]

You just go on and keep telling yourself that.

Were you going to argue against the points I made or just say "nyah nyah, you're wrong"?

Just answer the question: What's better, 50 people on a CRJ or 50 people on a Mad dog. Because you can't reduce frequency. We await your answer smart guy.

 

[FDJ2]

Were you going to argue against the points I made or just say "nyah nyah, you're wrong"?

I was just saying that you can go on and keep telling yourself that fairy tale.

Just answer the question: What's better, 50 people on a CRJ or 50 people on a Mad dog. Because you can't reduce frequency. We await your answer smart guy.

Neither if it's losing money. The problem is that the 50 seaters are the biggest gas hogs out there on a per passenger basis and have the highest CASM. This isn't the 1990s and $30/bbl oil. At $90/bbl oil fewer and fewer of the 50 seater city pairs are making money and more and more are losing money.

 

[John Pennekamp]

Neither if it's losing money. The problem is that the 50 seaters are the biggest gas hogs out there on a per passenger basis and have the highest CASM. This isn't the 1990s and $30/bbl oil. At $90/bbl oil fewer and fewer of the 50 seater city pairs are making money and more and more are losing money.

Ok, let me get this straight. A MD-88 carrying 50 people and burning 5500#/hour is better than a CRJ-200 carrying 50 people burning 3000# per hour. Because of the "highest CASM" (though you didn't give us the actual CASM numbers, let's see them for proof) and $90 barrel oil.

And which planet is your logic based on?

So let's see the numbers, since you mentioned it. Give us the actual CASMs for the airplanes, divided by the number of passengers, times the fuel price. Oh, and how many gallons of Jet A can be made from a barrel of crude, and what percentage of the Jet A price is affected by the price of crude? Thanks for playing.

 

[FDJ2]

Ok, let me get this straight.

I doubt you have it straight, but go ahead.

A MD-88 carrying 50 people and burning 5500#/hour is better than a CRJ-200 carrying 50 people burning 3000# per hour. Because of the "highest CASM" (though you didn't give us the actual CASM numbers, let's see them for proof) and $90 barrel oil.

I didn't say that. Nice try.

I said neither. Mainline can no longer afford to subsidize the CRJ200.

It just so happens that the CRJ200 burns the most/pax and also has the highest CASM. It is the least economical plane, particularly at higher fuel costs. Domestic capacity will be cut from routes that are not profitable. The reality, whether you choose to ignore it or not, is that the largest cuts will be from the routes flown by the CRJ200.

I believe at least 35 50 seaters are scheduled to be taken out of service in 2008. Probably at least that many next year. Meanwhile, the mainline will receive 7 B737-700s, 4 B757ERs, and 3 B777s in 2008.

However, if you choose to live in your own reality and believe that the CRJ200 is here to stay, go right ahead.

 

[John Pennekamp]

Ok, let me get this straight.

I doubt you have it straight, but go ahead.

A MD-88 carrying 50 people and burning 5500#/hour is better than a CRJ-200 carrying 50 people burning 3000# per hour. Because of the "highest CASM" (though you didn't give us the actual CASM numbers, let's see them for proof) and $90 barrel oil.

I didn't say that. Nice try.

I said neither. Mainline can no longer afford to subsidize the CRJ200.

It just so happens that the CRJ200 burns the most/pax and also has the highest CASM. It is the least economical plane, particularly at higher fuel costs. Domestic capacity will be cut from routes that are not profitable. The reality, whether you choose to ignore it or not, is that the largest cuts will be from the routes flown by the CRJ200.

I believe at least 35 50 seaters are scheduled to be taken out of service in 2008. Probably at least that many next year. Meanwhile, the mainline will receive 7 B737-700s, 4 B757ERs, and 3 B777s in 2008.

However, if you choose to live in your own reality and believe that the CRJ200 is here to stay, go right ahead.

That's all fine and dandy, but you still haven't PROVEN your statement that the CRJ 200 is the least economical compared to comparable mainline narrowbody equipment on a given route.

And are CASMs everything? If it was that easy, then why bother getting an MBA?!! Hey everyone, FDJ the pilot has it all figured out! Put THIS guy on the fast track to upper management!

So before we go any further, let's see the numbers. Otherwise, all this is is FDJ's OPINION on what it will be. Of which I couldn't care less.

And when you provide the cost analysis, be sure to factor in lost business opportunity by decreasing frequency on the routes when you cut the RJs out, losses from breaking contracts with airlines and airports outside of bankruptcy, and increased labor costs by moving to mainline crews. Also the lost customers to Airtran feeding them out of ATL to these destinations.

We'll be waiting. Please don't cop out again. Put your money where your mouth is by backing your inflammatory statements or go home, FDJ.

 

[FDJ2]

We'll be waiting. Please don't cop out again. Put your money where your mouth is by backing your inflammatory statements or go home, FDJ.

Read it and weep

Independence was bragging about 15.8 cents in 2004 at $40/bbl oil compared to UAL's RJ costs of 22 cents per seat mile. Any guess on whether those numbers are higher or lower at $90/bbl oil?

http://loudoun.vhost.vipnet.org/edc/packets/3-5-04/IndependenceAir.pdf


Here's some more from a Morgan Stanley Conference presentation by Morten Beyer and Agnew Inc.

http://www.mba.aero/presentations/040301_regional_jet_market_update.pdf


Looking at DAL's 4Q CASM breakout, mainline CASM was 10.79, when you add in the RJ factor, which accounts for only 18% of ASMs, consolidated CASM skyrockets to 12.19.

Last quarter alone DAL sold 7 CRJs and is expected to get rid of 35 50 seaters in 2008.

Like I said before, you can believe any fairy tale you want John, but there is a glut of 50 seaters and DAL will be parking quite a few 50 seat gas hogs. Unfortunately the revenue doesn't justify the high operating cost of many of the 50 seater routes. There will still be 50 seaters, just a lot fewer of them. Them the facts.

 

[John Pennekamp]

Read it and weep

Independence was bragging about 15.8 cents in 2004 at $40/bbl oil compared to UAL's RJ costs of 22 cents per seat mile. Any guess on whether those numbers are higher or lower at $90/bbl oil?

http://loudoun.vhost.vipnet.org/edc/packets/3-5-04/IndependenceAir.pdf


Here's some more from a Morgan Stanley Conference presentation by Morten Beyer and Agnew Inc.

http://www.mba.aero/presentations/040301_regional_jet_market_update.pdf


Looking at DAL's 4Q CASM breakout, mainline CASM was 10.79, when you add in the RJ factor, which accounts for only 18% of ASMs, consolidated CASM skyrockets to 12.19.

Last quarter alone DAL sold 7 CRJs and is expected to get rid of 35 50 seaters in 2008.

Like I said before, you can believe any fairy tale you want John, but there is a glut of 50 seaters and DAL will be parking quite a few 50 seat gas hogs. Unfortunately the revenue doesn't justify the high operating cost of many of the 50 seater routes. There will still be 50 seaters, just a lot fewer of them. Them the facts.

No, you dodged the question again. Indy air was on their own. I want to see DELTA'S numbers, since Delta absorbs all of the costs of our operation. Prove that the RJ costs DELTA more under it's operations structure. (Hint: you can't).

And CASM isn't the whole picture, it's just the tip of the iceberg. You have to factor in app of the incidental costs like lost market share, contracts, ground servicing, etc. But nice try. Look, you're just a pilot. Quit pretending you're an MBA. I know you Delta boys think you could run the company IF THEY WOULD JUST LISTEN TO YOU, but come on! Talk about fairy tales...

 

[FDJ2]

No, you dodged the question again. Indy air was on their own.

You failed again John. Indy air was comparing their RJ Casm of 15.8 cents to UAL's RJ CASM of over 22 cents. I'll remind you that was when oil was at $40/Bbl.

You also failed to research the Morgan Stanley Power Points I provided, which also shows the high CASM of a 50 seat RJ.

You also failed to address why DAL's CASM goes from over 10 cents when only the mainline is considered to over 12 cents when the RJ factor is included in the consolidated statement.

It just goes to show you that you can lead a horse to water, but you can't make him drink. I can provide you with the facts, but if you continue to ignore them, that's your problem. There will be fewer 50 seaters by the end of 2008 and even fewer each year going forward.

As much as you want to pretend that the 50 seater is a low CASM aircraft, the facts don't support it.

DAL mainline can no longer afford to subsidize the high cost and high fuel consumption of the 50 seaters. Fewer and fewer 50 seat routes are profitable at $90 oil. The revenue just isn't there to support the high cost of many 50 seat routes. You will see fewer 50s in the future. DAL is already parking them. 7 in 4Q 2007 and at least 35 in 2008.

 

[Caveman]

You're both right. There will be fewer 50 seat RJs in the future and the 50 seat RJ does make more sense than a mainline aircraft on some routes despite being less efficient per seat. Next topic please.

 

[John Pennekamp]

You failed again John. Indy air was comparing their RJ Casm of 15.8 cents to UAL's RJ CASM of over 22 cents. I'll remind you that was when oil was at $40/Bbl.

You also failed to research the Morgan Stanley Power Points I provided, which also shows the high CASM of a 50 seat RJ.

You also failed to address why DAL's CASM goes from over 10 cents when only the mainline is considered to over 12 cents when the RJ factor is included in the consolidated statement.

It just goes to show you that you can lead a horse to water, but you can't make him drink. I can provide you with the facts, but if you continue to ignore them, that's your problem. There will be fewer 50 seaters by the end of 2008 and even fewer each year going forward.

As much as you want to pretend that the 50 seater is a low CASM aircraft, the facts don't support it.

DAL mainline can no longer afford to subsidize the high cost and high fuel consumption of the 50 seaters. Fewer and fewer 50 seat routes are profitable at $90 oil. The revenue just isn't there to support the high cost of many 50 seat routes. You will see fewer 50s in the future. DAL is already parking them. 7 in 4Q 2007 and at least 35 in 2008.

No, you don't get it. You threw up a bunch of numbers, which I read, but you're still comparing apples to oranges. I want to see numbers for Delta and ASA. See, you're too bent on saying I'm wrong and how I failed to objectively prove your point. Typical Delta egomaniac. You keep making subjective statements, then using numbers with no relation to back them up. You, Fly Delta Jets 2, are a egomanicial moron.

Now, one more time. Put up a cost comparison of a Delta mainline airplane on a long thin route to an RJ. Or give up.