When is Delta going to SELL/IPO CMR/ASA?

jetflyer

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When is Delta going to SELL or IPO Comair and ASA?

With oil prices going high, it's going to be interesting to see the Profits(ha:)) or Losses of Delta in the second quarter. I'm sure the losses are going to be sizable.

I personally think Delta better sell Comair and ASA soon before Delta gets too much weaker or the VALUE of CMR/ASA will decline more.

I feel it's in the best interests of Comair and ASA employees to be sold/IPO'd as well. I'm with Comair and am hoping a sale/ipo happens really soon.
--Comair will then have the opportunity to contract with other carriers.
--Comair if sold would then not be dragged into bankruptcy WHEN Delta files CHAPTER 11.
--If Delta ultimately goes CHAPTER 7 one day, Comair would not be part of the LIQUIDATION to get the stakeholders some of their money back and could instead TRY to be their own independent airline like THE INDY-AIR EXPERIMENT. Oh how fun going it alone:(, but atleast it might give us jobs for a couple more years.

1)When do you guys think Comair/ASA will be IPO'd/Sold, if ever?

2)Comair/ASA pilots: Do you want to be IPO'd/sold OR stay owned by Delta?

Thanks for your comments,
Jet
 
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General Lee

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Well, you keep bringing this up so you are obviously worried or something. Remember, that as long as there are fare increases, the price of oil can keep going up. We have had 8 fare increases that have stuck over the last 8 months. Also, this is our best time of the year, so losses won't be as bad as the first quarter. Sure, there may be a loss, but it probably won't be as bad as the others.


As far as selling ASA or IPOing Comair, I think our management is reviewing those options. As to whether or not any of those options will happen, only Grinstein and Kolshak know. They have put out the "feelers" to see what they might be able to get, but I haven't heard anything other than that. Grinstein has publically said that we don't need to own them to profit from them. (Don't get mad Cmrflyr-----business is business) There probably wouldn't be much change if we did sell or IPO them, except somebody else would be signing the paychecks. Medflyer will undoubtable state that we may need Comair and ASA to "post bail" if we go to Chap 11, and that could be true. And, I don't care what you Comair fans think, the RJs have accumulated debt, and ridding ourselves of that would be useful. (Got that, DOH?) We would just have to find the right buyer, and maybe we haven't found that yet or the right price.

Recent word from the latest "incommand" session (new Captains meet with Grinstein and a bunch of the VPs) is that they would like to have fleet commonality eventually in mainline (probably 737-700 being the smallest DL mainline AC) and DCI running a mixture of 50 and 70 seaters ONLY. They acknowledged the high fuel costs, but said our $5 billion a year savings plan will show results eventually. Song will grow with more 757s also.


So, jetflyer, please relax and if you want to apply to a DCI and you are worried about a possible selloff, apply to these DCI airlines in this order: 1.ASA 2.CHQ 3.SkyWest 4.Mesa 5.Comair


Bye Bye--General Lee
 
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MedFlyer

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General Lee said:
Remember, that as long as there are fare increases, the price of oil can keep going up. We have had 8 fare increases that have stuck over the last 8 months.

Apparently, your buddy Kolshak disagrees with your assessment:

"So far, the number of fare increases have only covered a fraction of the increased costs," Kolshak said in a telephone interview.

http://news.enquirer.com/apps/pbcs.dll/article?AID=/20050702/BIZ01/507020333/1002/BIZ

So General, you better start praying that fuel prices come down, because the fare increases aren't getting it done. Rememeber too that in September, demand will drop like a rock which means fares will drop too. DL will probably get through the summer ok, but this fall will be a blood bath.

And, I don't care what you Comair fans think, the RJs have accumulated debt, and ridding ourselves of that would be useful. (Got that, DOH?) We would just have to find the right buyer, and maybe we haven't found that yet or the right price.

Bye Bye--General Lee

You can push the debt on someone else, but you'll still have to pay for it. Whoever buys ASA/CMR would simply build the debt service into the fee-for-departure.

Unfortunately, I think DL has waited too long to sell ASA/CMR at a good price. If they had wanted to get a good price, they should have done it two years ago. Now, with fuel prices high and LCC's becoming more and more dominant, the value of ASA/CMR is minimal. DL will probably sell one of them, but the sale will do little to boost the bottomline.
 

michael707767

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MedFlyer said:
Apparently, your buddy Kolshak disagrees with your assessment:

"So far, the number of fare increases have only covered a fraction of the increased costs," Kolshak said in a telephone interview.


I tend to agree that the fare raises have not covered fuel, but.......do you really think Kolshak would come out and say anything good until we know about pension reform? They will continue to paint the worst picture possible hoping for pension help.
 

General Lee

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MedFlyer said:
Apparently, your buddy Kolshak disagrees with your assessment:

"So far, the number of fare increases have only covered a fraction of the increased costs," Kolshak said in a telephone interview.

http://news.enquirer.com/apps/pbcs.dll/article?AID=/20050702/BIZ01/507020333/1002/BIZ

So General, you better start praying that fuel prices come down, because the fare increases aren't getting it done. Rememeber too that in September, demand will drop like a rock which means fares will drop too. DL will probably get through the summer ok, but this fall will be a blood bath.



You can push the debt on someone else, but you'll still have to pay for it. Whoever buys ASA/CMR would simply build the debt service into the fee-for-departure.

Unfortunately, I think DL has waited too long to sell ASA/CMR at a good price. If they had wanted to get a good price, they should have done it two years ago. Now, with fuel prices high and LCC's becoming more and more dominant, the value of ASA/CMR is minimal. DL will probably sell one of them, but the sale will do little to boost the bottomline.

Kolshak would not be saying anything good until they get pension relief. Michael707767 is correct. As far as the September drop off, that is correct---it always happens like that. But, Summer driving also falls, and gas usually comes down. With our own budget cuts, we may be able to ride it through. Also, we are realigning our flights in Sep, like some Song flights going to except Tue and Wed, to allow for yearly maintenance. It is all a work in progress.

Fee For departure will stay competitive, because there are so many people out there that want the business. Saying that a higher fee will result due to the debt service is speculative. The new owners probably have better credit and could possible renegotiate the debt service at a better schedule, and since they are more likely to pay it off--the creditors may agree. Again, all speculative. But, the debt will float away with the new owners.


Bye Bye--General Lee
 

Birddog

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When looking at an IPO or sale, an important question to ask is, ", who would want to buy/invest in an airline with a large fleet or RJs whose only flying comes from a mainline carrier struggling to keep its nose above water?" There is no shortage of RJ's out there. There is no great secondary market to convert them to cargo or corporate airplanes. I would not be surprised to learn that Delta has been quietly shopping CMR or ASA around and has failed to get any decent offers. If Delta doesn't want to own us, why should anyone else?
 

michael707767

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Birddog said:
If Delta doesn't want to own us, why should anyone else?



I don't think its a case of Delta not WANTING to own you so much as Delta not being able to AFFORD to own you........two totally seperate things.
 

General Lee

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Birddog said:
When looking at an IPO or sale, an important question to ask is, ", who would want to buy/invest in an airline with a large fleet or RJs whose only flying comes from a mainline carrier struggling to keep its nose above water?" There is no shortage of RJ's out there. There is no great secondary market to convert them to cargo or corporate airplanes. I would not be surprised to learn that Delta has been quietly shopping CMR or ASA around and has failed to get any decent offers. If Delta doesn't want to own us, why should anyone else?

Look at the number of investors lining up to try to get a piece of the USAir and AWA combo.... There is no shortage of people who want to lose money apparently.


Bye Bye--General Lee
 

Birddog

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General Lee said:
Look at the number of investors lining up to try to get a piece of the USAir and AWA combo.... There is no shortage of people who want to lose money apparently.


Bye Bye--General Lee

Good point, but, and this is only my armchair quarterback opinion, its apples and oranges. With America West/USAir, people are hoping that the result will be at least as good as the sum of the parts. With ASA/CMR, there is no similar strength to sell. As Michael pointed out, Delta may not be able to afford to own us as opposed as not wanting to. Either way, it is not a good position to try and sell something from. I am concerned as to what this will mean for ASA/CMR. There are other ways to get rid of us...
 

cmrflyer

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I agree with with the general, the sooner comair gets ipo'd the better. Nobody at comair wanted the buy out, Delta got heavy handed and said sell or you loose your contract to fly for us.

It would be nice to be our own airline again and not get dragged down by stupid managment decisions.

The sooner the better.
 

General Lee

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cmrflyer said:
I agree with with the general, the sooner comair gets ipo'd the better. Nobody at comair wanted the buy out, Delta got heavy handed and said sell or you loose your contract to fly for us.

It would be nice to be our own airline again and not get dragged down by stupid managment decisions.

The sooner the better.

Huh? You may not like the "real world" Cmrflyer. You would likely have to take a large pay cut just to be able to compete with the likes of Mesa and others that will "do it cheaper." Your new owner would stress this to you, saying "to be competitive and be able to get new contracts, we need to cut costs EVERYWHERE." Your industry leading rates (like our old industry leading rates) would go bye bye. Sure, I want us to sell or IPO you guys---but not because I don't love you guys, but rather for the needed cash or debt relief. It will never be like the "old days" at Comair---there will always be outward pressure from the likes of Mesa or others that will offer lower fee for departure services, and you will have to compete with them. We have learned that lesson too----the LCCs cost less, and now we make less. It's a new world.


Bye Bye--General Lee
 

General Lee

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Birddog said:
Good point, but, and this is only my armchair quarterback opinion, its apples and oranges. With America West/USAir, people are hoping that the result will be at least as good as the sum of the parts. With ASA/CMR, there is no similar strength to sell. As Michael pointed out, Delta may not be able to afford to own us as opposed as not wanting to. Either way, it is not a good position to try and sell something from. I am concerned as to what this will mean for ASA/CMR. There are other ways to get rid of us...

Even if we do sell you guys, it sounds like not much would change flying wise. I am sure there would be an extended contract attached to it. Medflyer thinks there would be an added fee to the fee for departure scheme, but that is only speculation. Some investors would see it as a bargain--compared to the actual purchase price a few years ago. And, some billionaires want to become millionaires.


Bye Bye--General Lee
 

jetflyer

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cmrflyer said:
I agree with with the general, the sooner comair gets ipo'd the better. Nobody at comair wanted the buy out, Delta got heavy handed and said sell or you loose your contract to fly for us.

It would be nice to be our own airline again and not get dragged down by stupid managment decisions.

The sooner the better.

Cmrflyer,

I am also a Comair pilot, and I agree "THE SOONER WE'RE SOLD OR IPO'D THE BETTER"

Delta's best chance of survival is a MERGER.

Delta is a sinking ship without a merger. Ch 11 would stink for Delta. I don't see Delta surviving CH 11 bankruptcy. Grinstein has even said Delta is in really BAD SHAPE to enter CH 11, and it's a place he "REALLY WANTS TO AVOID".
--Delta has most of their assets tied up as collateral already so getting exit financing would be VERY DIFFICULT.
--DELTA has almost no cash and a sale of CMR/ASA wouldn't help but for a couple months.

If Comair is still owned by Delta when they CH 11, that's bad news for Comair.
--If Delta doesn't survive CH 11 and LIQUIDATES,while owning Comair, wouldn't COMAIR BE LIQUIDATED ALSO??
--Wouldn't Comair's planes and assets then be sold off to give the Delta's major stakeholders some of their money back??

SELL US NOW while you can still get more than a Big Mac, Fries, and a Coke for US!

Jet
 
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bafanguy

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ASA and CMR are both up for sale...nobody wants them. Word from the inside.
 

General Lee

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jetflyer said:
Cmrflyer,

I am also a Comair pilot, and I agree "THE SOONER WE'RE SOLD OR IPO'D THE BETTER"

Delta's best chance of survival is a MERGER.

Delta is a sinking ship without a merger. Ch 11 would stink for Delta. I don't see Delta surviving CH 11 bankruptcy. Grinstein has even said Delta is in really BAD SHAPE to enter CH 11, and it's a place he "REALLY WANTS TO AVOID".
--Delta has most of their assets tied up as collateral already so getting exit financing would be VERY DIFFICULT.
--DELTA has almost no cash and a sale of CMR/ASA wouldn't help but for a couple months.

If Comair is still owned by Delta when they CH 11, that's bad news for Comair.
--If Delta doesn't survive CH 11 and LIQUIDATES,while owning Comair, wouldn't COMAIR BE LIQUIDATED ALSO??
--Wouldn't Comair's planes and assets then be sold off to give the Delta's major stakeholders some of their money back??

SELL US NOW while you can still get more than a Big Mac, Fries, and a Coke for US!

Jet

Wow, we have an RJ pilot Major CEO wannabe at Comair. Come on now. You don't think DL would survive a Chap 11? You don't? Grinstein said at that incommand session that we would survive regardless of what happens. He said we have good investors already---GE and AMEX----that are "impressed" with what we have accomplished so far. They know that fuel is hurting this whole industry somewhat, but they also see what we done with the budget and what we are continuing to do. He said they are doing what they can to stay out of court, and that our cutbacks will provide fruit eventually.

Getting financing would be difficult, eh? Look at USAir and AWA and their merger. Everyone thought USAir would be dead by now, and now they are merging their lopsided operations with a LCC large on the West Coast. Financing units are lining up regardless----infact a new one today came up with an extra $65 million out of nowhere. USAir got rid of their pensions and some of their debt, but still doesn't really have a well defined plan. They have submitted a bankruptcy plan to the judge as of late, but it is hard to figure out exactly what is going on. If we were to merge with someone, it would be with someone that compliments our routes and theirs. We may not have to do any of that.

Why would Grinstein say Chap 11 is a bad place he wants to avoid? He is still trying to get pension reform. If we don't get that, then they will probably have to go to court to release us of that financial burden. But, Grinstein would NOT go Chap 11 if he knew we wouldn't be able to get out. They have a plan, and the plan is to survive. As far as Comair and ASA----they will likely be sold IF needed.

Maybe if we sold Comair now they could become the next RJ LCC----like Indy Air. Pay cuts would rain down on you soon after the sale.


Bye Bye--General Lee
 

doh

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The non wholey owned are the only ones who can get financing for new and bigger aircraft. The sooner we can get sold the sooner we can start to thrive again. Bring it on General! Oh, I believe Delta will survive. I just don't think they have any thing good planned for any one at Comair. We were a lot better off before the Delta fiasco. JMO.
 

MedFlyer

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General Lee said:
But, Grinstein would NOT go Chap 11 if he knew we wouldn't be able to get out.

Bye Bye--General Lee

Grinstein doesn't necessarily have a choice. If DL's cash gets down to $1Billion or less, he will HAVE to file CH11. Regardless of whether or not DL can make it out, he won't have a choice. This team claims to have a plan to survive, but so far that plan isn't working, so well.

The plan called for oil prices to fall to $35-40 a barrel. Virtually every other airline out there expected oil prices to be higher, but only DL's crack team thought oil prices would fall. Because they were so off the mark, DL is now losing more money than planned.

DL continues to bring in lots of high CASM RJ's...even though you yourself said the high-CASM RJ's don't work against LCC's. Guess what, DL is putting RJ's head to head with WN on FLL-TPA and FLL-JAX starting next week. DL also keeps adding more long-distance RJ flights.

DL's plan called for better customer service, yet DL continues to cut service. On many DL first class flights, DL offers the same or less food than WN or B6.

DL's plan continues to put more and more flights through ATL. Now when the weather goes bad there, all hell breaks loose. DL can't reroute people through other hubs, because those other hubs don't have the capacity to handle even a small number of those pax.

As for AMEX/GE, they don't necessarily believe DL is doing well. GE doesn't want DL dumping a ton of planes on the market, so they'll prop DL up for the time being. But as other carriers get stronger, a time will come when GE won't need to keep DL propped up. AMEX gave DL a big vote of no confidence when they got into bed with JetBlue two weeks ago. For years, AMEX has only done business with one US airline...Delta. Now, AMEX sees that DL is slowly dying so they are drumming up new business with JetBlue....apparently they weren't so "impressed" with Delta after all.
 

inthewind

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I hate to rain on the Comair pilots' parade again but here goes. Question: What is the common link between all of the carriers that are losing money today? Answer: RJs. Their CASM is too stinkin' high to make money no matter what you pay the crews when fuel is $60+ bbl. You might say 'but we're fee for departure, same price every flight'. Well yes and no. The crew, ramp, lease and landing fees are the same but fuel is not. Guess who buys the gas, that's right kids, Mother Delta, United, Continental, Northwest, Independence. I'm sorry but the fuel burn for an RJ is not much better than that for a 737 or a Scarebus. I'm not slammin' the crews, hell I flew the damn things for almost three years before the hammer fell at Indy. Just stating the sad facts. The mainline guys are right, [/B]it's the fuel costs, stupid


No really, not flame bait. Please discuss.


Live to Ride, Ride to Live.
 

twobits

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General, you keep bringing up the point that RJ's have riddled Delta with Debt. That is true, however, the RJ's are accumulating a positive cash flow when compared to the average cost of capital they are buying them with. So, how do businesses make money? Leverage. What does that mean? Debt!!! you just have to make enough to cover the payment of the debt plus your required profit margin. ASA and Comair are doing this, which is one reason they have grown rapidly over the last few years. Sure, the casm may be slightly higher on an RJ but it is makes much more sense to use ASA on ATL to Shreveport 6 times a day rather than having two mainline flights a day. my $.02
 

jetflyer

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General Lee said:
Why would Grinstein say Chap 11 is a bad place he wants to avoid? He is still trying to get pension reform. If we don't get that, then they will probably have to go to court to release us of that financial burden. But, Grinstein would NOT go Chap 11 if he knew we wouldn't be able to get out. They have a plan, and the plan is to survive. As far as Comair and ASA----they will likely be sold IF needed.

Bye Bye--General Lee

General Lee---
"Things are great"
"Things are peachy"
"Those pesky pensions are just financial burdens"
"Delta is strong and getting stronger"
"Fuel surcharges will save the day"
"When we sell Comair/ASA we'll be almost completely debt free!!"
"People are lining up to throw money at Delta"
"Delta hasn't failed to plan, and certainly doesn't plan to fail"

Does everyone remember that IRAQI, grey haired goon that did newscasts on IRAQI TV every night when we were attacking Iraq? He to the very end, even as we entered Baghdad, was saying how the Iraqi's were kicking the U.S. militaries arses etc. It was very comical.

General Lee reminds me of that guy.

Sell Comair for $10 Million if that's all you can get. Heck pay someone $10 Million if you must if no buyer can be found! JUST GET RID OF COMAIR!!
Jet
 
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