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

[doh]

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]

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]

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]

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]

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

 

[General Lee]

Man alive. I sure do get a lot of responses. I will try to answer each.


Doh,

Maybe Comair will be sold or IPO'd, but it won't be great news for you guys. If and when it happens, the new owner will tell you that it is "time to be competitive." That really means PAY CUTS. Delta pays you more than any other regional, and even though I believe most regional pilots aren't paid enough, management doesn't think that way. They see you as being paid a lot more than most, and that would have to change to "be competitive." You have a contract, that is correct. When it is up, and you have a new owner (if you do), you will get a huge pay cut so you can bid those other contracts to fly feed for other airlines. That won't be fun, and I have been there already. Also, with all of your RJs, you don't want to be a stand alone carrier. You wouldn't last long against expanding Southwest, Airtran, and Jetblue. Right now you are profitable because we mostly put you on routes that LCCs don't serve directly. (sometimes we do, though)

Medflyer,

The plan is working, except for one part---oil. Did you know that it would get to $60 a barrel? I didn't. Did you buy any oil futures? You're right that high oil will not help our cause, but the rest of the plan is going very well. Our CFO--Palumbo, said that we have already hit 80% of our planned transformation in record time----faster than he has ever seen it done. Part of that is because we have only one major union---which is another attractive thing about our company (to potential investors). And yes, if we get to a certain cash level, we may have to file. That is true for everyone, and all of the majors are dealing with that right now (except the LCCs). Here are the good things going on at Delta right now:

1. Pilots and other employees gave big bucks for savings
2. Got rid of RJ hub--DFW, which was $ucking us dry
3. Started to advertise, and started Simplifares
4. Operation clockwork---doing wonders in ATL (during good weather)
5. working with major creditors--GE and AMEX---and allowing us flexibility
6. Song is growing, giving us a great tool against Jetblue--point to point
7. up to $5 billion a year in savings by 2006
8. short term fuel hedging---10%, not great but better than nothing

Bad things at DL:

1. Debt looming
2. Pension payments looming, trying to get pension relief through Congress
3. High Oil


If we have to go to Chap 11, two of those will be changed. The only thing we can't change is high oil. As far as investors or DIP financing while in Chap 11---it has been apparent that other airlines have not had any trouble getting either, and their assets sometimes have been minimal too. USAir owned very little, and they have people waiting in line to get onboard. United, without the pensions, has been approached by Texas Pacific group and another group headed by Gordon Bethune. United really hasn't formulated a plan yet, after 3 years in Chap 11, and we have. What does TED do anyway? It goes through hubs and point to point....? What I am saying is that our guys probably do have a plan----and hopefully that does not include Chap11, but if it does there will hopefully be something on the other side. And how do you know GE doesn't think Delta is doing well? We were told in a memo that they (GE and AMEX) were "impressed" with our progress (going for $5 billion a year cuts). Sounds probable to me. And, is there something in a contract that says AMEX can't use other airlines? The Skymiles card has 25 million customers. Yeah, they don't think that is worth it.....???? Come on now.


inthewind,

Don't say that out loud, you might get ambushed by an RJDC member or Medflyer. He thinks he is saving the WORLD with his RJ. (Just like the RJ saved DFW) The RJ is good for route finding, point to point away from hubs, and hub feeding to cities that don't have LCC service. Throw a LCC mainline plane in the mix, and the RJ is sunk most of the time with the business traveller.


twobits,

The reason the RJ service has grown is because Fred Greed (who is gone now) thought businessmen wanted FREQUENCY. He got that wrong. What did AirTran do with their RJ feed? They dumped it. How about Southwest? Never had it. How is INDY air doing with their majority RJ fleet? Worse than we are. Jetblue is starting with 100 seaters as their smallest plane. Good idea. The way to make money with low fares is high seat numbers. You can spread out the costs with more seats. If an RJ with 50 or 70 seats goes up against a Southwest 737 with 125 or so seats, Southwest can charge a fare that would make them money, but not on an RJ. Southwest , Jetblue, and Airtran are growing. Mainline hasn't gotten many new planes since 9-11 (some 738s and maybe a few widebodies---not many) and we actually parked our MD-11s too soon. The ex VP of Marketing (Vicky E.) stated that "She didn't think the loads would have been so good after the invasion of Iraq." Infact, we had record loads that Summer, and we parked all MD-11s just before it. There were many management blunders, and almost all of them are GONE now.



Jetflyer,

I don't always say things are "peachy." I tend to be upbeat, but I know what might be out there. I think we finally have people that want this airline to succeed (even with Gay Pride float sponsorship....). But, we may be too late with our initiatives. They are trying to do what they can, and hopefully more fare increases will come with the higher priced oil. It is their job to monitor that and make decisions. Leo Mullion waited too long, thinking USAir would die in the meantime. Never happend. Grinstein is working hard, and he should be on a golf course by now. He isn't, though. He still makes time to go to the incommand meetings, and is very straight forward. There is a plan out there.
You can continue to see all the bad, and your situation may warrant that. I really enjoy my job. I wish you did too.


Bye Bye--General Lee

 

[viper548]

Muhammed Saeed al-Sahaf. The Iraqi Information Minister.

Some of his best:
"There are no American infidels in Baghdad. Never!"
"Our initial assessment is that they will all die"
"God will roast their stomachs in hell at the hands of Iraqis."

"They're coming to surrender or be burned in their tanks."

"No I am not scared, and neither should you be!"

"Be assured. Baghdad is safe, protected"

"Who are in control, they are not in control of anything - they don't even control themselves!"

"We are not afraid of the Americans. Allah has condemned them. They are stupid. They are stupid" (dramatic pause) "and they are condemned."

"The Americans, they always depend on a method what I call ... stupid, silly. All I ask is check yourself. Do not in fact repeat their lies."

"I can say, and I am responsible for what I am saying, that they have
started to commit suicide under the walls of Baghdad. We
will encourage them to commit more suicides quickly."

"I triple guarantee you, there are no American soldiers in Baghdad."

"They're not even [within] 100 miles [of Baghdad]. They are not in any
place. They hold no place in Iraq. This is an illusion ... they are
trying to sell to the others an illusion."

"they are nowhere near the airport ..they are lost in the desert...they can not read a compass...they are retarded."

"They are not in Baghdad. They are not in control of any airport. I tell you this. It is all a lie. They lie. It is a hollywood movie. You do not believe them."

"Our estimates are that none of them will come out alive unless they surrender to us quickly."

"Their infidels are committing suicide by the hundreds on the gates of Baghdad. Be assured, Baghdad is safe, protected."

When told coalition troops occupied Baghdad airport -
"...at Saddam Airport? Now that's just silly!"

 

[General Lee]

Yeah, I look like him too------time to hit the gym....... I tend to be on the positive side, and if that is wrong, then sue me.


Bye Bye--General Lee

 

[jetflyer]

You're always so positive when it comes to Comair. You wouldn't ever hold a grudge or anything ......

I hope and pray you're right about Delta General. Let's cross our fingers and hope we can pull it off. I also hope the sale of Comair helps us all.

Let's hope,

Jet

 

[General Lee]

You're always so positive when it comes to Comair. You wouldn't ever hold a grudge or anything ......

I hope and pray you're right about Delta General. Let's cross our fingers and hope we can pull it off. I also hope the sale of Comair helps us all.

Let's hope,

Jet

Agreed. I keep saying that a possible sale would be "business"---and that things probably wouldn't change, except for who writes the pay check. And, as far as my grudge, we all know when that started.


Bye Bye--General Lee

 

[Tomct]

Well GL, I don't agree with you on the DFW hub. We were doing a lot of good business there and mother D just handed it over to AA. We had a lot of customers that were very upset at the fact that they were going to have to switch to Eagle from ASA! Believe it or not, we had a TON of faithful pax that preferred the RJ to mainline for one fact....They actually got Service!! No FA hiding in the galleys reading when their fat asses should be working! Yes, I know that we have some big people here, but most of them "bust a move" to serve the passengers to the best of their ability while those on mainline try to AVOID serving the passengers! I commute to/from work and see it first hand! Easy on the shoulder press!!

 

[StaySeated]

Be careful what you wish for

I am rather surprised by the number of people that are actually hoping to get sold in this economic era and stage of the game in aviation. Comair was very successful in the past, but the aviation world could not be more different today. I am not starting a pissing match here with other groups, but in the 90's there just was not the "small jet" whip saw to the extent that there is today. Do you people actually want to be a part of an RFP as an independent carrier against a company like XYZ (insert whatever air carrier you like here, I just don't want to get off topic and hurt someone's feelings). If you thought the "three year pay/longevity freeze for nothing" sucked wait until your costs are compared to other independents in a fee for departure war, or even worse, a pro rata agreement. Ask air whilly how well that went three years ago with Bain consulting and the UAL feeders. It was the beginning of the end of their code sharing agreement and now their industry leading contract is decimated and they have 15 year captains commuting from a closed home base in denver to philly. In 2002-3 air whilly and comair had very similiar pay and work rules. The parallels between what they went through and what comair is about to go through with a DAL bk are frightening ESPECIALLY when you consider the whip saw pilot groups that are now entrenched in both companies feeder system. It is obvious to me that independence is not the way to go. What ever happens, one thing is for sure, we are all totally fuked either way. I can't control the destiny of the airline I work for, therefor I am focused on the things I can control, like my exit strategy/back up plan.

 

[PropsR4Boats]

Delta’s mainline flying accounts for roughly 85% of the available seat miles marketed by Delta Airlines. That leaves 15% to be done by the regional affiliates. Of that 15%, 80% is flown by Comair and ASA (they both share a fairly equal portion of that). This equates to Comair and ASA flying a total of 11% of Delta’s marketed flights. If delta were to lose direct control of this large of a percent of flying they could see total cost increase by 3 cents per seat mile on 11% of there flying. This in turn will increase the total cost 1-2%. In Delta’s situation that is lose of 2%. In other words Delta could see lose (after the sale) of $75,000,000 per year, every year. In more other words the revenue generated by owning Comair and ASA would out weighs the cash gained by selling the two in a very short span. They just have to hang on to rep the benefits. These are rough numbers!

 

[cmrflyer]

When talking about costs, I would hope you could get your facts straight first, even the Generals old mate has been known to say Comair has the lowest costs of any regional. I sure he can't be "wrong" on this.

Delta is hanging on, it dosn't look good and the clock it ticking. Selling Comair now is better than dragging us down the shi**er with you. I'd rather take a pay cut from new managment rather than from a judge.

 

[PropsR4Boats]

Everyone takes the bait. They can't take it if the courts don't see it fit. Until then they may just be lying to you. If the CEO is a true pro he does not want his name to go do the craper too. He will find a way to make it out, and /or grow if not they need new ideas. There is no reason you should be paying fares for the pax. I think the SWA guys and gals make a tad more than the Delta & UAL 73 bros and hoes, and they are not paying for there pax to fly. No, in fact they get more cash if the company does well.