ComairCVG From United States of America, joined Mar 2004, 7 posts, RR: 0 Posted (9 years 7 months 3 weeks 15 hours ago) and read 3508 times:
I just watched a local TV station's news which stated that some experts (Whomever they may be) say that because of Delta's financial problems they are considering on selling one or more of their regional airlines (including Comair). Has anyone heard anything else about this?
Airways6max From United States of America, joined Aug 2003, 494 posts, RR: 0 Reply 1, posted (9 years 7 months 3 weeks 15 hours ago) and read 3459 times:
I think that's a good idea. Delta should sell off its regional subsidiaries and allow them to regroup as independent carriers with their own identity. For a long time, Delta and the other big airlines focused on providing mainline service and let regional airlines, such as Piedmont, Southern and Mohawk fly to the small airports. Delta should get back to flying mainline and international routes; narrow its focus. GMC has a slogan: Do One Thing, Do It Well. Delta and others should take that to heart.
ComairCVG From United States of America, joined Mar 2004, 7 posts, RR: 0 Reply 4, posted (9 years 7 months 3 weeks 14 hours ago) and read 3415 times:
I only say "including Comair" because I work for Comair. I've been quite downhearted since the news came out. I've grown up with Delta in Cincinnati and they are close to my heart. I've been proud to have Delta as part of Comair.
ComairCVG From United States of America, joined Mar 2004, 7 posts, RR: 0 Reply 6, posted (9 years 7 months 3 weeks 14 hours ago) and read 3319 times:
Here is a copy of a news article in Cincinnati's newspaper, The Cincinnati Post...
Some aviation experts predict Delta Air Lines may sell off one or both of its regional airlines -- including Cincinnati-based Comair Inc. -- to slow its financial tailspin.
Analyst Raymond Neidl of Blaylock & Partners thinks Delta will ultimately sell one or both of the regional carriers to raise money. He noted rivals Northwest and Continental airlines have done the same.
"I think they're going to do that at the end of the day," he said. "There's no reason for them to hold on to them."
Delta, a major employer in Greater Cincinnati and Northern Kentucky, is awash in red ink and its cash on hand is being depleted. Chief executive Gerald Grinstein last week was peppered with questions from investment analysts about the airline's financial options as Delta announced it lost $383 million in another dismal quarter ending in March.
Grinstein downplayed the possibility of a spin-off or initial public offering of stock in the airlines, noting they add passengers to Delta's mainline network from smaller cities.
"We think they're essential," he said. "They feed our hubs and are integral to our operations."
But UBS analyst Sam Buttrick pointed out Delta doesn't need to own the airlines to continue using them to connect to points around the country. Delta could contract with Atlantic Southeast and Comair as it did before buying them.
"The economic benefit could be maintained without maintaining the equity position," he said.
Chris Lozier, an analyst with Morningstar, said such a deal could raise money but might not be enough to make a difference. He said Delta needs to address its uncompetitive operating expenses, such as its industry-leading pilots' salaries.
"They need to generate cash from operations to get themselves out of this hole," he said. "If you can't get a good price, it's not something you can just do -- even though you desperately need cash."
Other experts also stressed a sale of the regionals wouldn't solve Delta's inability to turn a profit or make much of a dent in its $20 billion in debt and long-term leases.
"It would be a Band-aid," said Paul Biederman, a professor at New York University and former Trans World Airlines chief economist. "It's what we did at TWA -- we just sold off assets until we didn't have anything."
Biederman said a sale could only buy Delta time. He said Delta should seek bankruptcy protection to renegotiate better terms for aircraft leases and pilots pay.
Still, other airlines have sold portions of their regional subsidiaries.
Last November, Northwest raised $299 million selling almost 89 percent of its regional carrier, Pinnacle, in an public stock offering. In 2002, Continental raised $300 million with an IPO of ExpressJet that left it with a 53 percent stake in the regional. It has sold off more of that stock since.
Neidl speculated Delta was holding off on a sale to get a better price, but predicted the airline could get only "a few hundred million for each" regional airline.
That would be a far cry from the $700 million Delta bought ASA for in 1999 and the $1.8 billion it spent for Comair in 2000.
Neidl predicted Comair would be a tougher sell because its costs are higher than its sister regional ASA.
Delta has sold other assets to raise cash. Last summer it raised $285 million from selling its 40 percent stake in Worldspan, a computer reservation system.
Spokesman John Kennedy said he wasn't aware of any discussions regarding selling or spinning off regional carriers at this time.
Grinstein has promised the investment community a comprehensive turnaround plan by the end of summer.
...What do all you real aviation experts think about this article?
InnocuousFox From United States of America, joined Dec 2003, 2805 posts, RR: 15 Reply 7, posted (9 years 7 months 3 weeks 14 hours ago) and read 3265 times:
Hey kids... do the math. If the network as a whole is losing money, the parts aren't going to fare any better. "Selling" Comair, for example, generates a little cash for the parent, but the mainline will still bleed. Also, Comair itself will still bleed. While you may gain some ground by narrowing the scope on the two, it really doesn't help that much... People making Delta decisions will still be making Delta decisions. People making Comair decisions will still be making Comair decisions. There are only a few places where those decisions overlap - and they will still need to be there anyway since the carriers will still be intermixed functionally.
It IS a patch and a PR move. It also helps to "compartmentalize" the airline so that one's legal woes don't hurth the other, etc.
Dave Mark - Intrinsic Algorithm - Reducing the world to mathematical equations!
ScottysAir From , joined Dec 1969, posts, RR: Reply 8, posted (9 years 7 months 3 weeks 14 hours ago) and read 3227 times:
Please don't make any losing with the money and it should make saving with the millions bucks. It will still able not sell with the aircraft. Tell Delta that need to make save with the money and don't make spent too much money with their own.
Syncmaster From United States of America, joined Jul 2002, 1996 posts, RR: 13 Reply 9, posted (9 years 7 months 3 weeks 13 hours ago) and read 3180 times:
I agree with InncouousFox, I question how much it would really help in the long run to sell them off, DL has a lot more power over the regionals by owning them, a lot more then they would have if they simply contracted their services. And if they spin-off a regional carrier that may well be part of the problem that means they will still have a problem after being let go, and will only provide a temporary patch for DL, who's costs are still fairly high.
Short-term: Good idea
Long-term viability: Fairly poor
N77014 From , joined Dec 1969, posts, RR: Reply 10, posted (9 years 7 months 3 weeks 13 hours ago) and read 3113 times:
I'm surprised this hasn't happened already. The regionals and their rapid growth for years have had their market value diluted in with the majors, Now the major has the chance to pay off bills or rectify underfunded pension issues with the available proceeds of a sell-off of the regional. As far as control; the majors are not interested in controlling the day-to-day functions of their regionals. A capacity buyout agreement would be drawn up by which the major purchases all of the regional's flying and markets them as their own; the major sets the marketing and schedule planning, the planes are painted in the major's colors, and the passenger couldn't tell the difference.
Flashmeister From United States of America, joined Apr 2000, 2891 posts, RR: 7 Reply 11, posted (9 years 7 months 3 weeks 12 hours ago) and read 3095 times:
In their latest quarterly earnings conference call, DL management said that there were no short-term plans to offload the wholly-owned DCI carriers. Most Wall Street analysts are predicting that DL will end the year with about $2billion in cash. There's no crisis that would have them sell off the carriers... yet.
TWA902fly From United States of America, joined Dec 1999, 3078 posts, RR: 4 Reply 12, posted (9 years 7 months 3 weeks 12 hours ago) and read 3076 times:
All of Delta's hubs are too much reliant on Delta Connection carriers for Delta to lose them... its like all of DFW and then so much of CVG and SLC... except SkyWest wouldn't be one of those so that's not too much of a problem. But DFW would have like 2 flights left...
life wasn't worth the balance, or the crumpled paper it was written on
Flashmeister From United States of America, joined Apr 2000, 2891 posts, RR: 7 Reply 13, posted (9 years 7 months 3 weeks 11 hours ago) and read 3003 times:
It should be noted that if DL does decide to sell the DCI carriers that they own, they won't necessarily 'lose' their services. Look at what Continental did with ExpressJet. CO spun ExpressJet off, got lots of cash, and is still ExpressJet's only client. If DL does spin off Comair and/or ASA, I'm sure that the relationship with DL would continue.
Scottb From United States of America, joined Jul 2000, 6440 posts, RR: 33 Reply 15, posted (9 years 7 months 3 weeks 1 hour ago) and read 2767 times:
The problem with the idea of selling off the owned Delta Connection carriers is that it doesn't solve the company's problems. It buys time by providing a cash infusion, but it's arguable that that isn't what the company needs, either.
Delta's primary problem at this point (and I know I'll get flamed for this) is labor costs. How can the company be competitive when their pilots are paid up to 73% higher than their peers at the other network majors? Check http://www.apapdp.org/pay.comparison.php for pilot pay rates at the U.S. majors. A transcon on a jetBlue A320 costs roughly $1000 less to operate than a Delta 737-800 based simply on pilot pay rates. Delta's first quarter labor costs were 49% of revenue; compare this to 40% at Southwest.
At this point, it would be simply burning the furniture to stay warm. And Delta's situation is different than the situation that Continental and Northwest found themselves in. After 9/11, CO had relatively weak liquidity and few assets to mortgage -- and its pensions were underfunded. Spinning off ExpressJet to help fund the pensions and generate cash helped Continental avoid a liquidity squeeze. Their business was fundamentally sound, and labor costs were reasonable, but we all know how poor the air travel market was for several quarters. Moreover, they had planned a spinoff of ExpressJet for some time. Northwest's situation was similar, with underfunded pensions and a lack of unleveraged assets, but at least NWAC had a bunch of cash on hand. Using Pinnacle stock to fund its pensions made more sense than drawing on the cash pile, especially considering that the company has little additional funding available beyond that.
The problem for Delta is that it seems the pilots are already convinced that the company will file for bankruptcy anyway, and they might as well make as much money as they can until the contract is rewritten in Chaper 11. The thing is, Delta would have shown an operating profit last quarter given 25% lower labor costs. If the company can't get labor costs under control, there's no point in selling off assets to delay a Chapter 11 filing -- they'd just be that much weaker post-bankruptcy.
Aloha717200 From United States of America, joined Aug 2003, 4423 posts, RR: 16 Reply 16, posted (9 years 7 months 3 weeks 1 hour ago) and read 2742 times:
I hope they don't sell their regional partners. Like the member above, I grew up with Skywest. Skywest, to the smaller cities to the north of SLC, IS Delta. If they sold Skywest, and let it become its own independent carrier, I bet UA would buy the rest of it, and us folks who enjoy flying Skywest into SLC would instead be flying Skywest into SFO.
And it doesn't make sense to me why they'd sell their regional partners. These provide enourmous feed into Delta's hubs. They make hubs like SLC and CVG viable. Sell that off and allow that traffic to go to someone else, and suddenly, CVG and SLC are not such great hubs anymore. The way that the West works is that there are alot of scattered, medium to small cities. None of which can support a mainline operation. But if you route them into a central location, now you have a good-sized base for operations. That what Skywest means to Delta in SLC.
If Delta sells Skywest, I think they will have no choice but to drop SLC. Without that feed, there is significantly less market.
FlyPNS1 From United States of America, joined Nov 1999, 6279 posts, RR: 24 Reply 17, posted (9 years 7 months 3 weeks 1 hour ago) and read 2698 times:
I think you are a little confused.
First off, SkyWest is an independent company. DL used to own a portion of SkyWest, but they sold it off. DL has a contract with SkyWest to provide services...just like DL has a contract with Chautauqua and ACA (at least for now).
If DL sells Comair or ASA, that wouldn't end the feed. Instead, DL would contract with Comair/ASA as if they are an independent company. DL could probably lock them into a long-term deal to provide exclusive feed for DL.
Look at CO...they sold ExpressJet off. However, they still have XJT's feed.
FlyPNS1 From United States of America, joined Nov 1999, 6279 posts, RR: 24 Reply 20, posted (9 years 7 months 3 weeks 1 hour ago) and read 2636 times:
Delta Air Lines Sells Stake In SkyWest
ATLANTA, Oct 12, 2001 -- Delta Air Lines (NYSE:DAL) today reported that it has sold its stake in SkyWest Airlines (NASDAQ:SKYW). Delta sold 6.2 million shares of SkyWest common stock worth $125 million in a block trade pursuant to the Securities and Exchange Commission’s Rule 144. "Delta has an excellent relationship with our partner SkyWest," said M. Michele Burns, Delta’s executive vice president and chief financial officer. "This transaction in no way changes our operating relationship."
Delta’s goal is to become the No. 1 airline in the eyes of its customers, flying passengers and cargo from anywhere to everywhere. People choose to fly Delta more often than any other airline in the world on 4,813 flights each day to 370 cities in 64 countries on Delta, Delta Express, Delta Shuttle, Delta Connection carriers and Delta’s Worldwide Partners. Delta is a founding member of SkyTeam, a global airline alliance that gives customers extensive worldwide destinations, flights and services. In addition to safely and securely making reservations and purchasing tickets at delta.com, Delta customers can select seats, upgrade, get up-to-date flight information, make accommodations reservations, and more. U.S.-based travel agencies also can access Delta Web fares for their customers via delta.com’s Online Agency Service Center. For more information, go to delta.com.