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Do Song And TED Make Money  
User currently offlineMiami1 From Australia, joined Feb 2001, 706 posts, RR: 0
Posted (9 years 6 months 2 weeks 5 days 21 hours ago) and read 5318 times:

With all the hype of Majors starting up their own low cost variants, I was wondering if anybody knows do these airlines like Song and Ted make a profit. Ive heard Song are bleeding money and Delta are expanding the airline in a desperate attempt to start making some. Anybody know??

36 replies: All unread, showing first 25:
 
User currently offlinePadcrasher From , joined Dec 1969, posts, RR:
Reply 1, posted (9 years 6 months 2 weeks 5 days 20 hours ago) and read 5165 times:

Well if Jetblue is not making money not counting their fuel hedging then Song would not be making money. You can also lump Southwest in as losing money not counting their fuel hedging. But Song is not hedged so they surely lost money.

User currently offlineDeltadude8 From United States of America, joined Feb 2000, 569 posts, RR: 4
Reply 2, posted (9 years 6 months 2 weeks 5 days 16 hours ago) and read 5070 times:

No one knows about Ted or Song as their financial information is not released seperate. No one can say for sure about the profits and/or losses of Song or Ted.

Someones opinion may be given about the profits/losses but remember it is only an opinion! Padcrasher...you do not know FOR SURE whether song or ted lost or gained money. Please next time you post on this topic be sure you make it known if you have an opinion that it is an opinion.


User currently offlineMD88Captain From United States of America, joined Nov 2001, 1330 posts, RR: 20
Reply 3, posted (9 years 6 months 2 weeks 5 days 16 hours ago) and read 5059 times:

DAL internally tells us that Song is profitable. FWIW.

User currently offlineSESGDL From United States of America, joined Jan 2001, 3471 posts, RR: 10
Reply 4, posted (9 years 6 months 2 weeks 5 days 16 hours ago) and read 5051 times:

If Song were bleeding money than DL management wouldn't be expanding it now would they? Maybe them larger and larger isn't going to make it profitable, so evidently DL and UA see potential to make money in Song and Ted.

Jeremy


User currently onlineMaverickM11 From United States of America, joined Apr 2000, 17424 posts, RR: 46
Reply 5, posted (9 years 6 months 2 weeks 5 days 16 hours ago) and read 5027 times:

Depends how they allocate all their costs. I'm sure Ted and Song are real profitable if you allocate all the overhead, ground handling, and airport fees to UA and DL, respectively. Other than that I'm almost positive they are both losing money just like their parent companies.


E pur si muove -Galileo
User currently offlineAtrude777 From United States of America, joined Aug 2003, 5692 posts, RR: 52
Reply 6, posted (9 years 6 months 2 weeks 5 days 15 hours ago) and read 4954 times:

I have heard from United Press releases while they do not release seperate forms for TED and UAL, they are extremely pleased with TED's profits, and said it makes quite enough money for them. They coninute to expand on it where they see fit. So again this is what iv heard, and im NOT stating it as a fact.
Alex



Good things come to those who wait, better things come to those who go AFTER it!
User currently offlineDeltaMIA From United States of America, joined Feb 2004, 1672 posts, RR: 17
Reply 7, posted (9 years 6 months 2 weeks 5 days 15 hours ago) and read 4920 times:

If Song were bleeding money than DL management wouldn't be expanding it now would they

Yes they would still be expanding if they were losing money. The key is how are they losing money compared to a mainline flight. As MD88Captain said though, DL tells us they are making money. They operate at 30% less cost than a mainline 757 and have 21% more coach seats so they have a chance at producing a lot of revenue for the company.



It's a big building with patients, but that's not important right now.
User currently offlineNonRevKing From , joined Dec 1969, posts, RR:
Reply 8, posted (9 years 6 months 2 weeks 5 days 14 hours ago) and read 4887 times:

Before anyone says it, yes, Song is profitable, regardless of what any of the uninformed on here say.

B


User currently offline1millionflyer From , joined Dec 1969, posts, RR:
Reply 9, posted (9 years 6 months 2 weeks 5 days 14 hours ago) and read 4867 times:

MaverickM11


Thanks to the Sarbanes-Oxley law which was instituted after the Enron, WolrdCom and other financial meltdowns, playing with numbers is a thing of the past. There is now only 1 way to allocate costs properly.

DL could do a few "intercompany" chargebacks to mainline, but they have to be VERY careful to represent profitablity and losses within divisions since shareholders are involved, or people will be going to jail.


User currently offlinePadcrasher From , joined Dec 1969, posts, RR:
Reply 10, posted (9 years 6 months 2 weeks 5 days 14 hours ago) and read 4855 times:

I know beyond a reasonable doubt that Song is losing money. a) I know their load factors b) I have DOT data showing their yields C) I have quotes from their new Director saying that they did not quite make a 8 cent CASM. d) I know that Jetblue has much lower costs, quite a bit higher load factor and at least the same yields and would have still lost money without hedging.

So Song is losing money. You can take that to the bank.


User currently offlineFlyPNS1 From United States of America, joined Nov 1999, 6603 posts, RR: 24
Reply 11, posted (9 years 6 months 2 weeks 5 days 14 hours ago) and read 4849 times:

Delta's refusal to show Song results speaks volumes. If Song was doing so well, why would Delta be afraid to show its results? Just because Song is growing doesn't mean it's profitable. Delta Express continued to grow even when it was obvious that it couldn't compete with JetBlue out of JFK.

Even if Song is profitable, there's no way to know how DL is allocating costs to Song? It's a similar shell game with the Delta Connection carriers. DL says Comair/ASA are profitable, but no one knows how the costs are allocated. If the connection carriers were so profitable, shouldn't Delta be doing better than the other majors? DL has more RJ's under its control than any other carrier.

Until DL posts some real numbers, nobody will ever know what Song is really doing.



User currently offlineNonRevKing From , joined Dec 1969, posts, RR:
Reply 12, posted (9 years 6 months 2 weeks 5 days 14 hours ago) and read 4832 times:

Hey! There's the ones I was speaking of in my post! Welcome to the party! Did you get lost?  Wink/being sarcastic

Song is profitable. This is factual information.

B


User currently offlinePadcrasher From , joined Dec 1969, posts, RR:
Reply 13, posted (9 years 6 months 2 weeks 5 days 14 hours ago) and read 4826 times:

I don't agree with that. If Song is showing promise all the more reason not let everone in the industry know this. If AA/NW/CO want to know how LCC spinoffs are doing let them start their own Song.

Also Delta does do burdening accounting. In other words the do track Song's burden on mainline Delta to get a better idea how the venture is going.


User currently offlineLrgt From United States of America, joined Jul 2004, 710 posts, RR: 0
Reply 14, posted (9 years 6 months 2 weeks 5 days 14 hours ago) and read 4811 times:

But Song is not hedged so they surely lost money.

Despite what everyone on this site says about the 757 being a gas-guzzler, IT ONLY BURNS 1100 GALLONS/HR. This comes to 5.5 gallons per seat/per hour...or about 15 gallons/seat for JFK-FLL.

...now if they were operating 727's fuel would be a MUCH bigger story!



Don't bring up the NW DC9's unless you have to!
User currently offlineLrgt From United States of America, joined Jul 2004, 710 posts, RR: 0
Reply 15, posted (9 years 6 months 2 weeks 5 days 14 hours ago) and read 4806 times:

1millionflier: Song's numbers are consilidated with Delta so no matter how they allocate their costs, it is for internal purposes only and no one is going to jail no matter how they misrepresent their overhead.

However, Song would NOT be profitable 100% on their own (albeit they would only be posting MODEST losses). However, the DO REDUCE Delta's losses by (1) shrinking thieir unprofitable mainline service and (2) taking advantage of overhead already paid for by Delta. Therefore, in Delta's eyes, they ARE making money....that is why this is such a grey area.

I must say Song has done a good job at spending countless millions on advertising and not getting too far. For what they have spent, Song should be more famous than JetBlue but it is not.



Don't bring up the NW DC9's unless you have to!
User currently offlineFlyPNS1 From United States of America, joined Nov 1999, 6603 posts, RR: 24
Reply 16, posted (9 years 6 months 2 weeks 5 days 13 hours ago) and read 4798 times:

Song is profitable. This is factual information

If it was a fact, you'd have something to back it up with. But you have never provided any proof. You just regurgitate management propaganda. I'm sure you believed every word that came out of Leo Mullin's mouth too...as he was busy stuffing his pockets with cash and burying Delta in debt.

Here's an excerpt from the October 18, 2004, AJC:

Aimed at female leisure travelers, Song has won kudos for customer service and marketing. But it has yet to become profitable, and critics say it's a costly indulgence for a company on the brink of bankruptcy.

Maybe Song all of the sudden became profitable in the past few months, but as of October it wasn't.






[Edited 2005-02-05 19:57:08]

User currently offlineNonRevKing From , joined Dec 1969, posts, RR:
Reply 17, posted (9 years 6 months 2 weeks 5 days 13 hours ago) and read 4788 times:

Do you need to see the link again to the WSJ that said it is?

This is old news. Song is profitable, fact.

B


User currently onlineMaverickM11 From United States of America, joined Apr 2000, 17424 posts, RR: 46
Reply 18, posted (9 years 6 months 2 weeks 5 days 13 hours ago) and read 4763 times:

"Thanks to the Sarbanes-Oxley law which was instituted after the Enron, WolrdCom and other financial meltdowns, playing with numbers is a thing of the past. "

SOX says nothing about, say, DL allocating all the ticket counter costs at LGA to Delta mainline since they are effectively mainline employees and there's no such thing as a "Song ticket agent". At the end of the day it's all Delta mainline so as long as DAL is not doing anything shady, the internal cost allocations become very grey, as opposed to black and white.

"Do you need to see the link again to the WSJ that said it is?"

Yes.



E pur si muove -Galileo
User currently offlineExFATboy From United States of America, joined Jul 2003, 2974 posts, RR: 9
Reply 19, posted (9 years 6 months 2 weeks 5 days 13 hours ago) and read 4749 times:

Thanks to the Sarbanes-Oxley law which was instituted after the Enron, WolrdCom and other financial meltdowns, playing with numbers is a thing of the past. There is now only 1 way to allocate costs properly.

Incorrect. As long as you're doing managerial-accounting allocations between divisions for which there is no regulatory requirement to issue separate auditable financial statements, and which will not be released to the public (and thus affect securities markets), internal cost allocation is pretty much unregulated.

Even with regulated financials, there are frequently multiple ways to allocate expenses - for example, if Song had separate external financials, DL could choose to allocate certain ground expenses on a per-passenger basis, or on a per-aircraft-movement basis, or some other basis. GAAP/FASB allows for flexibility in choosing some cost allocations, even for arms-length transactions between subsidiaries. Most of the recent scandals, and the resulting regulation, have been more about how revenues and expenses were treated timing-wise (revenues booked before being earned, expenses inappropriately put on the balance sheet, etc.) and now information was being released to the media and the public.

Now if Delta chooses to issue a separate financial statement to the public for Song, then cost allocations would be subject to the same GAAP and other requirements as any other public information release that can affect a publicly-held corporation's stock price. But as long as Delta does not release the numbers to the public, whatever internal numbers their management is using for Song could be subject to DL's internal politics. I'd hope not, but it is entirely possible.


User currently offlinePadcrasher From , joined Dec 1969, posts, RR:
Reply 20, posted (9 years 6 months 2 weeks 5 days 13 hours ago) and read 4740 times:

I for one would love to see the WSJ link saying that Song is profitable.

User currently offlineMariner From New Zealand, joined Nov 2001, 25080 posts, RR: 85
Reply 21, posted (9 years 6 months 2 weeks 5 days 13 hours ago) and read 4709 times:
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There is a difference between "profit" and "operating profit".

Since both Delta and United are losing money, and since both Song and Ted are simply parts of their respective money losing parents, then Song and Ted are - in effect - losing money.

BUT - both Song and Ted could be making money simply on the routes they fly - or "operational profit".

From then on, it gets murky.

Ted didn't have to buy any aircraft (they belong to United) so Ted had no capital cost for aircraft - which another airline would have. Ted didn't have to build or lease a maintenance hangar, it belongs to United. What part of the United backed bonds at DIA does Ted pay - if any?

Does Ted pay Ted's part of United's massive legal fees for the bankruptcy?

You can't separate it out, because we do not know. It's possible that only the most senior accountants at the airline know. No one, not even the Wall Street Journal, can say that Song is profitable.

They may be able to say that Song is "operationally profitable".

cheers

mariner



aeternum nauta
User currently offlineOttoPylit From , joined Dec 1969, posts, RR:
Reply 22, posted (9 years 6 months 2 weeks 5 days 9 hours ago) and read 4595 times:

FlyPNS,

If Song was doing so well, why would Delta be afraid to show its results?

The reason why Delta refuses to show results of Song and molds them into Delta's numbers is because of simple mathematics. You show Song's results and any airline number cruncher can deduce the actual mathematics that make Song work. Before you know it, every major is down to Song's costs and every LCC is making sure that they stay below it. Airlines constantly watch other airlines numbers, every single day. That is the sole job of an airline analyst, to watch other airlines prices, schedules, sales, etc. to get as much information on the other airlines as possible. Delta is smart to NOT give out Song's numbers.


Delta Express continued to grow even when it was obvious that it couldn't compete with JetBlue out of JFK.

Where did you get that? DLX was already WELL established before JB was even a thought. DLX started in 1996 and by the time JB DID come around, DLX routes were already established. And for your information, DLX was barely profitable, until the 2000 pilot contract increased the costs, that is when the operation became unprofitable.


If it was a fact, you'd have something to back it up with. But you have never provided any proof.

How ironic, neither do you! What a revelation!


Here's an excerpt from the October 18, 2004, AJC:

You should have just stopped right there. Being that you do not live in ATL, I will let you in on a little secret that everyone else in ATL already knows. AJC has major beef with Delta. Because of DL being the largest employer of the city of Atlanta, you would think the AJC would be kissing DL ass. But no, the AJC reports everything they can on Delta and makes it negative. For instance, when Delta announced the Simplifares, the AJC put a little corner article, and a nice half page article of Joe Leonard complaining how the Simplifares would be revenue negative for the entire industry, but he was not worried, as Airtran is Atlanta's low fare airline and that FL would make sure that FL prices stay below Delta's. The AJC hates DL with a passion.

But, just to play devil's advocate here, lets use a little common sense. How could the uber-investigators at the AJC figure out Songs numbers? If other airlines can't, how could the AJC? And what reliable source did they base their information on? IF the AJC were to find out that Song was unprofitable, why wouldn't they release the numbers, since they know that would spell the end of Song?

Answer these questions with facts, and then your answers might have some credibility to them, but not much.

Is is just me, or is anyone else tired of beating this dead horse? Not that I mind very much, because I love being right.  Big thumbs up


User currently offlineIsitsafenow From United States of America, joined Feb 2004, 4984 posts, RR: 23
Reply 23, posted (9 years 6 months 2 weeks 5 days 6 hours ago) and read 4495 times:

Are they profitable? Who knows? The carriers don't say much about TED and SONG except in advertising. My guess is SONG hasn't turned a dollar....yet,but they are working on it. That's why 12 more 757s are getting repainted in Baby Diaper-PoooGreen. If SONG would have been a BIG success, DL would have blown their horn all up and down the media's face....lavish media parties, big blockbuster ads....just to drive it down Herbs throat....but it didn't happen. The only thing the world saw were ads to fly SONG on the east coast.
I don't have a clue what TED is up to, as far as turning a dollar. Maybe the UAL folks can clue us in.

safe



If two people agree on EVERYTHING, then one isn't necessary.
User currently offlineAkjetBlue From United States of America, joined Dec 2003, 790 posts, RR: 5
Reply 24, posted (9 years 6 months 2 weeks 5 days 5 hours ago) and read 4453 times:

Might I make a quick point and pose a question to everyone?

Song and TED are both not independent airlines.

If they were then they would have their own ground handlers and as last I checked Song is handled on the ground by Mother Delta. So the question is does Song pay Delta to handle its aircraft on the ground?

I Have yet to see the TED ground operation however I would only imagine that TED would be handled by UAL rampers.

Now who flies the planes? Pilots, yes, but which ones? Are they Song pilots? Are they TED pilots? Last I was told was that these are mainline pilots on mainline payscales.

Ground handling can be costly, Mainline pilots are costly too, even with concessions. The costs for Ramp service and Pilot Pay coming out of parent companys bank accounts, would make it seem as though these "carriers" (which I believe don't even have their own O.C.) were doing well when infact some of the higher costs were being deducted out of mainline accounts.

So the question is where are these costs paid from? Song & TED or Delta and United - Maybe this is the reason both posted wider losses than expected.

Anyone want to take a stab at it?

.



Save a horse! Ride a Cowboy!
25 Post contains images FriendlySkies : Since DL and UA both own Song and Ted respectively, and they have DL and UA employees operating the flights and handling them on the ground, any costs
26 Padcrasher : Thats not true. You can through accounting methods isolate out the Song divisions operating costs and burden to the parent company. It's not a exact s
27 Padcrasher : Let me give you an example. Delta has a purchasing Department that buys among other things fuel. That departments salaries, administrative costs, fuel
28 Mariner : Padcrasher: Let me give you a different example - or see reply 21. Delta owns the Song aircraft. Does Song lease those aircraft from Delta, or does De
29 DeltaMIA : So the question is does Song pay Delta to handle its aircraft on the ground? Yes they do upstairs and downstairs, except in JFK, MCO, and FLL where So
30 Post contains images ViveLeYHZ : My guess is that BOTH Song and Ted are losing money. You only need to look at the CASM for Delta and UAL, which applies to Song and Ted. The RASM for
31 Post contains images DeltaMIA : DLX started in 1996 and by the time JB DID come around, DLX routes were already established Don't forget Delta Express copied Jetblue
32 Post contains images OttoPylit : Don't forget Delta Express copied Jetblue. Correct you are. How can we compare the resemblences between the two carriers? They were so mirrorlike. Yet
33 Aa757first : For example, Delta's CASM was 15.46 cents for 2004, while their RASM was 8.73 cents. Clearly, Delta as a whole was losing about 7 cents on every avai
34 Nycfuturepilot : I must say Song has done a good job at spending countless millions on advertising and not getting too far. For what they have spent, Song should be mo
35 MaverickM11 : " All they have to do is have revenue exceed costs." You can allocate the mainline and Song/Ted costs in such a way that that always occurs.
36 1MillionFlyer : Please don't comment on accounting if you don't know what you are talking about. SOX demands more responsibility in the accounting of all accounting a
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