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Delta Selling Comair & ASA?  
User currently offlineDAYflyer From United States of America, joined Sep 2004, 3807 posts, RR: 3
Posted (9 years 4 months 3 weeks 2 days 18 hours ago) and read 4436 times:

Delta has entered into talks to sell Comair and ASA. Is this good or bad? If so, Why?

http://money.iwon.com/jsp/nw/nwdt_rt...eed=dji&date=20050308&cat=INDUSTRY


One Nation Under God
29 replies: All unread, showing first 25:
 
User currently offlineVgnAtl747 From United States of America, joined Apr 2001, 1513 posts, RR: 2
Reply 1, posted (9 years 4 months 3 weeks 2 days 17 hours ago) and read 4363 times:

I believe that DL is simply exploring its options and testing the water on this topic. I will be very suprised if they actually did sell us or ASA any time in the immediate future.


Work Hard. Fly Right. Continental Airlines
User currently offlineDAYflyer From United States of America, joined Sep 2004, 3807 posts, RR: 3
Reply 2, posted (9 years 4 months 3 weeks 2 days 17 hours ago) and read 4349 times:

Quoting VgnAtl747 (reply 1):
I believe that DL is simply exploring its options and testing the water on this topic. I will be very suprised if they actually did sell us or ASA any time in the immediate future


I have heard that flying 50 seat CRJ's is horribly expensive and that it would be to everyone's benefit if they could reduce the cost somehow. Is this correct?



One Nation Under God
User currently offlineATLFlyer323 From United States of America, joined Jan 2005, 614 posts, RR: 0
Reply 3, posted (9 years 4 months 3 weeks 2 days 17 hours ago) and read 4340 times:

I believe your roght DAYflyer..I have heard people comment on that in the past quite a few times!! (especially in the case of Indipendence Air)


Everyday, the fluffy temptation of wheat!
User currently offlineFlyPNS1 From United States of America, joined Nov 1999, 6578 posts, RR: 24
Reply 4, posted (9 years 4 months 3 weeks 2 days 16 hours ago) and read 4296 times:

The 50 seaters have an extremely high CASM. In the past, that high CASM was offset by a correspondingly high RASM. But with the rise of LCC's and overall lower fares, RASM's have plunged. I think DL's Simplifares have further reduced the viability of the small RJ. Keep in mind, I'm speaking mainly about the 50 seat and smaller category....the 70-90 seat RJ is a different story.

While ASA and Comair are technically profitable, they are only profitable because DL guarantees them a profit. If ASA/Comair had to go out on their own (like Indy), you'd see similar results to Indy (lots of red ink).

Don't get me wrong, the RJ still has a place in the DL network. The RJ is good for starting new service to smaller markets where yields are higher and LCC's are not present. But small RJ's on larger volume routes and up against LCC's is a losing proposition.

As for selling ASA/Comair, I think it's only a matter of time. In order to stay out of BK, DL is going to need extra cash. The sale of ASA/Comair will bring in cash and DL can dump some of the related debt. Whether or not this sale is good for Comair/ASA employees is definitely up for debate....there are both positives and negatives.


User currently offlineTinPusher007 From United States of America, joined Feb 2005, 971 posts, RR: 1
Reply 5, posted (9 years 4 months 3 weeks 2 days 16 hours ago) and read 4261 times:

I definately think the pilots at both ASA and Comair would balk at such a sale, as Skywest pilots are not represented by ALPA or anyone else for that matter.
Skywest pilots are also paid less.

Furthermore, if the 50-seat CRJ is so costly to operate, then why has DL ordered so many of them for ASA?

I know an ASA pilot who said that this was coming. It seems odd to me that DL wants to sell them both to Skywest. Just my two cents.



"Flying isn't inherently dangerous...but very unforgiving of carelessness, incapacity or neglect."
User currently offlineTokyoNarita From Palau, joined Aug 2003, 570 posts, RR: 0
Reply 6, posted (9 years 4 months 3 weeks 2 days 16 hours ago) and read 4250 times:

So let me get this right..Delta would rather sell ASA to SkyWest so Delta could pay them fee per every single ASA departures in Atlanta where it is most profitable just so Delta can collect quick cash....??? and somehow this is going to save the company in a long run???

TokyoNarita

[Edited 2005-03-08 16:33:31]

User currently offlineFlyPNS1 From United States of America, joined Nov 1999, 6578 posts, RR: 24
Reply 7, posted (9 years 4 months 3 weeks 2 days 15 hours ago) and read 4170 times:

Delta would rather sell ASA to SkyWest so Delta could pay them fee per every single ASA departures in Atlanta where it is most profitable just so Delta can collect quick cash....??? and somehow this is going to save the company in a long run???

Would you rather DL end up in bankruptcy? If DL doesn't get more cash that's where they will end up.

Plus, it's hard to know for sure if SkyWest or ASA would be cheaper. It might be cheaper to use SkyWest. CO and NW have sold off their regionals and they don't seem to be any worse for it. Maybe SkyWest could even improve ASA's dismal operations in ATL...teach the folks on concourse C what customer service really is.


User currently offlineN839mh From United States of America, joined Mar 2001, 369 posts, RR: 0
Reply 8, posted (9 years 4 months 3 weeks 2 days 14 hours ago) and read 4062 times:

Watch, if Delta sells Comair and or ASA, then Delta could possibly file CH.11. Maybe a possibility to reduce some long-term debt off the books. Just a thought!

I know here in DFW, the operation has been so much nicer and better ran without DCI here and all of their problems attached. Not saying Delta doesn't have its own problems, but a lot of the major headaches have been eliminated due to DCI's removal.



Solodude!
User currently offlineAzjubilee From United States of America, joined Apr 2000, 3888 posts, RR: 28
Reply 9, posted (9 years 4 months 3 weeks 2 days 14 hours ago) and read 3991 times:

THe pilots don't really have much of a say. The only thing protecting them is the SUCCESSORSHIP language in their respective ALPA bargaining agreements. They both effectively say that should their companies be aquired, they will bring their contracts with them. Most bargaining agreements contain this language. In this case, if this were to happen SKYW would probably run them as separate entities, but using one center core structure for efficiencies.

IMO DL does need to unload these partners. There is no real benefit in having the cost structures of a "regional" airline imbedded with the cost structures of the mainline affiliate. It's only a matter of time before DL sells them in an IPO or thorugh aquisition. This gives DL cash and alleviates the debt that Comair and ASA bring to the table.


AZJ


User currently offlineFRA2DTW From Germany, joined Feb 2004, 322 posts, RR: 0
Reply 10, posted (9 years 4 months 3 weeks 2 days 14 hours ago) and read 3977 times:

I think Delta is trying to do one of two things here, besides generating much-needed cash. They may be trying to set themselves up as a good merger target for another legacy carrier which already has a feeder operation, or they may be looking to expand their international operations while cutting down on their domestic network. In the latter case I think only ASA will be on the market because Comair will still be needed to feed Cinci. At the JFK international hub they could codeshare with JetBlue for feed and at ATL with AirTran (which may require some route realignment by them). Think this is far-fetched? Wait till you see some of the other schemes that will be floated by legacy managements.

User currently offlineDAL767400ER From , joined Dec 1969, posts, RR:
Reply 11, posted (9 years 4 months 3 weeks 2 days 13 hours ago) and read 3944 times:

Quoting FRA2DTW (reply 10):
At the JFK international hub they could codeshare with JetBlue for feed and at ATL with AirTran (which may require some route realignment by them). Think this is far-fetched? Wait till you see some of the other schemes that will be floated by legacy managements.

Hell will freeze over before DL starts codesharing with JB or FL. And for the time being, DL will not leave the domestic market. They might turn over even more flights to Song, but they will never leave it completely, let alone cooperate with LCC's.


User currently offlineAzjubilee From United States of America, joined Apr 2000, 3888 posts, RR: 28
Reply 12, posted (9 years 4 months 3 weeks 2 days 13 hours ago) and read 3839 times:

If they sell them, they'll still likely USE them! Why is that so hard to understand. NWA doesn't own Pinnacle or Mesaba. CO doesn't own EJT. US doesn't own Mesa, CHautauqua, Shuttle etc...



AZJ


User currently offlineHZ747300 From Hong Kong, joined Mar 2004, 1656 posts, RR: 1
Reply 13, posted (9 years 4 months 3 weeks 2 days 12 hours ago) and read 3811 times:
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Why would Skywest (SKYW) want to absorb ASA's and Comair's cost structure? They have a good thing going, I hope they don't ruin it.


Keep on truckin'...
User currently offlineAzjubilee From United States of America, joined Apr 2000, 3888 posts, RR: 28
Reply 14, posted (9 years 4 months 3 weeks 2 days 12 hours ago) and read 3778 times:

Do you know the difference between the two? With ASA and Comair being wholly owned, there is no real public data. YOu cannot go based on the fact that they're union vs. non union.


AZJ


User currently offlineJetdeltamsy From United States of America, joined Nov 2000, 2987 posts, RR: 8
Reply 15, posted (9 years 4 months 3 weeks 2 days 12 hours ago) and read 3766 times:

this is a very good idea.

the company should focus on our core mainline operations and could use the money a sale would generate.

comair and asa were created and built up during boom times. we are in anything but boom times right now.

selling of the units may also enable the company to pursue more competitive bids for regional services...much like United did (and is currently doing with Ais Wis).



Tired of airline bankruptcies....EA/PA/TW and finally DL.
User currently offlineFlashmeister From United States of America, joined Apr 2000, 2900 posts, RR: 6
Reply 16, posted (9 years 4 months 3 weeks 2 days 11 hours ago) and read 3718 times:
Support Airliners.net - become a First Class Member!

NW and CO unloaded their regionals (by spinning them off, not selling them, by the way) when oil was much cheaper and the airline industry wasn't nearly in the shape that it's in today. ExpressJet has a sweetheart deal with CO that isn't likely to be matched again, based on the fuel subsidies that CO's on the hook for now.

For just those two reasons, you can't compare the NW/CO regional situations with the DL proposed sale.

SkyWest shouldn't touch ASA or Comair with a ten foot pole, IMHO. They see the writing on the wall here: one of their big partners is in eternal Chapter 11, the other is circling the bowl. They have loads of 50 seaters and can't get 70 seaters fast enough to meet partner demands. So why take on more 50 seaters? No quicker way to go out of business than to get an increasing share of a decreasing market. DL's best option will probably be either a spinoff, which is lunacy in today's market, or Mesa, and then God help DL frequent fliers everywhere...


User currently offlineDALMD88 From United States of America, joined Jul 2000, 2534 posts, RR: 14
Reply 17, posted (9 years 4 months 3 weeks 2 days 10 hours ago) and read 3638 times:

I don't think selling DCI makes DL a merger target. I think it gives DL the cash to be the purchaser in the next round of mergers. We all know UAL is a target right now. The CEO has come out and said it. DL has always grown through mergers and UAL would give us the pacific routes we need. There was a very good thread on USAviation.com about a week ago about this topic.
http://www.usaviation.com/forums/index.php?showtopic=18881


User currently offlineOttopylit From , joined Dec 1969, posts, RR:
Reply 18, posted (9 years 4 months 3 weeks 2 days 7 hours ago) and read 3479 times:

Quoting FlyPNS1 (Reply 7):
Would you rather DL end up in bankruptcy? If DL doesn't get more cash that's where they will end up.



The amount that DL would get from selling EV and OH would be minimal. Delta paid more when they bought them than they could potentially get out of them. It would be like when DL sold their fuel hedging, they got more money up front, but screwed in the long run. They aren't gonna do that again. They will not sell OH and EV to get some quick cash up front and get lost out in the long run.

But, lets just say that DL did sell the carriers to OO. Then they put themselves in a pickle. See, DL's contract with SKYW is a fee per departure basis. No matter how many passengers an OO plane pulls out of SLC with, they still get paid the same amount, whether it is 1 passenger or 50. So if DL were to sell EV and OH to Skywest, they now have to pay that fee for departure with them, as compared to now, where EV and OH get paid for how many people they pull. It would actually cost DL more all around. I am sure Delta is looking at what would be the pros and cons of selling these subsidiaries, and someone at SkYW just happened to open their mouth to the press. I don't think you will hear any more about this from either company, as its highly unlikely it would come to fruition.


User currently offlineAirline7322 From United States of America, joined Sep 2004, 105 posts, RR: 0
Reply 19, posted (9 years 4 months 3 weeks 2 days 6 hours ago) and read 3413 times:

More information on the story:

http://aeroposte.blogspot.com/2005/0...ywest-considers-buying-comair.html or
http://www.marketwatch.com/news/yhoo...34%2D40FC%2D91CD%2D8B2B262C51C8%7D



"Good ideas must be driven into practice with courageous patience."
User currently offlineDelta fly boy From Japan, joined Oct 2000, 242 posts, RR: 1
Reply 20, posted (9 years 4 months 3 weeks 2 days 2 hours ago) and read 3249 times:

Messgae from Delta to it's employees:

"Several media outlets are reporting that officials from SkyWest Airlines have expressed an interest in acquiring one or more of Delta's wholly owned subsidiaries. Consistent with longstanding policy, Delta will not comment publicly on such stories. Delta has said repeatedly that the Delta Connection program remains a strategic component of the network. Employees of Delta Connection carriers have long played a critical role in delivering good service to Delta customers. Delta intends to continue its use of regional carriers to provide efficient, reliable service to customers."


User currently offlineBoeing7E7 From , joined Dec 1969, posts, RR:
Reply 21, posted (9 years 4 months 3 weeks 2 days ago) and read 3202 times:

Soak 'em up, order an ass load of DHC-8-400's and a few more CRJ-700's and go to town. 50 seaters just can't do it cost-wise anymore. Time to start parking them in the desert.

The old adage was don't put a jet aircaft (which includes a turboprop) into a market with less than 64 seats...

Well... Don't do it!


User currently offlineMaverickM11 From United States of America, joined Apr 2000, 17347 posts, RR: 46
Reply 22, posted (9 years 4 months 3 weeks 2 days ago) and read 3193 times:

What about American and American Eagle? What's their story? There must be some interest at AA to 86 American Eagle. Have they tried this or is this out of the question for some reason?


E pur si muove -Galileo
User currently offlineFlyPNS1 From United States of America, joined Nov 1999, 6578 posts, RR: 24
Reply 23, posted (9 years 4 months 3 weeks 1 day 18 hours ago) and read 3142 times:

Ottopylit,

I agree that DL won't get a lot back on the sale of Comair/ASA. I also agree that SkyWest probably won't be the buyer.

However, I don't agree that DL won't sell Comair/ASA for cash. DL is burning through cash fast and with fuel prices rising the losses could get even worse. Projected losses for DL this year alone now exceed $1 Billion dollars.

These losses leave DL will four options:

1) Sell assets (like ASA/Comair) for cash
2) Get additional concessions from employees. Easy to get from the non-union folks...but don't count on DALPA.
3) File for Ch 11 bankruptcy protection
4) Stick their head in the sand and pray oil prices plunge or other competitors fail


User currently offlineDAYflyer From United States of America, joined Sep 2004, 3807 posts, RR: 3
Reply 24, posted (9 years 4 months 3 weeks 1 day 17 hours ago) and read 3102 times:

I agree they may spin them off in an IPO somewhere down the road. I think that as bad as they may be, the 50 seaters are hanging around with us all for a while.


One Nation Under God
25 DAYflyer : MORE NEWS that appeared today in the "Cincinnati Post": No indication of Comair sale by Delta Regional line's parent had talks with SkyWest ----------
26 Ouboy79 : Keep in mind you can argue that AA and Eagle are essentially equals as they are both owned by AMR Corp. Don't confuse AMR for AA...they are not the s
27 KC135TopBoom : Delta's best chance to avoid bankruptcy is for US Aiways to fold. Their second bast chance is for United to fold. Both are a very real possibility. Ei
28 ACVitale : A quick correction.. While Skywest pilots may have a lower salery. They actually make more with profit sharing and incentives.
29 DAYflyer : No, because they dont have the money and the 717 is closing down production.
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