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Delta Reports 2005 Results  
User currently offlineOttoPylit From , joined Dec 1969, posts, RR:
Posted (8 years 7 months 6 days 15 hours ago) and read 4502 times:

Delta Air Lines Reports Results for December 2005 Quarter and Full Year
Tuesday February 14, 5:18 pm ET


ATLANTA, Feb. 14, 2006 (PRIMEZONE) -- Delta Air Lines (Other OTC:DALRQ) today reported results for the quarter and year ended December 31, 2005. Key points include:


-- Delta's fourth quarter net loss was $1.2 billion. Excluding
reorganization and special items, the fourth quarter net loss
was $782 million. (1)(2)

-- For 2005, Delta's net loss was $3.8 billion. Excluding
reorganization and special items, the full year 2005 net loss
was $2.2 billion. (1)(2)

-- Despite significant losses, Delta achieved important milestones
in its reorganization during the fourth quarter of 2005, including
strengthening its route network, making progress in restructuring
its aircraft fleet and reducing its employment costs.

-- As of December 31, 2005, Delta had $2.9 billion in cash and cash
equivalents, of which $2.0 billion was unrestricted.



Delta reported a net loss of $1.2 billion in the fourth quarter of 2005, compared to a net loss of $2.2 billion in the fourth quarter of 2004. Excluding the reorganization and special items described below, the net loss was $782 million in the fourth quarter of 2005. Excluding the special items described below, the net loss was $780 million in the fourth quarter of 2004.

For the full year 2005, Delta recorded a net loss of $3.8 billion, compared to 2004's full year net loss of $5.2 billion. Excluding reorganization and special items, the net loss was $2.2 billion in 2005. Excluding the special items described below, the net loss was $2.3 billion in 2004.

``Losses of the magnitude that Delta recorded in 2005 are not sustainable,'' said Edward H. Bastian, Delta's executive vice president and chief financial officer. ``These losses emphasize the need for the urgency with which we have to pursue route network and revenue improvements and the use of the bankruptcy process to reduce the cost and complexity of our business.''

Restructuring Progress

On September 14, 2005, Delta filed a petition for reorganization under Chapter 11 of the U.S. Bankruptcy Code. Since the filing, Delta has worked diligently to become a simpler, more efficient and customer-focused company. Through its restructuring efforts, Delta:



-- Strengthened its route network by adjusting capacity to match
demand, including reducing capacity in its Cincinnati hub,
utilizing smaller aircraft in its Atlanta domestic operations
and shifting wide-body aircraft to its expanded international
operations. The Company also announced plans to begin non-stop
service from Atlanta and New York's John F. Kennedy International
Airport to new markets in Europe, Latin America, Africa and the
Middle East, and to launch a new long-haul domestic Song(r)
service.

-- Made significant progress in restructuring its aircraft fleet
to reduce its cost structure and match its fleet to future needs.
In addition to a number of restructured aircraft arrangements for
which it is seeking bankruptcy court approval, Delta has already
reduced its fleet by 76 aircraft through the bankruptcy
restructuring process and lease returns.

-- Reduced employment costs through employee productivity
improvements; pay and benefit reductions for non-pilot employees,
including executives; and an interim agreement with the union
representing Delta's pilots, ALPA.

``2006 will be a year for Delta to stabilize our financial situation,'' Bastian continued. ``While masked by the high cost of fuel, our restructuring initiatives have begun to produce tangible results this quarter in the form of increased unit revenue and lower mainline non-fuel costs. By maintaining our focus on these efforts, I am confident that we can be successful in positioning Delta to emerge from bankruptcy as a profitable, competitively strong airline.''

Revenue Results

For the fourth quarter of 2005, consolidated passenger unit revenue increased 7.8 percent and consolidated passenger mile yield increased 7.7 percent, compared to the fourth quarter of the previous year. Total revenue for the fourth quarter of 2005 and full year 2005 improved 6.2 percent and 6.3 percent, respectively, compared to the same periods in the prior year. Delta is beginning to see the expected unit revenue improvement from the structural changes it has made to strengthen its route network.

Operating Expenses

As a result of higher fuel prices, Delta paid $410 million more for fuel in the fourth quarter of 2005 than it did in the fourth quarter of 2004, and $1.5 billion more for the full year 2005 as compared to the full year 2004.(3) Driven by fuel and special items, Delta's mainline unit costs increased by 15.7 percent in comparison to the fourth quarter of 2004. Excluding fuel and special items, mainline unit costs decreased 7.1 percent for the quarter as compared to the fourth quarter of 2004.(4) For the full year 2005, mainline unit costs increased 4.8 percent as compared with 2004; however, excluding fuel and special items, mainline unit costs decreased 12.5 percent.

Liquidity

At December 31, 2005, the company had $2.9 billion in cash and cash equivalents, of which $2.0 billion was unrestricted. In January 2006, Delta completed a letter of credit facility with Merrill Lynch that enables the company to utilize up to $300 million in cash that would have been held in reserve by Delta's Visa/MasterCard processor. At December 31, 2005, Delta was in compliance with all of the financial covenants in its post-petition financing arrangements.

Reorganization and Special Items

In the fourth quarter of 2005, Delta recorded $453 million in charges for reorganization and special items. These items are described below:



-- a $277 million charge for reorganization items. This net charge
primarily reflects estimated pre-petition bankruptcy claims for
aircraft and facilities lease matters, as well as professional
fees in the company's Chapter 11 case.

-- a $176 million net charge associated with pension and
restructuring items. Pension settlement charges totaled
$129 million and represent the accelerated recognition of
deferred actuarial losses, in accordance with SFAS 88,(5) due
primarily to lump sum retirement distributions from retirement
plan assets. Restructuring charges totaled $47 million and
represent estimated severance costs associated with
2005 workforce reduction programs.

In the fourth quarter of 2004, Delta recorded $1.4 billion in charges for special items, including (1) a $1.9 billion goodwill impairment charge associated with Atlantic Southeast Airlines, Inc. and Comair, Inc.; (2) a $194 million charge related to voluntary and involuntary workforce reduction programs; (3) a $120 million settlement charge related to the company's defined benefit pension plan for pilots; (4) a $527 million gain related to the elimination of the health care coverage subsidy for future retirees; (5) a $123 million gain related to the sale of Delta's equity investment in Orbitz, Inc.; and (6) a $114 million tax benefit from a reduction in the deferred tax asset allowance that resulted from a goodwill impairment charge.

Reclassifications

Delta sells mileage credits in the SkyMiles(r) frequent flyer program to participating partners, such as credit card companies, hotels and car rental agencies. The portion of the revenue from the sale of mileage credits that approximates the value of the transportation to be provided is deferred and recognized on a straight-line basis over the expected life of the awards. Effective with the December 2005 quarter, amounts received in excess of the value of the transportation to be provided are classified as other revenue on the Consolidated Statements of Operations. Previously, these amounts were classified as an offset to selling expenses.

The company has reclassified prior period amounts to be consistent with the December 2005 quarter presentation. These reclassifications did not impact the operating loss or net loss for any period presented.

December Monthly Operating Report

Delta filed with the U.S. Bankruptcy Court its Monthly Operating Report for December 2005. As reflected in that report, the company recorded a $372 million operating loss and $753 million net loss for the month. Excluding reorganization and special items, the company recorded a $196 million operating loss and a $358 million net loss for the month.

Other Matters

Attached to this press release are Delta's Consolidated Statements of Operations for the three and twelve months ended December 31, 2005, and 2004; a statistical summary for those periods; selected balance sheet data as of December 31, 2005 and December 31, 2004; and a reconciliation of certain GAAP to non-GAAP financial measures. The Consolidated Statements of Operations show Delta's net loss as reported under GAAP, as well as Delta's net loss excluding reorganization and special items.

About Delta

Delta Air Lines is one of the world's fastest growing international carriers with more than 50 new international routes added or announced in the last year. Delta offers daily flights to 503 destinations in 94 countries on Delta, Song, Delta Shuttle, the Delta Connection carriers and its worldwide partners. In summer 2006, Delta plans to offer customers more destinations and departures between the U.S., Europe, India and Israel than any global airline, including service on 11 new transatlantic routes from its Atlanta and New York-JFK hubs. Delta also is a major carrier to Mexico, South and Central America and the Caribbean, with more than 35 routes announced, added or applied to serve since January 1, 2005. Delta's marketing alliances also allow customers to earn and redeem SkyMiles on more than 14,000 flights offered by SkyTeam and other partners. Delta is a founding member of SkyTeam, a global airline alliance that provides customers with extensive worldwide destinations, flights and services. Customers can check in for flights, print boarding passes and check flight status at delta.com.

Endnotes

(1) Note 1 to the attached Consolidated Statements of Operations shows a reconciliation of Delta's net loss reported under accounting principles generally accepted in the United States (GAAP) to the net loss excluding reorganization and special items, as well as reconciliations of other financial measures including and excluding reorganization and special items. Delta excludes reorganization and special items because the exclusion of these items is helpful to investors to evaluate the company's recurring operational performance.

(2) Reorganization items are items of income, expense, gain or loss that are realized or incurred by us that are due to our reorganization under Chapter 11 of the U.S. Bankruptcy Code. In accordance with GAAP, these items are required to be separately classified in the Consolidated Statements of Operations.

(3) Includes the impact of fuel price increases reflected in both fuel expense and contract carrier arrangements in the Consolidated Statements of Operations.

(4) Delta presents mainline unit costs excluding fuel expense and special items because management believes (a) high fuel prices during the December 2005 quarter and full year 2005 mask the progress the Company achieved toward its business plan targets and (b) the exclusion of the special items is helpful to investors to evaluate the Company's recurring operational performance.

(5) SFAS No. 88, ``Employers' Accounting for Settlements and Curtailments of Defined Benefit Pension Plans and for Termination Benefits.''

Statements in this news release that are not historical facts, including statements regarding our estimates, expectations, beliefs, intentions, projections or strategies for the future, may be ``forward-looking statements'' as defined in the Private Securities Litigation Reform Act of 1995. All forward-looking statements involve a number of risks and uncertainties that could cause actual results to differ materially from the estimates, expectations, beliefs, intentions, projections and strategies reflected in or suggested by the forward-looking statements. These risks and uncertainties include, but are not limited to, the actions and decisions of our creditors and other third parties with interests in our Chapter 11 proceedings; our ability to obtain court approval with respect to motions in the Chapter 11 proceedings prosecuted from time to time; our ability to develop, prosecute, confirm and consummate one or more plans of reorganization with respect to the Chapter 11 proceedings and to consummate all of the transactions contemplated by one or more such plans of reorganization or upon which consummation of such plans may be conditioned; risks associated with third parties seeking and obtaining court approval to terminate or shorten the exclusivity period for us to propose and confirm one or more plans of reorganization, to appoint a Chapter 11 trustee or to convert the cases to Chapter 7 cases; our ability to obtain and maintain normal terms with vendors and service providers; our ability to maintain contracts that are critical to our operations; our ability to maintain adequate liquidity to fund and execute our business plan during the Chapter 11 proceedings and in the context of a plan of reorganization and thereafter; our ability to comply with financial covenants in our financing agreements; our ability to implement our business plan successfully; the cost of aircraft fuel; labor issues, including our ability to reduce our pilot labor costs to the level called for by our business plan and possible strikes or job actions by unionized employees; pension plan funding obligations; interruptions or disruptions in service at one of our hub airports; our increasing dependence on technology in our operations; our ability to retain management and key employees; restructurings by competitors; the effects of terrorist attacks; and competitive conditions in the airline industry.

Additional information concerning risks and uncertainties that could cause differences between actual results and forward-looking statements is contained in Delta's Securities and Exchange Commission filings, including its Form 10-Q, filed with the Commission on November 14, 2005.

The risks and uncertainties and the terms of any reorganization plan ultimately confirmed can affect the value of our various pre-petition liabilities, common stock and/or other securities. No assurance can be given as to what values, if any, will be ascribed in the bankruptcy proceedings to each of these liabilities or securities.

A plan of reorganization could result in holders of our liabilities and/or securities receiving no value for their interests. Because of such possibilities, the value of these liabilities and/or securities is highly speculative. Accordingly, we urge that caution be exercised with respect to existing and future investments in any of these liabilities and/or securities. Investors and other interested parties can obtain information about Delta's Chapter 11 filing on the Internet at delta.com/restructure. Court filings and claims information are available at deltadocket.com. Caution should be taken not to place undue reliance on Delta's forward-looking statements, which represent Delta's views only as of February 14, 2006, and which Delta has no current intention to update.

[Edited 2006-02-14 23:56:22]

28 replies: All unread, showing first 25:
 
User currently offlineCory6188 From United States of America, joined Feb 2004, 2686 posts, RR: 5
Reply 1, posted (8 years 7 months 6 days 14 hours ago) and read 4461 times:

Well, $782 million can't be good unless there's something hidden amongst the news that is a silver lining...

User currently offlineJetBluefan1 From United States of America, joined Dec 2003, 2982 posts, RR: 14
Reply 2, posted (8 years 7 months 6 days 14 hours ago) and read 4381 times:

4Q05 was a tough one for the whole U.S airline industry. While I wouldn't take these results to be good by any means, I think we'll see DL making significant progress over the next few months by dropping unprofitable routes and focusing on its strengths - something all airlines should be doing.

Here's to a better 06 for not only DL but the whole U.S airline industry!

jetBluefan1



Most people on a.net hate JetBlue. Get used to it.
User currently offlineDb373 From United States of America, joined Sep 2005, 238 posts, RR: 1
Reply 3, posted (8 years 7 months 6 days 13 hours ago) and read 4354 times:

Quoting Cory6188 (Reply 1):
Well, $782 million can't be good unless there's something hidden amongst the news that is a silver lining...

Revenue increased by 6.3%. Quoting from the article: "Delta is beginning to see the expected unit revenue improvement from the structural changes it has made to strengthen its route network."

They already have some of the lowest costs in the industry. They are focussing their bankruptcy not on lowering them even more, but by increasing the operations side of their business, namely revenue. While these aren't good numbers at all, it is encouraging to see that they've managed to increase revenue during a time that hurt all the airlines.

And one final word: Good luck to all airlines in 2006!



Keep Delta My Delta
User currently offline727LOVER From United States of America, joined Oct 2001, 6436 posts, RR: 17
Reply 4, posted (8 years 7 months 6 days 11 hours ago) and read 4197 times:

Quoting JetBluefan1 (Reply 2):
we'll see DL making significant progress over the next few months by dropping unprofitable routes

How can you tell the UNprofitable routes...if the whole operation is unprofitable? This is for any airline.



Listen Betty, don't start up with your 'White Zone' s*** again.
User currently offlineLightsaber From United States of America, joined Jan 2005, 13115 posts, RR: 100
Reply 5, posted (8 years 7 months 6 days 9 hours ago) and read 4041 times:
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Quoting JetBluefan1 (Reply 2):
I think we'll see DL making significant progress over the next few months by dropping unprofitable routes and focusing on its strengths - something all airlines should be doing.

I too think that DL will restructure in a major way. Another thread discusses a big May 1st schedule change for DL. While the 4th quarter was an exceptionally tough quarter for all airlines, Delta took it hard. Very hard. However, Delta's steps to free up cash will help them.

thread on schedule change:
Delta May 1 Schedule Change (by RL757PVD Feb 13 2006 in Civil Aviation)

Quoting Db373 (Reply 3):
They are focussing their bankruptcy not on lowering them even more, but by increasing the operations side of their business, namely revenue.

I think you meant to say "not only on lowering them even more."
That "nitpick" asside, I agree that DL seems to be focusing on raising revenue. The 1st quarter will be tough for DL. By the 2nd quarter we should see dramatic improvement on CASM and RASM.

This will make the talks with the pilots... even more interesting.

Lightsaber



Societies that achieve a critical mass of ideas achieve self sustaining growth; others stagnate.
User currently offlineDAL767400ER From , joined Dec 1969, posts, RR:
Reply 6, posted (8 years 7 months 6 days 4 hours ago) and read 3948 times:

A bad loss, but it is undeniable that DL is already making some major improvements, not only in lowering CASM, but also increasing RASM and still keeping unrestricted cash at $2 billion.
Btw. did I read it correctly that the breakeven loadfactor for 4Q04 was 123.63% ?


User currently offlineAirzim From Zimbabwe, joined Jun 2001, 1205 posts, RR: 1
Reply 7, posted (8 years 7 months 6 days 1 hour ago) and read 3897 times:

... and cancelling their pension plans. US Congress should be ashamed by allowing US Companies to just stop funding pension plans just because they feel like it.

Delta is turing into United. Scary.


User currently offlineAlitalia744 From United States of America, joined Mar 2000, 4749 posts, RR: 44
Reply 8, posted (8 years 7 months 5 days 22 hours ago) and read 3799 times:

Quoting DAL767400ER (Reply 6):
A bad loss, but it is undeniable that DL is already making some major improvements, not only in lowering CASM, but also increasing RASM and still keeping unrestricted cash at $2 billion.
Btw. did I read it correctly that the breakeven loadfactor for 4Q04 was 123.63% ?

DAL, you read that correctly, 123.63% BELF for 4Q04. Pretty scary. (And before anyone bashes my comments, please note - I am a LOYAL Delta Air Lines flyer)

What's more interesting is the compartive between CY 2004 vs. CY 2005 CASM and RASM numbers:

ORASM: 10.33 (2005) 10.04 (2004) 2.9% (Increase vs. 2004)
PRASM: 9.33 (2005) 9.09 (2004) 2.6% (Increase vs. 2004)
OCASM: 11.60 (2005) 12.23 (2004) -5.2% (Decrease vs. 2004)

Also of interest in the numbers is the CY break-even load factor is decreasing, which shows signs that Delta's financial plan is somewhat working:

PLF: 76.50% (2005) 74.70% (2004) 1.8pts (vs. 2004)
BELF: 86.98% (2005) 92.62% (2004) -5.6pts (vs. 2004)

While the numbers are skewing in the right direction, they're still not enough to guarantee sustainability of the carrier. Hopefully the transformation plan and allowing by the judge of some fuel hedges will further continue the lowering of CASM and increasing of RASM. I think employee costs will still need to see some decreases (and I'm not saying only the Pilots, everyone has to be in it together).

These are definitely interesting times for Delta, its employees and passengers. Hopefully, Gerry and the pilots can work together vs. against each other and the plan laid out ahead of everyone is enough to bring Delta back to it's glory days.

I'm flying today on DL1247 and looking forward to the service and treatment I've come to love when I fly. A treatment I've only yet experienced on Delta.

Here's to 75 more years of the widget!



Some see lines, others see between the lines.
User currently offlinePanamair From United States of America, joined Oct 2001, 4910 posts, RR: 25
Reply 9, posted (8 years 7 months 5 days 22 hours ago) and read 3769 times:
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Quoting DAL767400ER (Reply 6):
Btw. did I read it correctly that the breakeven loadfactor for 4Q04 was 123.63% ?

Actually, that was becaues of the huge "Impairment of Tangible Assets" special charge in the 2004 quarter that caused the breakeven LF to balloon. Excluding that item, it was more like 86.82% in Q4 04 compared to 84.29% in Q4 05.

Looking at 'pure' operating profit/loss from Q4 04 to Q4 05 (i.e., excluding the special items like the abovementioned, as well as Pension settlement charges), the operating loss did improve from $593m to $499m. Salaries were down by 27.1% while fuel rose 26.3%.

Other interesting stats involve RASM and Yield by markets. The following are changes for each category comparing Q4 05 with Q4 04:

Yield: North America +8.0%
Yield: Atlantic +1.7%
Yield: Latin America +8.4%
Yield: Pacific +10.6%

RASM: North America +8.6%
RASM: Atlantic +8.2%
RASM: Latin America -0.2%
RASM: Pacific +8.8%


User currently offlineAlitalia744 From United States of America, joined Mar 2000, 4749 posts, RR: 44
Reply 10, posted (8 years 7 months 5 days 18 hours ago) and read 3757 times:

Quoting Panamair (Reply 9):
Other interesting stats involve RASM and Yield by markets. The following are changes for each category comparing Q4 05 with Q4 04:

Interesting percentages for system yield/RASM, nice data. What's particularly interesting is even though Delta is right-sizing it's domestic network, both Yield and RASM experienced growth during 2005.

Hopefully these are telling signs of a successful future for Delta Air Lines.



Some see lines, others see between the lines.
User currently offlinePanamair From United States of America, joined Oct 2001, 4910 posts, RR: 25
Reply 11, posted (8 years 7 months 5 days 16 hours ago) and read 3757 times:
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Quoting Alitalia744 (Reply 10):
What's particularly interesting is even though Delta is right-sizing it's domestic network, both Yield and RASM experienced growth during 2005.

I would argue that the cuts in domestic capacity helped to increase yield and RASM...fewer seats offered with still-decent demand means DL is able to sell more seats at higher prices...


User currently offlineLightsaber From United States of America, joined Jan 2005, 13115 posts, RR: 100
Reply 12, posted (8 years 7 months 5 days 11 hours ago) and read 3408 times:
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Quoting Alitalia744 (Reply 8):

What's more interesting is the compartive between CY 2004 vs. CY 2005 CASM and RASM numbers:

ORASM: 10.33 (2005) 10.04 (2004) 2.9% (Increase vs. 2004)
PRASM: 9.33 (2005) 9.09 (2004) 2.6% (Increase vs. 2004)
OCASM: 11.60 (2005) 12.23 (2004) -5.2% (Decrease vs. 2004)

1st, thanks for the good numbers. I'm going to use them later in this post.

Quote:
Meanwhile, Delta's cost per available seat mile, excluding fuel and other one-time expenses, is a relatively high 7.71 cents.

from: http://www.thestreet.com/_yahoo/stoc...cm_ven=YAHOO&cm_cat=FREE&cm_ite=NA

While for B6:

Quote:
Operating expense per ASM (CASM) for the fourth quarter 2005 increased 18.9% year-over-year to 7.51 cents.

That's *with fuel*
at $1.87/gallon from:
http://www.jetblue.com/learnmore/pressDetail.asp?newsId=390

In other words, DL has a higher CASM without fuel than B6 has with fuel. Yikes! 10.3 vs. 7.51...  covereyes 

That said, I think that DL shifting 757's to international is going to change the game dramatically. Does DL have to compete with FL or B6 across the Atlantic? Obviously not. If 763ER's can thus be freed up to go across the Pacific (by these 757's)... DL's RASM will skyrocket. (Not to mention, longer stage lengths have inherently lower CASM's.)

In summary. I think Delta can pull it off. But... there is a window here. A bit of savings from lease rates, some savings by optimizing aircraft utilization, unfortunately some labor cost reductions, etc. 2006 will be interesting for DL. I'll say it again, DL was the first airline I ever flew. For that alone I hope to see the Widget continue flying. (Not to mention I've had good service on DL.)

Lightsaber



Societies that achieve a critical mass of ideas achieve self sustaining growth; others stagnate.
User currently offlineGalapagapop From United States of America, joined Feb 2005, 910 posts, RR: 4
Reply 13, posted (8 years 7 months 5 days 11 hours ago) and read 3401 times:

like the release looks like DL hired some ex-UAL media guys, here come the weekly reports on rain totals.....

User currently offlineFlashmeister From United States of America, joined Apr 2000, 2900 posts, RR: 6
Reply 14, posted (8 years 7 months 5 days 11 hours ago) and read 3398 times:
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Delta managed to lose about $4186 every minute of every day during 2005. That's a hell of a lot of money. What still baffles me is why DL insisted on entering Chapter 11 until quite literally the very last minute, and yet had no plan like AA to work with creditors to truly restructure debt -- their last-minute deals with GE and American Express were simply cash infusions.

There is indeed a window here. Depending on how quickly US/HP can get their stuff together and how much UA really has retooled to face new competitive environments, DL could be in a world of hurt. Add to it an emerging NW a year or so down the line, and you could really be looking at some trouble for DL, especially considering the extent to which NW has left no stone unturned to find efficiencies.

On the other hand, DL knows from UA's experience that Chapter 11 can be a refuge from which to launch assaults on entrenched carriers. If DL was smart, they'd get very savvy to AirTran and hit em where it hurts (as long as they don't launch yet another carrier-within-a-carrier ala Ted to do it).

It's going to be interesting for certain, but I tell you what: I'm spending my SkyMiles as quick as I can just in case.


User currently offlineOttoPylit From , joined Dec 1969, posts, RR:
Reply 15, posted (8 years 7 months 5 days 11 hours ago) and read 3375 times:

Quoting Flashmeister (Reply 14):
If DL was smart, they'd get very savvy to AirTran and hit em where it hurts (as long as they don't launch yet another carrier-within-a-carrier ala Ted to do it).

Oh, you haven't seen? The hunted has become the hunter.

Thanks to DL, Airtran has NO monopolistic markets anymore. Delta has juggled its BMI and MLI flights from CVG to ATL to compete with Airtran's. This summer, DL is starting service from MCO to 5 midwest markets served by Airtran. Airtran started up 5 BWI-BOS flights a day and is competing with 7 Delta Comair flights. Delta had started up service with a CR7 against Airtran's 717 on LGA-SRQ, and FL has pulled from the market. Any flight Airtran wants to start, they can expect Delta competition to be there right with them.

Since Airtran seems to be getting a little too big for their britches around with the media and taking shots at Delta, its time for Auntie Delta to show Airtran just where they rank on the food chain.



OttoPylit


User currently offlineDAL767400ER From , joined Dec 1969, posts, RR:
Reply 16, posted (8 years 7 months 5 days 4 hours ago) and read 3289 times:

Quoting Lightsaber (Reply 12):
That said, I think that DL shifting 757's to international is going to change the game dramatically. Does DL have to compete with FL or B6 across the Atlantic? Obviously not. If 763ER's can thus be freed up to go across the Pacific (by these 757's)... DL's RASM will skyrocket. (Not to mention, longer stage lengths have inherently lower CASM's.)

Which is not gonna happen for a few reasons.
First, no 757s across the pond, as it would take quite a large sum of money to get them ETOPS-certified, and their engines aren't the most powerful on the 757, so even though I'd like to see them used across the pond, I doubt it will happen.
Second, the Pacific flights: Where from?
SLC? Not enough demand, even with all the feed DL has there, not to mention that SLC's Hot&High conditions could prove a problem for the 763ER on the longer routes.
LAX? With all that competition? Hell no.
PDX? You gotta be kidding me.
Or in short, no new transpac operations for Delta. Their focus is on the Caribbean and LatAm (year-round), and Europe (summer) and South America (winter), with the latter two complementing each other with regards to plane switches.


User currently offlineSESGDL From United States of America, joined Jan 2001, 3483 posts, RR: 10
Reply 17, posted (8 years 7 months 4 days 21 hours ago) and read 3224 times:

Quoting Lightsaber (Reply 12):

That said, I think that DL shifting 757's to international is going to change the game dramatically. Does DL have to compete with FL or B6 across the Atlantic? Obviously not. If 763ER's can thus be freed up to go across the Pacific (by these 757's)... DL's RASM will skyrocket. (Not to mention, longer stage lengths have inherently lower CASM's.)

757s will not be going across the pond. Also, while 767-300s are the most viable aircraft for Pacific operations, there are relatively few routes that they could operate. It is likely anything East of LAX, SFO, PDX, or SEA would warrant a 777, which DL doesn't have enough of. While SLC-NRT or SLC-ICN may be an option in the future, SLC still needs a little more growth before that could happen. Any Pacific flights done with 767s would need to be in the form of SLC-HNL-NRT/ICN, LAX-HNL-KIX, LAX-HNL-HKG, etc. This simply isn't a good setup, however, there's already enough competition and passengers want direct flights. The next new DL route across the Pacific will likely be ATL-PEK in 2008.

Jeremy


User currently offlineLightsaber From United States of America, joined Jan 2005, 13115 posts, RR: 100
Reply 18, posted (8 years 7 months 4 days 20 hours ago) and read 3205 times:
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Quoting OttoPylit (Reply 15):
Since Airtran seems to be getting a little too big for their britches around with the media and taking shots at Delta, its time for Auntie Delta to show Airtran just where they rank on the food chain.

That sort of thinking could really hurt DL. FL is barely losing money; while I think this overlap will hurt them a little... it won't kill them off while it will cost DL tons of money. Maybe this is why FL is trying to expand more out of MDW...  scratchchin 

Quoting DAL767400ER (Reply 16):
First, no 757s across the pond, as it would take quite a large sum of money to get them ETOPS-certified, and their engines aren't the most powerful on the 757, so even though I'd like to see them used across the pond, I doubt it will happen.

OH... bummer.  Sad Idea shot down. Thanks. I though DL was joining the 757 ETOPS crowd..  Sad oops. Although, getting the engines "upthrusted" is pretty easy with the pw2000 family. But if this isn't already in the works... it would be tough to get any across the Atlantic before summer of 2007 now. How is DL getting 10 new flights across the Atlantic then? All 767's pulled from domestic?

Quoting SESGDL (Reply 17):
It is likely anything East of LAX, SFO, PDX, or SEA would warrant a 777, which DL doesn't have enough of.

Too true. DL needs (needed?) more 777's.

Lightsaber



Societies that achieve a critical mass of ideas achieve self sustaining growth; others stagnate.
User currently offlineRichierich From United States of America, joined Nov 2000, 4261 posts, RR: 6
Reply 19, posted (8 years 7 months 4 days 19 hours ago) and read 3155 times:

Quoting OttoPylit (Reply 15):
Since Airtran seems to be getting a little too big for their britches around with the media and taking shots at Delta, its time for Auntie Delta to show Airtran just where they rank on the food chain.

Otto, I've been reading but this quote made me start typing.....
I think the attitude of DL vs. every-LCC-out-there is pretty old and tired. While I know AirTran has obviously caused DL a lot of pain, DL is not exactly in a financial position to be backing up the sort of threat you implied with the above comment. Cutting of your nose to spite your face is not very smart business and I hope for DL's sake that they are only going after routes that are making money for them (or at least not losing as much as other routes) - to imply that DL will fly a route just because AirTran is doesn't make much sense.

Let's not allow this thread to erupt into a flame war like we always do, OK? If you are able to respond decently to my point, then go for it. Otherwise do not.


Quoting Lightsaber (Reply 12):
In other words, DL has a higher CASM without fuel than B6 has with fuel.

Ouch.
I didn't even see it that way. Man, DL has a long way to go - I hope they can pull it off without resorting to drastic measures.

Quoting OttoPylit (Reply 15):
Delta had started up service with a CR7 against Airtran's 717 on LGA-SRQ, and FL has pulled from the market.

Indeed.
I'm willing to bet that this was not a strong market for AirTran to begin with. Throw in 70 more seats of competition and it becomes a loser. (I'm sure it hasn't made DL much money, either.) Just out of curiosity, what does DL throw on this route now? Is it still the CR7?



None shall pass!!!!
User currently offlineOttoPylit From , joined Dec 1969, posts, RR:
Reply 20, posted (8 years 7 months 4 days 15 hours ago) and read 3078 times:

Quoting Lightsaber (Reply 18):
That sort of thinking could really hurt DL. FL is barely losing money; while I think this overlap will hurt them a little... it won't kill them off while it will cost DL tons of money. Maybe this is why FL is trying to expand more out of MDW...

But as long as it costs FL money is the point. With DL being under BK protection, they are protected and have a little extra money to throw around. You might as well put it to a good cause. By making Airtran lose money at minimal cost to you keeps them from making it. Take the LGA-SRQ flights for instance. DL didn't flood the market, they instituted 1 CRJ a day, and it reduced Airtrans' minimal capability to make any money on the route. Airtran left and Delta sticks around with an MD-88 once a week non-stop. Its a page right out of the AA/NW playbook. No longer is DL gonna sit around and let an LCC just walk into their turf.

Quoting Richierich (Reply 19):
I've been reading but this quote made me start typing.....

I'm sorry. Had I known that it would have caused you to go out of your way to type a response, I would have avoided having to reply since I know I won't get anywhere with you.

Quoting Richierich (Reply 19):
I think the attitude of DL vs. every-LCC-out-there is pretty old and tired

Well, considering DL has only been up against FL and B6, I would think we have a while to go before it gets very old, huh?  sarcastic 

Quoting Richierich (Reply 19):
While I know AirTran has obviously caused DL a lot of pain

They haven't caused DL a lot of pain as you imply, but they are in a position to become a much more formidable opponent if they continue to grow. Delta can only keep ATL locked down for so long, so now is a good time to pull out the good punches. Delta refers to Airtran like a gnat. It doesn't do severe damage, but its extremely annoying. Only difference is that given time and ignored, it could become a huge gnat and this gnat has recently had a big mouth to boot.

Quoting Richierich (Reply 19):
and I hope for DL's sake

Grinstein and Whitehurst appreciate your candor in the matter.

Quoting Richierich (Reply 19):
that they are only going after routes that are making money for them (or at least not losing as much as other routes) - to imply that DL will fly a route just because AirTran is doesn't make much sense.

Delta will go on whatever routes that make money, or whatever routes are giving Airtran subsidies, which has been Airtran's big payoff for quite a while. If you have 2 airlines flying the route, no need for subsidies to one of them and its likely they will get cut off. After that, may the best airline win!

Quoting Richierich (Reply 19):
Let's not allow this thread to erupt into a flame war like we always do, OK? If you are able to respond decently to my point, then go for it. Otherwise do not.

You and NRK are the ones that come out of the corners with the flamethrowers. And somehow always drag me in.

Quoting Richierich (Reply 19):
Just out of curiosity, what does DL throw on this route now? Is it still the CR7?

Nope, MD88.




OttoPylit


User currently offlineRichierich From United States of America, joined Nov 2000, 4261 posts, RR: 6
Reply 21, posted (8 years 7 months 4 days 14 hours ago) and read 3054 times:

Quoting OttoPylit (Reply 20):
I'm sorry. Had I known that it would have caused you to go out of your way to type a response, I would have avoided having to reply since I know I won't get anywhere with you.

That made me laugh, dude!
What's with the newfound Danish heritage? Is this because you liked the cartoon that is offending Muslims everywhere so much?

Quoting OttoPylit (Reply 20):
Delta refers to Airtran like a gnat. It doesn't do severe damage, but its extremely annoying. Only difference is that given time and ignored, it could become a huge gnat and this gnat has recently had a big mouth to boot.

While I admit this is amusing, this attitude also makes me think that maybe DL doesn't get it. While AirTran is not nearly as big as DL, obviously, it has been a pretty large fly in the widget-ointment for quite some time now. I've been looking at this industry for a long time and it is my belief now that AirTran might be a little too big for DL to simply out-muscle at this point. It is not like DL is sitting on a lot of cash and can afford to fight a long protracted battle in this manner. Like I said, I know route planning is a chess match of sorts, a strategy game, but ultimately it is profit & loss that will win the day. If DL were profitable, then maybe it would make more sense. But this strategery is almost counter-productive when the red ink is everywhere.

Interesting to hear the MD-88 is on the route now. Thanks.

BTW, I know this was discussed in previous thread so I'll keep it short. I'm glad ship 102 is being preserved and put on display. In this case, I think DL showed good sense in saving the one aircraft that meant so much to the company, its history, and most importantly its employees. The money it would have received from Airborne Express would not have been worth the memories that it would have lost. Although DL may not be my favorite airline, I, like a lot of people who come into this site, have an interest or appreciation of airlines and aviation in general, and I'm happy the right decision was made with this important 767.



None shall pass!!!!
User currently offlineFlyPNS1 From United States of America, joined Nov 1999, 6608 posts, RR: 24
Reply 22, posted (8 years 7 months 4 days 11 hours ago) and read 3033 times:

Quoting OttoPylit (Reply 20):
which has been Airtran's big payoff for quite a while.

Airtran does over $1Billion dollars a year in revenue and they only get a few million in subsidies. That's hardly a big payoff.

DL is just as big of a subsidy whore. DL cried to the city of Atlanta for fuel subsidies. What's your take on that?

Quoting OttoPylit (Reply 20):
But as long as it costs FL money is the point.

This type of thinking is exactly why DL is in bankruptcy. Instead of focusing on making DL profitable, you're focusing on making other carriers lose money.


User currently offlineOttoPylit From , joined Dec 1969, posts, RR:
Reply 23, posted (8 years 7 months 4 days 10 hours ago) and read 3033 times:

Quoting Richierich (Reply 21):
What's with the newfound Danish heritage? Is this because you liked the cartoon that is offending Muslims everywhere so much?

Yea, showing my support of freedom of expression and speech, EVEN though I also support respect of religion. But the way I see it, Muslims have no problem bashing anyone else's religion(Jewish, Christian), but if you do anything that disrespect's theirs, "OH, thats so bad." And these Middle Eastern countries can't contain their own people? So I say, the heck with 'em. Anyhoo...

Quoting Richierich (Reply 21):
While AirTran is not nearly as big as DL, obviously, it has been a pretty large fly in the widget-ointment for quite some time now. I've been looking at this industry for a long time and it is my belief now that AirTran might be a little too big for DL to simply out-muscle at this point.

Oh no, I'm not saying anything like that. If Delta wanted to squish Airtran, it should have done it in the early days of 93/94 when Valujet started. But they were quickly on their way to extinguishing themselves. Then you have 592, that basically did it for them. But they somehow struggled back to their feet and enjoyed the boom of the 90's with everyone else. A point in which Delta figured, "Heck, we're making record profits, so who care's if they do to, as long as we make more." It has gone past that point. Delta won't outmuscle Airtran and I don't think the intent is to. I think Delta is just trying to let Airtran know who is the big dog in ATL, like establishing dominance. Just because this dog is a little older and has a few battle scars doesn't mean it can't give a severe lashing to the young pup. Delta has seen Airtran as that annoying gnat. Now, its time for Delta to be the thorn in that gnat's side. Delta's always had Airtran trying to nip away at their heels and picking pieces of their routes(something FlyPNS calls "competition"), and so now Delta says, "We can play that game" and does the same(but what FlyPNS calls "flooding the market). Now it will be Airtran's time to have that annoying feeling of someone else in your market taking your share.

Quoting Richierich (Reply 21):
It is not like DL is sitting on a lot of cash and can afford to fight a long protracted battle in this manner. Like I said, I know route planning is a chess match of sorts, a strategy game, but ultimately it is profit & loss that will win the day.

I think its more like, "Since we're in BK and have a little extra money from not needing to pay creditors, let's make them bleed a little as well."

Quoting Richierich (Reply 21):
In this case, I think DL showed good sense in saving the one aircraft that meant so much to the company, its history, and most importantly its employees.

Thanks, I agree. If Mullin were still in charge, I'm sure 102 would have been sent to ABX or scrapped for paper clips. But with Grinstein in charge, he knows the passion and loyalty Delta people have for their airline and knows that anything less than keeping 102 would have been a slap in the face to anyone who has ever felt anything in their heart for this company.

Quoting FlyPNS1 (Reply 22):
Airtran does over $1Billion dollars a year in revenue and they only get a few million in subsidies. That's hardly a big payoff.

Let me let you in on a little something, Squirt. When you are paid 2 million to run 4 flights into a city a day, you are guaranteed a profit. That is enough money to pay for rent, landing fee's, employee costs, and even equipment costs with money left to play with. That extra cash goes directly into the bank. When you include that with other cities doing the same or near to it, that is a big payoff. I mis-spoke saying it WAS their big payoff, and I should have probably said it is A big constant payoff for them every year.

Quoting FlyPNS1 (Reply 22):
DL is just as big of a subsidy whore. DL cried to the city of Atlanta for fuel subsidies. What's your take on that?

Hardly. Delta will accept subsidies for cities with no air service(APF) or very little. You liked to bring up HVN before. Delta accepted subsidies for HVN and flew into there. When the subsidies stopped, about a year later Delta could not stir enough service in the city to keep operations. Apparently, US and their DH-8's had enough rule of the market to keep DL from making a profit from it. Airtran is different. Airtran wants subsidies from cities that already are saturated with service. Hell, they are even trying to get subsidies from cities that are already served by Southwest, arguing they can bring lower fares into the city(yea, for a price!).  sarcastic 


As far as the fuel prices, Delta informed the city of the problem they were having with the skyrocketingly high fuel prices(you forgot to mention this was during Katrina). Atlanta said something to the tune of(and I forget the actual numbers and am too lazy to look them up right now, so I will example them), "OK, just got ahead and pay what you need to, but if you get past $25 million in fuel, we'll take it from there for you." Had the city said no, Delta would have just looked to ways to overcome that cost. But if I'm not mistaken, everyone was "crying" during Katrina. Even Airtran wanted in on some of it and the city said, "Sorry, all tapped out here." You conveniently left that out, didn't ya?

Quoting FlyPNS1 (Reply 22):
Instead of focusing on making DL profitable, you're focusing on making other carriers lose money.

And while Delta needs to implement what will make them profitable, why let other's out of the barn to run amuck? Until your implementation plan is in place, use the extra money you save from BK protection to bring the others down. Keep in mind, things don't happen overnight, as much as you expect them too.


Getting in a little over your head with knowledge that you know so little on, aren't you? Let's hope you can continue to back up what you preach.



OttoPylit


User currently offlineFlyPNS1 From United States of America, joined Nov 1999, 6608 posts, RR: 24
Reply 24, posted (8 years 7 months 3 days 23 hours ago) and read 3022 times:

Quoting OttoPylit (Reply 23):
When you are paid 2 million to run 4 flights into a city a day, you are guaranteed a profit. That is enough money to pay for rent, landing fee's, employee costs, and even equipment costs with money left to play with. That extra cash goes directly into the bank.

The subsidy programs don't work that way even for DL. The airlines only get the money if they need it. Every month or quarter, the airlines submit a bill to the airport which indicates their profit or loss. The airport then provides a subsidy to make up for the loss plus some profit margin. However, if the airline posts a decent sized profit, they get NO subsidy at all. The airport authorities don't just write out a check for $2million.

Quoting OttoPylit (Reply 23):
When you include that with other cities doing the same or near to it, that is a big payoff.

You make it seem like every city Airtran serves is being subisidized when in fact very few provide subsidies. Only RIC, SRQ, ICT and GPT have any subsidy program in place. The total subsidies only add up to a few million dollars out of Airtran's $1Billion+ in revenues.

Quoting OttoPylit (Reply 23):
Delta would have just looked to ways to overcome that cost. But if I'm not mistaken, everyone was "crying" during Katrina. Even Airtran wanted in on some of it and the city said, "Sorry, all tapped out here." You conveniently left that out, didn't ya?

You say that it is unfair for ICT to subsidize FL on the ATL-ICT route and not subsidize DL. However, you think it is fair for ATL to subsidize DL's fuel and not FL's? That's pretty hypocritical. This gives DL an advantage over every carrier that serves ATL, not just FL, but US, UA, AA, CO, NW, F9,etc.

Quoting OttoPylit (Reply 23):
Now it will be Airtran's time to have that annoying feeling of someone else in your market taking your share.

But the problem is that DL isn't taking Airtran's share. Airtran continues to gain marketshare. And with DL reducing overall domestic capacity, it's unlikely that DL will be able to take marketshare from Airtran. DL has cut capacity on many of the routes they operate from ATL against FL.

And while DL may knock Airtran off a few marginal routes, Airtran will take far more from DL as they open new cities like ATL-DTW (started recently), ATL-SEA and ATL-HPN.


25 OttoPylit : The subsidies apparently that way for Airtran. Just look into the Wichita situation and its pretty evident. I was organizing an event for the Delta D
26 FlyPNS1 : How is it evident? If Airtran loses money, they send a bill to Wichita to make up the difference. However, Wichita doesn't just send them a check for
27 Usairways85 : Note this is 8x mainline and 1x Delta Conx While Airtran has gone from 4x to 6x a day ATL-PHL
28 OttoPylit : Apparently, they do. If you chose to do any research(which you apparently haven't), Delta began ICT-SLC service and offered ICT daily service to MCO
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