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Delta Looking At Selling Off Comair  
User currently offlineLCFreeman49 From United States of America, joined Jul 2006, 102 posts, RR: 0
Posted (7 years 7 months 2 days 22 hours ago) and read 5386 times:

http://news.enquirer.com/apps/pbcs.d...AID=/20070327/BIZ01/303270017/1076

I was looking at the Cincinnati Enquirer online addition this afternoon and came across this. My question is who would be interested in purchasing Comair? Anyone's thoughts on this?

I don't understand why Delta does not spin off Comair like Continental did Express Jet, this would make DL a nice return in my opinion.

Any thoughts?

[Edited 2007-03-27 21:20:12]


Thanks For Flying with Delta....
40 replies: All unread, showing first 25:
 
User currently offlineChrisNH From United States of America, joined Jun 1999, 4134 posts, RR: 2
Reply 1, posted (7 years 7 months 2 days 22 hours ago) and read 5374 times:

You hit the nail on the head: a seller without a buyer. I don't know why anyone would want 'in' on the airline business these days, unless to secure some assets and dispense with the rest.

Chris in NH


User currently offlineEA CO AS From United States of America, joined Nov 2001, 13649 posts, RR: 62
Reply 2, posted (7 years 7 months 2 days 22 hours ago) and read 5326 times:
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Hmm...a regional flying less-than-efficient CRJ200 equipment and built so they can really only efficiently feed traffic to one U.S. major without investing a lot more money in establishing footholds elsewhere.

Yeah, sign me up for THAT one...



"In this present crisis, government is not the solution to our problem - government IS the problem." - Ronald Reagan
User currently offlineDeltaDC9 From United States of America, joined Apr 2006, 2844 posts, RR: 4
Reply 3, posted (7 years 7 months 2 days 22 hours ago) and read 5290 times:

Quoting EA CO AS (Reply 2):
Yeah, sign me up for THAT one...

Dont forget the recent major accident 75 miles from the home office....not exactly a perk



Dont take life too seriously because you will never get out of it alive - Bugs Bunny
User currently offlineWorldTraveler From , joined Dec 1969, posts, RR:
Reply 4, posted (7 years 7 months 2 days 22 hours ago) and read 5267 times:

Your assessments are not accurate.

First, DL has spent a considerable amount of time and energy getting Comair’s costs down without breaking them. Secondly, DL has used the BK process to remove as many 50 seaters from its Delta Conx program as possible and OH took the biggest hit which means they have more upside on improved costs. Third, DL has a significant number of larger RJs on order which Comair could be awarded by Delta – and which any purchaser would want in order to increase OH’s value. Fourth, Comair has historically run a very good airline. They have had their problems of late but DL selected them to fly in the NE because they have the operational experience to deliver in tough environments. There will always be a market for subcontracted services in any industry and that is exactly what the regional airlines provide. It doesn’t matter what OH flies; they have value as long as there is a predictable revenue stream which DL or other carriers can provide them.

Comair is not a dead airline. Unlike ASA which had to be sold at firesale processes in a hurry prior to DL’s BK filing, DL is not rushed to sell Comair. DL has a pretty strong balance sheet coming out of BK and it will only get stronger if they sell off Comair, which is pretty likely.


User currently offlineLono From United States of America, joined Apr 2004, 1335 posts, RR: 1
Reply 5, posted (7 years 7 months 2 days 22 hours ago) and read 5235 times:

Anyone know how much DL paid for Comair...?????
And does anyone think DL can get a decent return... or will they dump it....????
Who would be interested in buying this carrier with its history of labor unrest????



Wally Bird Ruled the Skys!
User currently offline2H4 From United States of America, joined Oct 2004, 8955 posts, RR: 60
Reply 6, posted (7 years 7 months 2 days 22 hours ago) and read 5216 times:
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Quoting WorldTraveler (Reply 4):
They have had their problems of late but DL selected them to fly in the NE because they have the operational experience to deliver in tough environments.

From what I've heard, most of that operational experience has left the company and gone on to work for companies that they feel offer some degree of long-term job security. The most experienced schedulers/dispatchers/etc have left, and operational efficiency has significantly deteriorated as a result.


2H4





Intentionally Left Blank
User currently offlineDanairbus From , joined Dec 1969, posts, RR:
Reply 7, posted (7 years 7 months 2 days 22 hours ago) and read 5207 times:

Quoting Lono (Reply 5):
Anyone know how much DL paid for Comair...?????

Delta paid $2.3 billion for Comair in 2000.


User currently offlineEA CO AS From United States of America, joined Nov 2001, 13649 posts, RR: 62
Reply 8, posted (7 years 7 months 2 days 21 hours ago) and read 5177 times:
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Quoting WorldTraveler (Reply 4):
Your assessments are not accurate.

Are they? Explain to me how a potential buyer would have enough lift available to pull from the DL operation and respond to other majors' RFPs for cost-plus flying? Or how inexpensively they can move that lift and support to wherever that new major partner or partners may need them?

Comair is really only worthwhile if they can get newer, more efficient 70-plus seaters AND bid for other majors' flying in competing markets.



"In this present crisis, government is not the solution to our problem - government IS the problem." - Ronald Reagan
User currently offlineLono From United States of America, joined Apr 2004, 1335 posts, RR: 1
Reply 9, posted (7 years 7 months 2 days 21 hours ago) and read 5148 times:

Quoting Danairbus (Reply 7):
Delta paid $2.3 billion for Comair in 2000.

Thanks for that information.... $2.3 billion..... I wonder what DL is claiming this airline is worth in their B/R plan????

DL is saying "after"they come out of B/R they will look at Comair and see if it is worth having.... will they then ask $2.3 billion...???? I have a hard time thinking that anyone is in the market for the Comair business model.... especially at $2.3 billion.... I just don't see it....



Wally Bird Ruled the Skys!
User currently offlineOkie73 From United States of America, joined Mar 2006, 446 posts, RR: 0
Reply 10, posted (7 years 7 months 2 days 21 hours ago) and read 5123 times:

keep in mind, during the Bankruptcy process Delta wrote off the value of CMR. No matter what they sell CMR for, it will be shown as a profit, and I think Delta will be happy to get rid of them.

User currently offlineFloridaflyboy From United States of America, joined Jun 2006, 2015 posts, RR: 0
Reply 11, posted (7 years 7 months 2 days 21 hours ago) and read 5076 times:

Quoting 2H4 (Reply 6):
From what I've heard, most of that operational experience has left the company and gone on to work for companies that they feel offer some degree of long-term job security. The most experienced schedulers/dispatchers/etc have left, and operational efficiency has significantly deteriorated as a result.

That's very true. That said, though, I could see a SkyWest bid for Comair. But only under certain conditions. Essentially it would have to be a great deal money-wise, and they would have to of course evaluate whether they want to get into that kind of labor situation or not.



Good goes around!
User currently offlineRamerinianAir From United States of America, joined Nov 2003, 1486 posts, RR: 0
Reply 12, posted (7 years 7 months 2 days 21 hours ago) and read 5043 times:

This will be one of the worst RONs ever. Delta will loose a ton of money on Comair if/when they get rid of Comair. Their previous management had no insight in the industry. At least Gordo saw the CRJs being phased out due to high costs and spun off ExpressJet.
SR



W N = my Worst Nightmare!!!!!
User currently offlineFlavio340 From United States of America, joined Oct 2005, 180 posts, RR: 0
Reply 13, posted (7 years 7 months 2 days 21 hours ago) and read 4986 times:

What about Skywest doing like Airwiskie did with US Airways, buy so much into the 'new' Delta and there by getting a place on the board of directors? This would give Skywest a reason to buy Comair and Delta would not lose out of having a stable regional airline doing their smaller flying. If I am not mistaken Skywest does more flying for Delta than any other airline. This would also make Delta a smaller airline because Delta unlike other airlines (AA) includes Comair's flying into their ASM reports. As we all know a smaller airline has a better chance of buying or merging, which Delta's out going CEO says is not out of the world of possibilities for Delta.

User currently offlineSrbmod From , joined Dec 1969, posts, RR:
Reply 14, posted (7 years 7 months 2 days 21 hours ago) and read 4946 times:

Quoting WorldTraveler (Reply 4):
Unlike ASA which had to be sold at firesale processes in a hurry prior to DL’s BK filing, DL is not rushed to sell Comair

Both OH and EV were up for sale prior to the Chapter 11 filing. The fact is that nobody was interested in OH because of the pilot's strike of 2001 and the ops meltdown during Christmas of 2004 also gave the airline a black eye as well.

It was thought a few years back, that DL was going spin Delta Connection Inc. off ala ExpressJet and Pinnacle, but that never happened.

I foresee Comair ending up being owned by either Republic or Mesa. I doubt SkyWest wants to add another dysfunctional airline to their family. Or perhaps some private investment firm will step in and make an offer. But when you consider that part of Comair's fleet is owned by DL, not OH, that may make it a little harder to sell off the airline unless those DL-owned a/c are included in the deal.


User currently offlineWorldTraveler From , joined Dec 1969, posts, RR:
Reply 15, posted (7 years 7 months 2 days 21 hours ago) and read 4920 times:

In retrospect, DL did buy ASA and Comair at the worst time and lost much of the value associated with its acquisition. They also did not manage either OH or EV aggressively enough to keep them from becoming the problems they were going into BK. However, DL did write the assets off so they will benefit by selling them. And it will be hard cash… any cash will help DL’s balance sheet… which will be used to help them buy more airplanes and compete more aggressively. Since there aren’t many assets left in the US network carriers’ portfolios, DL does have an advantage. I would personally far rather see DL use the money to buy some 777s and 787s than to keep Comair.

EA CO AS,
You miss the point. It doesn’t matter what aircraft OH uses. They bid on their flying based on the equipment they fly. There are plenty of 50 seat jets in the US airline fleet so there are many comparisons that can be made between OH and other carriers. If OH is competitive – which DL is putting them in a position to be – it doesn’t matter what OH flies as long as other network carriers fly the same aircraft and OH has comparable costs to its peers It is DL’s problem that the CRJ is no longer as competitive as it once was – but that is why DL has/ is removing about 100 smaller CRJ/ERJs from its fleet. The cost of operating those aircraft is factored into the routes they fly – but there are still many routes where they make sense; the 50 seater is not dead but it’s not as valuable as it once was. There are and will be 50 seat jets in the US fleet for years to come and they are flying under contracts similar to what OH could get from DL or other carriers.

The point, though, is that any purchaser of OH simply will want to see that there are guaranteed revenues on the books into the future which OH will have by virtue of its contracts with DL and any other contracts they might acquire by the time they are sold.

And as was said, DL does have larger RJs which it could deploy to OH in order to boost its value. But OH’s value could just as easily be increased if DL added small aircraft to OH’s fleet. DL controls OH’s value by virtue of the contracts it awards to them. If OH starts flying for other carriers, that carrier will help to increase OH’s value as well.


User currently offlineATLAaron From United States of America, joined Apr 2006, 1023 posts, RR: 3
Reply 16, posted (7 years 7 months 2 days 20 hours ago) and read 4862 times:

Maybe SkyBus will buy it since it is almost in their backyard. Then SkyBus can run a regional before they begin mainline operations. Kidding of course.

 banghead 


User currently offlineAllstarflyer From , joined Dec 1969, posts, RR:
Reply 17, posted (7 years 7 months 2 days 20 hours ago) and read 4833 times:

Quoting Srbmod (Reply 14):
I foresee Comair ending up being owned by either Republic or Mesa

I doubt it would happen here. Bedford seems to be a pretty smart guy, and the deal would have to be a sweet one for him to consider it. Mesa, though, is another story. Ornstein is power hungry, and if he sees $$$ in it, he'll be a hungry wolf after it.

-R


User currently offlineOkie73 From United States of America, joined Mar 2006, 446 posts, RR: 0
Reply 18, posted (7 years 7 months 2 days 20 hours ago) and read 4826 times:

Quoting Srbmod (Reply 14):
I foresee Comair ending up being owned by either Republic or Mesa

We have a winner!

Quoting WorldTraveler (Reply 15):
DL controls OH’s value by virtue of the contracts it awards to them.

another winner. Whomever buys CMR will buy them for the value of the flying done for Delta, not for any value of CMR by itselt

Quoting WorldTraveler (Reply 15):
If OH starts flying for other carriers, that carrier will help to increase OH’s value as well.

This is another factor. Once CMR is no longer owned by Delta, I think you can be certain that they will end up with contracts beyond Delta.

Quoting RamerinianAir (Reply 12):
Delta will loose a ton of money on Comair if/when they get rid of Comair

Compared to what Delta paid for CMR, yes they will lose a ton of money. But compared to the current value of CMR on Delta's books, Delta will make money.


User currently offlineJammin From India, joined Nov 2006, 133 posts, RR: 0
Reply 19, posted (7 years 7 months 2 days 20 hours ago) and read 4792 times:

Can you guys explain one thing: if Delta sells off its regional carrier, who'll be flying those regional routes for them? Will they still code share with the new owner of Comair? or will Delta supply its own metal for those routes.

As an example: I recently flew JFK-ORD on Comair. What would happen to that route if Delta sold Comair?



Emancipate yourselves from mental slavery. None but ourselves can free our mind.
User currently offlineWorldTraveler From , joined Dec 1969, posts, RR:
Reply 20, posted (7 years 7 months 2 days 20 hours ago) and read 4769 times:

there's a good chance OH will continue to operate many of its current routes. OH's value is in the contracts it will have with DL. DL could switch carriers around on specific routes but since OH is predominantly CVG based and has infrastructure there, it makes sense for DL and any future owners to leave OH with a decent-sized CVG presence.

User currently offlineEA CO AS From United States of America, joined Nov 2001, 13649 posts, RR: 62
Reply 21, posted (7 years 7 months 2 days 19 hours ago) and read 4725 times:
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Quoting WorldTraveler (Reply 15):
EA CO AS,
You miss the point. It doesn’t matter what aircraft OH uses. They bid on their flying based on the equipment they fly.

I understand your point - at least I think I do - but my point is that while other regionals either have lower costs and/or larger equipment that keeps their CASM down, OH is stuck with all 50 seaters that keeps their CASM up, hindering their ability to competitively bid for flying against a Mesa.

And if owned by someone else, I'm doubtful DL will be gracious enough to keep all their express flying with OH. They'll put out bids for competitors, just like CO did with ExpressJet. And odds are it'll mean reduced DL flying for OH.

Sure, they could try to cherry-pick certain point-to-point markets like ExpressJet with their 60 or so orphaned ERJs, but it's an unproven strategy so far.



"In this present crisis, government is not the solution to our problem - government IS the problem." - Ronald Reagan
User currently offlineJkudall From United States of America, joined Mar 2004, 615 posts, RR: 1
Reply 22, posted (7 years 7 months 2 days 19 hours ago) and read 4683 times:

Quoting Jammin (Reply 19):
Can you guys explain one thing: if Delta sells off its regional carrier, who'll be flying those regional routes for them? Will they still code share with the new owner of Comair? or will Delta supply its own metal for those routes.

As an example: I recently flew JFK-ORD on Comair. What would happen to that route if Delta sold Comair?

Whoever buys Comair will likely operate the current Comair routes, or another regional. Delta doesn't have the equipment (mainline) to take over Comair routes.


User currently offlineKarlB737 From United States of America, joined Mar 2004, 3123 posts, RR: 10
Reply 23, posted (7 years 7 months 2 days 19 hours ago) and read 4676 times:

Quoting LCFreeman49 (Thread starter):
My question is who would be interested in purchasing Comair? Anyone's thoughts on this?

OK, just a wild thought. How would Comair with the fleet they have operate under the Southwest model? Would Southwest gain anything having instantly an RJ fleet to operate the way they operate an airline? Now before you say they just wouldn't buy that package look at the overall from a wider view. They might be able to send these smaller jets to cities they wouldn't send a 737 to and might free up a 737 for a more profitable route.

Also, they know that their costs are climbing and fuel hedges may be evaporating. There were whispers of RJ aquistion a while back so there must be reasons for the concept.

Finally how many more fairly large cities can you fly a 737 into if you continue expansion which doesn't include international routes?

Just my 6 cents........


User currently offlineLCFreeman49 From United States of America, joined Jul 2006, 102 posts, RR: 0
Reply 24, posted (7 years 7 months 2 days 19 hours ago) and read 4646 times:

I don't think you will ever see Southwest fly anything except one common fleet type. Maybe I am wrong. I do recall Southwest having a couple of 727's in the late 70's.


Thanks For Flying with Delta....
25 Doug_Or : They looked into it (around the time B6 annouced te 190s IIRC ) Any purchase would most likely involve a garuntee of a long term contract. I'm pretty
26 ScottB : Absolutely. The value of a spun-off or sold Comair would be closely tied to the actual contracts with Delta -- from the guaranteed margins and contra
27 EA CO AS : I'd imagine it would be more cost-effective - since any sale will be 100% profit to DL anyway - to remove any guarantees in exchange for a reduced pu
28 Okie73 : In case you have not noticed, CMR certainly does not do all of the Delta connection flying. There are many small jet providers doing DCI flying now.
29 AvConsultant : DL recently updated the contract with RP regarding the removal of aircraft and surrendering warrants on 3.4 million shares of RP stock. We have no ide
30 EA CO AS : Which only validates my point - which is that at present, OH has all the DL flying it will ever get. It will only go down from here.
31 Logos : I'm assuming you meant to say ROI not RON. It was actually the early 80s. Those were short-term leases from PeopleExpress. Cheers, Dave in Orlando
32 DAYflyer : And it's fleet of CRJ 700 with mx problems/delays....
33 DeltaDC9 : I think its very possible but with two separate business plans adding say 787's with a totally different objective than what they do with the 737s. D
34 Post contains links Milesrich : The link to a thread from May of 2001, pre 9/11, says it all about Delta, and Comair! Delta To Close Down Comair? (by PhilB May 10 2001 in Civil Aviat
35 Comet2404 : Okay - so I'll just throw this in to see what you guys think... IF DL does decide to sell off Comair and there isn't a buyer, what is the possibility
36 Flyinryan99 : In the near term I would think it's very slim. Remember, OH runs a lot of stations throughout the midwest and northeast. They would need to move Skyw
37 Okie73 : first of all, its no longer a question of IF. Delta is going to sell CMR. The question is when. Second, from what I am hearing a buyer is pretty much
38 Floridaflyboy : I agree that OH has all the DL flying it will ever get (at least in the forseeable future), but I don't think it's going to go down from here. As lon
39 EA CO AS : IIRC, they received one (or was it three?) 727s as part of a court settlement from BN.
40 Logos : I'd forgotten about the Braniff connection. It was some convoluted deal involving PeopleExpress, though. A PE F/A explained it to me at the time afte
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