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Delta May See 4th Qtr Loss  
User currently offlineRumorboy From United States of America, joined Aug 2002, 356 posts, RR: 1
Posted (6 years 10 months 2 days 23 hours ago) and read 4596 times:

Fuel is starting to eat away profits. Cutting capacity too.

http://www.reuters.com/article/marke...sNews/idUKN0449024120071204?rpc=44

25 replies: All unread, showing first 25:
 
User currently offlineFlyPNS1 From United States of America, joined Nov 1999, 6618 posts, RR: 24
Reply 1, posted (6 years 10 months 2 days 22 hours ago) and read 4563 times:

No big surprise here. I expect you'll see more announcements like this from other carriers.....including the LCC's. WN today announced that their growth will be slower next year.

The only surprise is the domestic capacity cuts. Earlier this year, projections for 2008 had domestic capacity holding almost flat. Now, DL is planning to chop a bit more from domestic.


User currently offlineLindy Field From United States of America, joined Mar 2001, 3120 posts, RR: 14
Reply 2, posted (6 years 10 months 2 days 22 hours ago) and read 4555 times:
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The article mentions that Delta is parking some aircraft and shedding some others. Anyone have an idea of which planes are being idled or returned to lessor?

I did see this photo in the database the other day, a 767-300 being returned to lessor.

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Click here for bigger photo!

Photo © Christopher Weyer - NYCAviation



User currently offlineEXAAUADL From , joined Dec 1969, posts, RR:
Reply 3, posted (6 years 10 months 2 days 22 hours ago) and read 4439 times:

With high oil, DL needs to pull down on some those transon point to points that are for added utlization.

User currently offlineHVNandrew From United States of America, joined Jan 2006, 437 posts, RR: 0
Reply 4, posted (6 years 10 months 2 days 22 hours ago) and read 4373 times:

My guess is that some of those LA redeyes will be gone soon.

User currently offlineZone1 From United States of America, joined Jan 2005, 1035 posts, RR: 7
Reply 5, posted (6 years 10 months 2 days 22 hours ago) and read 4319 times:

Quoting Rumorboy (Thread starter):
Cutting capacity too.

Are they going to start retirement of the MD-90s now? I have some DL shares, and now I'm happy I sold some covered calls last week.

[Edited 2007-12-04 07:51:01]


/// U N I T E D
User currently offlineSsides From United States of America, joined Feb 2001, 4059 posts, RR: 21
Reply 6, posted (6 years 10 months 2 days 21 hours ago) and read 4278 times:

I've been wondering about Delta -- they seem to be betting on a lot of international expansion, and to make this work, you have to have patience in order to recoup the capital cost of rolling out these routes. Personally, I wonder about some of them (particularly the Africa routes) and whether they will actually make money. Also, I'm not sure how much the dollar's slide will impact these routes; if they have to source any materials from abroad, that might have an impact. Not to mention that the reduced value of the dollar will reduce how much Americans spend on travel abroad (both leisure and business travel).


"Lose" is not spelled with two o's!!!!
User currently offlineJetlanta From United States of America, joined Jul 2001, 3298 posts, RR: 35
Reply 7, posted (6 years 10 months 2 days 21 hours ago) and read 4194 times:



Quoting Ssides (Reply 6):
I've been wondering about Delta -- they seem to be betting on a lot of international expansion, and to make this work, you have to have patience in order to recoup the capital cost of rolling out these routes. Personally, I wonder about some of them (particularly the Africa routes) and whether they will actually make money. Also, I'm not sure how much the dollar's slide will impact these routes; if they have to source any materials from abroad, that might have an impact. Not to mention that the reduced value of the dollar will reduce how much Americans spend on travel abroad (both leisure and business travel).

You are actually completely off-base. The international expansion, particularly Africa, is the best thing Delta has going. While the dollar's slide may affect the point of origin U.S. traffic, it pretty much balances out with more visitors to the U.S. taking advantage of the cheap exchange rate. You'll notice in this article that Delta's international expansion is proceeding unabated, while domestic capacity will be reduced.

http://www.ajc.com/business/content/...stories/2007/12/04/delta_1204.html

The rise in the price of fuel will be affecting carriers across the globe. This may be the first quarter where the full effect will be clear. Delta won't be the only carrier to make this sort of statement. In fact, it won't even be the only one today. You'll notice that WN has already done the same. Expect more as the Caylon Conference continues.


User currently offlineSESGDL From United States of America, joined Jan 2001, 3489 posts, RR: 10
Reply 8, posted (6 years 10 months 2 days 21 hours ago) and read 4118 times:

Looks like another bunch of planes are going to be retired. Looks like it will be more domestic 767-300s to me, as they are mostly leased and getting older. I hate this constant cutting of capacity by Delta in the domestic system. Will they ever grow again? Expect more mainline cuts to cities and more regional jets replacing them, though the article states that 35 regional jets will also be retired (like Comair CRJ-100s, IMO).

Jeremy


User currently offlineDAL767400ER From , joined Dec 1969, posts, RR:
Reply 9, posted (6 years 10 months 2 days 21 hours ago) and read 4101 times:



Quoting Zone1 (Reply 5):
Are they going to start retirement of the MD-90s now?

Not gonna happen. Granted, the MD-90 fleet is quite small, but the MD-90s still offer superior fuel burn over the MD-88s, which under current circumstances would be retired first. That said, I expect (and hope) that DL will be shedding more of their 50-seat CRJs and sub-50 RJs than they already are. IIRC, DL has already announced the intent to have CHQ retire all their E35s they fly, plus Comair replacing 14 CRJs on a one-to-one basis with CR9s. Nobody would shed a tear if DL were to get rid of, say, 150 of the 250 CRJs (not including 70-seaters) they still have operating for them. It would reduce capacity and delays at the same time  Wink .


User currently offlineFlyPNS1 From United States of America, joined Nov 1999, 6618 posts, RR: 24
Reply 10, posted (6 years 10 months 2 days 19 hours ago) and read 3919 times:



Quoting SESGDL (Reply 8):
I hate this constant cutting of capacity by Delta in the domestic system. Will they ever grow again?

To be fair, it's not just DL that is cutting domestic capacity. Almost all the legacies are cutting domestic capacity. And despite all the attention DL's international expansion gets, the domestic market is the primary generator of DL's profits. Much of that domestic profit has come from slashing domestic capacity and driving fares up.

Unfortunately, many of the legacies missed out on this past growth cycle. They should have been growing between 2004 and 2007, but because of their slow pace to restructure as well as high fuel costs most didn't. Now with continued high energy and a weakening economy, the growth will have to wait. On the up side, the control demonstrated by most of the legacies in terms of adding domestic capacity should pay dividends by reducing the size of their losses when the economy really tanks.

Quoting DAL767400ER (Reply 9):
Nobody would shed a tear if DL were to get rid of, say, 150 of the 250 CRJs (not including 70-seaters) they still have operating for them. It would reduce capacity and delays at the same time .

True, except for many small markets that would inevitably be cut out of DL's system if they dumped that many 50 seaters. We've already seen a decent number of markets get cut and more will likely come as the 50 seaters go away (DL did just recently tell SOP (Southern Pines, NC) that they won't be coming back next year).


User currently offlineMasseyBrown From United States of America, joined Dec 2002, 5462 posts, RR: 7
Reply 11, posted (6 years 10 months 2 days 19 hours ago) and read 3881 times:

Assuming the operating profit is breakeven, the upper end of DL's estimate, the net loss should be around $100 million. The good news is that, at that level of loss, the company's cash flow should still be positive by about $200 million.

Edit: I should have said cash flow from operations will still be positive; we don't know what else will have taken place.

[Edited 2007-12-04 10:39:15]


I love long German words like 'Freundschaftsbezeigungen'.
User currently offlineDAL767400ER From , joined Dec 1969, posts, RR:
Reply 12, posted (6 years 10 months 2 days 19 hours ago) and read 3871 times:



Quoting FlyPNS1 (Reply 10):
True, except for many small markets that would inevitably be cut out of DL's system if they dumped that many 50 seaters. We've already seen a decent number of markets get cut and more will likely come as the 50 seaters go away (DL did just recently tell SOP (Southern Pines, NC) that they won't be coming back next year).

Doubt too many markets would lose DL service if DL were to cut 3/5ths of their CRJs. If the markets are too weak, they are being cut already (see SOP, see ERI, see BGM). Sure, a few p2p routes, especially from MCO might be cut, but overall, I still see quite a few routes with a plethora of CR2s or ERJs that could easily see upgraded equipment and/or fewer flights. I mean, does BTR really need 7 daily flights to ATL, with 6 of them on 50-seaters? Hells no, throw a Mad Dog on that route and put the CRJs into small markets. Likewise with AGS, MGM or CHA, where a few additional AT7s could come in nicely given the distance, CVG-DAY/CLE/CMH, SLC-BOI/BZN/FCA, LGA-RDU, etc. In that sense I wish the rumors of DL getting the CZ MD-90s were true, and they'd use them to replace CRJs on a 1-for-4 basis, instead of the rumored 1-for-3. More mainline flights, less CRJs. Things could be soo easy...


User currently offlineEvan767 From United States of America, joined Aug 2005, 2957 posts, RR: 2
Reply 13, posted (6 years 10 months 2 days 17 hours ago) and read 3712 times:



Quoting Zone1 (Reply 5):
Are they going to start retirement of the MD-90s now?

It's probably going to be just the opposite.



The proper term is "on final" not "on finals" bud...
User currently onlineLAXdude1023 From India, joined Sep 2006, 7642 posts, RR: 25
Reply 14, posted (6 years 10 months 2 days 17 hours ago) and read 3682 times:



Quoting HVNandrew (Reply 4):
My guess is that some of those LA redeyes will be gone soon.

Ive always thought the LA expansion was doomed from day 1.



Stewed...Lewd...Crude...Irreverent...Belligerent
User currently offlineFlyPNS1 From United States of America, joined Nov 1999, 6618 posts, RR: 24
Reply 15, posted (6 years 10 months 2 days 17 hours ago) and read 3682 times:



Quoting DAL767400ER (Reply 12):
I mean, does BTR really need 7 daily flights to ATL, with 6 of them on 50-seaters?

The problem is that if you upgrade to mainline and dramatically reduce frequency plus keep fares very high, many of the customers will simply choose other options including other airports. In BTR's case, people will just migrate to MSY which I'm sure will make some of our MSY folks happy.


Quoting DAL767400ER (Reply 12):
Doubt too many markets would lose DL service if DL were to cut 3/5ths of their CRJs.

I don't know, there's probably 50-60 markets in the DL system that are surviving on 2-4 CRJ's a day. I'm sure some of those markets have high enough yields to survive, but not so sure about others.


User currently onlineJRadier From Netherlands, joined Sep 2004, 4702 posts, RR: 50
Reply 16, posted (6 years 10 months 2 days 17 hours ago) and read 3646 times:



Quoting FlyPNS1 (Reply 15):
The problem is that if you upgrade to mainline and dramatically reduce frequency plus keep fares very high, many of the customers will simply choose other options including other airports.

To predict that you can run models. On one side you have passenger numbers based on fares and frequency, on the other side you have costs, based on frequency and equipment. Finding the optimal isn't too hard. (Note: in aviation there are a lot more factors than the ones mentioned above, but it gives an idea)



For once you have tasted flight you will walk the earth with your eyes turned skywards, for there you have been and ther
User currently offlinePanAm330 From United States of America, joined Mar 2004, 2682 posts, RR: 9
Reply 17, posted (6 years 10 months 2 days 17 hours ago) and read 3621 times:



Quoting HVNandrew (Reply 4):
My guess is that some of those LA redeyes will be gone soon.

They've already cut LAX-JAX, and reduced (seasonally, IIRC) frequency on CMH and RDU.


User currently offlineJuanchie From United States of America, joined Jan 2004, 190 posts, RR: 0
Reply 18, posted (6 years 10 months 2 days 16 hours ago) and read 3527 times:



Quoting DAL767400ER (Reply 9):
Nobody would shed a tear if DL were to get rid of, say, 150 of the 250 CRJs (not including 70-seaters) they still have operating for them.

Except for the several hundred pilots relying on those planes...



God, forgive me for who I am, and help me be the man I want to be.
User currently offlineDAL767400ER From , joined Dec 1969, posts, RR:
Reply 19, posted (6 years 10 months 2 days 16 hours ago) and read 3434 times:



Quoting Juanchie (Reply 18):
Except for the several hundred pilots relying on those planes...

Because it's not like the aviation world isn't suffering from a massive pilot shortage or anything  Yeah sure .


User currently offlineJuanchie From United States of America, joined Jan 2004, 190 posts, RR: 0
Reply 20, posted (6 years 10 months 2 days 15 hours ago) and read 3321 times:



Quoting DAL767400ER (Reply 19):

Changing companies for a pilot is not like moving companies at most companies. Restarting at the bottom of the seniority list would be a significant loss of pay and quality of life. It seems like most people on this board forget the people who fly these planes have families to support. Not saying getting rid of rj's is not the right move, but don't say "no one would shed a tear" because such a move would negatively affect hundreds of families...



God, forgive me for who I am, and help me be the man I want to be.
User currently offlineDAL767400ER From , joined Dec 1969, posts, RR:
Reply 21, posted (6 years 10 months 2 days 15 hours ago) and read 3310 times:



Quoting Juanchie (Reply 20):
Restarting at the bottom of the seniority list would be a significant loss of pay and quality of life

Given the slave wages carriers like Mesa pay their pilots, would the pilots really lose much if they were then to start up at another carrier? Mesa, Chautauqua and the like are already at the bottom of the barrel, can't get further down than that.


User currently offlineSlcDeltaRUmd11 From United States of America, joined Jan 2004, 3476 posts, RR: 0
Reply 22, posted (6 years 10 months 2 days 9 hours ago) and read 2527 times:

I have always had ZERO faith in the LAX expansion. The airport is too expensive to operate out of in the ultra competitive ultra low fare western market. DL never says how much they loose in each market etc but im sure LAX has lost DL alot of money this year. I hope dl packs up alot of those loosing money LAX flights on RJs and cuts its loses.

User currently offlineConcordeBoy From , joined Dec 1969, posts, RR:
Reply 23, posted (6 years 10 months 2 days 7 hours ago) and read 2247 times:



Quoting FlyPNS1 (Reply 15):
In BTR's case, people will just migrate to MSY which I'm sure will make some of our MSY folks happy.

Already do... BTR's management constant rails about losing nearly half of their projected pax count (based on several demographic and economic calculations) to MSY, whose own statements support a similar conclusion.

BTR thought Katrina would stem that tide... but after that airport lost JFK, EWR, STL, MCO, and soon CVG; it seems the traveling public has once again gravitated towards MSY as the primary home gateway for non-regional travel for BTR residents.


User currently offlineHPRamper From United States of America, joined May 2005, 4059 posts, RR: 8
Reply 24, posted (6 years 10 months 2 days 6 hours ago) and read 2199 times:



Quoting FlyPNS1 (Reply 1):
WN today announced that their growth will be slower next year.

Over the next year, WN will actually retire more aircraft than it acquires, maybe for the first time ever?


User currently offlineBrilondon From Canada, joined Aug 2005, 4252 posts, RR: 1
Reply 25, posted (6 years 10 months 2 days 6 hours ago) and read 2147 times:



Quoting SESGDL (Reply 8):
Looks like another bunch of planes are going to be retired. Looks like it will be more domestic 767-300s to me, as they are mostly leased and getting older. I hate this constant cutting of capacity by Delta in the domestic system. Will they ever grow again? Expect more mainline cuts to cities and more regional jets replacing them, though the article states that 35 regional jets will also be retired (like Comair CRJ-100s, IMO).

Jeremy

There are a number of reasons for retiring of the CRJ's. They are older models and with limited capacity. Newer RJ's will be larger and more fuel efficient giving them more capacity at a lesser cost.



Rush for ever; Yankees all the way!!
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