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DL Investor/Analyst Presentation - 5/19/2011  
User currently offlinePSU.DTW.SCE From United States of America, joined Jan 2002, 7591 posts, RR: 27
Posted (3 years 4 months 3 days 13 hours ago) and read 7102 times:

DL presented today at the Global Transporation Conference, with the link to the presentation below.
It really isn't much different to a similar presentation than what was given last month at a similar investor/analyst conference.

Overall, it is a good summary of recent news and previously made announcements in a single document,

http://www.sec.gov/Archives/edgar/da...01968711001736/delta_8k-ex9901.htm

A few highlights:
- April RASM up 7%, May RASM up 12%
- 25% increase in corporate revenue in 2011 due to increased share and new accounts
- Domestic yields and load factor strong
- Pacific & Latin America very strong
- Japan continues to rebound

Post-Labor Day Capacity Reduction:
- 1-3% reduction Domestic, including the previously announced 25% reduction in MEM departures
- 10-12% reduction Atlantic, with market cancelation and frequency reductions in collaboration with JV partners
- 2-4% increase in Latin America, with thinning of Carribean off-peak (e.g. the Sept/Oct. CUN reductions, offset by increases to Mexico and deep South America
- 1-3% decrease Pacific, with HND downgauging and other frequency reductions

Other:
- Reduction of maintenance costs in 2nd half of 2011 by $250 versus 1st half
- Plan to reduce debt to $10B from currently ~$14B by mid-2013
- Plan to maintain $5B in liquidity
- Capital Expenitures to remain flat YOY through 2014 at $1.2-1.4B per year


-----
Somewhat related, an interesting article on the challenges within Skyteam to agree upon the capacity reductions slated for this fall. It is interesting to see the finger pointing between DL vs. AF/KL on both capacity, pricing, and agreements of where and when to add versus pull back.
http://www.bloomberg.com/news/2011-0...nts-fourth-quarter.html?cmpid=yhoo

28 replies: All unread, showing first 25:
 
User currently offlineFlyASAGuy2005 From United States of America, joined Sep 2007, 7004 posts, RR: 11
Reply 1, posted (3 years 4 months 3 days 13 hours ago) and read 7049 times:

Quoting PSU.DTW.SCE (Thread starter):
- 25% increase in corporate revenue in 2011 due to increased share and new accounts



Everything i've read through varying sources but this is what caught me. Word was/is that DL recruited someone from an outside firm to step in and take a look at the way they handle corporate accounts. My understanding is that many of the new adds over the past year can be directly linked to bolstering some markets to broaden the options for some of their biggest clients. Namely RDU as it has hovered around 50 flights. With weekend frequency cuts, i'm not sure what the solid # is, maybe someone can chime in on what they have in Raleigh on say a Friday?

Anyway, glad to see they have a solid business plan to fight fuel but also a way-ahead to continue to pay down debt which is a HUGE deal right now.



What gets measured gets done.
User currently offlinepanamair From United States of America, joined Oct 2001, 4910 posts, RR: 24
Reply 2, posted (3 years 4 months 3 days 12 hours ago) and read 6854 times:
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Some other points from Bastian's presentation today:

- June RASM growth also projected to be around 12% (same as May)
- Double-digit yield improvements in all sectors expected for Q2
- Economy Comfort already generating about $500,000 a day in additional revenue
- Widebody reduction in 2nd half will include the 747 (Bastian mentioned "four-engine planes").


User currently offlineCubsrule From United States of America, joined May 2004, 23014 posts, RR: 20
Reply 3, posted (3 years 4 months 3 days 11 hours ago) and read 6714 times:

Quoting FlyASAGuy2005 (Reply 1):
Namely RDU as it has hovered around 50 flights. With weekend frequency cuts, i'm not sure what the solid # is, maybe someone can chime in on what they have in Raleigh on say a Friday?

I don't have the answer to your question, but I'll jump in and say that RDU demonstrates the difference between UA and DL quite well and what happens when you merger two airlines with a history of p2p operations (DL and NW) as opposed to two airlines with very little p2p flying (UA and CO). By offering connections to cities like DCA, LGA and BOS in these smaller markets, I think DL is at an advantage over UA. Of course, UA offers New York (via EWR) and Chicago, but this is something I think DL can exploit unless/until new UA gets more of a point to point focus.

[Edited 2011-05-19 09:44:14]


I can't decide whether I miss the tulip or the bowling shoe more
User currently offlineMaverickM11 From United States of America, joined Apr 2000, 17504 posts, RR: 45
Reply 4, posted (3 years 4 months 3 days 11 hours ago) and read 6713 times:

March 2011 quarter Transatlantic unit revenue down 1%, unit costs up 11%. Ouch. Hence the cuts...


E pur si muove -Galileo
User currently offlineFlyASAGuy2005 From United States of America, joined Sep 2007, 7004 posts, RR: 11
Reply 5, posted (3 years 4 months 3 days 10 hours ago) and read 6509 times:

Quoting Cubsrule (Reply 3):
I don't have the answer to your question, but I'll jump in and say that RDU demonstrates the difference between UA and DL quite well and what happens when you merger two airlines with a history of p2p operations (DL and NW) as opposed to two airlines with very little p2p flying (UA and CO). By offering connections to cities like DCA, LGA and BOS in these smaller markets, I think DL is at an advantage over UA. Of course, UA offers New York (via EWR) and Chicago, but this is something I think DL can exploit unless/until new UA gets more of a point to point focus.



Very good point and something I haven't considered. Sort of the same with AA I guess as they're re-focusing on hubs. Now, I know I might get flamed for this but a little birdie also told me that DL has been playing hard ball with AA's clients in RDU, trying to snatch up the RDU-LHR route from up under them. I called bull towards my friend but he's been batting above 300 recently with rumors so i'm not very sure. I still find it hard to believe but not TOTALLY out of the realm of possibility.



What gets measured gets done.
User currently offlineFSDan From United States of America, joined Jan 2011, 755 posts, RR: 2
Reply 6, posted (3 years 4 months 3 days 9 hours ago) and read 6360 times:

Quoting panamair (Reply 2):
Widebody reduction in 2nd half will include the 747 (Bastian mentioned "four-engine planes").

I wonder if this will be organic due to taking some of them out of service for the lie-flat/IFE mods...



SEA SFO SJC LAX ONT SAN DEN IAH DFW OMA FSD MSP MSN MKE ORD DTW CVG MEM JAN BHM RSW ATL CLT BWI PHL LGA JFK MEX LIM KEF
User currently offlinePSU.DTW.SCE From United States of America, joined Jan 2002, 7591 posts, RR: 27
Reply 7, posted (3 years 4 months 3 days 9 hours ago) and read 6328 times:

Quoting FSDan (Reply 6):

I wonder if this will be organic due to taking some of them out of service for the lie-flat/IFE mods...

2 are supposedly being parked in July-Aug when they time out for heavy maintenance and being put into storage. There are 2 744's scheduled to leave the fleet in 2012 when they are returned to their lessor, at which time the 2 in storage will get heavy maintenance, mods, and return to service. Looks like there still will be an 10-11 aircraft schedule (out of 14) this fall, with the remaining be allocated for charter, spare, maintenance, mods.


User currently offlinepeanuts From Netherlands, joined Dec 2009, 1438 posts, RR: 4
Reply 8, posted (3 years 4 months 3 days 6 hours ago) and read 6022 times:

Quoting Cubsrule (Reply 3):
but I'll jump in and say that RDU demonstrates the difference between UA and DL quite well and what happens when you merger two airlines with a history of p2p operations (DL and NW) as opposed to two airlines with very little p2p flying (UA and CO). By offering connections to cities like DCA, LGA and BOS in these smaller markets, I think DL is at an advantage over UA. Of course, UA offers New York (via EWR) and Chicago, but this is something I think DL can exploit unless/until new UA gets more of a point to point focus.

Correct. This is huge.
DL is actually very smart utilizing CR2's on p2p traffic. This gets often ridiculed on this site but there is way more to it.
I received some very interesting feedback recently which clarifies DL's strategy for me.

Let's put it this way: they're not playing darts. DL is toying with AA's ego and it's not gonna be pretty. But, in all seriousness, WN/ATL plays a huge role in DL's current East Coast strategies.

Take out some popcorn.



Question Conventional Wisdom. While not all commonly held beliefs are wrong…all should be questioned.
User currently offlineFWAERJ From United States of America, joined Jun 2006, 3751 posts, RR: 2
Reply 9, posted (3 years 4 months 3 days 5 hours ago) and read 5903 times:

Quoting panamair (Reply 2):
- Economy Comfort already generating about $500,000 a day in additional revenue

I can only imagine the numbers when Economy Comfort is fully deployed. Maybe if it's successful enough across the ponds (and it looks like it will be), DL can roll it out on mainline planes and 70-76 seat RJs.

Quoting PSU.DTW.SCE (Thread starter):
- Plan to reduce debt to $10B from currently ~$14B by mid-2013

And going from $17 billion to $13.8 billion in debt (almost a 20% reduction) in a year and a half is pretty amazing as on its own, especially for a company in such a debt-heavy industry.

Quoting peanuts (Reply 8):
But, in all seriousness, WN/ATL plays a huge role in DL's current East Coast strategies.

I will be very interested to see how DL responds to WN at ATL.

IMO, to fight WN at ATL, DL will dust off the old NW heartland strategy, tweak it a bit to counter WN, and run with it.



"Did he really need the triple bypass? Or was it the miles?"
User currently online1337Delta764 From United States of America, joined Oct 2005, 6535 posts, RR: 2
Reply 10, posted (3 years 4 months 3 days 5 hours ago) and read 5867 times:

Quoting FWAERJ (Reply 9):
I will be very interested to see how DL responds to WN at ATL.

IMO, to fight WN at ATL, DL will dust off the old NW heartland strategy, tweak it a bit to counter WN, and run with it.

I really hope that if WN introduces an ATL-ABQ route, DL can still be competitive. Considering that WN would likely use 73Gs on the route, continuing to use MD-88s on the route would put DL at a competitive disadvantage; the A319, A320, 738, or MD-90 would be better choices. Many people in Albuquerque refuse to fly any airline other than WN, and I hope DL can remain competitive on the route.

Look how quickly WN became the #1 carrier on ABQ-DEN, beating out UA and F9. I hope the same doesn't happen on ABQ-ATL.



The Pink Delta 767-400ER - The most beautiful aircraft in the sky
User currently offlineCODC10 From United States of America, joined Jul 2000, 2412 posts, RR: 6
Reply 11, posted (3 years 4 months 3 days 5 hours ago) and read 5790 times:

Quoting Cubsrule (Reply 3):
I think DL is at an advantage over UA. Of course, UA offers New York (via EWR) and Chicago, but this is something I think DL can exploit unless/until new UA gets more of a point to point focus.

The difference is that UA has full-scale hubs in bigger business markets (EWR, ORD, LAX, SFO, IAD, DEN, etc.) and intends to dominate corporate traffic in these markets. DL isn't able to compete as well since these airports are mostly spokes, so they will take a much more fragmented strategy. I think both can coexist and be successful, and I'm looking forward to seeing how airlines like US and AA try to compete, since the two big dogs have essentially taken sides.


User currently offlineLAXtoATL From United States of America, joined Oct 2009, 1596 posts, RR: 2
Reply 12, posted (3 years 4 months 3 days 3 hours ago) and read 5607 times:

Quoting FWAERJ (Reply 9):
Maybe if it's successful enough across the ponds (and it looks like it will be), DL can roll it out on mainline planes and 70-76 seat RJs.

It will be a lot harder to convince passengers to pay the extra money on the shorter domestic flights. I assume the reason they limited it to international to begin with is because their research should they can generate more revenue with the extra seats in economy versus removing seats to install economy comfort on their domestic fleet. But I do hope it is successful enough that they feel it worthwhile to roll it out fleet wide but I'm not optimistic it will happen.

Quoting FWAERJ (Reply 9):
I will be very interested to see how DL responds to WN at ATL.

As am I, but I am more interested in what WN does in ATL.

Quoting FWAERJ (Reply 9):
IMO, to fight WN at ATL, DL will dust off the old NW heartland strategy

Which was what?

Quoting CODC10 (Reply 11):
The difference is that UA has full-scale hubs in bigger business markets (EWR, ORD, LAX, SFO, IAD, DEN, etc.) and intends to dominate corporate traffic in these markets.

Not questioning that UA's hubs overall are in stronger business markets, but DL's hubs (ATL, JFK, DTW, MSP, NRT, etc.) aren't exactly small business markets. One could argue that DL is actually stronger positioned than UA for corporate travel in that they have a much stronger presence in UA's hubs than UA has in their hubs, I'm not making that argument because I don't know the dynamics in each of those markets, but surely UA's hubs from a business market perspective are not that much stronger than DL's.


User currently offlineFlyASAGuy2005 From United States of America, joined Sep 2007, 7004 posts, RR: 11
Reply 13, posted (3 years 4 months 3 days 2 hours ago) and read 5551 times:

Quoting FSDan (Reply 6):
I wonder if this will be organic due to taking some of them out of service for the lie-flat/IFE mods...

I think PSU put it will although I will air my answer with caution. Had fuel not shot up again with Atlantic OPS taking such a hit and HND being downgraded, i'm not sure we would have been seeing such a pull-down in widebodies (can't really speak for the 744s, that may have happened anyway). However, it all sort of worked out for DL anyway. They get to right-size TATL traffic once again and now can move forward with the flat-bed mods on the 763ERs as planned. Maybe even a little faster as there will be mroe slack in the fleet. Only question is WHEN. The first a/c that went in for mods hasn't returned yet. Not sure what the story is on that, i.e. has the supplier issues been resolved yet.



What gets measured gets done.
User currently offlinen9801f From Samoa, joined Apr 2004, 333 posts, RR: 0
Reply 14, posted (3 years 4 months 3 days 1 hour ago) and read 4871 times:

Quoting CODC10 (Reply 11):
The difference is that UA has full-scale hubs in bigger business markets (EWR, ORD, LAX, SFO, IAD, DEN, etc.) and intends to dominate corporate traffic in these markets

  

Yes, and don't forget to add IAH to the list now, too...

UA has a comparatively better slate of opportunities to deploy aircraft, so non-hub flying doesn't look so enticing for them as it does for DL.

This is somewhat better after the mergers, but I'd still rather have hubs in ORD (vs. DTW), DEN (vs. SLC). etc.

Instead of point-to-point RDU flying, UA has transcons from LAX, SFO, and IAD, complete with international feed...


User currently offlineslcdeltarumd11 From United States of America, joined Jan 2004, 3463 posts, RR: 0
Reply 15, posted (3 years 4 months 3 days 1 hour ago) and read 4851 times:

Quoting LAXtoATL (Reply 12):
Quoting FWAERJ (Reply 9):
I will be very interested to see how DL responds to WN at ATL.

As am I, but I am more interested in what WN does in ATL.

Exactly i think Delta can do nothing more than guess and plan ahead of southwest. It is going to be southwests move first. Delta will be in the respond position. Until WN is done merging and makes the first move its just business as usual for them.

Quoting 1337Delta764 (Reply 10):
Look how quickly WN became the #1 carrier on ABQ-DEN, beating out UA and F9. I hope the same doesn't happen on ABQ-ATL.

oh i would be shocked if by 2020 WN is not the largest carrier on ATL-ABQ. I think they are going after those profitable Delta monopolies but in due time. ATL-SLC on WN i think is more an if then when at this point....that should make Delta blink


User currently offlineFSDan From United States of America, joined Jan 2011, 755 posts, RR: 2
Reply 16, posted (3 years 4 months 3 days ago) and read 4685 times:

Quoting CODC10 (Reply 11):
The difference is that UA has full-scale hubs in bigger business markets (EWR, ORD, LAX, SFO, IAD, DEN, etc.) and intends to dominate corporate traffic in these markets.

I doubt UA dominates the New York, Chicago, or Los Angeles markets in the same way that DL dominates the ATL, MSP, and DTW markets, though... They have to share a lot of corporate traffic with AA.

Quoting slcdeltarumd11 (Reply 15):
ATL-SLC on WN i think is more an if then when at this point....that should make Delta blink

Yeah, 737s with no premium cabin on a four-hour flight up against 757s and 767s should make DL blink...



SEA SFO SJC LAX ONT SAN DEN IAH DFW OMA FSD MSP MSN MKE ORD DTW CVG MEM JAN BHM RSW ATL CLT BWI PHL LGA JFK MEX LIM KEF
User currently offlineCODC10 From United States of America, joined Jul 2000, 2412 posts, RR: 6
Reply 17, posted (3 years 4 months 3 days ago) and read 4540 times:

Quoting FSDan (Reply 16):
I doubt UA dominates the New York, Chicago, or Los Angeles markets in the same way that DL dominates the ATL, MSP, and DTW markets, though... They have to share a lot of corporate traffic with AA.

Right, but I would wager that the corporate markets of ATL, MSP, and DTW combined do not equal that of NYC. UA is definitely a work in progress, but the projected network will undoubtedly lead to greater corporate business... it already has.

Of course, this should in no way be construed as a knock on DL. They have strong positions in all of the major markets and their connecting hubs, taken collectively, are the best facilities among their peers. It's just an assessment of the strategies both airlines seem to be pursuing as they structure their networks for the emerging competitive landscape. UA will sink or swim based on its positions in the major business centers of the country, whereas DL seems to be taking a more diversified (but higher cost) approach.


User currently offlineLAXtoATL From United States of America, joined Oct 2009, 1596 posts, RR: 2
Reply 18, posted (3 years 4 months 2 days 23 hours ago) and read 4403 times:

Quoting CODC10 (Reply 17):

Right, but I would wager that the corporate markets of ATL, MSP, and DTW combined do not equal that of NYC.

I wouldn't be so sure of that. ATL is a major business and political hub, MSP is home to a lot of major corporations (people often forget this as it doesn't seem like it should be hq for major corporations but for some reason it is), and DTW still has the auto industry - and they don't have to split those markets. Also, DL is certainly a major player in NYC (they actually have a huge operation at LGA which is the preferred airport of business travelers in NYC). Once again not challenging your assertion that UA's hub are positioned in stronger business markets overall, but I don't think the gap is a wide as you think.


User currently offlineCubsrule From United States of America, joined May 2004, 23014 posts, RR: 20
Reply 19, posted (3 years 4 months 2 days 14 hours ago) and read 3451 times:

Quoting LAXtoATL (Reply 18):
and they don't have to split those markets

That might be the most interesting point of all. In terms of the hub O&D, dominance in DTW is unquestionably superior to a third of the pie in CHI. But it's different at the outstations (what some call the S curve markets). If I'm in St Louis, I'm more likely to need to go to Denver versus Salt Lake City and Chicago versus Detroit, and I might pick UA (or WN) for that reason rather than connections on DL or a split of, say, AA and F9.



I can't decide whether I miss the tulip or the bowling shoe more
User currently offlinegatechae From United States of America, joined Sep 2005, 90 posts, RR: 0
Reply 20, posted (3 years 4 months 2 days 13 hours ago) and read 3363 times:

Quoting panamair (Reply 2):
- Economy Comfort already generating about $500,000 a day in additional revenue

Im curious to know how this number is being calculated. Is it "this is how much money economy comfort is generating" or "this is how much money economy comfort is generating minus how much money the regular economy seats in its place would be generating"



What are these?Pancakes?*gets force fed one*Oh oh, these are delectable.Good news Flappy, I've decided not to kill you!
User currently offlineLAXtoATL From United States of America, joined Oct 2009, 1596 posts, RR: 2
Reply 21, posted (3 years 4 months 2 days 12 hours ago) and read 3223 times:

Quoting gatechae (Reply 20):
Im curious to know how this number is being calculated. Is it "this is how much money economy comfort is generating" or "this is how much money economy comfort is generating minus how much money the regular economy seats in its place would be generating"

Good question. The fact that they say "additional" revenue would suggest the number is revenue above what regular economy seats in its place would be generating. However, I would assume it does not account for any missed revenue from seats that have been removed and could have been sold.


User currently offlinen9801f From Samoa, joined Apr 2004, 333 posts, RR: 0
Reply 22, posted (3 years 4 months 1 day 11 hours ago) and read 2834 times:

Quoting LAXtoATL (Reply 21):
Im curious to know how this number is being calculated.

DL seems pretty sharp on the finance side.

Whether they disclose it publicly or not, the number they based the internal decision and evaluation on was probably calculated as follows:

(Revenue from x economy comfort seats) - (revenue of the worst y economy seats)

Where x and y consume the same amount of floor space.


User currently offlineFlyASAGuy2005 From United States of America, joined Sep 2007, 7004 posts, RR: 11
Reply 23, posted (3 years 4 months 1 day 9 hours ago) and read 2703 times:

Quoting gatechae (Reply 20):
Im curious to know how this number is being calculated. Is it "this is how much money economy comfort is generating" or "this is how much money economy comfort is generating minus how much money the regular economy seats in its place would be generating"



Let's also not forget, on most of the a/c, they did not see much of a net decrease in seats. For example, on the 752, the seat count is still 158 in roach. The 763ER is just about the same in seats as well. Sure, they could have stuffed more seats in like they did on the domestic side but int'l fliers are a bit more picky.



What gets measured gets done.
User currently offlineLAXtoATL From United States of America, joined Oct 2009, 1596 posts, RR: 2
Reply 24, posted (3 years 4 months 1 day 9 hours ago) and read 2692 times:

Quoting FlyASAGuy2005 (Reply 23):
For example, on the 752, the seat count is still 158 in roach.

YIKES! Please tell me they are not offering roach class!


25 Post contains links STT757 : Atlanta has a nice corporate presence, but it's not even in the same league as Houston. Houston is second only to NYC in terms of Fortune 500 compani
26 FSDan : That's a fairly biased analysis, to be honest. Metro Atlanta has 12-13 Fortune 500 companies, and metro Minneapolis has 19. It's not all about compan
27 Post contains images FlyASAGuy2005 : LOL, that wasn't a typo actually. I have two names for coach on a.net. Steerage and roach although it's just meant to be tongue in cheek
28 fun2fly : 4-7) Cleveland - 9, ATL, CHI, MSP 8, 9) SFO, STL Somehow you forgot that Cleveland's a hub. Therefore, UA has a hub in 4 of top 7 or 5 of top 9. DL 3
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