miami1
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Do Song And TED Make Money

Sat Feb 05, 2005 8:00 pm

With all the hype of Majors starting up their own low cost variants, I was wondering if anybody knows do these airlines like Song and Ted make a profit. Ive heard Song are bleeding money and Delta are expanding the airline in a desperate attempt to start making some. Anybody know??
 
padcrasher
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RE: Do Song And TED Make Money

Sat Feb 05, 2005 9:50 pm

Well if Jetblue is not making money not counting their fuel hedging then Song would not be making money. You can also lump Southwest in as losing money not counting their fuel hedging. But Song is not hedged so they surely lost money.
 
deltadude8
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RE: Do Song And TED Make Money

Sun Feb 06, 2005 1:25 am

No one knows about Ted or Song as their financial information is not released seperate. No one can say for sure about the profits and/or losses of Song or Ted.

Someones opinion may be given about the profits/losses but remember it is only an opinion! Padcrasher...you do not know FOR SURE whether song or ted lost or gained money. Please next time you post on this topic be sure you make it known if you have an opinion that it is an opinion.
 
MD88Captain
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RE: Do Song And TED Make Money

Sun Feb 06, 2005 1:28 am

DAL internally tells us that Song is profitable. FWIW.
 
SESGDL
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RE: Do Song And TED Make Money

Sun Feb 06, 2005 1:35 am

If Song were bleeding money than DL management wouldn't be expanding it now would they? Maybe them larger and larger isn't going to make it profitable, so evidently DL and UA see potential to make money in Song and Ted.

Jeremy
 
MaverickM11
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RE: Do Song And TED Make Money

Sun Feb 06, 2005 1:47 am

Depends how they allocate all their costs. I'm sure Ted and Song are real profitable if you allocate all the overhead, ground handling, and airport fees to UA and DL, respectively. Other than that I'm almost positive they are both losing money just like their parent companies.
E pur si muove -Galileo
 
atrude777
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RE: Do Song And TED Make Money

Sun Feb 06, 2005 2:28 am

I have heard from United Press releases while they do not release seperate forms for TED and UAL, they are extremely pleased with TED's profits, and said it makes quite enough money for them. They coninute to expand on it where they see fit. So again this is what iv heard, and im NOT stating it as a fact.
Alex
Good things come to those who wait, better things come to those who go AFTER it!
 
DeltaMIA
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RE: Do Song And TED Make Money

Sun Feb 06, 2005 2:54 am

If Song were bleeding money than DL management wouldn't be expanding it now would they

Yes they would still be expanding if they were losing money. The key is how are they losing money compared to a mainline flight. As MD88Captain said though, DL tells us they are making money. They operate at 30% less cost than a mainline 757 and have 21% more coach seats so they have a chance at producing a lot of revenue for the company.
It's a big building with patients, but that's not important right now.
 
Guest

RE: Do Song And TED Make Money

Sun Feb 06, 2005 3:12 am

Before anyone says it, yes, Song is profitable, regardless of what any of the uninformed on here say.

B
 
1MillionFlyer
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RE: Do Song And TED Make Money

Sun Feb 06, 2005 3:27 am

MaverickM11


Thanks to the Sarbanes-Oxley law which was instituted after the Enron, WolrdCom and other financial meltdowns, playing with numbers is a thing of the past. There is now only 1 way to allocate costs properly.

DL could do a few "intercompany" chargebacks to mainline, but they have to be VERY careful to represent profitablity and losses within divisions since shareholders are involved, or people will be going to jail.
Golf Foxtrot you are cleared for departure
 
padcrasher
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RE: Do Song And TED Make Money

Sun Feb 06, 2005 3:33 am

I know beyond a reasonable doubt that Song is losing money. a) I know their load factors b) I have DOT data showing their yields C) I have quotes from their new Director saying that they did not quite make a 8 cent CASM. d) I know that Jetblue has much lower costs, quite a bit higher load factor and at least the same yields and would have still lost money without hedging.

So Song is losing money. You can take that to the bank.
 
FlyPNS1
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RE: Do Song And TED Make Money

Sun Feb 06, 2005 3:37 am

Delta's refusal to show Song results speaks volumes. If Song was doing so well, why would Delta be afraid to show its results? Just because Song is growing doesn't mean it's profitable. Delta Express continued to grow even when it was obvious that it couldn't compete with JetBlue out of JFK.

Even if Song is profitable, there's no way to know how DL is allocating costs to Song? It's a similar shell game with the Delta Connection carriers. DL says Comair/ASA are profitable, but no one knows how the costs are allocated. If the connection carriers were so profitable, shouldn't Delta be doing better than the other majors? DL has more RJ's under its control than any other carrier.

Until DL posts some real numbers, nobody will ever know what Song is really doing.

 
Guest

RE: Do Song And TED Make Money

Sun Feb 06, 2005 3:41 am

Hey! There's the ones I was speaking of in my post! Welcome to the party! Did you get lost?  Wink/being sarcastic

Song is profitable. This is factual information.

B
 
padcrasher
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RE: Do Song And TED Make Money

Sun Feb 06, 2005 3:43 am

I don't agree with that. If Song is showing promise all the more reason not let everone in the industry know this. If AA/NW/CO want to know how LCC spinoffs are doing let them start their own Song.

Also Delta does do burdening accounting. In other words the do track Song's burden on mainline Delta to get a better idea how the venture is going.
 
LRGT
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RE: Do Song And TED Make Money

Sun Feb 06, 2005 3:51 am

But Song is not hedged so they surely lost money.

Despite what everyone on this site says about the 757 being a gas-guzzler, IT ONLY BURNS 1100 GALLONS/HR. This comes to 5.5 gallons per seat/per hour...or about 15 gallons/seat for JFK-FLL.

...now if they were operating 727's fuel would be a MUCH bigger story!
Don't bring up the NW DC9's unless you have to!
 
LRGT
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RE: Do Song And TED Make Money

Sun Feb 06, 2005 3:53 am

1millionflier: Song's numbers are consilidated with Delta so no matter how they allocate their costs, it is for internal purposes only and no one is going to jail no matter how they misrepresent their overhead.

However, Song would NOT be profitable 100% on their own (albeit they would only be posting MODEST losses). However, the DO REDUCE Delta's losses by (1) shrinking thieir unprofitable mainline service and (2) taking advantage of overhead already paid for by Delta. Therefore, in Delta's eyes, they ARE making money....that is why this is such a grey area.

I must say Song has done a good job at spending countless millions on advertising and not getting too far. For what they have spent, Song should be more famous than JetBlue but it is not.
Don't bring up the NW DC9's unless you have to!
 
FlyPNS1
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RE: Do Song And TED Make Money

Sun Feb 06, 2005 3:55 am

Song is profitable. This is factual information

If it was a fact, you'd have something to back it up with. But you have never provided any proof. You just regurgitate management propaganda. I'm sure you believed every word that came out of Leo Mullin's mouth too...as he was busy stuffing his pockets with cash and burying Delta in debt.

Here's an excerpt from the October 18, 2004, AJC:

Aimed at female leisure travelers, Song has won kudos for customer service and marketing. But it has yet to become profitable, and critics say it's a costly indulgence for a company on the brink of bankruptcy.

Maybe Song all of the sudden became profitable in the past few months, but as of October it wasn't.






[Edited 2005-02-05 19:57:08]
 
Guest

RE: Do Song And TED Make Money

Sun Feb 06, 2005 4:00 am

Do you need to see the link again to the WSJ that said it is?

This is old news. Song is profitable, fact.

B
 
MaverickM11
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RE: Do Song And TED Make Money

Sun Feb 06, 2005 4:17 am

"Thanks to the Sarbanes-Oxley law which was instituted after the Enron, WolrdCom and other financial meltdowns, playing with numbers is a thing of the past. "

SOX says nothing about, say, DL allocating all the ticket counter costs at LGA to Delta mainline since they are effectively mainline employees and there's no such thing as a "Song ticket agent". At the end of the day it's all Delta mainline so as long as DAL is not doing anything shady, the internal cost allocations become very grey, as opposed to black and white.

"Do you need to see the link again to the WSJ that said it is?"

Yes.
E pur si muove -Galileo
 
exFATboy
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RE: Do Song And TED Make Money

Sun Feb 06, 2005 4:22 am

Thanks to the Sarbanes-Oxley law which was instituted after the Enron, WolrdCom and other financial meltdowns, playing with numbers is a thing of the past. There is now only 1 way to allocate costs properly.

Incorrect. As long as you're doing managerial-accounting allocations between divisions for which there is no regulatory requirement to issue separate auditable financial statements, and which will not be released to the public (and thus affect securities markets), internal cost allocation is pretty much unregulated.

Even with regulated financials, there are frequently multiple ways to allocate expenses - for example, if Song had separate external financials, DL could choose to allocate certain ground expenses on a per-passenger basis, or on a per-aircraft-movement basis, or some other basis. GAAP/FASB allows for flexibility in choosing some cost allocations, even for arms-length transactions between subsidiaries. Most of the recent scandals, and the resulting regulation, have been more about how revenues and expenses were treated timing-wise (revenues booked before being earned, expenses inappropriately put on the balance sheet, etc.) and now information was being released to the media and the public.

Now if Delta chooses to issue a separate financial statement to the public for Song, then cost allocations would be subject to the same GAAP and other requirements as any other public information release that can affect a publicly-held corporation's stock price. But as long as Delta does not release the numbers to the public, whatever internal numbers their management is using for Song could be subject to DL's internal politics. I'd hope not, but it is entirely possible.
 
padcrasher
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RE: Do Song And TED Make Money

Sun Feb 06, 2005 4:29 am

I for one would love to see the WSJ link saying that Song is profitable.
 
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mariner
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RE: Do Song And TED Make Money

Sun Feb 06, 2005 4:50 am

There is a difference between "profit" and "operating profit".

Since both Delta and United are losing money, and since both Song and Ted are simply parts of their respective money losing parents, then Song and Ted are - in effect - losing money.

BUT - both Song and Ted could be making money simply on the routes they fly - or "operational profit".

From then on, it gets murky.

Ted didn't have to buy any aircraft (they belong to United) so Ted had no capital cost for aircraft - which another airline would have. Ted didn't have to build or lease a maintenance hangar, it belongs to United. What part of the United backed bonds at DIA does Ted pay - if any?

Does Ted pay Ted's part of United's massive legal fees for the bankruptcy?

You can't separate it out, because we do not know. It's possible that only the most senior accountants at the airline know. No one, not even the Wall Street Journal, can say that Song is profitable.

They may be able to say that Song is "operationally profitable".

cheers

mariner
aeternum nauta
 
OttoPylit
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RE: Do Song And TED Make Money

Sun Feb 06, 2005 8:30 am

FlyPNS,

If Song was doing so well, why would Delta be afraid to show its results?

The reason why Delta refuses to show results of Song and molds them into Delta's numbers is because of simple mathematics. You show Song's results and any airline number cruncher can deduce the actual mathematics that make Song work. Before you know it, every major is down to Song's costs and every LCC is making sure that they stay below it. Airlines constantly watch other airlines numbers, every single day. That is the sole job of an airline analyst, to watch other airlines prices, schedules, sales, etc. to get as much information on the other airlines as possible. Delta is smart to NOT give out Song's numbers.


Delta Express continued to grow even when it was obvious that it couldn't compete with JetBlue out of JFK.

Where did you get that? DLX was already WELL established before JB was even a thought. DLX started in 1996 and by the time JB DID come around, DLX routes were already established. And for your information, DLX was barely profitable, until the 2000 pilot contract increased the costs, that is when the operation became unprofitable.


If it was a fact, you'd have something to back it up with. But you have never provided any proof.

How ironic, neither do you! What a revelation!


Here's an excerpt from the October 18, 2004, AJC:

You should have just stopped right there. Being that you do not live in ATL, I will let you in on a little secret that everyone else in ATL already knows. AJC has major beef with Delta. Because of DL being the largest employer of the city of Atlanta, you would think the AJC would be kissing DL ass. But no, the AJC reports everything they can on Delta and makes it negative. For instance, when Delta announced the Simplifares, the AJC put a little corner article, and a nice half page article of Joe Leonard complaining how the Simplifares would be revenue negative for the entire industry, but he was not worried, as Airtran is Atlanta's low fare airline and that FL would make sure that FL prices stay below Delta's. The AJC hates DL with a passion.

But, just to play devil's advocate here, lets use a little common sense. How could the uber-investigators at the AJC figure out Songs numbers? If other airlines can't, how could the AJC? And what reliable source did they base their information on? IF the AJC were to find out that Song was unprofitable, why wouldn't they release the numbers, since they know that would spell the end of Song?

Answer these questions with facts, and then your answers might have some credibility to them, but not much.

Is is just me, or is anyone else tired of beating this dead horse? Not that I mind very much, because I love being right.  Big thumbs up
I don't have a microwave, but I do have a clock that occasionally cooks shit.
 
isitsafenow
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RE: Do Song And TED Make Money

Sun Feb 06, 2005 11:43 am

Are they profitable? Who knows? The carriers don't say much about TED and SONG except in advertising. My guess is SONG hasn't turned a dollar....yet,but they are working on it. That's why 12 more 757s are getting repainted in Baby Diaper-PoooGreen. If SONG would have been a BIG success, DL would have blown their horn all up and down the media's face....lavish media parties, big blockbuster ads....just to drive it down Herbs throat....but it didn't happen. The only thing the world saw were ads to fly SONG on the east coast.
I don't have a clue what TED is up to, as far as turning a dollar. Maybe the UAL folks can clue us in.

safe
If two people agree on EVERYTHING, then one isn't necessary.
 
akjetBlue
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RE: Do Song And TED Make Money

Sun Feb 06, 2005 12:32 pm

Might I make a quick point and pose a question to everyone?

Song and TED are both not independent airlines.

If they were then they would have their own ground handlers and as last I checked Song is handled on the ground by Mother Delta. So the question is does Song pay Delta to handle its aircraft on the ground?

I Have yet to see the TED ground operation however I would only imagine that TED would be handled by UAL rampers.

Now who flies the planes? Pilots, yes, but which ones? Are they Song pilots? Are they TED pilots? Last I was told was that these are mainline pilots on mainline payscales.

Ground handling can be costly, Mainline pilots are costly too, even with concessions. The costs for Ramp service and Pilot Pay coming out of parent companys bank accounts, would make it seem as though these "carriers" (which I believe don't even have their own O.C.) were doing well when infact some of the higher costs were being deducted out of mainline accounts.

So the question is where are these costs paid from? Song & TED or Delta and United - Maybe this is the reason both posted wider losses than expected.

Anyone want to take a stab at it?

.
Save a horse! Ride a Cowboy!
 
FriendlySkies
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RE: Do Song And TED Make Money

Sun Feb 06, 2005 1:34 pm

Since DL and UA both own Song and Ted respectively, and they have DL and UA employees operating the flights and handling them on the ground, any costs associated with Song and Ted are incurred by the parent company. Therefore, there is no feasible way to know if either Song or Ted is making a net profit because neither is a REAL COMPANY. Hope this clears things up.  Big grin
 
padcrasher
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RE: Do Song And TED Make Money

Sun Feb 06, 2005 1:51 pm

Thats not true. You can through accounting methods isolate out the Song divisions operating costs and burden to the parent company. It's not a exact science but it gives a good picture if the program is working. They do this with the cargo divisions all the time. The give a internal net profit after the burdening of the airline as a whole.
 
padcrasher
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RE: Do Song And TED Make Money

Sun Feb 06, 2005 1:57 pm

Let me give you an example. Delta has a purchasing Department that buys among other things fuel. That departments salaries, administrative costs, fuel purchases represent a certain figure. If Song accounts for 10% of the ASM's or 10% of the fuel burn they will pass 10% of this Departments cost on to Song.
 
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mariner
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RE: Do Song And TED Make Money

Sun Feb 06, 2005 2:56 pm

Padcrasher:

Let me give you a different example - or see reply 21.

Delta owns the Song aircraft. Does Song lease those aircraft from Delta, or does Delta run an operational charge against the Song accounts?

Is any charge made, by Delta against Song, for any interest costs, past or present, in association with the purchase/lease of those aircraft?

Who gets any write-downs on those aircraft? Since Delta owns them, Delta should - Song doesn't own any aircraft. If Song doesn't own any aircraft, how can Song possibly get - say - an income tax relief from aircraft ownership?

cheers

mariner
aeternum nauta
 
DeltaMIA
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RE: Do Song And TED Make Money

Sun Feb 06, 2005 3:03 pm

So the question is does Song pay Delta to handle its aircraft on the ground?

Yes they do upstairs and downstairs, except in JFK, MCO, and FLL where Song has their own personnel handling above wing operations.
The same holds true for ASA or Comair operating in DL stations. Or DL operating in ASA/Comair stations. Comair operating in ASA stations. In some cases where the costs would be too great you will see more than one airline represented. Such as at DTW there are OH employees handle DCI and DL employees handling DL.

Are they Song pilots?

No they are DL pilots.

So the question is where are these costs paid from?

Song has a budget. All they have to do is have revenue exceed costs. EV does this year in year out and we have no one question that they are making money.
It's a big building with patients, but that's not important right now.
 
ViveLeYHZ
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RE: Do Song And TED Make Money

Sun Feb 06, 2005 4:06 pm

My guess is that BOTH Song and Ted are losing money. You only need to look at the CASM for Delta and UAL, which applies to Song and Ted. The RASM for Song and Ted would be similar to Southwest's and JetBlue. You can't expect to make money when you combine the costs of legacy carriers and the fares of LCCs.

For example, Delta's CASM was 15.46 cents for 2004, while their RASM was 8.73 cents. Clearly, Delta as a whole was losing about 7 cents on every available seat mile last year, and because Song's RASM would logically be lower than Delta's mainline, it is not difficult to see that Song was losing money, no matter how good their LFs are. In fact, Song can potentially be losing more money (on an available seat mile basis) than the mainline.

By the way, the number qouted above come straight from Delta's financial statements released last month. (I couldn't get the link to work, but here it is anyway, since many people want arguments backed by evidence.  Smile )

http://investor.delta.com/EdgarDetail.cfm?CompanyID=DAL&CIK=27904&FID=1167966-05-82&SID=05-00

Maybe when oil prices come down to a reasonable level, and when TED and Song get their costs down, they will have a chance to become profitable. I would also suspect that if Ted and Song were making money now, AA NW and CO would have noticed and followed suite.

My two cents,
ViveLeYHZ
 
DeltaMIA
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RE: Do Song And TED Make Money

Sun Feb 06, 2005 5:04 pm

DLX started in 1996 and by the time JB DID come around, DLX routes were already established

Don't forget Delta Express copied Jetblue  Big grin
It's a big building with patients, but that's not important right now.
 
OttoPylit
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RE: Do Song And TED Make Money

Mon Feb 07, 2005 1:14 am

Don't forget Delta Express copied Jetblue.

Correct you are. How can we compare the resemblences between the two carriers? They were so mirrorlike. Yet just another example of how Delta copies Jetblue at every turn, even before Jetblue was born.  Big thumbs up
I don't have a microwave, but I do have a clock that occasionally cooks shit.
 
aa757first
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RE: Do Song And TED Make Money

Mon Feb 07, 2005 2:12 am

For example, Delta's CASM was 15.46 cents for 2004, while their RASM was 8.73 cents. Clearly, Delta as a whole was losing about 7 cents on every available seat mile last year, and because Song's RASM would logically be lower than Delta's mainline, it is not difficult to see that Song was losing money, no matter how good their LFs are. In fact, Song can potentially be losing more money (on an available seat mile basis) than the mainline.

Song's CASM is probably lower as well. Flight attendants work for lower wages, food is sold, in some stations gate agents work soley Song flights, so I assume they work for lower wages. And so on and so forth.

AAndrew
 
nycfuturepilot
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RE: Do Song And TED Make Money

Mon Feb 07, 2005 2:56 am

I must say Song has done a good job at spending countless millions on advertising and not getting too far. For what they have spent, Song should be more famous than JetBlue but it is not.

I live in the NYC area and spend a lot of time in PBI/FLL and BDL (all song cities) and have only heard 1 advertisement for song since the airline started. Where are you seeing all of these ads?
Father, Son, HOYA spirit
 
MaverickM11
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RE: Do Song And TED Make Money

Mon Feb 07, 2005 3:14 am

" All they have to do is have revenue exceed costs."

You can allocate the mainline and Song/Ted costs in such a way that that always occurs.
E pur si muove -Galileo
 
1MillionFlyer
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RE: Do Song And TED Make Money

Wed Feb 09, 2005 10:57 pm

Please don't comment on accounting if you don't know what you are talking about.


SOX demands more responsibility in the accounting of all accounting and management (including internal) transactions.

Unless some of you are actually in the treasury or finance arm of DL, we will not know how they allocate exactly. but SOX makes them accountable and bound to a process for this the Song/DL costing


[Edited 2005-02-09 15:03:06]
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