DAYflyer
Topic Author
Posts: 3546
Joined: Wed Sep 08, 2004 9:35 pm

Delta Selling Comair & ASA?

Tue Mar 08, 2005 10:46 pm

Delta has entered into talks to sell Comair and ASA. Is this good or bad? If so, Why?

http://money.iwon.com/jsp/nw/nwdt_rt...eed=dji&date=20050308&cat=INDUSTRY
One Nation Under God
 
VgnAtl747
Posts: 1333
Joined: Fri Apr 06, 2001 3:59 am

RE: Delta Selling Comair & ASA?

Tue Mar 08, 2005 11:33 pm

I believe that DL is simply exploring its options and testing the water on this topic. I will be very suprised if they actually did sell us or ASA any time in the immediate future.
Work Hard. Fly Right. Continental Airlines
 
DAYflyer
Topic Author
Posts: 3546
Joined: Wed Sep 08, 2004 9:35 pm

RE: Delta Selling Comair & ASA?

Tue Mar 08, 2005 11:36 pm

Quoting VgnAtl747 (reply 1):
I believe that DL is simply exploring its options and testing the water on this topic. I will be very suprised if they actually did sell us or ASA any time in the immediate future


I have heard that flying 50 seat CRJ's is horribly expensive and that it would be to everyone's benefit if they could reduce the cost somehow. Is this correct?
One Nation Under God
 
ATLFlyer323
Posts: 489
Joined: Sun Jan 16, 2005 2:01 am

RE: Delta Selling Comair & ASA?

Tue Mar 08, 2005 11:38 pm

I believe your roght DAYflyer..I have heard people comment on that in the past quite a few times!! (especially in the case of Indipendence Air)
Everyday, the fluffy temptation of wheat!
 
FlyPNS1
Posts: 5272
Joined: Wed Dec 01, 1999 7:12 am

RE: Delta Selling Comair & ASA?

Wed Mar 09, 2005 12:06 am

The 50 seaters have an extremely high CASM. In the past, that high CASM was offset by a correspondingly high RASM. But with the rise of LCC's and overall lower fares, RASM's have plunged. I think DL's Simplifares have further reduced the viability of the small RJ. Keep in mind, I'm speaking mainly about the 50 seat and smaller category....the 70-90 seat RJ is a different story.

While ASA and Comair are technically profitable, they are only profitable because DL guarantees them a profit. If ASA/Comair had to go out on their own (like Indy), you'd see similar results to Indy (lots of red ink).

Don't get me wrong, the RJ still has a place in the DL network. The RJ is good for starting new service to smaller markets where yields are higher and LCC's are not present. But small RJ's on larger volume routes and up against LCC's is a losing proposition.

As for selling ASA/Comair, I think it's only a matter of time. In order to stay out of BK, DL is going to need extra cash. The sale of ASA/Comair will bring in cash and DL can dump some of the related debt. Whether or not this sale is good for Comair/ASA employees is definitely up for debate....there are both positives and negatives.
 
tinpusher007
Posts: 890
Joined: Wed Feb 09, 2005 2:03 am

RE: Delta Selling Comair & ASA?

Wed Mar 09, 2005 12:17 am

I definately think the pilots at both ASA and Comair would balk at such a sale, as Skywest pilots are not represented by ALPA or anyone else for that matter.
Skywest pilots are also paid less.

Furthermore, if the 50-seat CRJ is so costly to operate, then why has DL ordered so many of them for ASA?

I know an ASA pilot who said that this was coming. It seems odd to me that DL wants to sell them both to Skywest. Just my two cents.
"Flying isn't inherently dangerous...but very unforgiving of carelessness, incapacity or neglect."
 
TokyoNarita
Posts: 556
Joined: Fri Aug 15, 2003 5:30 am

RE: Delta Selling Comair & ASA?

Wed Mar 09, 2005 12:23 am

So let me get this right..Delta would rather sell ASA to SkyWest so Delta could pay them fee per every single ASA departures in Atlanta where it is most profitable just so Delta can collect quick cash....??? and somehow this is going to save the company in a long run???

TokyoNarita

[Edited 2005-03-08 16:33:31]
 
FlyPNS1
Posts: 5272
Joined: Wed Dec 01, 1999 7:12 am

RE: Delta Selling Comair & ASA?

Wed Mar 09, 2005 12:58 am

Delta would rather sell ASA to SkyWest so Delta could pay them fee per every single ASA departures in Atlanta where it is most profitable just so Delta can collect quick cash....??? and somehow this is going to save the company in a long run???

Would you rather DL end up in bankruptcy? If DL doesn't get more cash that's where they will end up.

Plus, it's hard to know for sure if SkyWest or ASA would be cheaper. It might be cheaper to use SkyWest. CO and NW have sold off their regionals and they don't seem to be any worse for it. Maybe SkyWest could even improve ASA's dismal operations in ATL...teach the folks on concourse C what customer service really is.
 
N839MH
Posts: 298
Joined: Tue Mar 27, 2001 4:05 pm

RE: Delta Selling Comair & ASA?

Wed Mar 09, 2005 1:55 am

Watch, if Delta sells Comair and or ASA, then Delta could possibly file CH.11. Maybe a possibility to reduce some long-term debt off the books. Just a thought!

I know here in DFW, the operation has been so much nicer and better ran without DCI here and all of their problems attached. Not saying Delta doesn't have its own problems, but a lot of the major headaches have been eliminated due to DCI's removal.
Solodude!
 
azjubilee
Posts: 3399
Joined: Sat Apr 29, 2000 5:26 am

RE: Delta Selling Comair & ASA?

Wed Mar 09, 2005 2:30 am

THe pilots don't really have much of a say. The only thing protecting them is the SUCCESSORSHIP language in their respective ALPA bargaining agreements. They both effectively say that should their companies be aquired, they will bring their contracts with them. Most bargaining agreements contain this language. In this case, if this were to happen SKYW would probably run them as separate entities, but using one center core structure for efficiencies.

IMO DL does need to unload these partners. There is no real benefit in having the cost structures of a "regional" airline imbedded with the cost structures of the mainline affiliate. It's only a matter of time before DL sells them in an IPO or thorugh aquisition. This gives DL cash and alleviates the debt that Comair and ASA bring to the table.


AZJ
 
FRA2DTW
Posts: 236
Joined: Wed Feb 11, 2004 6:51 am

RE: Delta Selling Comair & ASA?

Wed Mar 09, 2005 2:36 am

I think Delta is trying to do one of two things here, besides generating much-needed cash. They may be trying to set themselves up as a good merger target for another legacy carrier which already has a feeder operation, or they may be looking to expand their international operations while cutting down on their domestic network. In the latter case I think only ASA will be on the market because Comair will still be needed to feed Cinci. At the JFK international hub they could codeshare with JetBlue for feed and at ATL with AirTran (which may require some route realignment by them). Think this is far-fetched? Wait till you see some of the other schemes that will be floated by legacy managements.
 
DAL767400ER
Posts: 5084
Joined: Wed Feb 09, 2005 2:47 am

RE: Delta Selling Comair & ASA?

Wed Mar 09, 2005 2:57 am

Quoting FRA2DTW (reply 10):
At the JFK international hub they could codeshare with JetBlue for feed and at ATL with AirTran (which may require some route realignment by them). Think this is far-fetched? Wait till you see some of the other schemes that will be floated by legacy managements.

Hell will freeze over before DL starts codesharing with JB or FL. And for the time being, DL will not leave the domestic market. They might turn over even more flights to Song, but they will never leave it completely, let alone cooperate with LCC's.
 
azjubilee
Posts: 3399
Joined: Sat Apr 29, 2000 5:26 am

RE: Delta Selling Comair & ASA?

Wed Mar 09, 2005 3:48 am

If they sell them, they'll still likely USE them! Why is that so hard to understand. NWA doesn't own Pinnacle or Mesaba. CO doesn't own EJT. US doesn't own Mesa, CHautauqua, Shuttle etc...



AZJ
 
hz747300
Posts: 1911
Joined: Thu Mar 11, 2004 11:38 pm

RE: Delta Selling Comair & ASA?

Wed Mar 09, 2005 3:54 am

Why would Skywest (SKYW) want to absorb ASA's and Comair's cost structure? They have a good thing going, I hope they don't ruin it.
Keep on truckin'...
 
azjubilee
Posts: 3399
Joined: Sat Apr 29, 2000 5:26 am

RE: Delta Selling Comair & ASA?

Wed Mar 09, 2005 4:10 am

Do you know the difference between the two? With ASA and Comair being wholly owned, there is no real public data. YOu cannot go based on the fact that they're union vs. non union.


AZJ
 
jetdeltamsy
Posts: 2688
Joined: Tue Nov 14, 2000 11:51 am

RE: Delta Selling Comair & ASA?

Wed Mar 09, 2005 4:17 am

this is a very good idea.

the company should focus on our core mainline operations and could use the money a sale would generate.

comair and asa were created and built up during boom times. we are in anything but boom times right now.

selling of the units may also enable the company to pursue more competitive bids for regional services...much like United did (and is currently doing with Ais Wis).
Tired of airline bankruptcies....EA/PA/TW and finally DL.
 
flashmeister
Posts: 2671
Joined: Fri Apr 28, 2000 4:32 am

RE: Delta Selling Comair & ASA?

Wed Mar 09, 2005 4:54 am

NW and CO unloaded their regionals (by spinning them off, not selling them, by the way) when oil was much cheaper and the airline industry wasn't nearly in the shape that it's in today. ExpressJet has a sweetheart deal with CO that isn't likely to be matched again, based on the fuel subsidies that CO's on the hook for now.

For just those two reasons, you can't compare the NW/CO regional situations with the DL proposed sale.

SkyWest shouldn't touch ASA or Comair with a ten foot pole, IMHO. They see the writing on the wall here: one of their big partners is in eternal Chapter 11, the other is circling the bowl. They have loads of 50 seaters and can't get 70 seaters fast enough to meet partner demands. So why take on more 50 seaters? No quicker way to go out of business than to get an increasing share of a decreasing market. DL's best option will probably be either a spinoff, which is lunacy in today's market, or Mesa, and then God help DL frequent fliers everywhere...
 
Dalmd88
Posts: 2412
Joined: Fri Jul 28, 2000 3:19 am

RE: Delta Selling Comair & ASA?

Wed Mar 09, 2005 5:58 am

I don't think selling DCI makes DL a merger target. I think it gives DL the cash to be the purchaser in the next round of mergers. We all know UAL is a target right now. The CEO has come out and said it. DL has always grown through mergers and UAL would give us the pacific routes we need. There was a very good thread on USAviation.com about a week ago about this topic.
http://www.usaviation.com/forums/index.php?showtopic=18881
 
OttoPylit
Posts: 2259
Joined: Wed Dec 17, 2003 10:58 am

RE: Delta Selling Comair & ASA?

Wed Mar 09, 2005 9:16 am

Quoting FlyPNS1 (Reply 7):
Would you rather DL end up in bankruptcy? If DL doesn't get more cash that's where they will end up.



The amount that DL would get from selling EV and OH would be minimal. Delta paid more when they bought them than they could potentially get out of them. It would be like when DL sold their fuel hedging, they got more money up front, but screwed in the long run. They aren't gonna do that again. They will not sell OH and EV to get some quick cash up front and get lost out in the long run.

But, lets just say that DL did sell the carriers to OO. Then they put themselves in a pickle. See, DL's contract with SKYW is a fee per departure basis. No matter how many passengers an OO plane pulls out of SLC with, they still get paid the same amount, whether it is 1 passenger or 50. So if DL were to sell EV and OH to Skywest, they now have to pay that fee for departure with them, as compared to now, where EV and OH get paid for how many people they pull. It would actually cost DL more all around. I am sure Delta is looking at what would be the pros and cons of selling these subsidiaries, and someone at SkYW just happened to open their mouth to the press. I don't think you will hear any more about this from either company, as its highly unlikely it would come to fruition.
I don't have a microwave, but I do have a clock that occasionally cooks shit.
 
Airline7322
Posts: 104
Joined: Wed Sep 01, 2004 8:42 am

RE: Delta Selling Comair & ASA?

Wed Mar 09, 2005 9:55 am

"Good ideas must be driven into practice with courageous patience."
 
delta fly boy
Posts: 215
Joined: Tue Oct 17, 2000 7:16 pm

RE: Delta Selling Comair & ASA?

Wed Mar 09, 2005 2:39 pm

Messgae from Delta to it's employees:

"Several media outlets are reporting that officials from SkyWest Airlines have expressed an interest in acquiring one or more of Delta's wholly owned subsidiaries. Consistent with longstanding policy, Delta will not comment publicly on such stories. Delta has said repeatedly that the Delta Connection program remains a strategic component of the network. Employees of Delta Connection carriers have long played a critical role in delivering good service to Delta customers. Delta intends to continue its use of regional carriers to provide efficient, reliable service to customers."
 
Boeing7E7
Posts: 5512
Joined: Sat Jul 31, 2004 9:35 pm

RE: Delta Selling Comair & ASA?

Wed Mar 09, 2005 4:05 pm

Soak 'em up, order an ass load of DHC-8-400's and a few more CRJ-700's and go to town. 50 seaters just can't do it cost-wise anymore. Time to start parking them in the desert.

The old adage was don't put a jet aircaft (which includes a turboprop) into a market with less than 64 seats...

Well... Don't do it!
 
MaverickM11
Posts: 15323
Joined: Thu Apr 06, 2000 1:59 pm

RE: Delta Selling Comair & ASA?

Wed Mar 09, 2005 4:18 pm

What about American and American Eagle? What's their story? There must be some interest at AA to 86 American Eagle. Have they tried this or is this out of the question for some reason?
E pur si muove -Galileo
 
FlyPNS1
Posts: 5272
Joined: Wed Dec 01, 1999 7:12 am

RE: Delta Selling Comair & ASA?

Wed Mar 09, 2005 10:21 pm

Ottopylit,

I agree that DL won't get a lot back on the sale of Comair/ASA. I also agree that SkyWest probably won't be the buyer.

However, I don't agree that DL won't sell Comair/ASA for cash. DL is burning through cash fast and with fuel prices rising the losses could get even worse. Projected losses for DL this year alone now exceed $1 Billion dollars.

These losses leave DL will four options:

1) Sell assets (like ASA/Comair) for cash
2) Get additional concessions from employees. Easy to get from the non-union folks...but don't count on DALPA.
3) File for Ch 11 bankruptcy protection
4) Stick their head in the sand and pray oil prices plunge or other competitors fail
 
DAYflyer
Topic Author
Posts: 3546
Joined: Wed Sep 08, 2004 9:35 pm

RE: Delta Selling Comair & ASA?

Wed Mar 09, 2005 11:09 pm

I agree they may spin them off in an IPO somewhere down the road. I think that as bad as they may be, the 50 seaters are hanging around with us all for a while.
One Nation Under God
 
DAYflyer
Topic Author
Posts: 3546
Joined: Wed Sep 08, 2004 9:35 pm

RE: Delta Selling Comair & ASA?

Wed Mar 09, 2005 11:28 pm

MORE NEWS that appeared today in the "Cincinnati Post":

No indication of Comair sale by Delta
Regional line's parent had talks with SkyWest
--------------------------------------------------------------------------------
By Alexander Coolidge
Post staff reporter

Delta Air Lines has discussed selling Cincinnati-based Comair and its sister airline with a growing Utah regional carrier, a high-ranking official at the Utah airline said.
Bradford Rich, chief financial officer and executive vice president of regional airline SkyWest, on Monday said his company has discussed buying one or both of Delta's regional subsidiaries, Comair and Atlantic Southeast Airlines. He made his comments to analysts at an industry conference on Monday.

Comair spokesman Nick Miller, though, said Rich's comments were "not based on fact as applied to Comair." Miller said Comair officials have not been asked to assemble the proof of financial soundness, called due diligence, that usually precedes the sale of a company.

He declined to comment further.

In December, Gerald Grinstein, Delta's chief executive, publicly discussed the possibility of spinning off either Comair or ASA. Rich's comments were the first word of any specific overtures.

"(Delta has) expressed interest in liquidating -- monetizing -- two very significant assets," Rich said referring to Comair and ASA. "We think we're in the best position of anyone to take advantage of this type of an opportunity. We've had some discussion with Delta about this. They have expressed their desire pretty specifically to us."

The executive did not say which airline SkyWest would be more likely buy if it only purchases one. He estimated he could cut operating costs by 5 percent at either subsidiary.

Rich said his $1.1 billion St. George, Utah-based company is looking for growth opportunities and has deliberately stockpiled cash to take advantage of potential acquisitions available in what is a troubled industry. At the end of last year, SkyWest reported it had almost $550 million in cash.

SkyWest vice president of finance Michael Kraupp, characterized the discussions with Delta as hypothetical and "very general." He declined to say if discussions are continuing.

"We've discussed very what-if scenarios with them from time to time," Kraupp said. "We've had numerous opportunities to bounce ideas off one another."

Comair, based at the Cincinnati/Northern Kentucky International Airport in Hebron, Ky., employs about 4,500 people in the region.

In recent weeks, the regional airline has sought pay concessions from employees to help spur growth. Last week, its pilots union agreed to a two-year pay freeze in exchange for an additional 35 aircraft to be added to Comair's 164-jet fleet. The airline is also seeking concessions from its flight attendants union as well as a new contract with its mechanics union.

Delta officials declined to discuss what they said was "rumor and speculation."

There has been much speculation among analysts on Delta's intentions for its two regional airlines as the company continued to rack up losses. Delta has lost nearly $8.5 billion in the last four years. It purchased Comair in 2000 for $1.8 billion and Atlantic Southeast in 1999 for $700 million.

Since the 89-day Comair strike of 2001, though, Delta has used a stable of carriers under contract, such as SkyWest, to move passengers from small markets into its mainline network. Analysts have said Delta doesn't need to own its regional partners to continue doing business with them; it could cash out its stake but preserve a business relationship through contracts.

Skeptics say Delta wouldn't be able to raise more than a few hundred million from selling its regionals, citing similar transactions by Northwest and Continental airlines. Delta recorded a $1.9 billion goodwill impairment charge against fair value estimates of Comair and Atlantic Southeast during its fourth quarter last year.

Publication Date: 03-09-2005
One Nation Under God
 
ouboy79
Posts: 4113
Joined: Sun Nov 18, 2001 1:48 pm

RE: Delta Selling Comair & ASA?

Tue Mar 15, 2005 3:49 pm

Quoting MaverickM11 (Reply 22):
What about American and American Eagle? What's their story? There must be some interest at AA to 86 American Eagle. Have they tried this or is this out of the question for some reason?

Keep in mind you can argue that AA and Eagle are essentially equals as they are both owned by AMR Corp. Don't confuse AMR for AA...they are not the same legal entitity. Also Eagle is a major airline...losing control of that airline could pose a lot of risk to AMR's AA subsidiary.
 
User avatar
kc135topboom
Posts: 11006
Joined: Sun Jan 30, 2005 2:26 am

RE: Delta Selling Comair & ASA?

Tue Mar 15, 2005 4:35 pm

Delta's best chance to avoid bankruptcy is for US Aiways to fold. Their second bast chance is for United to fold.

Both are a very real possibility. Either one of these airlines (US or UA) going out of business could very well return DL to profitability. It would also help AA, too.

If UA folded, who would get UAs pacific routes?

Could DL also sell ASA and Comair and start their own feeder business, using B-717s instead of RJs?
 
acvitale
Posts: 1911
Joined: Sat Aug 18, 2001 8:25 am

RE: Delta Selling Comair & ASA?

Tue Mar 15, 2005 6:41 pm

A quick correction.. While Skywest pilots may have a lower salery. They actually make more with profit sharing and incentives.
 
DAYflyer
Topic Author
Posts: 3546
Joined: Wed Sep 08, 2004 9:35 pm

RE: Delta Selling Comair & ASA?

Wed Mar 16, 2005 4:46 am

Quoting KC135TopBoom (Reply 27):
Could DL also sell ASA and Comair and start their own feeder business, using B-717s instead of RJs?

No, because they dont have the money and the 717 is closing down production.
One Nation Under God