juventus
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Delta To Stay Solvent In 2005, No Need For Chp 11.

Tue May 10, 2005 8:43 pm

"Delta can avoid a chapter 11 filling in 2005, but some adjustments will have to be made". Delta's CEO. source- USAToday

I give Delta all the credit in the world. With all the money they've lost in the last four years, its a miracle they haven't file. I think any other airline in the world would be facing liquidation by now if they had Delta's losses. (Just my opinion)
 
monteycarlos
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RE: Delta To Stay Solvent In 2005, No Need For Chp 11.

Tue May 10, 2005 8:48 pm

Quoting Juventus (Thread starter):
"Delta can avoid a chapter 11 filling in 2005, but some adjustments will have to be made". Delta's CEO. source- USAToday

 crossfingers  Please don't let another one go south!
It's a beautiful night to fly like a phoenix...
 
DAL767400ER
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RE: Delta To Stay Solvent In 2005, No Need For Chp 11.

Tue May 10, 2005 9:43 pm

Quoting Juventus (Thread starter):
but some adjustments will have to be made"

Or in other words, more paycuts and outsourcing. Of course, that will not be the only thing. Delta is still tweaking its schedules here and there, adding and dropping flights, and is retiring 732s and 733s at a fast pace, which is obvious when you look at CVG's schedules and compare those to February. Also, more 757s are being turned over to Song, and the domestic 763ERs are almost guaranteed to be turned back into international configuration, allowing for up to 6 more daily Europe-bound flights next summer.
 
B4REAL
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RE: Delta To Stay Solvent In 2005, No Need For Chp 11.

Tue May 10, 2005 9:46 pm

My only optimism is that these extreme losses in 4Q 2004 and 1Q 2005 are finally moving the airline into the better position. DL has done a lot of adjustments and is taking charges for the actions, so that these XBillion dollar quarterly losses are paving the way for an infrastructure where DL can become profitable on T class fares and 75-81% L/F, all done through less DL mainline flying, more song, more DL Connection, less a/c types...

We are seeing the adjustments finally take place now, I just wish this all would have started in 2001 or 2002.
B4REAL, spelled like it sounds
 
positiverate
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RE: Delta To Stay Solvent In 2005, No Need For Chp 11.

Tue May 10, 2005 10:44 pm

Quoting DAL767400ER (Reply 2):
Or in other words, more paycuts and outsourcing.

Actually...

Delta: Enough worker pay cuts; Cost reductions will now concentrate on building more efficient hubs, executives say.
Author:RUSSELL GRANTHAM
Date: April 30, 2005
Publication: Atlanta Journal-Constitution

Despite continuing financial losses and sky-high fuel prices, Delta Air Lines executives say they don't expect to go back to pilots or other employees for more pay cuts.


"That is not our plan," Chief Executive Gerald Grinstein said Friday.

Further employee sacrifices at the Atlanta-based airline would hurt morale and service, he suggested.

"We have gotten to the point where I think the morale and spirit of the people is so important," Grinstein said.
 
DAL767400ER
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RE: Delta To Stay Solvent In 2005, No Need For Chp 11.

Tue May 10, 2005 11:06 pm

Ok, so he said there will be no pay cuts. Doesn't mean that benefits won't be cut. Nonetheless, pay and benefit cuts would only be an option if Delta is deep in the sh*t, and all the other cost reductions should be enough to avoid that.
 
avek00
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RE: Delta To Stay Solvent In 2005, No Need For Chp 11.

Tue May 10, 2005 11:52 pm

I guess you guys have completely missed today's SEC filing by Delta. Here are some excerpts:

"As discussed above, we do not expect to achieve the full $5 billion in targeted benefits under our transformation plan until the end of 2006. In addition, we continue to face significant challenges due to historically high aircraft fuel prices, low passenger mile yields and other cost pressures. Accordingly, we believe that we will record a substantial net loss for the nine months ending December 31, 2005, and that our cash flows from operations will not be sufficient to meet all of our liquidity needs for that period."


"If we are unsuccessful in further reducing our operating expenses and continue to experience significant losses, we will need to seek to restructure under Chapter 11 of the U.S. Bankruptcy Code."


"A restructuring under Chapter 11 of the U.S. Bankruptcy Code may be particularly difficult because we pledged substantially all of our remaining unencumbered collateral in connection with transactions we completed in the December 2004 quarter as a part of our out-of-court restructuring. "

So as things stand now, Delta will NOT be a solvent entity by YE 2005 barring a near-miraculous change in the company's fortunes or the industry environment generally.
Live life to the fullest.
 
DLPMMM
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RE: Delta To Stay Solvent In 2005, No Need For Chp 11.

Wed May 11, 2005 12:26 am

 
MD11junkie
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RE: Delta To Stay Solvent In 2005, No Need For Chp 11.

Wed May 11, 2005 12:40 am

From the Atlanta-Journal Constitution:

"Delta said the quarter's loss, $7.64 per share, included $531 million in charges related to employee job cuts, pilot retirements, and grounding six aircraft, and a $144 million gain from reversing earlier reserves for deferred taxes. Delta reported a year-ago loss of $383 million, or $3.12 per share.

Without those one-time items, Delta said it lost $684 million during the quarter, slightly worse than Wall Street projections."


The 1Q 2005 1.1bn dollar loss was a one time thing. Grinstein's plan is making its way up, but for the transformation plan to be truly successful there's a need for a 40-45 dollar a barrel oil, 50+ does not make it. The Grinstein plan has already saved 3-5% in ops this year.

There's a new warning from Delta, for substantial losses. 1.8bn dollar in unrestricted cash reserves at the end of March. Facing 730 million dollars in debt obligations for the rest of this year alone.
Anyone care to guess what will Grinstein's plan will make the next step on? Since pay cuts are no longer an issue, and outsourcing seems to be as most feasable actions... will outsourcing be the thing that make DL spend or lose less money?

http://www.ajc.com/business/content/business/delta/0405/21delta.html
http://www.ajc.com/hp/content/shared...Finance_General/Delta_Outlook.html

Cheers!  wave 
Gastón - The MD-11 Junkie
There is no such thing as Boeing vs Airbus as the queen of the skies has three engines, winglets and the sweetest nose!
 
DLPMMM
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RE: Delta To Stay Solvent In 2005, No Need For Chp 11.

Wed May 11, 2005 12:49 am

I think it is more likely that they will sell one or both of their regional carriers to raise cash. I don't think there is that much more outsourcing they can do that would significantly cut costs.

Also, have they frozen their pension plans and instituted defined contribution plans to replace them? This would be an obvious cost savings measure for long term stability.
 
AussieItaliano
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RE: Delta To Stay Solvent In 2005, No Need For Chp 11.

Wed May 11, 2005 1:22 am

Quoting DLPMMM (Reply 9):
I think it is more likely that they will sell one or both of their regional carriers to raise cash. I don't think there is that much more outsourcing they can do that would significantly cut costs.

Do they even own their regional carriers? I thought that those were all independent companies with no % ownership by DL.
Third Runway - LHR, Second Runway - LGW, Build Them Both!!!
 
wgw2707
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RE: Delta To Stay Solvent In 2005, No Need For Chp 11.

Wed May 11, 2005 1:22 am

I can't help but feel Grinstein was not aggressive enough in tackling Delta's problems last year. I believe I said it at the time, but taking several months to do an internal review when the company was loosing that kind of money was, in my opinion, absurd. I think if anything, one of his priorities should have been to complete a review as soon as possible, even if it meant bringing in a team of outside consultants to accelerate the process.

I think Grinstein should also have gone further in terms of cost cuts from employees, and I think pledging substantially all assets in an out of court restructuring was rather dumb. I think it would actually have been smarter to save some of those assets for a potential Chapter 11 financing.

-WGW2707
 
padcrasher
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RE: Delta To Stay Solvent In 2005, No Need For Chp 11.

Wed May 11, 2005 1:25 am

I get the feeling someone is not telling us the whole story here. 1) They almost rule out pay cuts, saying they're not needing due to the restructuring savings 2) They put out a 10K that says the restructuring savings will not be fully in place till end 06. 3) The 10K spells out a cash crisis at the end of the year.

Why are the ruling out paycuts and at the same time warning of BK possibilities?
 
avek00
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RE: Delta To Stay Solvent In 2005, No Need For Chp 11.

Wed May 11, 2005 1:28 am

Quoting WGW2707 (Reply 11):
and I think pledging substantially all assets in an out of court restructuring was rather dumb

At the time, it made plenty of sense.
Live life to the fullest.
 
DAL767400ER
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RE: Delta To Stay Solvent In 2005, No Need For Chp 11.

Wed May 11, 2005 1:28 am

Quoting AussieItaliano (Reply 10):
Do they even own their regional carriers? I thought that those were all independent companies with no % ownership by DL.

Both ASA and Comair are wholly-owned subsidiaries of Delta, and can be sold.
Skywest, Chautauqua, American Eagle and soon Mesa are only working as feeders for Delta.
 
StevenUhl777
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RE: Delta To Stay Solvent In 2005, No Need For Chp 11.

Wed May 11, 2005 1:30 am

There's an article on MSNBC today that says DL *WILL* have to file Ch. 11 by the end of this year.

Once again, the media reports the same story with two different outcomes. Gotta love 'em!
And the winner for best actress is....REESE WITHERSPOON for 'Walk the Line'!!!!!!!!
 
avek00
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RE: Delta To Stay Solvent In 2005, No Need For Chp 11.

Wed May 11, 2005 1:37 am

Quoting StevenUhl777 (Reply 15):
There's an article on MSNBC today that says DL *WILL* have to file Ch. 11 by the end of this year.

That's not technically incorrect - under current projections, DL will have to seek bankruptcy protection by year-end on account of its lack of cash-on-hand.
Live life to the fullest.
 
juventus
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RE: Delta To Stay Solvent In 2005, No Need For Chp 11.

Wed May 11, 2005 3:02 am

I guess Delta did OK during the 1990s. I wonder if UAL or US had lost what Delta has lost during the past four years, would they still be around? Probably NOT.
 
FriendlySkies
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RE: Delta To Stay Solvent In 2005, No Need For Chp 11.

Wed May 11, 2005 3:12 am

Quoting Positiverate (Reply 4):
Delta Air Lines executives say they don't expect to go back to pilots or other employees for more pay cuts.

Wow, we've never heard that from an airline before...
 
DAYflyer
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RE: Delta To Stay Solvent In 2005, No Need For Chp 11.

Wed May 11, 2005 3:27 am

Everyone had better read this one:

http://story.news.yahoo.com/news?tmp...10/bs_nm/airlines_delta_dc&cid=580

Delta Air struggle raises bankruptcy fear By Jui Chakravorty
1 hour, 6 minutes ago



NEW YORK (Reuters) - Delta Air Lines Inc. on Tuesday said it won't generate enough cash to meet its needs this year, raising new alarms the airline could have to file for bankruptcy in the next few months.

In a quarterly filing with the Securities and Exchange Commission, Delta also said it expects a "substantial" loss for the remainder of 2005 as it struggles with record-high fuel prices, low air fares and other cost pressures.

"Unless they sell at least one of their regional carriers, they will be forced to file for bankruptcy within the next six months," Standard & Poor's analyst Jim Corridore said. "And if they did sell a regional carrier, it still wouldn't change their overall situation. It would just buy them more time out of bankruptcy court."
One Nation Under God
 
m404
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RE: Delta To Stay Solvent In 2005, No Need For Chp 11.

Wed May 11, 2005 9:10 am

Just something I wonder about. Could DL raise the Simple fares say $50 to 75 rt and gain quite a bit, at least against the Legacy carriers, or are they framed as they now stand specifically toward LCC fare levels?

If you already recognized that employee morale is down and should know it's possibly reflecting in pax service yet your 10K makes dire warnings that scare away the money men would it not be fiducially responsible to raise fares enough to cover the $5.00 barrel shortfall?

Anyone have some numbers to see if this might work OR is this another end game to see which company dies first.
Less sarcasm and more thought equal better understanding
 
avek00
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RE: Delta To Stay Solvent In 2005, No Need For Chp 11.

Wed May 11, 2005 9:16 am

Because the moment Delta raises fares and its competitors don't match, there will be a significant bookaway that will harm revenues even further.
Live life to the fullest.
 
m404
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RE: Delta To Stay Solvent In 2005, No Need For Chp 11.

Wed May 11, 2005 9:26 am

With the Legacies all mentioning that the SimpliFares are eating into their bottom line so bad I doubt any would not take the opportunity to raise revenue a little. As I asked, I wonder about the effect on LCCs, especially since WN has already stated their own fares are already lower.
Less sarcasm and more thought equal better understanding
 
wgw2707
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RE: Delta To Stay Solvent In 2005, No Need For Chp 11.

Sun May 15, 2005 4:06 am

Delta's Simplifares look to be another mess that Grinstein has gotten them into. Cutting fares with oil at this price level is, in my opinion, absolutely moronic. Especially when you consider the projected increase in traffic levels to 2000 levels, which given the capacity reductions we've seen since then and the lower capacity of airports to process passengers due to added security, will cause major headaches.

-WGW2707
 
srbmod
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RE: Delta To Stay Solvent In 2005, No Need For Chp 11.

Sun May 15, 2005 4:10 am

Quoting WGW2707 (Reply 23):
Delta's Simplifares look to be another mess that Grinstein has gotten them into. Cutting fares with oil at this price level is, in my opinion, absolutely moronic.

Everyone seems to think that Delta cut fares when they rolled out Simplifares systemwide. All they did was cut down on the number of fare codes they have, so while it may seem as though it was something revolutionary, they just cut out the fare codes that were rarely booked. While fares may have appeared to have gone down, it's just smoke and mirrors.
 
slider
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RE: Delta To Stay Solvent In 2005, No Need For Chp 11.

Mon May 16, 2005 4:10 am

Quoting Srbmod (Reply 24):
While fares may have appeared to have gone down, it's just smoke and mirrors.

Uh-huh.

Is that why the revenue hit to the industry has been anything but smoke and mirrors?

CO estimates SimpliStupidFares tallies to about $10-12M per month in terms of a revenue leak.
 
DeltaA380
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RE: Delta To Stay Solvent In 2005, No Need For Chp 11.

Mon May 16, 2005 4:29 am

I had a Platinum Medallion tell me how pleased he was with Simplifares flying out of CVG. I think they are necessary to DL's long term survival even if they do seem like a bad idea in the short term given the absurd fuel prices.

One harder to gauge factor is whether Simplifares will attract more customers because it builds trust about the fare you are paying. Historic fares and fare rules were so convuluted this lead to a lot of frustration for customers. Hopefully this new simplicity will help Delta.
Vote Democratic in '06 and '08
 
panamair
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RE: Delta To Stay Solvent In 2005, No Need For Chp 11.

Mon May 16, 2005 11:27 am

Simplifares affected the expensive walk-up one-way fares more than any other fare category. Simplifares is simply Delta looking to the future and dealing with the fact that that's where the industry is headed. No one is going to pay $1000-$2000 for a one-way walk up fare anymore. If you continue to live under the illusion that you can make a quick buck by gouging the customer, sooner or later, an LCC will pop up in your backyard and eat your lunch.
 
commavia
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RE: Delta To Stay Solvent In 2005, No Need For Chp 11.

Mon May 16, 2005 11:36 am

Quoting Panamair (Reply 27):
Simplifares affected the expensive walk-up one-way fares more than any other fare category. Simplifares is simply Delta looking to the future and dealing with the fact that that's where the industry is headed.

I agree. I think SimpliFares was one of the smartest business decisions DL has made in a long time following stupid decisions like repainting the entire fleet for the millionth time and paying for designer uniforms for FAs.

DL recognized, as AA did back in 1993 with Value Pricing, that the industry is moving towards a simpler, easier to understand fare structure with fewer, lower fares, and they simply kickstarted that process. Will it cost them some money in the longrun? Sure. But it at least gets them out in front of the curve of airlines like UA or NW and may very well ending being a net revenue positive years from now.
 
wgw2707
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RE: Delta To Stay Solvent In 2005, No Need For Chp 11.

Mon May 16, 2005 3:08 pm

The problem with Simplifares was even though it did simplify fare structures, the fare caps still caused it to be a de facto fare cut on certain routes. Eliminating fare caps, or in any other way reducing existing fares, in this climate, seems to make no sense.

Furthermore, if Simplifares was such a great move for Delta, why is it that their performance still has yet to improve? Oil was only slightly cheaper at the time the program was rolled out...

-WGW2707
 
slider
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RE: Delta To Stay Solvent In 2005, No Need For Chp 11.

Mon May 16, 2005 10:21 pm

Quoting WGW2707 (Reply 29):
The problem with Simplifares was even though it did simplify fare structures, the fare caps still caused it to be a de facto fare cut on certain routes. Eliminating fare caps, or in any other way reducing existing fares, in this climate, seems to make no sense.

Furthermore, if Simplifares was such a great move for Delta, why is it that their performance still has yet to improve?

Bingo.

Too many opinions here, and I respect the contrarian thoughts certainly, seem to assign some altruistic value to what DL did. As if customer loyalty will somehow reflect itself on the balance sheet or something.

Sorry, but SimpliStupidFares didn't just stratify fare buckets, they nuked them and scuttled the caps. Stupid. It sacrificed yield for liquidity; that's it in a nutshell.

DL pilloried some of it's OWN high end revenue. And for what? A few other butts in the seats? Terribly myopic decision.

I'm all for fare reform, hell, we all know how obfuscated it is. But to make some draconian hack and slash that hinders your own financial picture is short-sighted. And the timing couldn't have been worse.
 
commavia
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RE: Delta To Stay Solvent In 2005, No Need For Chp 11.

Mon May 16, 2005 10:52 pm

Quoting WGW2707 (Reply 29):
The problem with Simplifares was even though it did simplify fare structures, the fare caps still caused it to be a de facto fare cut on certain routes. Eliminating fare caps, or in any other way reducing existing fares, in this climate, seems to make no sense.

True. The concept of SimpliFares was good on DL's part, but I agree that the execution was poor. They should not have capped fares as it does artificially limit their revenue-generating potential on many relativley high-yielding routes. AA, by contrast, matched DL's SimpliFares but not the fare caps, and thus is experiencing a much less severe revenue impact from its new simplified fare structure.

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