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Who Is In Worse Shape?

Thu Aug 11, 2005 6:09 pm

Everyone knows that many of the legacy carriers in the US are not doing well right now... Two airlines that both seem to be in a downward spiral but haven't yet filed for bankruptcy are Northwest and Delta.

Of these two, which is in the worst shape right now?

I'm curious to hear some valid points and good arguements, not just a flame-fest...
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RE: Who Is In Worse Shape?

Thu Aug 11, 2005 6:27 pm

I would tend to think that it's NW. My main reason is their personnel problems. If there is a strike on 20th, then there is no way that NW can maintain complete operationality by using their replacement workers and insourcing Champion Air. There will have to be cuts made somewhere. The ones that will hurt the airline most will be international operations. With the increase in competition, they really don't want to lose any good will which in the long run will cause them to lose future passengers.

I have been hearing good things about Delta on the other hand. It seems like some people have been having great experiences on Delta. Plus the new flights by Song suggests that it is doing quite well (or could mean that they're still trying to find ways to make it work).

That's just my opinion. I sincerely hope that both airlines will do well. There are enough passengers to go around for all the airliners (yields are another matter  Smile

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RE: Who Is In Worse Shape?

Thu Aug 11, 2005 11:43 pm

Quoting Hawaijahaz (Reply 1):
That's just my opinion. I sincerely hope that both airlines will do well. There are enough passengers to go around for all the airliners (yields are another matter

Wouldn't it be true that if there were enough passengers to go around then the yields would be higher. In fact, the yields would cover expenses and allow the carriers to atleast break even?

The problem is there are too many seats chasing too few bottoms!
Fly fast, live slow
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RE: Who Is In Worse Shape?

Fri Aug 12, 2005 12:52 am

I don't know about finnancial situation but i think Delta is having such a bad time these days with the Visa and MC processors issue. I can see the picture:

Delta.com: For PayPal payment method click here
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RE: Who Is In Worse Shape?

Fri Aug 12, 2005 12:53 am

I would like to add to the qualifications for how we are comparing them. I think that NW has a lot of imediate problems that they must solve. Delta has many more long term issues that they need to correct. I think Northwest is in more trouble now due to the fact that they have the short term issues.
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RE: Who Is In Worse Shape?

Fri Aug 12, 2005 2:26 am

NW may seek court protection, but they will be around. Never count Northwest out.
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RE: Who Is In Worse Shape?

Fri Aug 12, 2005 2:36 am

NW definitely has a harder road ahead of them especially with them teetering on the brink of B.K., as well as having some tough labor issues. First the mechanics, then the F/A's are getting in on it, now the pilots are really pissed and filing grievances for the flight substitutions by Champion. DL on the other hand doesn't have those kind of problems as of yet, but is loosing a considerable amount of $, and is also on the edge of B.K. DL's biggest mistake was to sell their fuel hedging stake for cash ( my opinion). Indy is in deep do-do, and Aloha isn't fairing well either, seeing they have rid quite a few of the 737-700 fleet and cut back service substantially.
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RE: Who Is In Worse Shape?

Fri Aug 12, 2005 2:46 am

Indy is REALLY in trouble. I don't hold out much hope for them. It is kind of sad.....

NW does have a VERY hard road to go down, but in the end, they'll still
be around.
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RE: Who Is In Worse Shape?

Fri Aug 12, 2005 2:55 am

Mexicana And Aeromexico are both up for sale if anyone wants to buy an airline? =]

I flew on Champion Air Last night, they are owned by NWA. I was talking with the FA and she was talking about how they dont have any pillows or blankets on most airliners anymore, because they get dirty eaisly and have to get washed.

I remember last fall AAL was talking about filing, but somehow they avoided it. They SEEM to be doing somewhat okay out of all of them. All you hear on the news anymore is DAL and NWA strike this and strike that and strike strike strike! Majority of the costs are from the actualy airport itself.

Such as CCP will be pulling out of DFW this fall. DFW forced all International Flights to the new terminal, and they are charging a whole lot per sq. foot of space there.

I find it funny DFW whines about loosing money and having too many open gates.

Well maybe lower prices would be nice?
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RE: Who Is In Worse Shape?

Fri Aug 12, 2005 2:59 am

Not directly answering the topic, but my own personal general assessment of the six U.S. legacy carriers today (in order of size):

AA: Probably the best situated of all the legacy carriers, or at least tied with CO for that top spot. AA has shown a dramatic ability since April 2003 to turn around their operations, engage their labor groups and get non-fuel costs down considerably. AA seems to be genuinely interested in restructuring their operations and realigning their processes and structures to fit today's operating environment.
Chance of survival: 100%

DL: DL has quite a hell of a few months ahead of it. Facing seemingly insurmountable fuel costs, a crushing debt load, labor unrest and resentment and now the problem of a Visa/MC credit card processor, DL certainly has a lot to work out. Since 9/11, they remained behind the curve in getting their costs in line and are just now beginning to focus on cost cutting. In addition, their management has focused on several risky business models -- launching Song, and hoping to make it the first airline-within-an-airline ever to actually succeed, shifting significant portions of their network outside of ATL
to RJs, and moving away from mainline service on transcons. They have a tough road ahead, but they'll probably be able to pull it out, perhaps in bankruptcy, though.
Chance of survival: 75%

UA: While only a few months ago, my "chance of survival" for them would probably have been closer to 50%, UA seems to be on a roll in the last few weeks. They got the labor situation under control, even if some employees are a bit upset. They got the aircraft leases secured. UA had a tough time in bankruptcy court, but even with their current creditors committee issue, I still think they will probably emerge in early 2006 as a leaner competitor ready to fight the low cost carriers. Good for them.
Chance of survival: 90%

CO: Definitely together with AA as the legacy carrier(s) most likely to survive. CO, like AA, has dramatically turned around their losses since 9/11 and has actually turned a profit this past quarter, one of only two legacies to do so. CO has focused, very smartly, on innovation and leveraged the power of their hubs: they've pioneered RJs down to Mexico from IAH and pioneered 757s to Europe via EWR. This is a dynamic, smartly-run company with highly motivated employees, that I don't think is going anywhere anytime soon.
Chance of survival: 100%

NW: Much like DL, NW is about to fly into a few months of complete torturous hell and uncertainty, perhaps starting on August 20 at 12:01 am. NW perhaps has the biggest uphill challenge of all the legacies -- they still have yet to get their labor costs down to competitive levels, and they still have work to do on their non-labor costs. They do have some competitive strengths, however, that I think will ultimately pull them through their current turmoil -- namely, their huge Asian network, their KLM partnership, and their three continental U.S. hubs, all of which are almost completely monopolized and face virtually no low fare competition (a big plus!).
Chance of survival: 75%

US: Call me crazy, but I'll believe the whole US-HP merger success pitch when I see it. I still fail to see how they are going to mash together high-cost US with low-cost HP, when their operations, structures, workforces, fleets, facilities, equipment, etc. simply don't fit together. We'll see -- I hope for the sake of all employees involved that it works, but I think that US has a really tough road ahead of it to try and rework its network and operations to start making money without pulling HP down with it. Time will tell.
Chance of survival: 60%

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