ua777222
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Delta CFO: "Airline Is Tapped Out"

Wed Mar 15, 2006 4:44 am

Delta Air Lines Inc. is "tapped out" and can't borrow any more money to cover its mounting losses, making deep pay and benefit cuts it is seeking from its pilots essential to its survival, the company's chief financial officer told an arbitration panel Tuesday.

CFO Edward Bastian testified before the three-member panel as part of Delta's effort to void its contract with its 6,000 pilots so it can impose up to $325 million in long-term cuts.

The pilots union has said repeatedly it will strike if its contract is rejected. A walkout would put the nation's third-largest carrier out of business, Delta has said.

"We are clearly in the worst shape and are the most fragile of anyone in the industry," Bastian told the panel.

Bastian also told the panel that what the company is asking of its pilots could be worse.

"One of the things that keeps me up at night is whether we're being aggressive enough," Bastian said. "I'm not suggesting we do, but that's the thing I worry about."

He said in an interview outside the hearing that Delta has no current plans to seek more cuts from its pilots after this request, but he added there can be no guarantee.

Lee Moak, chairman of the union's executive committee, said Bastian's comments raise concerns for pilots.

"I'd like to believe they're trying to do it once, but historically that has not been the case," Moak said in an interview.

Atlanta-based Delta, which is operating under bankruptcy protection, has lost roughly $12.6 billion since January 2001, the year the industry downturn started amid the terrorist attacks.

The panel, on the second day of two weeks of hearings at a Washington hotel, must decide by April 15 whether to grant Delta's request to reject its pilot contract. The pilots, meanwhile, will wrap up their strike authorization vote on April 4. Typically, if such a vote is approved, union leaders could set a date for a strike.

Delta has said a strike by its pilots would be illegal, and it would likely seek a court injunction if its pilots walk off the job.

Bastian told the panel that Delta expects fuel prices to remain high and ticket prices to remain low because of competition and too many seats available in the industry. Therefore, he said, Delta needs to keep cutting costs to survive long-term. He noted the pilot cuts the airline is seeking are only about 10 percent of the $3 billion in overall annual cost cuts Delta is seeking.

"We have both a revenue problem and a cost problem, and we're tackling both," Bastian said.

He said the $3 billion cost-cut figure is not final.

"We're hoping to do better than $3 billion in other ways," Bastian told the panel. He didn't elaborate.

The pilots have acknowledged that the company is in trouble and they have offered to help. But the pilots argue that they previously gave Delta $1 billion in annual concessions in a five-year deal in 2004, and they believe the amount of further concessions the company is seeking is too much. They also argue that since the company has admitted it will likely terminate the pilots' defined benefit pension plan, they should receive some credit for the savings they say the company will reap.

Delta has said it hopes to emerge from bankruptcy in the summer of 2007.

The airline had asked the New York bankruptcy court in November to void the pilot contract, but shortly before a judge was set to issue a decision, the company and its pilots reached a deal on interim pay cuts.

That deal, equal to a little less than half of what the company is seeking on an annual basis, would be replaced by the long-term deal the two sides have been negotiating since December. They missed a March 1 deadline to settle on their own, sending the matter to arbitration.

In the latest negotiating proposals, the company has agreed to reduce its request to $305 million in cuts annually, while the union said it is offering $140 million annually.

According to the company, the average earnings of pilots last year who worked the full year was more than $157,000.


All together this is one bad bad situation. Management vs. employees. It's never going to be alright for either of them. Sadly, the CFO and other managment personel have stated that "Bastian also told the panel that what the company is asking of its pilots could be worse."..."He said in an interview outside the hearing that Delta has no current plans to seek more cuts from its pilots after this request, but he added there can be no guarantee."


Matt
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RE: Delta CFO: "Airline Is Tapped Out"

Wed Mar 15, 2006 5:34 am

I didn't think DL would run out of leveragable assets quite this early. Don't get me wrong, I wasn't under the allusion they had much left. But "tapped out" in a hearing is a scary phrase even if stated during pilot negotiations.

I agree DL is fragile. They are down to < $2.0 billion in free cash. How can they get more dough? GE? Maybe... but why? US had an amazing exposure to GE, thus GE's incentive to finance the merger with HP. Will Wells Fargo come to DL's rescue?

Related (due to this quote coming from arbitration with pilots):

Quote:
And more than the Atlanta arm of ALPA may be involved: Last Thursday, a statement on the union's Web site announced that the SkyTeam Pilots Association (SPA) had inked an "unprecedented International Mutual Assistance Agreement" backing pilots at Delta and at Northwest Airlines--both of which filed for Chapter 11 protection on Sept. 14.

The SPA comprises pilots from nine global SkyTeam member carriers, which maintain international codeshare agreements. The carriers are Delta, Northwest, AeroMexico, Alitalia, CSA Czech Airlines, KLM and Air France (under one corporate roof, Air France KLM (nyse: AKH - news - people )), Korean Air and Continental Airlines (nyse: CAL - news - people ).

The statement didn't specify what actions, if any, the SPA would take if the U.S. pilots' contracts were voided. But union Master Executive Council Chairman Capt. Lee Moak said the agreement "sends a strong message to senior executives that pilots around the globe stand united with their...colleagues."

from:
http://www.forbes.com/2006/03/14/del...tofacescan09.html?partner=yahootix

Yikes! A full skyteam full press.  devil  oh boy...

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nkops
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RE: Delta CFO: "Airline Is Tapped Out"

Wed Mar 15, 2006 5:43 am

Quoting UA777222 (Thread starter):
Delta has said a strike by its pilots would be illegal, and it would likely seek a court injunction if its pilots walk off the job.

Now how would this be illegal... with a voided contract, the Railroad Act would not apply since technically the pilots would not fall under a contract agreement, is that correct???

I didn't realize it was that bad at DL

Quoting UA777222 (Thread starter):
In the latest negotiating proposals, the company has agreed to reduce its request to $305 million in cuts annually, while the union said it is offering $140 million annually.

Those numbers aren't even close
:evil:
 
worldtraveler
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RE: Delta CFO: "Airline Is Tapped Out"

Wed Mar 15, 2006 5:48 am

What kind of language do you expect a company that is resorting to a process that has almost never been used to extract concessions from its pilots? DL has used doom and gloom talk for years in order to get what it wants which is a big reason why so many people are convinced they are doomed. As soon as they get the cost cuts they need (which includes an answer on pension reform), the news will get much cheerier. ALPA can see through that.
 
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RE: Delta CFO: "Airline Is Tapped Out"

Wed Mar 15, 2006 6:07 am

Quoting WorldTraveler (Reply 3):
What kind of language do you expect a company that is resorting to a process that has almost never been used to extract concessions from its pilots? DL has used doom and gloom talk for years in order to get what it wants which is a big reason why so many people are convinced they are doomed. As soon as they get the cost cuts they need (which includes an answer on pension reform), the news will get much cheerier. ALPA can see through that.

At the same time, is pissing off management the right way to go about turning a company around? In my opinion, if they don't find their funds here it'll be somewhere else and that the longer this entire process proceeds the longer until a profitable company rises. At the same time, it's like a ticking time bomb. Both pilots and management are running towards a cliff, they can bitch and moan back and forth at eachother but without eachother they're both screwed.

Matt
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beefstew25
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RE: Delta CFO: "Airline Is Tapped Out"

Wed Mar 15, 2006 6:16 am

Yet another example of how unions hold the idea of a free market hostage.
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RE: Delta CFO: "Airline Is Tapped Out"

Wed Mar 15, 2006 6:16 am

DL most likely is not is such a dire condition that they are proclaiming. It is most likey that they are trying to sell how bad a shape they are in to win the arbitrators sympathy
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RE: Delta CFO: "Airline Is Tapped Out"

Wed Mar 15, 2006 6:38 am

Quoting FlyDeltaJets (Reply 6):
DL most likely is not is such a dire condition that they are proclaiming. It is most likey that they are trying to sell how bad a shape they are in to win the arbitrators sympathy

Certainly could be a ploy. I would doubt they would publicly announce such a harsh position if it was not true. Delta may be in a very dire position, and it really sounds like they are following the path that Eastern went down.

I seriously doubt they are trying to arm wrestle the pilots at this point, as the losses are black and white in my eyes. They are bleeding very badly, and at this point could be considered to be on life support. It is really sad to see Delta in this position.

I hope they pull out of this. Remember, Independence Air was not afraid to announce their troubles months before shutdown.

Could Delta perhaps restructure itself as far as its flying is concerned? Perhaps they could start relieving some aircraft and routes?
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F9Animal
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RE: Delta CFO: "Airline Is Tapped Out"

Wed Mar 15, 2006 6:45 am

A few other things to consider:

A. They are in Bankruptcy.

B. They are losing money like crazy.

C. They are publicly announcing they are tapped out.

D. Things are looking really bad right now in this industry.

E. Fuel prices are skyrocketing.

F. The pilots are supposedly the only savior for the airline.

Equals= Bad outlook at this point.

Plus the bankruptcy judge really holds the plug at this point. Amazing how quickly this industry has been shaking out lately.

BTW- I am in no way bashing DL. I really hope they pull out of this. I could not imagine not seeing Delta anymore.
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RE: Delta CFO: "Airline Is Tapped Out"

Wed Mar 15, 2006 7:09 am

Quoting Lightsaber (Reply 1):
They are down to < $2.0 billion in free cash

No, unrestricted cash has remained at around $2.1 billion for the past few months (check out the January 06 and December 05 monthly operating reports) while total cash (including restricted) has been around $2.8 - $3.0 billion.
 
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RE: Delta CFO: "Airline Is Tapped Out"

Wed Mar 15, 2006 7:15 am

Quoting F9Animal (Reply 8):

B. They are losing money like crazy.

C. They are publicly announcing they are tapped out.

Just for clarity: DL is losing *cash* right now at an amazing rate. Paper loses are one thing and are what are usually written off in BK. But... DL is losing cash every day. Take that $2.0 billion and subtract every new loss from that reserve.

I'm not DL bashing, but DL is in really poor shape. I too cannot image not seeing Delta anymore. Yes, part of DL's issues is the shutdown of the Colonial and Plantation oil/fuel pipelines. But that is done, that cash is gone.

Can anyone provide a link to the legality or illegality of a DL pilot strike? I am not a lawyer but it would be intresting to know more. Under the RR labor act, they are under binding arbitration; thus technically as I read it the pilots would be subject to said arbitration. On the other hand, is this technically throwing out the voted on contract and thus allowing them to strike? Notice I'm asking as I'm afraid the DL pilots might strike.  Sad

Quoting F9Animal (Reply 7):
I seriously doubt they are trying to arm wrestle the pilots at this point, as the losses are black and white in my eyes. They are bleeding very badly, and at this point could be considered to be on life support. It is really sad to see Delta in this position.

I hope they pull out of this. Remember, Independence Air was not afraid to announce their troubles months before shutdown.

 checkmark  The best thing for the pilots to do is make salary concessions contingent upon profit sharing. Mind you, profit sharing pre-executive bonuses. Perhaps force DL to account for all bonuses and profit sharing on a pre-negotiated formula? This will get interesting...

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RE: Delta CFO: "Airline Is Tapped Out"

Wed Mar 15, 2006 7:24 am

If Delta is truly tapped out, then pilot pay concessions seem a bit like re-arranging the deck chairs on the Titanic. If they are truly losing that much money, then the pilots could work for free and it would only delay the inevitable. If Delta managment is telling the truth, then it sounds as if they may not be able to afford to be in business. If it is simply rhetoric, then the lie will eventually come to light and and it will further errode the relationship between management and ALPA. Either way, I need to go work on my resume...
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RE: Delta CFO: "Airline Is Tapped Out"

Wed Mar 15, 2006 7:30 am

Quoting Beefstew25 (Reply 5):
Yet another example of how unions hold the idea of a free market hostage.

Um, excuse me? How do you defend this tripe?

The pilots are free to walk off the job if their contract is voided. Delta is free to hire non-union pilots to staff its planes. That's the free market.
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RE: Delta CFO: "Airline Is Tapped Out"

Wed Mar 15, 2006 7:45 am

Enough already!

We heard this with UA. Then we heard it with US. Then NW. Even ATA. Now DL.

Is someone going to die?? Probably not. Hasn't happened yet. Frankly, cut the crap already. If you're really losing millions a day (like UA was, like US was, like DL is) you can't stay in business. . . that's a free market!

The United States won't turn upside down if a major airline goes under. It's happened before . . . and we are at the point where it should happen again.

So enough with the courts, enough with the fake strike threats, enough with the CFO proclaiming the death rattle. If this was reality TV, we would have all tuned out a while ago.

There's an old saying, "Sh*t or get off the pot."

We have all been watching an industry in turmoil for 5 years now. It's like watching a sick person suffer for way too long.

Stick a fork in one of these guys cause this scene is getting really, really old and its end is very, very near.

PJ
 
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RE: Delta CFO: "Airline Is Tapped Out"

Wed Mar 15, 2006 7:46 am

I guess with all the international expansion i think they need to cut most of the non profit route before they expand. DL needs to think about cutting not adding routes. Hmm maybe no more DL in the sky  Smile or make them low cost carrier  Smile.
 
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RE: Delta CFO: "Airline Is Tapped Out"

Wed Mar 15, 2006 7:53 am

Quoting AirCanada014 (Reply 14):
i think they need to cut most of the non profit route before they expand. DL needs to think about cutting not adding routes

Where have you been? What do you call cutting CVG by 25%? What do you call cutting JFK-STL/JAX/CLT? What do you call substituting 763/764/762s on all LGA flights with 757/M88/738s? What do you call dropping most widebodies from ATL-Florida routes?
 
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RE: Delta CFO: "Airline Is Tapped Out"

Wed Mar 15, 2006 8:01 am

Bring on the Delta and NW merge!!!!!!!
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RE: Delta CFO: "Airline Is Tapped Out"

Wed Mar 15, 2006 8:02 am

Quoting AirCanada014 (Reply 14):
Hmm maybe no more DL in the sky

And why exactly is that a smiley character comment to you?
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RE: Delta CFO: "Airline Is Tapped Out"

Wed Mar 15, 2006 8:05 am

Quoting JFKLGANYC (Reply 13):
Enough already!

I have to agree. I've heard these dramatic, awful, death-proclaiming reports so many times from all of the carriers that you mentioned that I am completely convinced that regardless of what these airlines might claim, nothing is actually ever going to happen. It doesn't matter how awful they claim that things are, the legacies just don't die.
 
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RE: Delta CFO: "Airline Is Tapped Out"

Wed Mar 15, 2006 8:08 am

DL is "right sizing" their markets right now.
It is re-aligning it's self almost.
They are expanding internationally and thus:
Some 764s are being pulled from the domestic market and
The remaining 763ERs that were on Domestic duty are no longer there
So, the widebodies that are going international or to hawaii expansion are no longer in the domestic system. 757, MD80s and 738 will replace those routes and some shorter routes will be filled with RJs.
A lot of what we percieve as "cuts" are only due to the movement of A/C. On many routes, DL would rather keep 7 daily flights - a few with RJs, than cut the flight to 4 or 5 dailies with larger jets.
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phuebner
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RE: Delta CFO: "Airline Is Tapped Out"

Wed Mar 15, 2006 8:13 am

Quoting RamerinianAir (Reply 19):
DL is "right sizing" their markets right now.

What a great way to say, "We're fixin stuff!"
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RE: Delta CFO: "Airline Is Tapped Out"

Wed Mar 15, 2006 8:55 am

Quoting UA777222 (Thread starter):
"One of the things that keeps me up at night is whether we're being aggressive enough," Bastian said.

And the fact that thousands of people's jobs are depending on these clowns to turn that sinking mess around.
 
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RE: Delta CFO: "Airline Is Tapped Out"

Wed Mar 15, 2006 9:06 am

Quoting Panamair (Reply 9):
No, unrestricted cash has remained at around $2.1 billion for the past few months (check out the January 06 and December 05 monthly operating reports) while total cash (including restricted) has been around $2.8 - $3.0 billion.

Did you include the $300 million injection by Merril Lynch that occurred between those two reports? Going through that much a month is... painful. It sounds like Merril Lynch got the last of DL's leveragable assets. Date of transaction January 26th:

http://news.delta.com/article_display.cfm?article_id=10052

On paper DL is losing $10million/day. In cash... its still high, by my math, close to $200million/month. $2.1 Billion won't last long at that rate. Yes, I know summer is better, but DL *must* reduce cash burn to survive the winter of 2006/2007.

Quoting Phuebner (Reply 20):
What a great way to say, "We're fixin stuff!"

DL is fixing stuff. I'm most exited about their trans-Atlantic expansion. While one could wish for a trans-pacific expansion... alas, another day when new planes can be purchased.

Curious that DL is trying to cut interest rates on their DIP financing:
http://biz.yahoo.com/pz/060314/95671.html
from above link:

Quote:
In particular, the proposed amendment to the DIP Credit Agreement will permit Delta to grant additional liens to GE with respect to the unrelated financing arrangements and with respect to Delta's current and future lease obligations to GE under certain leases of regional jets.

Whisky tango foxtrot? Granting additional liens means there is more equity to leverage! ?!? I'm officially confused now.  confused 


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ChiGB1973
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RE: Delta CFO: "Airline Is Tapped Out"

Wed Mar 15, 2006 9:09 am

Quoting JFKLGANYC (Reply 13):
Enough already!

We heard this with UA. Then we heard it with US. Then NW. Even ATA. Now DL.

Is someone going to die?? Probably not. Hasn't happened yet. Frankly, cut the crap already. If you're really losing millions a day (like UA was, like US was, like DL is) you can't stay in business. . . that's a free market!

The United States won't turn upside down if a major airline goes under. It's happened before . . . and we are at the point where it should happen again.

So enough with the courts, enough with the fake strike threats, enough with the CFO proclaiming the death rattle. If this was reality TV, we would have all tuned out a while ago.

There's an old saying, "Sh*t or get off the pot."

We have all been watching an industry in turmoil for 5 years now. It's like watching a sick person suffer for way too long.

Stick a fork in one of these guys cause this scene is getting really, really old and its end is very, very near.

PJ

All that was said before too, about UA, US, NW. You didn't come up with anything new either.

You say stick a fork in one? FL, WN are all adding seats to this "saturated" market. It's not saturated. Virgin America has applied for certification. These all point to mismanagement. I would include B6 in adding seats, which they are, but also losing money and trying to pick up the pieces. So, you can pretty much add B6 in the mismanagement category.

DL flying 767s all over the U.S., got a huge reprieve from AmEx and whomever else gave them $1 billion + over the last year or two and still royally screwed this deal up. Too little, too slowly. They will probably pull out of this, just as UA, US, NW (will), TZ, AQ, CO, HA all did. Plus, there are not really that many airlines that went out this way. PanAm and Braniff, the others were, generally, small, especially compared to DL.

M
 
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RE: Delta CFO: "Airline Is Tapped Out"

Wed Mar 15, 2006 9:13 am

Quoting Lightsaber (Reply 22):
Whisky tango foxtrot? Granting additional liens means there is more equity to leverage! ?!? I'm officially confused now.

You can file First position liens (which is the usual lien you would think about), but this sounds like DL is getting a lender to give them a loan on a second position lien. A second positioin lien is like a second mortgage on your house. If anything happens and they need to sell the assets, the first lender would recover fees and equity first and the second lender would get any possible remaining equity should a liquidation of assets occur.

When a lender loans money on an asset they do not loan 100% of the fair market value, instead they use usually 60-80% of the "Forced liquidation value".
This means technically after fees and etc if a second lienholder had a lien then they might be able to recover some actual miniscule amout of cash.

This might allow DL to borrow maybe an additional 10-20% of the forced liquidation value on assets, but without seeing the filing there is no way to know for sure what they are allowing DL to borrow.

[Edited 2006-03-15 01:14:23]

[Edited 2006-03-15 01:14:51]
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ckfred
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RE: Delta CFO: "Airline Is Tapped Out"

Wed Mar 15, 2006 9:29 am

Quoting Nkops (Reply 2):
Now how would this be illegal... with a voided contract, the Railroad Act would not apply since technically the pilots would not fall under a contract agreement, is that correct???

If DL pilots, or any pilots from a bankrupt carrier, walk off the job after a bankruptcy court voids a collective bargaining agreement, that would be a case of first impression. The RLA has no provisions for a job action after the voiding of a contract by court order.

Technically, airline employees under a union contract can only strike after a federal mediator declares an impasse and a 30-day-cooling-off period expires. The leverage for Delta in court is that the union had agreed to arbitration, if a new agreement couldn't be reached by March 1. The arbitrator can rule for DL's proposal or ALPA's proposal, and that proposal is submitted to the court for approval, or so I understand situation.
 
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RE: Delta CFO: "Airline Is Tapped Out"

Wed Mar 15, 2006 10:17 am

Quoting ChiGB1973 (Reply 23):
You say stick a fork in one? FL, WN are all adding seats to this "saturated" market. It's not saturated. Virgin America has applied for certification. These all point to mismanagement.

 checkmark  Airlines in the US and around the world have made profits, sometimes huge profits (wasn't it last year or the year before Qantas posted a $1 BILLION PROFIT before taxes???!!!) DL needs to clean house. So does NW. UA and US both did this, they are now looking at money again.

Quoting ChiGB1973 (Reply 23):
I would include B6 in adding seats, which they are, but also losing money and trying to pick up the pieces. So, you can pretty much add B6 in the mismanagement category.

B6 isn't mismanaged. Their CEO, IMO, was the best with some hedges and breaks. now, B6's polish is wearing off, and they have to find profitable routes again.

Quoting ChiGB1973 (Reply 23):
Plus, there are not really that many airlines that went out this way. PanAm and Braniff, the others were, generally, small, especially compared to DL.

How true. I'm just trying to fathom what would happen to DL and its 90 mil+ passengers to the industry......

Quoting Lightsaber (Reply 22):
Whisky tango foxtrot?

I don't know about the tango or foxtrot, but DL employees probably need a lot of that whiskey at the moment.  Wink

btw, what would happen to Comair, ASA, Chataqua (sp?), SkyWest, Shuttle America, and the rest of the DL connection carriers if DL folds? I know some have other contracts, but Comair is screwed.
Well I believe it all is coming to an end. Oh well, I guess we are gonna pretend.
 
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RE: Delta CFO: "Airline Is Tapped Out"

Wed Mar 15, 2006 10:45 am

Quoting 1MillionFlyer (Reply 24):
This might allow DL to borrow maybe an additional 10-20% of the forced liquidation value on assets, but without seeing the filing there is no way to know for sure what they are allowing DL to borrow.

Thanks for the update. But I thought that with DL's Debt > equity situation that this wasn't likely, but shows you why I do engineering.  Smile How much in these 2nd position leins are available? I have a feeling DL is scrapping the bottom of the barrel searching for anything to borrow against. Is their landscaping hedged yet?  duck 

Quoting Piercey (Reply 26):
but DL employees probably need a lot of that whiskey at the moment.

 rotfl  Thanks for the laugh.

Quoting Piercey (Reply 26):
btw, what would happen to Comair, ASA, Chataqua (sp?), SkyWest, Shuttle America, and the rest of the DL connection carriers if DL folds? I know some have other contracts, but Comair is screwed.

The hold a party converting CRJ's to beer cans.  duck 

Seriously, Boyd has discussed how the "small jet provider" market is playing a game of musical chairs. The connection carriers would be at the dance without a partner if DL folds (which I hope it doesn't).

Quoting Piercey (Reply 26):

B6 isn't mismanaged. Their CEO, IMO, was the best with some hedges and breaks. now, B6's polish is wearing off, and they have to find profitable routes again.

I would concur. B6 is well managed. I would also say WN's management is looking exceptional with those hedges. If anything, B6 will sell their oldest A320's onto the secondary market. Recall B6 has kept their dept to equity at 75%.  Smile

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ptharris
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RE: Delta CFO: "Airline Is Tapped Out"

Wed Mar 15, 2006 10:57 am

Quoting Piercey (Reply 26):
How true. I'm just trying to fathom what would happen to DL and its 90 mil+ passengers to the industry......

Other domestic carriers would thrive like we haven't seen them thrive before.

Quoting Piercey (Reply 26):
I don't know about the tango or foxtrot, but DL employees probably need a lot of that whiskey at the moment.

 rotfl 

Quoting Piercey (Reply 26):
btw, what would happen to Comair, ASA, Chataqua (sp?), SkyWest, Shuttle America, and the rest of the DL connection carriers if DL folds? I know some have other contracts, but Comair is screwed.

I'm sure they would somehow retain the market they hold. I think, while Comair is part of Delta, they still are they're own entity, correct? If so, then they'll hold on to their stake of the claim and become mini-airlines?

Well, after re-reading that, maybe they wouldn't work that well. Hard to say. Perhaps some other carrier like AirTran would come in and pick them up for pennies on the dollar. Whoosh.. AirTran balloons into the next biggest thing in the airline world. That'd be wierd to see. Big grin
If at first you don't succeed, skydiving isn't for you.
 
ncflyer
Posts: 505
Joined: Tue Sep 05, 2000 7:03 pm

RE: Delta CFO: "Airline Is Tapped Out"

Wed Mar 15, 2006 11:13 am

I find delta's bk strategy mind boggling. It is expensive to add new routes-- they take months or years to take hold and build traffic. There's the cost of starting up service at new airports overseas. . . advertising to get the word out. Yet they are adding flights willy nilly to overseas, to JFK, to SLC. . .

I Agree it's hard to take an airlines fret of closure seriously, but if we give them the benefit of the doubt their actions hardly speak to a carrier watching it's every last penny (I'm also reminded of that every time I see $5000 worth of flat panel monitors at every DL gate. Yeah I know peanuts for a multi-billion dollar company, but somehow CO and WN are able to fly planes just fine with their 1970's vintage LCD displays or worse yet flip in signs.)
 
777fan
Posts: 2256
Joined: Wed Jan 04, 2006 12:09 pm

RE: Delta CFO: "Airline Is Tapped Out"

Wed Mar 15, 2006 11:18 am

Quoting Beefstew25 (Reply 5):
Yet another example of how unions hold the idea of a free market hostage.



Quoting FCYTravis (Reply 12):
Um, excuse me? How do you defend this tripe?

The pilots are free to walk off the job if their contract is voided. Delta is free to hire non-union pilots to staff its planes. That's the free market.

I dare the DL pilots to strike - there's not much love for an airline pilot at the moment, given every airline's desire to slim down. They know better but have don't have any cards left to play. UA's FAs tried it but came back to reality when they realized that striking would put themselves out of a job. Talk about cutting off one's nose to spite the face. Unions are most definitely the "common man's" way of attempting to regulate the job market.

Ultimately, free market enterprise has the final word. For those that have been asleep for the last 25-30 years, the US is getting its ass kicked by foreign-owned and run companies (yes, airlines, too) that don't give a damn about fair market practice, let alone unions. Labor costs are the bane of many companies' existence, thanks at least in part to union hard-bargaining.

Quoting Phuebner (Reply 16):
Bring on the Delta and NW merge!!!!!!!

Ewwww, gross. Is it possible to create a more decrepit airline?!
DC-8 61/63/71 DC-9-30/50 MD-80/82/83 DC-10-10/30 MD-11 717 721/2 732/3/4/5/G/8/9 741/2/4 752 762/3 777 A306/319/20/33 AT
 
767Lover
Posts: 3254
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RE: Delta CFO: "Airline Is Tapped Out"

Wed Mar 15, 2006 11:29 am

Quoting Piercey (Reply 26):
I'm just trying to fathom what would happen to DL and its 90 mil+ passengers to the industry......

They will be fine...someone will come in and pick up the slack.

What worries me is the impact to the Southeast's largest city. The number of people in ATL who are either employed by Delta or employed by companies that serve Delta is mind boggling. Maybe I should put off my search for a new home...  scratchchin 

Seriously, though, Delta has royally screwed up too many times to count...from their egregious management windfalls to not taking AirTran seriously as a competitor until it was too late. If they fail, it was their own making.
 
skibum9
Posts: 862
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RE: Delta CFO: "Airline Is Tapped Out"

Wed Mar 15, 2006 11:48 am

Quoting Ckfred (Reply 25):
The leverage for Delta in court is that the union had agreed to arbitration, if a new agreement couldn't be reached by March 1. The arbitrator can rule for DL's proposal or ALPA's proposal, and that proposal is submitted to the court for approval, or so I understand situation.

You are incorrect. The arbitration panel only decides if the current contract can be terminated, not which proposal to take. If they decide to terminate the contract management is then free to impose the changes they propose immediately. If this occurs the pilots have said they will strike, even though they agreed to using the arbitration panel and picked 2 of the 3 panel members. Management would then ask for an immediate injunction against the work action. This is a grey area under the RLA and has never been tested, that is if a strike is legal. Now if the panel decided to not throw the contract out, management will be pretty much screwed because the pilots can just sit back and not give them anything. So in either case, the pilots have the trump card and the courts would need to figure out if a strike is legal.
Tailwinds!!!
 
tu154
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RE: Delta CFO: "Airline Is Tapped Out"

Wed Mar 15, 2006 11:50 am

If "good goes around," then "what goes around comes around".........Delta delt the death blow to Pan Am.....ran off with the crown jewels and left Pan Amers with their mouths hanging open and jobless. While Delta did not kill PAA per se, they had no intention of any kind of relationship with Pan Am after the European routes were officially transfered over.

Karma....it all comes full circle.
FIRST ON THE ATLANTIC.....FIRST ON THE PACIFIC.....FIRST IN LATIN AMERICA...FIRST 'ROUND THE WORLD.....PAN AM!!
 
nycfly75
Posts: 643
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RE: Delta CFO: "Airline Is Tapped Out"

Wed Mar 15, 2006 12:14 pm

Quoting Ptharris (Reply 28):
Other domestic carriers would thrive like we haven't seen them thrive before.

  



Quoting 767Lover (Reply 31):
They will be fine...someone will come in and pick up the slack.

  

COuldnt have said it better myself. Its somewhat about market forces now and survival of the fittest. If DL (and even NW) is destined to history, so be it. I think the US Aviation market will be fine with AA, CO, UA, US, B6, WN et.al. It will be a short term shock, but in the long term things would balance out nicely for the surviving carriers,their expanded networks and passengers.

[Edited 2006-03-15 04:17:15]

[Edited 2006-03-15 04:18:54]
 
ChiGB1973
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RE: Delta CFO: "Airline Is Tapped Out"

Wed Mar 15, 2006 12:44 pm

Quoting Piercey (Reply 26):
B6 isn't mismanaged. Their CEO, IMO, was the best with some hedges and breaks. now, B6's polish is wearing off, and they have to find profitable routes again



Quoting Lightsaber (Reply 27):
I would concur. B6 is well managed. I would also say WN's management is looking exceptional with those hedges. If anything, B6 will sell their oldest A320's onto the secondary market. Recall B6 has kept their dept to equity at 75%

Come on fellows. I'd give them a quarter or two of losses, after all, it is a tough industry, but predictions for the entire year from the head man. Having money in the bank is a great thing, but not making profits means losing that cushion. It's a loss for employees, investors and the airline as a whole. There is talk of deferring deliveries. Times change and things happen, but times did not change nor things happen in the past 3 quarters that weren't predictable. They deviated from their business plan and it's showing. I am certainly not counting them out, but once something starts going downhill with a predicted year of losses, it will take 2 (at the very least) to recover.

The 75% debt to equity ratio (however they worded it?) will be tough to hold on to. I don't see anything major happening to them, but there are some problems that this current management doesn't seem to be handling well.

M
 
jfr
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RE: Delta CFO: "Airline Is Tapped Out"

Wed Mar 15, 2006 12:50 pm

With both DL and NW in bankruptcy, it seems like a funny time for Malaysia Airlines to be considering joining Sky Team.
 
nycfly75
Posts: 643
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RE: Delta CFO: "Airline Is Tapped Out"

Wed Mar 15, 2006 12:54 pm

Quoting Jfr (Reply 36):
With both DL and NW in bankruptcy, it seems like a funny time for Malaysia Airlines to be considering joining Sky Team.

Why? You still have airlines like CO, AF and KL in Skyteam...I think if DL goes CO will step up to lead SKyteam with AF.

Vin
 
ckfred
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RE: Delta CFO: "Airline Is Tapped Out"

Wed Mar 15, 2006 12:54 pm

Skibum9:

I stand corrected. You're also right about the gray area of the RLA. Lawyers will be reading the Congressional Record to look into hearings and debates about the RLA, as it's been amended over the years, to see if there is any mention about bankruptcy proceedings, as well as the changes to the bankrutpcy code, after Frank Lorenzo put CO in bankruptcy, to get out of the labor contracts.
 
avconsultant
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RE: Delta CFO: "Airline Is Tapped Out"

Wed Mar 15, 2006 1:05 pm

Quoting 767Lover (Reply 31):
Seriously, though, Delta has royally screwed up too many times to count...from their egregious management windfalls to not taking AirTran seriously as a competitor until it was too late. If they fail, it was their own making.

I disagree, during J7 days, Delta was matching every move by J7. DL placed mainlined aircraft with double or triple mileage on competing routes and fare's sometimes $5 cheaper than J7.

There was investor conference in '98 or '99 where Gordon Bethune cited J7 as DL greatest distraction while CO expanded in S. and C. America. He desribed DL actions as child chasing a squirrel
 
airlinespotter
Posts: 76
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RE: Delta CFO: "Airline Is Tapped Out"

Wed Mar 15, 2006 1:09 pm

Did I hear the fat lady sing?
 
tu154m
Posts: 610
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RE: Delta CFO: "Airline Is Tapped Out"

Wed Mar 15, 2006 1:22 pm

Does anyone realistically see DL still being here by say 2008???? Seriously...........they have got to go down as one of the worst managed companies ever. Economics majors will hopefully be studying Leo Mullin era-DL to learn what not to do.
CEOs should swim with cement flippers!
 
nycfly75
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RE: Delta CFO: "Airline Is Tapped Out"

Wed Mar 15, 2006 1:27 pm



Quoting Airlinespotter (Reply 40):
Did I hear the fat lady sing?

Not yet, The Atlanta Philharmonic is warming up first.
 
phuebner
Posts: 240
Joined: Thu Feb 02, 2006 2:37 pm

RE: Delta CFO: "Airline Is Tapped Out"

Wed Mar 15, 2006 1:38 pm

Quoting 777fan (Reply 30):
Ewwww, gross. Is it possible to create a more decrepit airline?!

Sure, how about a DL NW and UA merge?  faint 
Remember this, Your Body is a temple Not a pull toy!
 
nycfly75
Posts: 643
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RE: Delta CFO: "Airline Is Tapped Out"

Wed Mar 15, 2006 1:45 pm

Quoting Phuebner (Reply 43):
Sure, how about a DL NW and UA merge?

Well at least UA understands the value of a premium TransCon Product.  Smile
 
skibum9
Posts: 862
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RE: Delta CFO: "Airline Is Tapped Out"

Wed Mar 15, 2006 1:47 pm

Quoting Tu154m (Reply 41):
Does anyone realistically see DL still being here by say 2008???? Seriously...........they have got to go down as one of the worst managed companies ever. Economics majors will hopefully be studying Leo Mullin era-DL to learn what not to do

How can you say that the actions of one (Leo Mullin) management team means the company is the worst managed "ever?" DL has a 75 year history of success. Yes, Mullin was terrible and he should be strung up by the gonads for his decisions, but he was not there the entire 75 years, nor was DL mismanaged the entire 75 years. Gernstein is doing his best to right the wrongs of Mullin. Hopefully he will suceed, but it will need help from all the employees, including the pilots. I hope they are around in 2008.

Now given your earlier comments about DL and Pan Am, shouldn't you also being "wishing" bad karma on UA as well?
Tailwinds!!!
 
phuebner
Posts: 240
Joined: Thu Feb 02, 2006 2:37 pm

RE: Delta CFO: "Airline Is Tapped Out"

Wed Mar 15, 2006 1:47 pm

Quoting Nycfly75 (Reply 44):
Well at least UA understands the value of a premium TransCon Product.

UHHHHHH, hahahahahaha...I don't get it.  Wink
Remember this, Your Body is a temple Not a pull toy!
 
eyeonthesky17
Posts: 54
Joined: Sat Jun 04, 2005 8:42 am

RE: Delta CFO: "Airline Is Tapped Out"

Wed Mar 15, 2006 1:56 pm

Quoting AirCanada014 (Reply 14):
I guess with all the international expansion i think they need to cut most of the non profit route before they expand. DL needs to think about cutting not adding routes. Hmm maybe no more DL in the sky or make them low cost carrier .

I COULD NOT AGREE MORE!!!

I resent all this crying and whining by a management team that ran this great carrier into the ground. The DL bankruptcy is a total embarrassment and is becoming a cancer on other carriers who are far more financially sound.

DL has no money, so here's what they do...

1. Force further financial concessions from the very people who are trying to save this sinking ship. A real morale booster.... good job DL.

2. Implement an unprecedented and COSTLY international expansion that is sure to see some spectacular failures, not to mention an inventory overload on the North Atlantic that will dilute yields of many healthy European and American carriers.

JFK-Kiev: What a ridiculous move. I bet they will be their own worst enemy on this route. I would expect more dilution from their own JFKSVO than actual passenger gains from any other competitor.

JFKTXL: Since they have now began giving away the premium cabin for under $2,500, one can easily assume that current performance must be abismal. Well deserved.

ATLVCE: Once again, they will be their own worst enemy. Expect dilution of JFKVCE and ATLFCO. The announcement of this route produced many hearty belly laughs from many of my colleagues

ATLTLV: The one smart move.... should have been added years ago. Although, I am sure that CO is not happy with this. CO got great feed for EWRTLV from the southeast. With alliance partners like DL, who needs competitors.

Last but not least..... The addition of all these domestic feeder segments in order to fill the JFK Atlantic routes. On paper, this is a great idea, but the reality of the situation is that Star and OneWorld have a firm grip on the corporate community in ROC, ALB, BUF, and SYR. DL has no Pacific network to leverage against Atlantic performance and will never be seen as a primary carrier in this region. UA/LH, AA/BA, and NW have phenominal Asian and European networks thus having a lock on these customers. CLE belongs to CO and EWR offers far easier connections than JFK. US has a good lock on PHL. They already have a strong network with plenty of nonstops.

All of this behavior is irresponsible. It is bad enough that the great employees of DL are being robbed of pay and benefits. What is worse is that they are attempting to raise cash by destroying the pricing power of those who are profitable or just coming out of a bad financial situation. If this trend at DL continues, I assure you we all will see pay cuts, regardless of what airline you work for. It is just deplorable and should stop immediately.
 
tu154
Posts: 334
Joined: Fri Dec 17, 2004 1:37 am

RE: Delta CFO: "Airline Is Tapped Out"

Wed Mar 15, 2006 2:01 pm

Now given your earlier comments about DL and Pan Am, shouldn't you also being "wishing" bad karma on UA as well?

Pan Am sold UA it's pacific division, and Heathrow rights. UA was awarded
it's Latin American division after PA shut down. There was no dirty playing on UA's part, big difference.


Also, don't flame tu154m, when it was tu154 that posted the comment on PA/DL.
FIRST ON THE ATLANTIC.....FIRST ON THE PACIFIC.....FIRST IN LATIN AMERICA...FIRST 'ROUND THE WORLD.....PAN AM!!
 
ua777222
Posts: 2987
Joined: Mon Dec 22, 2003 11:23 am

RE: Delta CFO: "Airline Is Tapped Out"

Wed Mar 15, 2006 2:08 pm

Quoting Tu154 (Reply 48):
Pan Am sold UA it's pacific division, and Heathrow rights. UA was awarded
it's Latin American division after PA shut down. There was no dirty playing on UA's part, big difference.

Awarded? More like took over or bought....

Matt
"It wasn't raining when Noah built the ark."

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