fantasticflyer
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Why Is Delta In Financial Trouble?

Sat Mar 25, 2006 4:55 am

I would really appreciated if someone could help me out here. I've been taking Delta for years now,and imo they always seem to have good deals and at least when I travel their planes are usually packed.

What is the reason behind Delta's financial trouble?
 
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SLCUT2777
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RE: Why Is Delta In Financial Trouble?

Sat Mar 25, 2006 5:07 am

Quoting FantasticFlyer (Thread starter):
What is the reason behind Delta's financial trouble?

Inept leadership! The biggest financial goofs that happened under previous CEO Leo Mullin were the acquisition of network carriers ASA and ComAir, which gave the cash reserve it's first big hit from high profits gained during the 1990's. the second big financial mistake was not renegotiating the pilots contract soon after 9/11. It finally was the first time in late 2004, but this should have happened two years earlier. If Delta had resisted buying ASA and ComAir, and redid the pilots contract in '02 rather than '04, and made many of the network changes in a measured way over time, I think it is quite a safe assumption they would be every bit as profitable as Continental right now if not more. Instead, they are a Chapter 11 sick step child like United and USAir were and in the same boat as Northwest. If Mullin had been given the boot in '02 I think workers would not be taking the steep cuts they've been forced to swallow and DL would be right up there as being one of the best managed carriers in North America and growing rather than relying on network carriers. But they will be back!
DELTA Air Lines; The Only Way To Fly from Salt Lake City; Let the Western Heritage always be with Delta!
 
MalpensaSFO
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RE: Why Is Delta In Financial Trouble?

Sat Mar 25, 2006 5:18 am

Quoting FantasticFlyer (Thread starter):
What is the reason behind Delta's financial trouble?

Inept Management
Greedy Pilots
Insane Leases
Less than Sensible Route Planning
Inconsistent Service
TO FLY IS TO SERVE
 
ikramerica
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RE: Why Is Delta In Financial Trouble?

Sat Mar 25, 2006 5:22 am

Outdated MD80 and 763 interiors
Song "experiment" devalued image on key transcon routes
Too much old, inefficient metal
Of all the things to worry about... the Wookie has no pants.
 
starrion
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RE: Why Is Delta In Financial Trouble?

Sat Mar 25, 2006 5:23 am

And the very basic fundamental problem that they are selling tickets for less than what their costs are in order to remain competitive.

The above posts explain why their costs are higher than their competitor's.
Knowledge Replaces Fear
 
fantasticflyer
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RE: Why Is Delta In Financial Trouble?

Sat Mar 25, 2006 5:25 am

Quoting SLCUT2777 (Reply 1):

Wow, thanks for the response ! I figured that it had to be something behind the scenes because as I said i've been taking Delta for years and i've never had any problems. Whether it be fares, which i've always found very reasonable, and/or customer service which imo has always been great. They took out food on certain flights but that was never a huge issue for me, so I was really stuggling trying to figure out what exactly their problems were, because I and obviously many others view them as an excellent airline.

I agree I believe that they will be back as well. It stinks that they are not in the position that they should be in because of poor leadership. Again Thanks
 
WesternA318
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RE: Why Is Delta In Financial Trouble?

Sat Mar 25, 2006 5:25 am

And not ot mention a CEO who didnt know A DAMN THING about the airline, ro the industry, and brought all his cronies in and the board gave ALL of them their blessing.
Check out my blog at fl310travel.blogspot.com!
 
fantasticflyer
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RE: Why Is Delta In Financial Trouble?

Sat Mar 25, 2006 5:30 am

Quoting Ikramerica (Reply 3):
Outdated MD80 and 763 interiors

Thats a pretty weak reason as to why they are in financial trouble. Are you saying that people dont want to fly Delta because they have outdated interiors?

Im NOT being snarky here, really just asking
 
fantasticflyer
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RE: Why Is Delta In Financial Trouble?

Sat Mar 25, 2006 5:34 am

Quoting Starrion (Reply 4):
And the very basic fundamental problem that they are selling tickets for less than what their costs are in order to remain competitive.

The above posts explain why their costs are higher than their competitor's

This is interesting. Your saying that they are selling tickets for less in order to remain competitive. But that for a flyer like myself is one of the reason why I fly Delta. Their tickets imo have always been reasonable. I dont even consider an airline like CO because they're charging 100-200$ more !!
 
MalpensaSFO
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RE: Why Is Delta In Financial Trouble?

Sat Mar 25, 2006 5:35 am

Quoting Ikramerica (Reply 3):
Outdated MD80 and 763 interiors

You mean... A N C I E N T

Quoting Ikramerica (Reply 3):
Song "experiment" devalued image on key transcon routes

And threw out the Premium traffic.. But we all know United and American are more than happy with the ex-Delta Premium traffic.. wink 

Quoting FantasticFlyer (Reply 8):
Thats a pretty weak reason as to why they are in financial trouble.

It is a direct result of bad decison making..

Quoting FantasticFlyer (Reply 8):
Are you saying that people dont want to fly Delta because they have outdated interiors?

Why would anyone want to fly on the "Biman" of North America?
TO FLY IS TO SERVE
 
ikramerica
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RE: Why Is Delta In Financial Trouble?

Sat Mar 25, 2006 5:38 am

Quoting FantasticFlyer (Reply 8):
Thats a pretty weak reason as to why they are in financial trouble. Are you saying that people dont want to fly Delta because they have outdated interiors?

CO got 40,000 paid miles from me last year, and one reason for me was the product. MD80s and run-down domestic 763s are a turnoff to me when I can pay CO the same price and get much more modern 737 and 757 interiors (though a few of their 757s are showing wear).

Other people on these threads have said the same thing about DLs interiors. Haven't read too many "CO's XXX interior was disgusting" threads.

AA had same complaints about MD80s until they upgraded them, and still get them re: the 757s. People DO care. I avoid AA because the routes they fly that I need out of LAX are mostly 757s and MD80s. If they were 738s, I'd be more interested.

It's one of MANY factors. I added some to a list already started by the posts above me.

Singling out that one factor I listed as the reason is "pretty weak" of you.

You have to combine it with the old metal comment: 732s, MD80s, old 763s. They go together. Give the impression of old, loud, dirty planes.

If you are going to pay the same price for a product and fly often, you might as well choose the one that seems like you are getting your money's worth.

The occasional flyer won't really know they could get better elsewhere. Airlines don't make their money on occasional flyers, however...
Of all the things to worry about... the Wookie has no pants.
 
WesternA318
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RE: Why Is Delta In Financial Trouble?

Sat Mar 25, 2006 5:38 am

Quoting FantasticFlyer (Reply 9):
I dont even consider an airline like CO because they're charging 100-200$ more !!

Funny, I'm more than willingto pay three times the price if it means DL would lose that money and CO can get me there.
Check out my blog at fl310travel.blogspot.com!
 
Pope
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RE: Why Is Delta In Financial Trouble?

Sat Mar 25, 2006 5:39 am

Cost > Revenue will always lead you to financial problems.
Hypocrisy. It's the new black for liberals.
 
fantasticflyer
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RE: Why Is Delta In Financial Trouble?

Sat Mar 25, 2006 5:40 am

Quoting MalpensaSFO (Reply 10):
Why would anyone want to fly on the "Biman" of North America?

I cant speak for everyone only myself, in that my one of my main considerations when flying is cost. If Delta has a flight for 180$ (this is all hypothetical of course) and CO has that same flight for 280$ im taking Delta. My thought process isnt on the interior decor
 
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1337Delta764
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RE: Why Is Delta In Financial Trouble?

Sat Mar 25, 2006 5:42 am

The interior issue is being fixed. So far, the new interiors have been done on some MD-88s, MD-90s, 757-200s, 767-300 domestic, and 737-800. I have flown on the 757 with the new interior.

[Edited 2006-03-24 21:43:32]
The Pink Delta 767-400ER - The most beautiful aircraft in the sky
 
fantasticflyer
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RE: Why Is Delta In Financial Trouble?

Sat Mar 25, 2006 5:44 am

Quoting Ikramerica (Reply 11):
Singling out that one factor I listed as the reason is "pretty weak" of you

I understood and agree with everything else you said that one in particular stuck out because people that I know who fly, interior isnt a major issue.

And I believe I said that I wasnt trying to be snarky I really wanted to know why you felt that was such a serious issues that would lead to financial issues. So there was no need for the little comment
 
MalpensaSFO
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RE: Why Is Delta In Financial Trouble?

Sat Mar 25, 2006 5:48 am

Quoting FantasticFlyer (Reply 14):
I cant speak for everyone only myself, in that my one of my main considerations when flying is cost. If Delta has a flight for 180$ (this is all hypothetical of course) and CO has that same flight for 280$ im taking Delta. My thought process isnt on the interior decor

That is very well.... For other people, as myself, an extra $100.00 or so is well spent on an airline that is not broke, falling apart, or a mess from the word go!

Quoting 1337Delta764 (Reply 15):
So far, the new interiors have been done on some

Some.... That always helps.... Some.....

Just like some... people chose to fly some... other airlines over Delta  wink 
TO FLY IS TO SERVE
 
azstagecoach
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RE: Why Is Delta In Financial Trouble?

Sat Mar 25, 2006 5:51 am

Contrary to your experience, out of the DC market they are consistently higher priced, not lower (of the majors).

As others have pointed out, the Delta planes flown are cosmetically falling apart, from brown paneling to ripped seats and seatback pockets. Still worse, their "updated" interiors don't seem updated at all, with no winged headrests or ife and less comfortable FC. More incredible still, they bought those pretty 764's and didn't bother putting in the IFE they were already wired for-- makes them look pennywise and pound foolish.

But even if DL raised their prices as others have suggested here, they would still have huge financial problems: they have leveraged everything they have and are as noted elsewhere on a.net are now borrowing for day-to-day operations. Pilots contracts and asa/comair aside, I really wonder what those dividends looked like in the late 90's. We already know where the profits weren't going, namely the pension plan.

Strange as it may sound, AA often has the lowest fares of the majors in the DC market. Not that AA has a much better product. -A
 
bobnwa
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RE: Why Is Delta In Financial Trouble?

Sat Mar 25, 2006 5:52 am

Quoting MalpensaSFO (Reply 10):
Why would anyone want to fly on the "Biman" of North America?

Kahala, how do you explain one of the highest load factors in the industry?
 
Cadet57
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RE: Why Is Delta In Financial Trouble?

Sat Mar 25, 2006 5:53 am

Quoting MalpensaSFO (Reply 17):
Some.... That always helps.... Some.....

you do realize that, well they arent done in a day and the entire fleet will take some time... sarcastic 

Quoting Ikramerica (Reply 11):
You have to combine it with the old metal comment: 732s, MD80s, old 763s. They go together. Give the impression of old, loud, dirty planes.

yes, but those planes are paid for..... hence the reason why they arent sitting in MHV right now or on their way to some third world airline.
Doors open, right hand side, next stop is Springfield.
 
boeingguy1
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RE: Why Is Delta In Financial Trouble?

Sat Mar 25, 2006 5:57 am

Quoting FantasticFlyer (Reply 9):
I fly Delta. Their tickets imo have always been reasonable. I dont even consider an airline like CO because they're charging 100-200$ more !!

...and now you know why CO acutally made money some quarters last year... compared to the hemmoraging DL did.
Gatwick South! Id rather crash in Brighton!
 
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SLCUT2777
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RE: Why Is Delta In Financial Trouble?

Sat Mar 25, 2006 5:58 am

Former CEO Leo Mullin was a classic example of a "Pig-at-the-trough!" All he did was loot DL for an outlandish salary and bonus $$$ while everyone began to suffer (the pilots a little later though). It was very clear right after 9/11 he was the wrong person to be running the company let alone an airline! Now Grinstien, Bastian and Whitehurst are left to clean up the mess of what was once a proud airline.
They do have the company on the right track however, and they have set up a more realistic network they can work with and have divested themselves of ASA as well as their unprofitable DFW hub and will divest ComAir during the remaining course of their Chapter 11 proceedings. I'm confident they will have a niche in 30-35% of their mainline flying to International destinations, especially to Latin America, Canada and Eastern Europe, the later being a new niche that no North American Carrier has sought to carve out a following of loyal customers. They will compete with AA for Latin America and AC for trans-49th routes, particualrly from their SLC hub.
Late this year or early next year they will emerge from Chapter 11 and start looking at some needed fleet additions and some retirements further of older a/c. I see them adding more 777s (200 & even 300 LR/ERs!) as well as getting an order in for some 787s not to mention the possibility of some Embraer 190/195s. I also see them finally getting some routes into China from their ATL hub and perhaps upon getting some LR/ER 777s getting a route or two into Australia. SLC will compete with DEN & UA for the western part of North America successfully and do something they couldn't do at DFW against AA and WN at DAL.
Yes folks, don't write DL off, they will be back!

[Edited 2006-03-24 22:02:42]
DELTA Air Lines; The Only Way To Fly from Salt Lake City; Let the Western Heritage always be with Delta!
 
WesternA318
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RE: Why Is Delta In Financial Trouble?

Sat Mar 25, 2006 6:04 am

Quoting Cadet57 (Reply 20):
Trespassers will be shot. Survivors will be shot again.

Cadet, that is AWESOME! Welcome to my RU list!
Check out my blog at fl310travel.blogspot.com!
 
Cadet57
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RE: Why Is Delta In Financial Trouble?

Sat Mar 25, 2006 6:05 am

Quoting Boeingguy1 (Reply 21):
...and now you know why CO acutally made money some quarters last year... compared to the hemmoraging DL did.

why? because the happened to charge less on a route? CO is unbeleiveable out of BDL, I never fly them... its either AA, US, or DL as they are by far a BETTER, CHEAPER, and PLESANT airline
Doors open, right hand side, next stop is Springfield.
 
WesternA318
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RE: Why Is Delta In Financial Trouble?

Sat Mar 25, 2006 6:08 am

Quoting Cadet57 (Reply 24):
CO is unbeleiveable out of BDL, I never fly them... its either AA, US, or DL as they are by far a BETTER, CHEAPER, and PLESANT airline

I think all we fly there now is mainly ERJS from all 3 hubs, and the occasional 737 from IAH.
Check out my blog at fl310travel.blogspot.com!
 
AADC10
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RE: Why Is Delta In Financial Trouble?

Sat Mar 25, 2006 6:13 am

DL also had a couple of other problems. The large L-1011 and later 767 fleets gave them very extensive widebody service throughout the country but as airlines moved toward more frequent flights and more point-to-point travel the 2 aisle jets were not as useful, although nicer to fly in than a 737.

DL was also sheltered from LCCs until realtively recently when AirTran/ValueJet got their act together and B6 started taking the NY-FL market. Over in the west, UA, WN, HP, AA, CO, and US battled it out for years with the last three giving up many of their former flight there.

They also had less to cut since DL is far less unionized than any other legacy or WN. The other legacies got tremendous consessions from the unions but DL only had the pilots. They had already squeezed everybody else and had nowhere to go.
 
MrMcCoy
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RE: Why Is Delta In Financial Trouble?

Sat Mar 25, 2006 6:19 am

Quoting Ikramerica (Reply 3):
Outdated MD80 and 763 interiors
Song "experiment" devalued image on key transcon routes
Too much old, inefficient metal

If you are implying that this is why Delta is flopping, then my sir you might want to grab a copy of the airline's year-end records and give them a once-over. True these items are detractors to the quality of the airline, but $200mil aircraft with sparkling interiors aren't going to suddenly "make money for the airline." Delta has above-average full-to-empty seat ratios, alluding to much deeper issues than equipment choice.

Leasing, Pilot Contracts, Fuel Costs, Poor Aquisition Choices, etc. -- THOSE are good reasons why Delta has been thrown under the bus.
It only takes five years to go from rumor to standard operating procedure.
 
gigneil
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RE: Why Is Delta In Financial Trouble?

Sat Mar 25, 2006 6:20 am

Quoting FantasticFlyer (Reply 5):
Whether it be fares, which i've always found very reasonable

That's the problem right there. You get a lot of customers by giving your product away, but you don't really make any money.

N
 
DL787932ER
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RE: Why Is Delta In Financial Trouble?

Sat Mar 25, 2006 6:22 am

One thing that no one's mentioned yet on this thread is the revenue side of the equation. DL is probably the legacy with the most direct LCC competition, with FL based out of DL's main hub and B6 opening a New England-Florida network in direct competition. Since DL had a lower proportion of its revenues from LCC-free international flights than almost any other legacy, the lack of any pricing power in the areas where they were strong domestically has really hurt their RASM. Moving assets to international routes and reducing domestic capacity on lower-yielding routes where LCCs can set the pricing will help DL's revenues come back as the cost-saving measures of the past year or so begin to take effect.
F L Y D E L T A J E T S
 
MrMcCoy
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RE: Why Is Delta In Financial Trouble?

Sat Mar 25, 2006 6:30 am

Exactly, that's why anyone who wants to really know what's happening with Delta needs to grab a copy of the 4Q05 financial report and read it cover to cover comparing it to 4Q03, 02, and 01.
It only takes five years to go from rumor to standard operating procedure.
 
jetdeltamsy
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RE: Why Is Delta In Financial Trouble?

Sat Mar 25, 2006 6:42 am

Quoting FantasticFlyer (Thread starter):
What is the reason behind Delta's financial trouble?

Low cost carriers. September 11. A changing world economy. Fuel prices. Leo Mullin. Leo Mullin. Leo Mullin.
Tired of airline bankruptcies....EA/PA/TW and finally DL.
 
rwsea
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RE: Why Is Delta In Financial Trouble?

Sat Mar 25, 2006 7:02 am

1) As mentioned, DL has taken a huge hit in Florida which has historically been their market. FL, B6, and to a lesser extent WN have taken a huge bite into DL's yields. DL used to fly 10-14x daily 763/764 on routes like ATL-FLL, ATL-MCO, and ATL-MIA. And it isn't that this was too much capacity - prior to 9/11 DL was the most profitable carrier. I think this is a direct result of LCC competition. DL will always be strong in Florida given their strength in ATL, MCO, FLL, and in the Northeast, but they'll start to realize better yields in the coming months as they put 757s/M88s on these routes in place of widebodies.

2) DL has a fragmented and inefficient fleet, which has left them exposed to higher fuel costs. This situation will improve with the retirement of the 762/732. However, things won't improve fully until the airline can replace its current narrowbody fleet with E90/73G/738.

3) After 9/11, many European flights were cut and the capacity was reallocated to Florida. We are now seeing a reversal with these planes being taken away from Florida and sent back to Europe/Asia/South America.

4) Delta pilots were the highest paid in the industry prior to 9/11, and are still today. They need to take a paycut. Of course, I would expect the Company to give them a stake in the reorganized company, including some stock options and maybe an agreement that they will receive raises when the company is profitable again. Same for FA's and other front-line employees.

5) Prior to 9/11, DL relied more than other carriers on hub and spoke. Problem with this is that 2 of their 3 largest hubs (CVG, SLC) do not have strong business O&D traffic. Hubs like ORD, DTW, IAH, DFW, and DEN generate strong business traffic already, and connecting traffic is icing on the cake. DL suffered because they had less O&D traffic to their hubs, and in many cases their yields suffer because people would rather pay $50 more and fly non-stop to ORD then go through CVG. At the same time, this model costs the airline more than P2P. The situation has been improved in the past couple of years, with closing of the DFW hub, shrinking of CVG, and expansion of SLC.

DL has lots of problems, but I think they've done a great job of lowering costs and have made lots of positive changes that should boost revenue (e.g. international expenses). The biggest remaining challenge seems to be the fleet - and hopefully this is something that can be corrected after bankruptcy.
 
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SLCUT2777
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RE: Why Is Delta In Financial Trouble?

Sat Mar 25, 2006 7:20 am

Quoting RwSEA (Reply 32):
2) DL has a fragmented and inefficient fleet, which has left them exposed to higher fuel costs. This situation will improve with the retirement of the 762/732. However, things won't improve fully until the airline can replace its current narrow-body fleet with E90/73G/738.

Quite honestly I think that getting rid of ALL the remaining "MDs" will help and going with a few more 73G or 738 will improve yields, and for smaller markets the Embraer 190/195 should also help considerably (The E-170/175 should work well for SkyWest, Shuttle America in the future)

Quoting RwSEA (Reply 32):
5) Prior to 9/11, DL relied more than other carriers on hub and spoke. Problem with this is that 2 of their 3 largest hubs (CVG, SLC) do not have strong business O&D traffic. Hubs like ORD, DTW, IAH, DFW, and DEN generate strong business traffic already, and connecting traffic is icing on the cake. DL suffered because they had less O&D traffic to their hubs, and in many cases their yields suffer because people would rather pay $50 more and fly non-stop to ORD then go through CVG. At the same time, this model costs the airline more than P2P. The situation has been improved in the past couple of years, with closing of the DFW hub, shrinking of CVG, and expansion of SLC.

Like PIT was for US, CVG is a market in decline despite the presence of the likes of The Kroger Companies as well as Proctor & Gamble, DL was wise to cut down this hub since O&D traffic will decline still further. SLC on the other hand is a fast growing market and a good central point in the western part of the North American continent which is why WA made the logistical choice to hub there back in 1982. While the metro population is still small for a hub (@1.7million when the entire Wasatch Front is included), the growth in SLC will be similar to how the growth in DEN has helped UA there and why UA kept a hub there despite being smaller in market size than SFO, LAX, ORD or IAD.. SLC will likely become DL's #2 hub after ATL in the next couple of years.
DELTA Air Lines; The Only Way To Fly from Salt Lake City; Let the Western Heritage always be with Delta!
 
fantasticflyer
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RE: Why Is Delta In Financial Trouble?

Sat Mar 25, 2006 7:40 am

Quoting RwSEA (Reply 32):

Really appreciate the response
 
MalpensaSFO
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RE: Why Is Delta In Financial Trouble?

Sat Mar 25, 2006 8:43 am

Quoting Bobnwa (Reply 19):
Kahala, how do you explain one of the highest load factors in the industry?

High Load factors have nothing to do with the bottom line... High Load factors dont bring in the money, high ticket revenue does. You can fill a 767 with 220 seats at a $150.00 ticket cost, it takes a lot more to fill a 767 with 220 seats at a $350.00 ticket cost... It takes a lot more to fill an aircraft at a profit than it does at a loss. For some reason Delta and Northwest are just waking up to this reality.

There is a reason why Delta and Northwest are broke...

Years of cheap tickets, low yield market concentration, crap for management, outdated fleets, lack of customer service, and outsourcing fever!
TO FLY IS TO SERVE
 
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SLCUT2777
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RE: Why Is Delta In Financial Trouble?

Sat Mar 25, 2006 10:00 am

Quoting MalpensaSFO (Reply 35):
High Load factors have nothing to do with the bottom line... High Load factors don't bring in the money, high ticket revenue does. You can fill a 767 with 220 seats at a $150.00 ticket cost, it takes a lot more to fill a 767 with 220 seats at a $350.00 ticket cost... It takes a lot more to fill an aircraft at a profit than it does at a loss. For some reason Delta and Northwest are just waking up to this reality.
There is a reason why Delta and Northwest are broke...
Years of cheap tickets, low yield market concentration, crap for management, outdated fleets, lack of customer service, and outsourcing fever!

In the case of NW I think virtually all can be said, some can be said for DL, which is why I think NW is going to go down into Chapter 7 if anyone does.
DELTA Air Lines; The Only Way To Fly from Salt Lake City; Let the Western Heritage always be with Delta!
 
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chrisnh
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RE: Why Is Delta In Financial Trouble?

Sat Mar 25, 2006 10:56 am

Labor costs are too high. It's understood that this is the problem, but the convenience of blaming 'fuel' masks the other obvious problem: Labor. One way of dealing with it is to get rid of people, and that causes two problems. One, you get rid of good people who do good work. Second, the people still around (and I'm speaking BOTH of rank-and-file as well as management) STILL pull down BIG BUCKS. They are paid WAY more than they are worth, and again I'm speaking of rank-and-file as well as management. I'm not playing favorites here.

So, Delta and all airlines would do well to pay people a whole lot less and keep more of them. The answer isn't to shed workers; the answer is to keep the people and ratchet down their pay. And none of this 'easy-for-you-to-say' whining; people in ALL industries have seen rollbacks in pay/compensation, so I'm not picking on one airline or one industry. It is utterly stupid to fire five good rank-and-file workers just so Mr. Executive can get his fat salary.
 
bobnwa
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RE: Why Is Delta In Financial Trouble?

Sat Mar 25, 2006 10:50 pm

Quoting MalpensaSFO (Reply 10):
Why would anyone want to fly on the "Biman" of North America?



Quoting MalpensaSFO (Reply 35):
High Load factors have nothing to do with the bottom line

Kahala, you implied that no-one would want to fly Delta and I am countering with their high load factors. The botton line was not under discussion but I am very well aware that high load factors have little to do with profitability.

Lets stick to the subject, shall we LHR001.
 
boeingguy1
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RE: Why Is Delta In Financial Trouble?

Sat Mar 25, 2006 11:53 pm

Quoting Cadet57 (Reply 24):
why? because the happened to charge less on a route? CO is unbeleiveable out of BDL, I never fly them... its either AA, US, or DL as they are by far a BETTER, CHEAPER, and PLESANT airline

Well, I might agree with you on US, but AA and DL are certainly not better (service and quality wise) than CO. And yes, because DL charges LESS on most routes, that is why they are loosing a lot of money... Simple economics 101.
Gatwick South! Id rather crash in Brighton!
 
dl757md
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RE: Why Is Delta In Financial Trouble?

Sun Mar 26, 2006 12:14 am

Quoting ChrisNH (Reply 37):
They are paid WAY more than they are worth, and again I'm speaking of rank-and-file as well as management.

Currently all Delta employees including management and excluding pilots are in the bottom third of their respective industy-wide payscales.

Quoting ChrisNH (Reply 37):
The answer isn't to shed workers; the answer is to keep the people and ratchet down their pay.

Ratcheting down pay has the same effect as shedding workers. The most experienced and talented leave for greener pastures elsewhere. While a number of those remaining become less productive. At delta Tech Ops we've experienced three post 9-11 RIFs (Reduction In Force) previous to the current one happening know. In each of those, few if any employees we're involuntarily furloughed. Many retired, many more took voluntary severance resulting in the fact that most who wanted to stay with the company were able to do so. The current RIF is getting rid of a lot off of the bottom because many of the more experienced employees who wanted to leave have already done so. So we'e lost our most experienced old timers and now we're losing much of our fresh blood. Yes the company wanted to get rid of employees but it was because of the pay issue that they lost many of their most experienced people.

DL757Md
757 Most beautiful airliner in the sky!
 
jetbluefan1
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RE: Why Is Delta In Financial Trouble?

Sun Mar 26, 2006 12:26 am

My parents flew JFK/LGA-ATL-STT-ATL-JFK this past week. The round trip price for their flights was over $730 when booking several weeks in advance. To me that's absolutely ridiculous for a flying out on a Tuesday (see: least traveled day) and returning on a Friday (see: the day that everyone goes to STT, not comes back), but nevertheless, no LCC's are on the route and they were willing to pay it.

The day they left (this past Tuesday), they had to wake up at 4:00am and be at JFK by 5am for a 6am flight to ATL. Unfortunately, the flight was delayed six and a half hours, and there was no way they'd be able to make the connection to the only flight DL has to STT. So they grabbed a cab at their own expense and headed over to LGA and just made the 6am flight there. Once they got to ATL, the STT flight was delayed for an hour. On the return, the outbound flight was a bit behind schedule, and the ATL-JFK flight had a 25 minute delay.

When I went to JFK to pick them up, they told me DL is really falling apart and it was really not a good experience at all. At $730 pp r/t, they were frustrated. To DL's credit, however, it managed to get their luggage though the transfer in ATL required going from Terminal A to Terminal E.

I'm not trying to come down hard on DL here, but it just seems like they had an all-around lousy experience. I flew DL to IAH (via ATL and CVG) last year and thought it was great. I'm flying DL again to PVR this April and hope to have the same experience. But it seems that, from my parents' experience with them this past week, the quality of service that DL offers has really declined. I hope DL can prove me wrong with my next experience.

JetBluefan1
 
scalebuilder
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RE: Why Is Delta In Financial Trouble?

Sun Mar 26, 2006 2:07 am

Quoting MalpensaSFO (Reply 35):
High Load factors dont bring in the money, high ticket revenue does.

All of this I can agree with, but you also have to add low and controllable operating costs to your equation. Should your cost exceed your revenue, Delta will still lose money despite the fact that revenues exceed that of the competition.

For several years now the legacy carriers have already faced the fact that operating costs is the only thing left for them to influence or control in any way to stay alive. That is why you have seen an increase in bankruptcy protection. It will give each of them that breather to scale back the defined benefit plan, lease rates etc.. Revenues are controlled by competitive pressures. No legacy carrier is large enough these days to effectively control its competition. Good for you and me and the traveling public.

Not much can be done becoming more competitive except making fares cheaper which will also hurt the airline and its margins. Costs such as those associated with employees are controlled by these forces too, but certainly not to the same degree. They are largely fixed of nature. Fuel costs are pretty much uniform across the board as well.

So here is Delta still paying their employees premium compared to the industry, they maintain and support pension plans that corporate America, including most other airlines, do not provide for their employees anylonger. These are very costly. They face stubborn unions that still expect this. Delta will never succeed unless the cost of employees is as variable as the cost of flying to the public. This may never happen.

Over the years, this has resulted in financial distress. When such occurs, your credit rating will suffer, your cost of capital will go up and so will your lease rates. Suddenly you have just become more risky to make a deal with.

It is ironic. I paid less for my Southwest ticket the other day compared to Northwest. I received the expected drink and snack, and I would not if I had flown Northwest. Could not care less about either the drink or the snack, but cost cutting shows up in the wrong place on the legacies. They pay their flight crew more for delivering less to the passenger than the low costs. The face of flying just changed for the public, and it came unexpected. The flying commoner never expected cheaper fares to come at the expense of the free soda. Bad reflection of the airline, and a strong symptom that something isn't working right internally within the airline when it comes to defining your customer.
Go the extra mile......and avoid the traffic!!!
 
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SLCUT2777
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RE: Why Is Delta In Financial Trouble?

Sun Mar 26, 2006 4:18 am

Quoting Scalebuilder (Reply 42):
So here is Delta still paying their employees premium compared to the industry, they maintain and support pension plans that corporate America, including most other airlines, do not provide for their employees any longer. These are very costly. They face stubborn unions that still expect this. Delta will never succeed unless the cost of employees is as variable as the cost of flying to the public. This may never happen.
Over the years, this has resulted in financial distress. When such occurs, your credit rating will suffer, your cost of capital will go up and so will your lease rates. Suddenly you have just become more risky to make a deal with.

Delta is the least unionized of the major legacy carriers. But yes this defined pension retirement benefit plan is costly and for non-pilot employees it can and must be phased out and replaced by a 401k plan. It is unrealistic even for AA and CO to assume that they can keep their retirement benefits in place as presently constituted. Delta employees however have taken pay-cut after pay-cut to the point that they are at the end of their respective financial ropes. Delta pilots on the other hand feel are being singled out as the only organized classification of employees at Delta and they are putting up a fight over what they are being asked for additionally, but the best thing will likely prevail in the end of this standoff.
Your comments probably can be better applied to Northwest Airlines which is why they are in a terrible state financially. Delta on the other hand has made drastic changes already, and with the right deals in place can come out of this mess and be a player again. Northwest's financial status might be worth another thread however.  stirthepot 
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GQfluffy
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RE: Why Is Delta In Financial Trouble?

Sun Mar 26, 2006 4:28 am

Quoting MalpensaSFO (Reply 2):
Less than Sensible Route Planning

I know this may be on OO, not DL, but last May I took a flight out of HLN to SLC at 8:30 pm. Anyone who knows Montana knows the loads out of ANY city in Montana at that time of night are not going to be full...much less profitable. There was me (non-reving obviously), two other non-revs, and ONE paying passenger. The flight crew and the f/a (who was 20...rather cute...and had a Starbucks with me in SLC  bigthumbsup  ...still got her email addy  checkmark  )...were remarking on how much money DL was losing on this flight, laughing and cracking jokes, then got to work. It amazed me that they even bothered operating that flight. They've now cut way back in Montana, which even though it hurts us non-revs trying to fly, I hope it helped out the cashflow....

Sorry for the random story, but it's probably useless flights like these that help drain DL...and OO...
This isn't where I parked my car...
 
RiddlePilot215
Posts: 280
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RE: Why Is Delta In Financial Trouble?

Sun Mar 26, 2006 4:47 am

Quoting MalpensaSFO (Reply 2):

Inept Management
Greedy Pilots
Insane Leases
Less than Sensible Route Planning
Inconsistent Service

Let's take the pilots out of the equation.......An airline pilot is still one of the most stressful jobs on this planet, next to being a controller. You can't put a price on safely delivering 250 people to a destination 1/4 to 1/2 the way around the world, on time.


If anything DL is just too big, too inefficient, with too many a/c types in it's fleet. They at max operated like 10 - 12 different types of a/c.

EMB-120, CRJ's, B727, B737. DC9, MD88, MD90, L1011, B757, B767, B777, MD11. Hell they even operated the DC-10 (in the 80's), 747 (in the 70's), and the A310 (after buying out PA's assets).

Delta's time has come. We just need to accept it.
God is good, all the time. All the time, God is good.
 
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TVNWZ
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RE: Why Is Delta In Financial Trouble?

Sun Mar 26, 2006 5:10 am

I fly Delta often from TPA through ATL. I find them, mostly, on time, efficient and friendly. I find the interiors clean. The lights work. The seats work. And the Diet Coke refreshing. Often the prices are competitive.

The rest is Blah. Blah. Blah.
 
Glareskin
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RE: Why Is Delta In Financial Trouble?

Sun Mar 26, 2006 5:36 am

Quoting FantasticFlyer (Reply 14):
I cant speak for everyone only myself, in that my one of my main considerations when flying is cost. If Delta has a flight for 180$ (this is all hypothetical of course) and CO has that same flight for 280$ im taking Delta. My thought process isnt on the interior decor

Some years ago I followed the same decisive process. And back then I ended up with Delta a lot of time (20 plus segments a year) because they are cheap. But I came to the conclusion that I prefer paying a little more for not being annoyed before, during and after flights. Delta is one of the worst airlines I've experienced.
There's still a long way to go before all the alliances deserve a star...
 
DL4EVR
Posts: 635
Joined: Sun Jan 15, 2006 3:46 am

RE: Why Is Delta In Financial Trouble?

Sun Mar 26, 2006 5:53 am

Quoting RiddlePilot215 (Reply 45):
If anything DL is just too big, too inefficient, with too many a/c types in it's fleet. They at max operated like 10 - 12 different types of a/c.

EMB-120, CRJ's, B727, B737. DC9, MD88, MD90, L1011, B757, B767, B777, MD11. Hell they even operated the DC-10 (in the 80's), 747 (in the 70's), and the A310 (after buying out PA's assets).

Delta's time has come. We just need to accept it.

The DC-10's were from the Western acquisition and were only used for about 2 years.
And DL's time has not come. They are not going anywhere.
We Love To Fly And It Shows.
 
MalpensaSFO
Posts: 1110
Joined: Mon Feb 20, 2006 10:17 am

RE: Why Is Delta In Financial Trouble?

Sun Mar 26, 2006 7:08 am

Quoting DL4EVR (Reply 48):
And DL's time has not come. They are not going anywhere.

Except in the direction of the Bankruptcy judge... wink 
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SLCUT2777
Posts: 3407
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RE: Why Is Delta In Financial Trouble?

Sun Mar 26, 2006 7:26 am

Quoting GQfluffy (Reply 44):
I know this may be on OO, not DL, but last May I took a flight out of HLN to SLC at 8:30 pm. Anyone who knows Montana knows the loads out of ANY city in Montana at that time of night are not going to be full...much less profitable. There was me (non-reving obviously), two other non-revs, and ONE paying passenger. The flight crew and the f/a (who was 20...rather cute...and had a Starbucks with me in SLC ...still got her email addy )...were remarking on how much money DL was losing on this flight, laughing and cracking jokes, then got to work. It amazed me that they even bothered operating that flight. They've now cut way back in Montana, which even though it hurts us non-revs trying to fly, I hope it helped out the cashflow....
Sorry for the random story, but it's probably useless flights like these that help drain DL...and OO...

Helena (HLN) is probably a community subsidized flight by the Feds. Go to Great Falls (GTF) or Kalispell (FCA) and you'll see high frequencies of CRJ's for DC/SkyWest that are at least half full coming out of Montana. Full of many Canadian passengers from SW Alberta saving $200 or so by not getting on at YYC and driving across the border.  twocents 
DELTA Air Lines; The Only Way To Fly from Salt Lake City; Let the Western Heritage always be with Delta!

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