LCFreeman49
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Delta Looking At Selling Off Comair

Wed Mar 28, 2007 4:18 am

http://news.enquirer.com/apps/pbcs.d...AID=/20070327/BIZ01/303270017/1076

I was looking at the Cincinnati Enquirer online addition this afternoon and came across this. My question is who would be interested in purchasing Comair? Anyone's thoughts on this?

I don't understand why Delta does not spin off Comair like Continental did Express Jet, this would make DL a nice return in my opinion.

Any thoughts?

[Edited 2007-03-27 21:20:12]
Thanks For Flying with Delta....
 
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chrisnh
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RE: Delta Looking At Selling Off Comair

Wed Mar 28, 2007 4:23 am

You hit the nail on the head: a seller without a buyer. I don't know why anyone would want 'in' on the airline business these days, unless to secure some assets and dispense with the rest.

Chris in NH
 
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EA CO AS
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RE: Delta Looking At Selling Off Comair

Wed Mar 28, 2007 4:38 am

Hmm...a regional flying less-than-efficient CRJ200 equipment and built so they can really only efficiently feed traffic to one U.S. major without investing a lot more money in establishing footholds elsewhere.

Yeah, sign me up for THAT one...
"In this present crisis, government is not the solution to our problem - government IS the problem." - Ronald Reagan

Comments made here are my own and are not intended to represent the official position of Alaska Air Group
 
deltadc9
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RE: Delta Looking At Selling Off Comair

Wed Mar 28, 2007 4:45 am

Quoting EA CO AS (Reply 2):
Yeah, sign me up for THAT one...

Dont forget the recent major accident 75 miles from the home office....not exactly a perk
Dont take life too seriously because you will never get out of it alive - Bugs Bunny
 
worldtraveler
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RE: Delta Looking At Selling Off Comair

Wed Mar 28, 2007 4:49 am

Your assessments are not accurate.

First, DL has spent a considerable amount of time and energy getting Comair’s costs down without breaking them. Secondly, DL has used the BK process to remove as many 50 seaters from its Delta Conx program as possible and OH took the biggest hit which means they have more upside on improved costs. Third, DL has a significant number of larger RJs on order which Comair could be awarded by Delta – and which any purchaser would want in order to increase OH’s value. Fourth, Comair has historically run a very good airline. They have had their problems of late but DL selected them to fly in the NE because they have the operational experience to deliver in tough environments. There will always be a market for subcontracted services in any industry and that is exactly what the regional airlines provide. It doesn’t matter what OH flies; they have value as long as there is a predictable revenue stream which DL or other carriers can provide them.

Comair is not a dead airline. Unlike ASA which had to be sold at firesale processes in a hurry prior to DL’s BK filing, DL is not rushed to sell Comair. DL has a pretty strong balance sheet coming out of BK and it will only get stronger if they sell off Comair, which is pretty likely.
 
Lono
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RE: Delta Looking At Selling Off Comair

Wed Mar 28, 2007 4:54 am

Anyone know how much DL paid for Comair...?????
And does anyone think DL can get a decent return... or will they dump it....????
Who would be interested in buying this carrier with its history of labor unrest????
Wally Bird Ruled the Skys!
 
2H4
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RE: Delta Looking At Selling Off Comair

Wed Mar 28, 2007 4:57 am




Quoting WorldTraveler (Reply 4):
They have had their problems of late but DL selected them to fly in the NE because they have the operational experience to deliver in tough environments.

From what I've heard, most of that operational experience has left the company and gone on to work for companies that they feel offer some degree of long-term job security. The most experienced schedulers/dispatchers/etc have left, and operational efficiency has significantly deteriorated as a result.


2H4


Intentionally Left Blank
 
Danairbus
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RE: Delta Looking At Selling Off Comair

Wed Mar 28, 2007 4:59 am

Quoting Lono (Reply 5):
Anyone know how much DL paid for Comair...?????

Delta paid $2.3 billion for Comair in 2000.
 
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RE: Delta Looking At Selling Off Comair

Wed Mar 28, 2007 5:02 am

Quoting WorldTraveler (Reply 4):
Your assessments are not accurate.

Are they? Explain to me how a potential buyer would have enough lift available to pull from the DL operation and respond to other majors' RFPs for cost-plus flying? Or how inexpensively they can move that lift and support to wherever that new major partner or partners may need them?

Comair is really only worthwhile if they can get newer, more efficient 70-plus seaters AND bid for other majors' flying in competing markets.
"In this present crisis, government is not the solution to our problem - government IS the problem." - Ronald Reagan

Comments made here are my own and are not intended to represent the official position of Alaska Air Group
 
Lono
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RE: Delta Looking At Selling Off Comair

Wed Mar 28, 2007 5:10 am

Quoting Danairbus (Reply 7):
Delta paid $2.3 billion for Comair in 2000.

Thanks for that information.... $2.3 billion..... I wonder what DL is claiming this airline is worth in their B/R plan????

DL is saying "after"they come out of B/R they will look at Comair and see if it is worth having.... will they then ask $2.3 billion...???? I have a hard time thinking that anyone is in the market for the Comair business model.... especially at $2.3 billion.... I just don't see it....
Wally Bird Ruled the Skys!
 
okie73
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RE: Delta Looking At Selling Off Comair

Wed Mar 28, 2007 5:16 am

keep in mind, during the Bankruptcy process Delta wrote off the value of CMR. No matter what they sell CMR for, it will be shown as a profit, and I think Delta will be happy to get rid of them.
 
floridaflyboy
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RE: Delta Looking At Selling Off Comair

Wed Mar 28, 2007 5:25 am

Quoting 2H4 (Reply 6):
From what I've heard, most of that operational experience has left the company and gone on to work for companies that they feel offer some degree of long-term job security. The most experienced schedulers/dispatchers/etc have left, and operational efficiency has significantly deteriorated as a result.

That's very true. That said, though, I could see a SkyWest bid for Comair. But only under certain conditions. Essentially it would have to be a great deal money-wise, and they would have to of course evaluate whether they want to get into that kind of labor situation or not.
Good goes around!
 
ramerinianair
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RE: Delta Looking At Selling Off Comair

Wed Mar 28, 2007 5:32 am

This will be one of the worst RONs ever. Delta will loose a ton of money on Comair if/when they get rid of Comair. Their previous management had no insight in the industry. At least Gordo saw the CRJs being phased out due to high costs and spun off ExpressJet.
SR
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flavio340
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RE: Delta Looking At Selling Off Comair

Wed Mar 28, 2007 5:45 am

What about Skywest doing like Airwiskie did with US Airways, buy so much into the 'new' Delta and there by getting a place on the board of directors? This would give Skywest a reason to buy Comair and Delta would not lose out of having a stable regional airline doing their smaller flying. If I am not mistaken Skywest does more flying for Delta than any other airline. This would also make Delta a smaller airline because Delta unlike other airlines (AA) includes Comair's flying into their ASM reports. As we all know a smaller airline has a better chance of buying or merging, which Delta's out going CEO says is not out of the world of possibilities for Delta.
 
srbmod
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RE: Delta Looking At Selling Off Comair

Wed Mar 28, 2007 5:53 am

Quoting WorldTraveler (Reply 4):
Unlike ASA which had to be sold at firesale processes in a hurry prior to DL’s BK filing, DL is not rushed to sell Comair

Both OH and EV were up for sale prior to the Chapter 11 filing. The fact is that nobody was interested in OH because of the pilot's strike of 2001 and the ops meltdown during Christmas of 2004 also gave the airline a black eye as well.

It was thought a few years back, that DL was going spin Delta Connection Inc. off ala ExpressJet and Pinnacle, but that never happened.

I foresee Comair ending up being owned by either Republic or Mesa. I doubt SkyWest wants to add another dysfunctional airline to their family. Or perhaps some private investment firm will step in and make an offer. But when you consider that part of Comair's fleet is owned by DL, not OH, that may make it a little harder to sell off the airline unless those DL-owned a/c are included in the deal.
 
worldtraveler
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RE: Delta Looking At Selling Off Comair

Wed Mar 28, 2007 5:56 am

In retrospect, DL did buy ASA and Comair at the worst time and lost much of the value associated with its acquisition. They also did not manage either OH or EV aggressively enough to keep them from becoming the problems they were going into BK. However, DL did write the assets off so they will benefit by selling them. And it will be hard cash… any cash will help DL’s balance sheet… which will be used to help them buy more airplanes and compete more aggressively. Since there aren’t many assets left in the US network carriers’ portfolios, DL does have an advantage. I would personally far rather see DL use the money to buy some 777s and 787s than to keep Comair.

EA CO AS,
You miss the point. It doesn’t matter what aircraft OH uses. They bid on their flying based on the equipment they fly. There are plenty of 50 seat jets in the US airline fleet so there are many comparisons that can be made between OH and other carriers. If OH is competitive – which DL is putting them in a position to be – it doesn’t matter what OH flies as long as other network carriers fly the same aircraft and OH has comparable costs to its peers It is DL’s problem that the CRJ is no longer as competitive as it once was – but that is why DL has/ is removing about 100 smaller CRJ/ERJs from its fleet. The cost of operating those aircraft is factored into the routes they fly – but there are still many routes where they make sense; the 50 seater is not dead but it’s not as valuable as it once was. There are and will be 50 seat jets in the US fleet for years to come and they are flying under contracts similar to what OH could get from DL or other carriers.

The point, though, is that any purchaser of OH simply will want to see that there are guaranteed revenues on the books into the future which OH will have by virtue of its contracts with DL and any other contracts they might acquire by the time they are sold.

And as was said, DL does have larger RJs which it could deploy to OH in order to boost its value. But OH’s value could just as easily be increased if DL added small aircraft to OH’s fleet. DL controls OH’s value by virtue of the contracts it awards to them. If OH starts flying for other carriers, that carrier will help to increase OH’s value as well.
 
atlaaron
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RE: Delta Looking At Selling Off Comair

Wed Mar 28, 2007 6:18 am

Maybe SkyBus will buy it since it is almost in their backyard. Then SkyBus can run a regional before they begin mainline operations. Kidding of course.

 banghead 
 
allstarflyer
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RE: Delta Looking At Selling Off Comair

Wed Mar 28, 2007 6:30 am

Quoting Srbmod (Reply 14):
I foresee Comair ending up being owned by either Republic or Mesa

I doubt it would happen here. Bedford seems to be a pretty smart guy, and the deal would have to be a sweet one for him to consider it. Mesa, though, is another story. Ornstein is power hungry, and if he sees $$$ in it, he'll be a hungry wolf after it.

-R
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okie73
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RE: Delta Looking At Selling Off Comair

Wed Mar 28, 2007 6:32 am

Quoting Srbmod (Reply 14):
I foresee Comair ending up being owned by either Republic or Mesa

We have a winner!

Quoting WorldTraveler (Reply 15):
DL controls OH’s value by virtue of the contracts it awards to them.

another winner. Whomever buys CMR will buy them for the value of the flying done for Delta, not for any value of CMR by itselt

Quoting WorldTraveler (Reply 15):
If OH starts flying for other carriers, that carrier will help to increase OH’s value as well.

This is another factor. Once CMR is no longer owned by Delta, I think you can be certain that they will end up with contracts beyond Delta.

Quoting RamerinianAir (Reply 12):
Delta will loose a ton of money on Comair if/when they get rid of Comair

Compared to what Delta paid for CMR, yes they will lose a ton of money. But compared to the current value of CMR on Delta's books, Delta will make money.
 
Jammin
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RE: Delta Looking At Selling Off Comair

Wed Mar 28, 2007 6:41 am

Can you guys explain one thing: if Delta sells off its regional carrier, who'll be flying those regional routes for them? Will they still code share with the new owner of Comair? or will Delta supply its own metal for those routes.

As an example: I recently flew JFK-ORD on Comair. What would happen to that route if Delta sold Comair?
Emancipate yourselves from mental slavery. None but ourselves can free our mind.
 
worldtraveler
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RE: Delta Looking At Selling Off Comair

Wed Mar 28, 2007 6:51 am

there's a good chance OH will continue to operate many of its current routes. OH's value is in the contracts it will have with DL. DL could switch carriers around on specific routes but since OH is predominantly CVG based and has infrastructure there, it makes sense for DL and any future owners to leave OH with a decent-sized CVG presence.
 
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RE: Delta Looking At Selling Off Comair

Wed Mar 28, 2007 7:07 am

Quoting WorldTraveler (Reply 15):
EA CO AS,
You miss the point. It doesn’t matter what aircraft OH uses. They bid on their flying based on the equipment they fly.

I understand your point - at least I think I do - but my point is that while other regionals either have lower costs and/or larger equipment that keeps their CASM down, OH is stuck with all 50 seaters that keeps their CASM up, hindering their ability to competitively bid for flying against a Mesa.

And if owned by someone else, I'm doubtful DL will be gracious enough to keep all their express flying with OH. They'll put out bids for competitors, just like CO did with ExpressJet. And odds are it'll mean reduced DL flying for OH.

Sure, they could try to cherry-pick certain point-to-point markets like ExpressJet with their 60 or so orphaned ERJs, but it's an unproven strategy so far.
"In this present crisis, government is not the solution to our problem - government IS the problem." - Ronald Reagan

Comments made here are my own and are not intended to represent the official position of Alaska Air Group
 
jkudall
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RE: Delta Looking At Selling Off Comair

Wed Mar 28, 2007 7:21 am

Quoting Jammin (Reply 19):
Can you guys explain one thing: if Delta sells off its regional carrier, who'll be flying those regional routes for them? Will they still code share with the new owner of Comair? or will Delta supply its own metal for those routes.

As an example: I recently flew JFK-ORD on Comair. What would happen to that route if Delta sold Comair?

Whoever buys Comair will likely operate the current Comair routes, or another regional. Delta doesn't have the equipment (mainline) to take over Comair routes.
 
KarlB737
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RE: Delta Looking At Selling Off Comair

Wed Mar 28, 2007 7:23 am

Quoting LCFreeman49 (Thread starter):
My question is who would be interested in purchasing Comair? Anyone's thoughts on this?

OK, just a wild thought. How would Comair with the fleet they have operate under the Southwest model? Would Southwest gain anything having instantly an RJ fleet to operate the way they operate an airline? Now before you say they just wouldn't buy that package look at the overall from a wider view. They might be able to send these smaller jets to cities they wouldn't send a 737 to and might free up a 737 for a more profitable route.

Also, they know that their costs are climbing and fuel hedges may be evaporating. There were whispers of RJ aquistion a while back so there must be reasons for the concept.

Finally how many more fairly large cities can you fly a 737 into if you continue expansion which doesn't include international routes?

Just my 6 cents........
 
LCFreeman49
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RE: Delta Looking At Selling Off Comair

Wed Mar 28, 2007 7:40 am

I don't think you will ever see Southwest fly anything except one common fleet type. Maybe I am wrong. I do recall Southwest having a couple of 727's in the late 70's.
Thanks For Flying with Delta....
 
doug_or
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RE: Delta Looking At Selling Off Comair

Wed Mar 28, 2007 7:57 am

Quoting KarlB737 (Reply 23):
Also, they know that their costs are climbing and fuel hedges may be evaporating. There were whispers of RJ aquistion a while back so there must be reasons for the concept.

They looked into it (around the time B6 annouced te 190s IIRC )

Quoting EA CO AS (Reply 21):
And if owned by someone else, I'm doubtful DL will be gracious enough to keep all their express flying with OH. They'll put out bids for competitors, just like CO did with ExpressJet. And odds are it'll mean reduced DL flying for OH.

Any purchase would most likely involve a garuntee of a long term contract. I'm pretty sure the ASA sale had some pretty good garuntees, both for the duration of Skwest and ASAs DCA status, and even for the amount of ATL flying they would have.
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ScottB
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RE: Delta Looking At Selling Off Comair

Wed Mar 28, 2007 8:36 am

Quoting Doug_Or (Reply 25):
Any purchase would most likely involve a garuntee of a long term contract. I'm pretty sure the ASA sale had some pretty good garuntees, both for the duration of Skwest and ASAs DCA status, and even for the amount of ATL flying they would have.

Absolutely. The value of a spun-off or sold Comair would be closely tied to the actual contracts with Delta -- from the guaranteed margins and contractual guarantees of how much flying they would be awarded to any freedom they might receive to operate competitive flying on the behalf of other airlines. SkyWest got some guarantees with respect to ASA when the purchase was made, and the purchase agreement included some financial penalties if Delta were to reject ASA's regional flying.

Quoting EA CO AS (Reply 21):
And if owned by someone else, I'm doubtful DL will be gracious enough to keep all their express flying with OH. They'll put out bids for competitors, just like CO did with ExpressJet.

Perhaps so, but any potential purchaser of Comair is going to take a very close look at their contracts for Delta Connection flying. The fact that Continental could begin to withdraw capacity from ExpressJet at the end of 2006 was no secret. And ExpressJet chose to keep the 69 ERJ's withdrawn from the capacity purchase agreement; Continental's initial agreement with Republic was based on the assumption that some or all of those planes would be returned to CO.
 
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EA CO AS
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RE: Delta Looking At Selling Off Comair

Wed Mar 28, 2007 8:40 am

Quoting Doug_Or (Reply 25):
Any purchase would most likely involve a garuntee of a long term contract.

I'd imagine it would be more cost-effective - since any sale will be 100% profit to DL anyway - to remove any guarantees in exchange for a reduced purchase price. This way the effect of the purchase price on the new owner's CASM can be reduced, and they can STILL compete for any new RFPs that DL can put out as well as competing for new business with other majors.

Again though, it's all contingent upon getting the right price, and I don't know that DL will want to monetize OH for too little.
"In this present crisis, government is not the solution to our problem - government IS the problem." - Ronald Reagan

Comments made here are my own and are not intended to represent the official position of Alaska Air Group
 
okie73
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RE: Delta Looking At Selling Off Comair

Wed Mar 28, 2007 9:05 am

Quoting EA CO AS (Reply 21):
I'm doubtful DL will be gracious enough to keep all their express flying with OH.

In case you have not noticed, CMR certainly does not do all of the Delta connection flying. There are many small jet providers doing DCI flying now.
 
avconsultant
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RE: Delta Looking At Selling Off Comair

Wed Mar 28, 2007 1:26 pm

DL recently updated the contract with RP regarding the removal of aircraft and surrendering warrants on 3.4 million shares of RP stock. We have no idea what other deals were cut in the ammendment.
 
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EA CO AS
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RE: Delta Looking At Selling Off Comair

Wed Mar 28, 2007 4:27 pm

Quoting Okie73 (Reply 28):
Quoting EA CO AS (Reply 21):
I'm doubtful DL will be gracious enough to keep all their express flying with OH.

In case you have not noticed, CMR certainly does not do all of the Delta connection flying. There are many small jet providers doing DCI flying now.

Which only validates my point - which is that at present, OH has all the DL flying it will ever get. It will only go down from here.
"In this present crisis, government is not the solution to our problem - government IS the problem." - Ronald Reagan

Comments made here are my own and are not intended to represent the official position of Alaska Air Group
 
Logos
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RE: Delta Looking At Selling Off Comair

Wed Mar 28, 2007 9:05 pm

Quoting RamerinianAir (Reply 12):
This will be one of the worst RONs ever.

I'm assuming you meant to say ROI not RON.

Quoting LCFreeman49 (Reply 24):
I do recall Southwest having a couple of 727's in the late 70's.

It was actually the early 80s. Those were short-term leases from PeopleExpress.

Cheers,
Dave in Orlando
Too many types flown to list
 
DAYflyer
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RE: Delta Looking At Selling Off Comair

Wed Mar 28, 2007 9:14 pm

Quoting Lono (Reply 5):
Who would be interested in buying this carrier with its history of labor unrest????

And it's fleet of CRJ 700 with mx problems/delays....
One Nation Under God
 
deltadc9
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RE: Delta Looking At Selling Off Comair

Wed Mar 28, 2007 9:31 pm

Quoting LCFreeman49 (Reply 24):
I don't think you will ever see Southwest fly anything except one common fleet type. Maybe I am wrong. I do recall Southwest having a couple of 727's in the late 70's.

I think its very possible but with two separate business plans adding say 787's with a totally different objective than what they do with the 737s. Definately not operating two or more types in their current route structure though.
Dont take life too seriously because you will never get out of it alive - Bugs Bunny
 
milesrich
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RE: Delta Looking At Selling Off Comair

Wed Mar 28, 2007 9:39 pm

The link to a thread from May of 2001, pre 9/11, says it all about Delta, and Comair!
Delta To Close Down Comair? (by PhilB May 10 2001 in Civil Aviation)

Go and read, and then think about how ridiculous the whole scenario was. What Delta management did to Comair 6 years ago was the first of many decisions that almost led to the liquidation of Delta Air Lines. Leo Mullin and his assistants used Comair as means to bash the unions, pure and simple. Over a contract difference of less than $200 million over the life of the contract, they decided to make Comair their union busting tool. They more less busted the union's strength, lost over $1 Billion on the Comair Strike, and sent the airline reeling financially. And why? So they could play one employee group off against another, and make connection flying a commodity, awarding the contracts to the cheapest provider. (If China had a commuter RJ carrier, they could probably under bid everyone.)

Management threatened mainline employees, telling them, work for less than you did ten years ago, or Comair or ASA can replace you. Then they turned around and told Comair and ASA employees, work for less, or we will find someone to replace you.

The Race to the Bottom. And then 9/11 came, and gave all of these greedy jerks the cover to do just what they planned to, without any catastrophic event to the industry. Just remember how much Mullin, and the rest of them walked away with. And what the stockholders, who backed them ended up with. And the thousands who lost their jobs, and what the state of the industry is now.
 
Comet2404
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RE: Delta Looking At Selling Off Comair

Wed Mar 28, 2007 10:20 pm

Okay - so I'll just throw this in to see what you guys think... IF DL does decide to sell off Comair and there isn't a buyer, what is the possibility of DL liquidating OH?
 
flyinryan99
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RE: Delta Looking At Selling Off Comair

Wed Mar 28, 2007 10:36 pm

Quoting Comet2404 (Reply 35):
what is the possibility of DL liquidating OH?

In the near term I would think it's very slim. Remember, OH runs a lot of stations throughout the midwest and northeast. They would need to move Skywest or ASA in to pick up the slack to run ground and with a lot of stations all at the same time. That would create havoc, IMO.
 
okie73
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RE: Delta Looking At Selling Off Comair

Wed Mar 28, 2007 11:43 pm

Quoting Comet2404 (Reply 35):
IF DL does decide to sell off Comair and there isn't a buyer, what is the possibility of DL liquidating OH?

first of all, its no longer a question of IF. Delta is going to sell CMR. The question is when.

Second, from what I am hearing a buyer is pretty much lined up. But to answer your question, if there were no buyer, I think the odds of DL liquidating CMR, at least short term, is very small.
 
floridaflyboy
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RE: Delta Looking At Selling Off Comair

Wed Mar 28, 2007 11:44 pm

Quoting EA CO AS (Reply 30):
Which only validates my point - which is that at present, OH has all the DL flying it will ever get. It will only go down from here.

I agree that OH has all the DL flying it will ever get (at least in the forseeable future), but I don't think it's going to go down from here. As long as Comair can get its act together and keep it that way, I don't see any reason DL would continue to pull the rug out from under them.
Good goes around!
 
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EA CO AS
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RE: Delta Looking At Selling Off Comair

Thu Mar 29, 2007 2:29 am

Quoting Logos (Reply 31):
Quoting LCFreeman49 (Reply 24):
I do recall Southwest having a couple of 727's in the late 70's.

It was actually the early 80s. Those were short-term leases from PeopleExpress.

IIRC, they received one (or was it three?) 727s as part of a court settlement from BN.
"In this present crisis, government is not the solution to our problem - government IS the problem." - Ronald Reagan

Comments made here are my own and are not intended to represent the official position of Alaska Air Group
 
Logos
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RE: Delta Looking At Selling Off Comair

Thu Mar 29, 2007 6:18 am

Quoting EA CO AS (Reply 39):
IIRC, they received one (or was it three?) 727s as part of a court settlement from BN.

I'd forgotten about the Braniff connection. It was some convoluted deal involving PeopleExpress, though. A PE F/A explained it to me at the time after an offhand remark that they were leasing it to WN (this was after I'd seen a WN 727 at Houston-Hobby and commented on it). Most (if not all) of PE's initial 727's were ex-BN and WN was somehow an intermediate stop for, I believe, 3 of them.

Cheers,
Dave in Orlando
Too many types flown to list