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TTailedTiger
Posts: 2522
Joined: Sun Aug 26, 2018 5:19 am

Re: Delta plans to emerge a

Tue Apr 14, 2020 8:38 pm

0newair0 wrote:
Aceskywalker wrote:
DL has been confirmed as the anonymous takeover of 10 A350s that LATAM dropped earlier this year.

https://www.reuters.com/article/us-airb ... SKCN21W1PU

Thinking out loud - 30+ orders for A339 and now 20+ orders for A350. That's quite a lot of capacity for an airline that plans to be downsizing and in an industry that insiders have thrown 3-4+ years to recover to 2019 levels. Wouldn't it be smarter to purchase A321XLR to replace the aging 757 and 767 types instead of these large widebodies that will serve exclusively international routes?
The announcement was part of the deal with LATAM. Essentially it is old information that was just confirmed. Delta still has time to decide what will ultimately be delivered.


My wild guess is that DL sells them after taking delivery. It wouldn't be the first time they did that.
 
Austin787
Posts: 424
Joined: Fri Jun 17, 2016 11:39 pm

Re: Delta plans to emerge a "smaller" carrier

Tue Apr 14, 2020 8:47 pm

Aceskywalker wrote:
DL has been confirmed as the anonymous takeover of 10 A350s that LATAM dropped earlier this year.

https://www.reuters.com/article/us-airb ... SKCN21W1PU

Thinking out loud - 30+ orders for A339 and now 20+ orders for A350. That's quite a lot of capacity for an airline that plans to be downsizing and in an industry that insiders have thrown 3-4+ years to recover to 2019 levels. Wouldn't it be smarter to purchase A321XLR to replace the aging 757 and 767 types instead of these large widebodies that will serve exclusively international routes?

According to planespotters.net, Delta has 77 767s, and 56 of those are 763s. Delta also has 18 777s which they may phase out after all 767s are retired. 50+ widebody orders seems about right.
 
MIflyer12
Posts: 8060
Joined: Mon Feb 18, 2013 11:58 pm

Re: Delta plans to emerge a

Tue Apr 14, 2020 9:04 pm

0newair0 wrote:
Aceskywalker wrote:
DL has been confirmed as the anonymous takeover of 10 A350s that LATAM dropped earlier this year.

https://www.reuters.com/article/us-airb ... SKCN21W1PU

Thinking out loud - 30+ orders for A339 and now 20+ orders for A350. That's quite a lot of capacity for an airline that plans to be downsizing and in an industry that insiders have thrown 3-4+ years to recover to 2019 levels. Wouldn't it be smarter to purchase A321XLR to replace the aging 757 and 767 types instead of these large widebodies that will serve exclusively international routes?
The announcement was part of the deal with LATAM. Essentially it is old information that was just confirmed. Delta still has time to decide what will ultimately be delivered.


Yeh, I don't see Reuter's excitement about this. That it now appears in Airbus' backlog for Delta? Taking over LATAM's order for ten new, and buying 4 LATAM A350s used, was announced in the press release outlining the LATAM equity purchase deal, and repeated in an 8-K SEC filing 9/26/2019.

Delta will acquire four A350 aircraft from LATAM and has agreed to assume LATAM’s commitment to purchase 10 additional A350 aircraft to be
delivered beginning in 2020 through 2025, supporting Delta’s ongoing fleet transformation.


https://d18rn0p25nwr6d.cloudfront.net/C ... a2fc75.pdf
 
DDR
Posts: 1731
Joined: Sat Sep 28, 2013 11:09 pm

Re: Delta plans to emerge a "smaller" carrier

Tue Apr 14, 2020 9:25 pm

This whole "will emerge a smaller airline" is bullshit. DL, UA, AA, were all making record profits. Why the hell would they not want to go back to those numbers? Travel will rebound. Plus, airlines HAVE to grow because their costs go up each year. Yes they may retire certain fleets now, but those fleets will be replaced. 3 years from now, DL will be operating more daily flights than they were prior to this outbreak.
 
TTailedTiger
Posts: 2522
Joined: Sun Aug 26, 2018 5:19 am

Re: Delta plans to emerge a "smaller" carrier

Tue Apr 14, 2020 9:27 pm

Austin787 wrote:
Aceskywalker wrote:
DL has been confirmed as the anonymous takeover of 10 A350s that LATAM dropped earlier this year.

https://www.reuters.com/article/us-airb ... SKCN21W1PU

Thinking out loud - 30+ orders for A339 and now 20+ orders for A350. That's quite a lot of capacity for an airline that plans to be downsizing and in an industry that insiders have thrown 3-4+ years to recover to 2019 levels. Wouldn't it be smarter to purchase A321XLR to replace the aging 757 and 767 types instead of these large widebodies that will serve exclusively international routes?

According to planespotters.net, Delta has 77 767s, and 56 of those are 763s. Delta also has 18 777s which they may phase out after all 767s are retired. 50+ widebody orders seems about right.


Why would they dump 767's unless they were about to cycle out? The 767 is likely the only plane that can be profitable for the next few years with bookings in the gutter. They don't need the capacity of the A330/350 or 777 if a 767 has the range capability. Oil is shockingly cheap and the 767 was still quite efficient even before oil prices plummeted.
 
0newair0
Posts: 417
Joined: Fri Jun 01, 2007 12:21 am

Re: Delta plans to emerge a "smaller" carrier

Tue Apr 14, 2020 9:37 pm

DDR wrote:
This whole "will emerge a smaller airline" is bullshit. DL, UA, AA, were all making record profits. Why the hell would they not want to go back to those numbers? Travel will rebound. Plus, airlines HAVE to grow because their costs go up each year. Yes they may retire certain fleets now, but those fleets will be replaced. 3 years from now, DL will be operating more daily flights than they were prior to this outbreak.
No one is talking about 3 years from now. Everyone talking about 3 months and 6 months from now. The industry still hasn't reached bottom. Each day is worse than the last. Each carrier will be significantly smaller 6 months from now than they were pre-virus and it will take years for the carriers to rebuild and for demand to return to pre-virus levels.
That's not how this works! That's not how any of this works!
 
PSU.DTW.SCE
Posts: 8063
Joined: Mon Jan 28, 2002 11:45 am

Re: Delta plans to emerge a "smaller" carrier

Tue Apr 14, 2020 9:39 pm

They will likely pull ahead any of the 767s that were scheduled to retire in the next 24 months. No reason to incur the ongoing maintenance costs associated with planes that were going to retire when there is more than enough frames of other fleet types that are going to stay in the fleet. Storage isn't cheap either. Thus what it comes down it is to I pay to maintain a 763 that was going to retire in 2022 or do I pay to store an A333?

Yes they will be a smaller carrier no doubt. At a minimum, we are going to have a severely wounded global/national economy for 3-6, if not 12 months. The entire travel/leisure/cruise/hospitality industry is decimated at least until 2021 if not longer. The business meeting, convention, trade-show business is vaporized until at least 2021. Major sporting events and concerts are gone for at least all of Summer 2020, if not the rest of the year. Every city big and small is cancelling all of the festivals, concerts, events, parades for the next 4 months. This effectively eliminates so much travel from the seasonal peak, we aren't even looking at any sort of stabilization in travel until 2021 and likely at a much lower level.

This doesn't even factor in people's personal economic situation or corporate travel spend that is going to be trashed in many cases after a 3-6 month of decimated economy.
This doesn't even factor in if/when/how countries are going to reopen borders or ease travel restrictions.
A lot of people are going to think long and hard about planning an international trip in the next 12-24 months, or cruises for that matter.
If we have strict PPE requirements, screenings, social distancing, venues closed, reduced ammenities, restrictions, risks of quarenteens, how much fun is travel really going to be for many of the masses over the next 6-12 months?
We saw what happened after 9/11 and that didn't get anywhere near the scale of an economic disaster like we are seeing now. The fear then was much different, and a lot more irrational then versus what we are seeing now.

This sucks.
 
Aceskywalker
Posts: 148
Joined: Sat Nov 17, 2018 4:55 am

Re: Delta plans to emerge a "smaller" carrier

Tue Apr 14, 2020 9:53 pm

DDR wrote:
This whole "will emerge a smaller airline" is bullshit. DL, UA, AA, were all making record profits. Why the hell would they not want to go back to those numbers? Travel will rebound. Plus, airlines HAVE to grow because their costs go up each year. Yes they may retire certain fleets now, but those fleets will be replaced. 3 years from now, DL will be operating more daily flights than they were prior to this outbreak.


Of course airlines would want to go back to those numbers. Its business. But one has to acknowledge the reality of the situation. In the immediate future after this COVID-19 outbreak is all said and done, carriers will have no choice BUT to be smaller. Returning to 2019 levels with growth seemingly limitless and record profits will depend on the health of the economy, consumer confidence, and how confident the public will be about non-essential travel. No butts in seats, no money.

Many people will find needing to cut back on traveling because economic downturns have dropped their disposable income significantly. Others will find it wiser to use their disposable income normally spent on luxuries like travel to fatten their savings.
 
slcdeltarumd11
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Joined: Fri Jan 09, 2004 7:30 am

Re: Delta plans to emerge a "smaller" carrier

Tue Apr 14, 2020 10:26 pm

DDR wrote:
This whole "will emerge a smaller airline" is bullshit. DL, UA, AA, were all making record profits. Why the hell would they not want to go back to those numbers? Travel will rebound. Plus, airlines HAVE to grow because their costs go up each year. Yes they may retire certain fleets now, but those fleets will be replaced. 3 years from now, DL will be operating more daily flights than they were prior to this outbreak.


Not trying to fight with you, but airlines are in survival mode not growth mode. They are permanantly retiring planes. They are burning cash And fighting to not go under currently.

The industry will come back but it really might take a while. Destinations such as Disney, cruises, ski resorts, pro sport games leisure people have less places to go. Businesses have made tele work and remote conference calls and meetings actually acceptable feeling. Businesses for liability and or can't ask people to travel until there is a vaccine.

Will travel be back absolutely. But it might be a long long time away. 2023 we may still be in a huge depression. I can't see spending money back that soon alot of the world is bringing their personal and retirement savings.
 
tphuang
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Re: Delta plans to emerge a "smaller" carrier

Tue Apr 14, 2020 10:45 pm

People don't really seem to comprehend how bad this is for airlines. We are going into the largest economic slowdown since the great depression (yes, even greater than the 2008 recession). The latest project has it that the economic growth will be -3% for this year worldwide. Our employment rate could hit 20%.

IATA estimated it will take 3 to 5 years for domestic travel to return to 2019 levels and 4 to 6 years for international travel to return to 2019 levels. So yes, everyone will be smaller this time next year. It's unsure if all the legacies will even be able to avoid chapter 11 at this point.

The rumours coming out of the major airlines are that they expect the legacies to be 30 to 40% smaller a year for now. With AA emerging the weakest. Even WN/AS/B6 are estimated to be 20% smaller a year from now. When we get back to 2019 traffic level, legacies will be significantly weakened from having to pay back all that loans for the interim years. LCCs/ULCCs are likely to be a larger fraction of the market share. That's just the natural consequences of legacies having to furlough more pilots to survive and business/long haul travel coming back slower than domestic/short haul stuff.
 
Atlwarrior
Posts: 476
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Re: Delta plans to emerge a "smaller" carrier

Wed Apr 15, 2020 12:32 am

https://www.bizjournals.com/atlanta/new ... ZiOWVLYiJ9

Delta obtains 5.4 billion from the Cares fund.
 
Dalmd88
Posts: 3139
Joined: Fri Jul 28, 2000 3:19 am

Re: Delta plans to emerge a "smaller" carrier

Wed Apr 15, 2020 12:57 am

PSU.DTW.SCE wrote:
They will likely pull ahead any of the 767s that were scheduled to retire in the next 24 months. No reason to incur the ongoing maintenance costs associated with planes that were going to retire when there is more than enough frames of other fleet types that are going to stay in the fleet. Storage isn't cheap either. Thus what it comes down it is to I pay to maintain a 763 that was going to retire in 2022 or do I pay to store an A333?

Yes they will be a smaller carrier no doubt. At a minimum, we are going to have a severely wounded global/national economy for 3-6, if not 12 months. The entire travel/leisure/cruise/hospitality industry is decimated at least until 2021 if not longer. The business meeting, convention, trade-show business is vaporized until at least 2021. Major sporting events and concerts are gone for at least all of Summer 2020, if not the rest of the year. Every city big and small is cancelling all of the festivals, concerts, events, parades for the next 4 months. This effectively eliminates so much travel from the seasonal peak, we aren't even looking at any sort of stabilization in travel until 2021 and likely at a much lower level.

This doesn't even factor in people's personal economic situation or corporate travel spend that is going to be trashed in many cases after a 3-6 month of decimated economy.
This doesn't even factor in if/when/how countries are going to reopen borders or ease travel restrictions.
A lot of people are going to think long and hard about planning an international trip in the next 12-24 months, or cruises for that matter.
If we have strict PPE requirements, screenings, social distancing, venues closed, reduced ammenities, restrictions, risks of quarenteens, how much fun is travel really going to be for many of the masses over the next 6-12 months?
We saw what happened after 9/11 and that didn't get anywhere near the scale of an economic disaster like we are seeing now. The fear then was much different, and a lot more irrational then versus what we are seeing now.

This sucks.

I agree this sucks, I do disagree with pull forward the 767 retirement plan. No, park the new ones. Run the old ones up to the last hour, then beer can them. If you were going to park all the 767 it would make sense to me. Then you are getting rid of a type which you now don't have to support. One less type to have a pilot group for. Less parts to stock. You run the old paid for ones until they are up for HMV, At that point they cost real money. You said parking planes isn't cheap. That's true, but those 767 that you want to pull forward to retire early. They really are not worth that much on the used market right now. Delta could end up paying to park them until the used market catches up. Just because they are retired doesn't mean they cost nothing.
 
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flymco753
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Re: Delta plans to emerge a "smaller" carrier

Wed Apr 15, 2020 2:26 am

I don't see MSP and DTW both surviving as hubs after this is over. One is going to have to go unless they cut MSP-East Coast and reduce services to the South East in favor of DTW. Services DTW and W/SW would go too.
...the carriage of liquids, gels, and aerosols are prohibited through the screening checkpoint except for travel size toiletries of 3 ounces or less...
 
PSU.DTW.SCE
Posts: 8063
Joined: Mon Jan 28, 2002 11:45 am

Re: Delta plans to emerge a "smaller" carrier

Wed Apr 15, 2020 2:39 am

That is a bit of a stretch at this point to speculate as that is a longer-term restructuring issue that isn't really on anyone's radar at this point.
If that is the case there are a lot of other fundamental issues going on that are impacting everyone in the industry and other economic sectors as well.
 
DL777200LR
Posts: 153
Joined: Fri Nov 20, 2015 12:15 am

Re: Delta plans to emerge a "smaller" carrier

Wed Apr 15, 2020 3:12 am

Austin787 wrote:
Aceskywalker wrote:
DL has been confirmed as the anonymous takeover of 10 A350s that LATAM dropped earlier this year.

https://www.reuters.com/article/us-airb ... SKCN21W1PU

Thinking out loud - 30+ orders for A339 and now 20+ orders for A350. That's quite a lot of capacity for an airline that plans to be downsizing and in an industry that insiders have thrown 3-4+ years to recover to 2019 levels. Wouldn't it be smarter to purchase A321XLR to replace the aging 757 and 767 types instead of these large widebodies that will serve exclusively international routes?

According to planespotters.net, Delta has 77 767s, and 56 of those are 763s. Delta also has 18 777s which they may phase out after all 767s are retired. 50+ widebody orders seems about right.


The 10 77Ls aren’t going away anytime soon.
Nothing better than the sound of a 77W GE90-115B on engine start.
 
winginit
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Re: Delta plans to emerge a "smaller" carrier

Wed Apr 15, 2020 3:15 am

Atlwarrior wrote:
https://www.bizjournals.com/atlanta/news/2020/04/14/delta-air-lines-cares-act-funds.html?ana=e_atl_bn_breakingnews_breakingnews&j=90504131&t=Breaking%20News&mkt_tok=eyJpIjoiTkRSaU5qUXpOREUzWlRKaCIsInQiOiJKc0srQU5oakJCUlwvbzNYcnJPeFJJTEVRV09PaGlrdXpadUtFRW84elc1VHJ4TG44NDBUVDBRRmF1UndSK0R2U2NBWlAzUW5IREpmR21jajdLMEJKalQxQTcraEtSdk42SVZuQ0xkVUFZeVwvUHNseGxcL09RUFEzMDRsTmZiOWVLYiJ9

Delta obtains 5.4 billion from the Cares fund.


I believe Ed said in a recent memo that that money will be fully spent by end of June.

... what then? Assuming demand has, at a maximum, recovered to the tune of -75% year over year
 
ShinyAndChrome
Posts: 280
Joined: Fri Aug 28, 2015 1:53 am

Re: Delta plans to emerge a "smaller" carrier

Wed Apr 15, 2020 3:29 am

flymco753 wrote:
I don't see MSP and DTW both surviving as hubs after this is over. One is going to have to go unless they cut MSP-East Coast and reduce services to the South East in favor of DTW. Services DTW and W/SW would go too.


Again with this website's perennial obsession. Every airline's hubs will be seeing some significant haircuts coming out of this but what's the sense in dehubbing cities that already drive a disproportionate share of your revenues and profits? If anything, those hubs will be even more important as airlines try and dig themselves out of this in 2021 and beyond.
 
Cactusjuba
Posts: 243
Joined: Thu Dec 14, 2017 8:06 am

Re: Delta plans to emerge a "smaller" carrier

Wed Apr 15, 2020 5:16 am

winginit wrote:
Atlwarrior wrote:
https://www.bizjournals.com/atlanta/news/2020/04/14/delta-air-lines-cares-act-funds.html?ana=e_atl_bn_breakingnews_breakingnews&j=90504131&t=Breaking%20News&mkt_tok=eyJpIjoiTkRSaU5qUXpOREUzWlRKaCIsInQiOiJKc0srQU5oakJCUlwvbzNYcnJPeFJJTEVRV09PaGlrdXpadUtFRW84elc1VHJ4TG44NDBUVDBRRmF1UndSK0R2U2NBWlAzUW5IREpmR21jajdLMEJKalQxQTcraEtSdk42SVZuQ0xkVUFZeVwvUHNseGxcL09RUFEzMDRsTmZiOWVLYiJ9

Delta obtains 5.4 billion from the Cares fund.


I believe Ed said in a recent memo that that money will be fully spent by end of June.

... what then? Assuming demand has, at a maximum, recovered to the tune of -75% year over year


That's CEO speak to drum up concern among employees to volunteer to take unpaid leave. The CARES act grant is based off 2Q+3Q 2019 payroll costs. It is intended to last until October 1st (2Qs worth). That money from the grant takes all payroll costs off the table until then, so it's not "all spent by end of June". With 1/3 of all employees on unpaid leaves, and the remaining 2/3 on reduced hours and without 2019 levels of overtime pay, the $5.3B should cover the whole year's worth of labor costs.

The burn rate was qouted last at about 1.8B a month, under the 5-10% revenue scenario. That wont last for 9 solid months. Add in that labor is paid for, fuel is uber cheap, deferment on taxes and leases on gates, rent, reduced landing fees, etc. This isnt about going belly up in 2 months,
but about maintaining 5B in cash at the end of the year.
 
Aceskywalker
Posts: 148
Joined: Sat Nov 17, 2018 4:55 am

Re: Delta plans to emerge a "smaller" carrier

Wed Apr 15, 2020 11:21 am

ShinyAndChrome wrote:
flymco753 wrote:
I don't see MSP and DTW both surviving as hubs after this is over. One is going to have to go unless they cut MSP-East Coast and reduce services to the South East in favor of DTW. Services DTW and W/SW would go too.


Again with this website's perennial obsession. Every airline's hubs will be seeing some significant haircuts coming out of this but what's the sense in dehubbing cities that already drive a disproportionate share of your revenues and profits? If anything, those hubs will be even more important as airlines try and dig themselves out of this in 2021 and beyond.


De-hubbing cities is unlikely to happen. But if it were MSP and DTW are fortress hubs in less expensive markets to operate in. Frankly if any of the US3 downgrades any of their hubs to a focus city, it’s going to be LAX.
 
CaliguyNYC
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Re: Delta plans to emerge a "smaller" carrier

Wed Apr 15, 2020 11:27 am

I think the biggest issue for the US3 will be the slump in business travel for the rest of 2020. Here in NYC a lot of the companies have already told employees that travel/conferences/off sites will be cut or severely restricted for financial reasons (a much easier may to cut some costs). Even if you can travel, I would imagine employees would think twice before booking last minute $3k domestic tix and $8k international. These types of business trips were the US3’s bread and butter. Look I want everything to return to normal asap. I just think 2020 will be a long road even after the doctors give the all clear. That said, I think 2021 should be much better because its a new financial year and as long as the economy is fine, companies will relax travel restrictions.
 
MIflyer12
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Joined: Mon Feb 18, 2013 11:58 pm

Re: Delta plans to emerge a "smaller" carrier

Wed Apr 15, 2020 11:29 am

Cactusjuba wrote:
With 1/3 of all employees on unpaid leaves...


The number of employees taking voluntary leave has been cited, but one can't assume they're gone for a salary-weighted average of six months.
 
tphuang
Posts: 5210
Joined: Tue Mar 14, 2017 2:04 pm

Re: Delta plans to emerge a "smaller" carrier

Wed Apr 15, 2020 11:34 am

flymco753 wrote:
I don't see MSP and DTW both surviving as hubs after this is over. One is going to have to go unless they cut MSP-East Coast and reduce services to the South East in favor of DTW. Services DTW and W/SW would go too.


That's ridiculous. DL has been pretty transparent about where they have been making cuts so far. Which would normally indicates which stations they are willing to downsize.

They are not cutting their core hubs. You just have to see how many cities their core hubs still serve after the cuts. Most of them just got frequency cuts.

What did get cut are the new stations.
RDU got cut first - so I assume many of the routes out there never come back. I don't see it being down to just hub routes, but stuff like EWR/ORD/BWI/MIA/FLL/AUS are probably all goners.
CVG got cut next - I think this will get downsized not to the same degree as RDU, but their ff base there allows them to do serious downsizing without much damage to their pnl.
BOS got cut next - More likely to become a focus city after this. Question is whether this becomes a 110 to 130 flight station or 70 to 90 flight station. I expect some of the routes they cutin April/May to come back, but definitely not all of them. Not much point having a second Northeast TATL hub at this point when JFK slots will be widely available.

and then there are the other coastal hubs.
SEA/LAX - both of these still serve a lot of places and have well over 50 flights a day even with the significantly reduced schedule. They will probably come back as 150+ flights stations.
NYC - Even with all the cuts they made here, they have far and away the most number of flights of any airline. No way they don't pour more resource into New York when AA is clearly going to have to downsize NYC.

If DL is 1/3 smaller a year from now, it's not going to be core hubs or NYC that will see service to fewer places. Maybe a few, but mostly will just be down-gauges and frequency reductions.
 
jayunited
Posts: 2872
Joined: Sat Jan 05, 2013 12:03 am

Re: Delta plans to emerge a "smaller" carrier

Wed Apr 15, 2020 12:24 pm

flymco753 wrote:
I don't see MSP and DTW both surviving as hubs after this is over. One is going to have to go unless they cut MSP-East Coast and reduce services to the South East in favor of DTW. Services DTW and W/SW would go too.



Why would DL dismantle part of their core network that makes absolutely no sense at all. Emerging as a smaller carrier does not mean you take a machete and chop off part of your core network.

Even if DL were to retire 200 aircraft (mai.nline and Delta Connection combined) they would still have more than enough aircraft to maintain both MSP and DTW. Outside of DL ATL hub the next three hubs where DL faces the lease amount of competition in no particular order are SLC, DTW and MSP. DL is slugging it out with B6 at BOS and JFK. A case could be made they are also fighting it out with UA in New York City although UA is at EWR. AT Lax they are slugging it out with AA, UA, and WN, and up at SEA their main competition is AS.

There will be frequency reductions across the board and some of DL's focus cities will be cut down to a simple line station. However at their ATL, SLC, MSP and DTW hubs DL has complete control, we have had threads devoted to this very issue and how these hubs give DL pricing power that an airline like UA does not have at all because UA faces stiff competition at almost all our hubs. To de-hub DTW or MSP that will never happen. I think DL would scale back BOS first, maybe even make deeper cuts at SEA before they de-hub one of their core hubs.
 
enplaned
Posts: 112
Joined: Mon Aug 29, 2016 9:49 pm

Re: Delta plans to emerge a "smaller" carrier

Wed Apr 15, 2020 12:53 pm

flymco753 wrote:
I don't see MSP and DTW both surviving as hubs after this is over. One is going to have to go unless they cut MSP-East Coast and reduce services to the South East in favor of DTW. Services DTW and W/SW would go too.


Airlines make money where they "own" a market, and Delta owns Minneapolis and Detroit by virtue of them being hubs. There's a lot of other stuff that will go before DL give up on MSP and DTW. The old Northwest used to say "if it's cold, and dark, it's ours" - that's still an accurate statement about how DL sees DTW & MSP.
 
B757Forever
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Joined: Tue May 04, 2010 3:23 am

Re: Delta plans to emerge a "smaller" carrier

Wed Apr 15, 2020 2:59 pm

MIflyer12 wrote:
Cactusjuba wrote:
With 1/3 of all employees on unpaid leaves...


The number of employees taking voluntary leave has been cited, but one can't assume they're gone for a salary-weighted average of six months.


Right now the majority of unpaid leaves are for 30 days. Some people, me included, are thinking of changing to 60 days. After taking leave, you return to a 40 hour / week schedule. The unpaid leaves produce a significant savings for DL, just not as big as you may think or as big as is truly needed right now.
The Rolls Royce Dart. Noise = Shaft Horsepower.
 
MIflyer12
Posts: 8060
Joined: Mon Feb 18, 2013 11:58 pm

Re: Delta plans to emerge a "smaller" carrier

Wed Apr 15, 2020 3:05 pm

enplaned wrote:
flymco753 wrote:
I don't see MSP and DTW both surviving as hubs after this is over. One is going to have to go unless they cut MSP-East Coast and reduce services to the South East in favor of DTW. Services DTW and W/SW would go too.


Airlines make money where they "own" a market, and Delta owns Minneapolis and Detroit by virtue of them being hubs. There's a lot of other stuff that will go before DL give up on MSP and DTW. The old Northwest used to say "if it's cold, and dark, it's ours" - that's still an accurate statement about how DL sees DTW & MSP.


Different from 'owning' DTW and MSP - they don't have enough O&D traffic to squeeze to be really valuable - is CrankyFlier's assessment of WN's network evolving to hub-and-spoke. Big hubs offer efficient connectivity. IIRC, DL at DTW and MSP each had more destinations that UA at ORD. Mid-con hubs are well-placed to survive this.

https://crankyflier.com/2020/04/14/sout ... -schedule/
 
MIflyer12
Posts: 8060
Joined: Mon Feb 18, 2013 11:58 pm

Re: Delta plans to emerge a "smaller" carrier

Wed Apr 15, 2020 3:06 pm

B757Forever wrote:
MIflyer12 wrote:
Cactusjuba wrote:
With 1/3 of all employees on unpaid leaves...


The number of employees taking voluntary leave has been cited, but one can't assume they're gone for a salary-weighted average of six months.


Right now the majority of unpaid leaves are for 30 days. Some people, me included, are thinking of changing to 60 days. After taking leave, you return to a 40 hour / week schedule. The unpaid leaves produce a significant savings for DL, just not as big as you may think or as big as is truly needed right now.


That just makes my point. A bunch of 30-day leaves where DL is still paying benefits doesn't save DL anywhere near 1/3 of payroll expenses between 4/1 and 9/30, in contrast to the reference up-thread. And if it's not high-wage employees taking medium to lengthy leave it doesn't matter much.

Example:

A newish FA making $3,000/month taking a 7-month leave.

A ten-yr 739 captain making $21,000/month taking a 1-month leave.

That's an average 4-month leave.

However, combined salaries are $24,000/month and the total savings are $42,000 - a salary-weighted leave of just 42/24 = 1.75 months.
 
hiflyeras
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Re: Delta plans to emerge a "smaller" carrier

Wed Apr 15, 2020 3:24 pm

They'll soon own MSP outright if SY can't survive this. For now I see as few cuts as possible at MSP and build back up when demand returns.
 
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NWAESC
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Re: Delta plans to emerge a "smaller" carrier

Wed Apr 15, 2020 3:35 pm

MIflyer12 wrote:
B757Forever wrote:
MIflyer12 wrote:

The number of employees taking voluntary leave has been cited, but one can't assume they're gone for a salary-weighted average of six months.


Right now the majority of unpaid leaves are for 30 days. Some people, me included, are thinking of changing to 60 days. After taking leave, you return to a 40 hour / week schedule. The unpaid leaves produce a significant savings for DL, just not as big as you may think or as big as is truly needed right now.


That just makes my point. A bunch of 30-day leaves where DL is still paying benefits doesn't save DL anywhere near 1/3 of payroll expenses between 4/1 and 9/30, in contrast to the reference up-thread. And if it's not high-wage employees taking medium to lengthy leave it doesn't matter much.

Example:

A newish FA making $3,000/month taking a 7-month leave.

A ten-yr 739 captain making $21,000/month taking a 1-month leave.

That's an average 4-month leave.

However, combined salaries are $24,000/month and the total savings are $42,000 - a salary-weighted leave of just 42/24 = 1.75 months.


And just to add on, the timeline on these makes it hard to do any sort of long range calculations. For example, B757Forever notes that he is on a 30 day leave now, but may change to a 60 day one. Meanwhile, I took 1 week in June, but we all have until 4/24 to put in for anything in May.
"Nothing ever happens here, " I said. "I just wait."
 
B737Captain1980
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Re: Delta plans to emerge a "smaller" carrier

Wed Apr 15, 2020 3:44 pm

DDR wrote:
This whole "will emerge a smaller airline" is bullshit. DL, UA, AA, were all making record profits. Why the hell would they not want to go back to those numbers? Travel will rebound. Plus, airlines HAVE to grow because their costs go up each year. Yes they may retire certain fleets now, but those fleets will be replaced. 3 years from now, DL will be operating more daily flights than they were prior to this outbreak.


It's not that easy. The public will take some time to feel comfortable flying again. Additionally, a pilot must perform 3 takeoffs and landings every 90 days to be current to carry pax. This is true from a private pilot flying a cessna, to a A380 captain flying the super. If this thing goes another 1-2 months, you're going to see pilots having to go back to the simulator for their 90 day currency. When I tore my shoulder I was out for 9 months. I returned to flying the line before my 1 year sim check, but my 90 day currency was expired so off to sim training I went. Airlines like Delta only have so many simulators in their training facilities which are already booked up with new hire and recurrent training. They can't handle 100% of their pilots going out of currency. They won't have enough simulators to train pilots fast enough. The same goes for all US legacies and any airline with more than 1000 pilots.

When this is all over, expect complaints about lack of available simulators to get the pilots back up and running.

I was around before 9/11. This is worse. Much worse.
 
saab2000
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Re: Delta plans to emerge a "smaller" carrier

Wed Apr 15, 2020 3:49 pm

hiflyeras wrote:
They'll soon own MSP outright if SY can't survive this. For now I see as few cuts as possible at MSP and build back up when demand returns.


SY is not a true competitor. I spent a year there and in my interview asked how they compete with Delta. The answer? “We don’t. We stay out of their way”.

If SY goes away there will be other LCCs which move in to fill that small void.
smrtrthnu
 
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NWAESC
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Re: Delta plans to emerge a "smaller" carrier

Wed Apr 15, 2020 4:47 pm

B737Captain1980 wrote:
...I was around before 9/11. This is worse. Much worse.


It's very hard to clearly explain this to people that weren't part of the industry yet. They just can't relate.
"Nothing ever happens here, " I said. "I just wait."
 
0newair0
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Re: Delta plans to emerge a "smaller" carrier

Wed Apr 15, 2020 5:11 pm

NWAESC wrote:
B737Captain1980 wrote:
...I was around before 9/11. This is worse. Much worse.


It's very hard to clearly explain this to people that weren't part of the industry yet. They just can't relate.
It's actually surprisingly hard to explain this to people that are in the industry. Many don't understand how bad this disruption in cash flow is. Order of magnitudes worse than anything experienced by any airline since the beginning of commercial air travel.
That's not how this works! That's not how any of this works!
 
slcdeltarumd11
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Re: Delta plans to emerge a "smaller" carrier

Wed Apr 15, 2020 5:27 pm

I work for a very large corporation. Six figures number of employees. The only layoffs have been our frequent flyers. Just happened this week! All corporate travel blocked for 2000. And no bookings for 2021 yet. We were told permanent changes to travel moving forward. New normal. I would assume most large corporations are the same.

We had sales staff, support, trainers people who lived on the road. They laid a good amount off! Sad. Only layoffs I know of. They are very worried about their image and don't want to be seen laying off right now and still chose to let the road warriors go.
That means they don't see them coming back and want their high salaries gone asap.
Planing on major changes and more video conferencing . They were personalities that got higher pay for live customer service and great skills live on locations. Will make existing customer service and sales do more via phone and video conferencing.

Do you lose something by getting rid of these road warriors. Yes absolutely. But they also save a ton of money. And the economy is gonna be iffy for a few years. Alot I know were very high elites , just a small sample But real example of why they are retiring planes and will emerge smaller.

Delta and all the big 4 must be seeing similar things. Leisure will come back first, business travel is dead until there is a vaccine. They are worried how they will look making people travel, even if they volunteer or want to go.
 
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lightsaber
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Re: Delta plans to emerge a

Wed Apr 15, 2020 6:30 pm

0newair0 wrote:
NWAESC wrote:
B737Captain1980 wrote:
...I was around before 9/11. This is worse. Much worse.


It's very hard to clearly explain this to people that weren't part of the industry yet. They just can't relate.
It's actually surprisingly hard to explain this to people that are in the industry. Many don't understand how bad this disruption in cash flow is. Order of magnitudes worse than anything experienced by any airline since the beginning of commercial air travel.

The normalization mean makes it difficult for people to realize a step change has happened.

Due to the million people per day losing jobs (USA), there will be less demand for almost everything. Look at advertising. I believe this article understates that part of the downturn:

https://www.cnbc.com/amp/2020/04/14/adv ... nding.html

Read the above, the advertising supported industries will be hit hard as consumers are buying less, so why advertise?

The cruise industry will take years to recover. That means shipbuilding is hit hard.
Hollywood isn't filming. They are making money, but the lack of advertising revenue will alter deals going forward
People are not driving:
Oil storage will max out soon. That means premium oil traffic goes away.
Car will not sell as who is putting on the miles? There is a whole supply chain.

I personally am enjoying more off time, but it meansy income and thus vacation budget is down.

Everyone employed in services, outside of medicine, is really hurting: Dance, teachers, music teachers, kids entertainment (Disney).

Since DL feeds cruise lines and Orlando done. i expect ATL to lose hub waves.

This isn't just DL.

Lightsaber
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FSDan
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Re: Delta plans to emerge a "smaller" carrier

Wed Apr 15, 2020 10:04 pm

MIflyer12 wrote:
IIRC, DL at DTW and MSP each had more destinations than UA at ORD. Mid-con hubs are well-placed to survive this.


If we're talking about pre-COVID destinations, I don't believe that's correct. UA at ORD served a ton of destinations, including many smaller/EAS destinations like SLN, CGI, CMX, EAU, DEC, MKG, PAH, CKB, LWB, SHD, and OGS.

Nonetheless, I agree with the overall point that MSP and DTW will both be hubs in the future.
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flymco753
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Re: Delta plans to emerge a "smaller" carrier

Wed Apr 15, 2020 10:14 pm

FSDan wrote:
MIflyer12 wrote:
IIRC, DL at DTW and MSP each had more destinations than UA at ORD. Mid-con hubs are well-placed to survive this.


If we're talking about pre-COVID destinations, I don't believe that's correct. UA at ORD served a ton of destinations, including many smaller/EAS destinations like SLN, CGI, CMX, EAU, DEC, MKG, PAH, CKB, LWB, SHD, and OGS.

Nonetheless, I agree with the overall point that MSP and DTW will both be hubs in the future.
I don't. What point is there to keep DTW other than strong traffic to the Southeast? None. Everything can easily be funneled through MSP going west and ATL going south.
...the carriage of liquids, gels, and aerosols are prohibited through the screening checkpoint except for travel size toiletries of 3 ounces or less...
 
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millionsofmiles
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Re: Delta plans to emerge a

Wed Apr 15, 2020 10:22 pm

TTailedTiger wrote:
0newair0 wrote:
Aceskywalker wrote:
DL has been confirmed as the anonymous takeover of 10 A350s that LATAM dropped earlier this year.

https://www.reuters.com/article/us-airb ... SKCN21W1PU

Thinking out loud - 30+ orders for A339 and now 20+ orders for A350. That's quite a lot of capacity for an airline that plans to be downsizing and in an industry that insiders have thrown 3-4+ years to recover to 2019 levels. Wouldn't it be smarter to purchase A321XLR to replace the aging 757 and 767 types instead of these large widebodies that will serve exclusively international routes?
The announcement was part of the deal with LATAM. Essentially it is old information that was just confirmed. Delta still has time to decide what will ultimately be delivered.


My wild guess is that DL sells them after taking delivery. It wouldn't be the first time they did that.


Sell them to whom? LOL

Nobody’s gonna be buying anything for a while.
 
LAXdude1023
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Re: Delta plans to emerge a "smaller" carrier

Wed Apr 15, 2020 10:25 pm

flymco753 wrote:
FSDan wrote:
MIflyer12 wrote:
IIRC, DL at DTW and MSP each had more destinations than UA at ORD. Mid-con hubs are well-placed to survive this.


If we're talking about pre-COVID destinations, I don't believe that's correct. UA at ORD served a ton of destinations, including many smaller/EAS destinations like SLN, CGI, CMX, EAU, DEC, MKG, PAH, CKB, LWB, SHD, and OGS.

Nonetheless, I agree with the overall point that MSP and DTW will both be hubs in the future.
I don't. What point is there to keep DTW other than strong traffic to the Southeast? None. Everything can easily be funneled through MSP going west and ATL going south.


Ask yourself this: why was DTW chosen as the Asia hub by NW and later DL despite the fact that MSP is better geographically suited to serve Asia? The answer is that DTW has a lot more O&D to Asia than MSP.

MSP on the other hand has sky high margins on domestic travel.

Why give up two markets where they are both strong? The argument that they will have to shrink both is there...and DUH! EVERY hub nationwide will shrink. That includes behemoths like ATL and DFW. But you dont have to give up the market to scale down a hub,. DL would be foolish to do that with either DTW or MSP.
FOR THE LOVE OF GOD BRING BACK THE PAYWALL!!!!
 
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millionsofmiles
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Re: Delta plans to emerge a "smaller" carrier

Wed Apr 15, 2020 10:29 pm

tphuang wrote:
People don't really seem to comprehend how bad this is for airlines. We are going into the largest economic slowdown since the great depression (yes, even greater than the 2008 recession). The latest project has it that the economic growth will be -3% for this year worldwide. Our employment rate could hit 20%.

IATA estimated it will take 3 to 5 years for domestic travel to return to 2019 levels and 4 to 6 years for international travel to return to 2019 levels. So yes, everyone will be smaller this time next year. It's unsure if all the legacies will even be able to avoid chapter 11 at this point.

The rumours coming out of the major airlines are that they expect the legacies to be 30 to 40% smaller a year for now. With AA emerging the weakest. Even WN/AS/B6 are estimated to be 20% smaller a year from now. When we get back to 2019 traffic level, legacies will be significantly weakened from having to pay back all that loans for the interim years. LCCs/ULCCs are likely to be a larger fraction of the market share. That's just the natural consequences of legacies having to furlough more pilots to survive and business/long haul travel coming back slower than domestic/short haul stuff.


The rumors I’ve been hearing are that Delta will be emerging the weakest of the US3. Delta insiders have been talking about “burning the furniture.”
 
0newair0
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Re: Delta plans to emerge a "smaller" carrier

Wed Apr 15, 2020 10:31 pm

millionsofmiles wrote:
tphuang wrote:
People don't really seem to comprehend how bad this is for airlines. We are going into the largest economic slowdown since the great depression (yes, even greater than the 2008 recession). The latest project has it that the economic growth will be -3% for this year worldwide. Our employment rate could hit 20%.

IATA estimated it will take 3 to 5 years for domestic travel to return to 2019 levels and 4 to 6 years for international travel to return to 2019 levels. So yes, everyone will be smaller this time next year. It's unsure if all the legacies will even be able to avoid chapter 11 at this point.

The rumours coming out of the major airlines are that they expect the legacies to be 30 to 40% smaller a year for now. With AA emerging the weakest. Even WN/AS/B6 are estimated to be 20% smaller a year from now. When we get back to 2019 traffic level, legacies will be significantly weakened from having to pay back all that loans for the interim years. LCCs/ULCCs are likely to be a larger fraction of the market share. That's just the natural consequences of legacies having to furlough more pilots to survive and business/long haul travel coming back slower than domestic/short haul stuff.


The rumors I’ve been hearing are that Delta will be emerging the weakest of the US3. Delta insiders have been talking about “burning the furniture.”


Haha, this is completely false. Delta will continue to be the strongest of the big 3. You need to get a better source.
That's not how this works! That's not how any of this works!
 
Ciel
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Re: Delta plans to emerge a "smaller" carrier

Wed Apr 15, 2020 10:35 pm

millionsofmiles wrote:
tphuang wrote:
People don't really seem to comprehend how bad this is for airlines. We are going into the largest economic slowdown since the great depression (yes, even greater than the 2008 recession). The latest project has it that the economic growth will be -3% for this year worldwide. Our employment rate could hit 20%.

IATA estimated it will take 3 to 5 years for domestic travel to return to 2019 levels and 4 to 6 years for international travel to return to 2019 levels. So yes, everyone will be smaller this time next year. It's unsure if all the legacies will even be able to avoid chapter 11 at this point.

The rumours coming out of the major airlines are that they expect the legacies to be 30 to 40% smaller a year for now. With AA emerging the weakest. Even WN/AS/B6 are estimated to be 20% smaller a year from now. When we get back to 2019 traffic level, legacies will be significantly weakened from having to pay back all that loans for the interim years. LCCs/ULCCs are likely to be a larger fraction of the market share. That's just the natural consequences of legacies having to furlough more pilots to survive and business/long haul travel coming back slower than domestic/short haul stuff.


The rumors I’ve been hearing are that Delta will be emerging the weakest of the US3. Delta insiders have been talking about “burning the furniture.”


Just curious, may I ask where did you hear these rumors? In my layman's view, DL is certainly not the strongest, but not the weakest either.
 
B757rocket
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Re: Delta plans to emerge a "smaller" carrier

Wed Apr 15, 2020 11:25 pm

Another view of the situation, it’s an interesting read for those that are wondering:


https://seekingalpha.com/article/433650 ... -headlines
 
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NWAESC
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Re: Delta plans to emerge a "smaller" carrier

Wed Apr 15, 2020 11:39 pm

cokepopper wrote:
Let’s hope ALL survive.


We should be so lucky!
"Nothing ever happens here, " I said. "I just wait."
 
tphuang
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Re: Delta plans to emerge a "smaller" carrier

Wed Apr 15, 2020 11:53 pm

The problem with the SA article is that they've lost a lot of money already. Even with the recent $1 billion in sales and leaseback, they likely have just 6.5 billion left and they are losing like 65 million a day. Add in $5.4 billion in grant/loan, you got $12 billion. That's not bad, but things have to start getting better for the airlines to breathe easily. And the commercial market right now seems pretty rough. So they probably need to apply for more loans.

Tough time for everyone.
 
questions
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Re: Delta plans to emerge a "smaller" carrier

Thu Apr 16, 2020 1:39 am

[twoid][/twoid]
cokepopper wrote:
Please don’t feed the troll whom is Just looking for attention. Consider the source.

Delta will emerge smaller and most likely every other carrier in the US. Let’s hope ALL survive. And not troll the carrier that may have hurt your feelings decades ago.


Hold it!

Which one just the troll? And which one is feeding?

Delta may have unique situations they are dealing with. But so do the other two US3. They had different strategies and financial positions heading into this crisis.

Can you imagine the bloodbath if this scenario happened in 2008 with US, NW and CO around?
 
incitatus
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Re: Delta plans to emerge a "smaller" carrier

Thu Apr 16, 2020 2:27 am

DDR wrote:
This whole "will emerge a smaller airline" is bullshit. DL, UA, AA, were all making record profits. Why the hell would they not want to go back to those numbers? Travel will rebound. Plus, airlines HAVE to grow because their costs go up each year. Yes they may retire certain fleets now, but those fleets will be replaced. 3 years from now, DL will be operating more daily flights than they were prior to this outbreak.


I have a different perspective on this one.

For the last couple of years, the upper management and strategy people at these airlines have been divided into two camps. The first one is influenced by Wall Street with the belief that airlines should have flat capacity. That will do wonders for pricing and help them achieve better and better profitability - that is the type of stable growth that would make their P/E ratio go up. The second camp believes that size matters. Growth can be achieved by larger aircraft or by adding more seats to existing aircraft, leading to a lower cost per seat. Lower cost per seat leads to more people willing to fly, they come back to fly more, and volume creates a growing market. With lower cost per seat, this lead to more profitability.

Up to two months ago, this battle was close to a draw, with the growth people being able to marginally win. Now the tide has turned completely. The focus of airlines should be on resilience and having stable finances to withstand shocks. Profitability comes from scarcity and from dominating hub markets.

Eventually Delta will be bigger than it was in the recent past. But that is not going to be any time soon.
I do not consume Murdoch products including the Wall Street Journal
 
slcdeltarumd11
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Re: Delta plans to emerge a "smaller" carrier

Thu Apr 16, 2020 6:03 am

Airlines executives were buying their own stocks back to raise the stock prices for their own personal gain. . This has placed them in a much lower cash position then they should be in. Now those stocks have tanked and they need the cash but can't get it back. They knew this was a risk, but chose to buy back stock in way too large quantities.
 
jagraham
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Re: Delta plans to emerge a "smaller" carrier

Thu Apr 16, 2020 6:57 am

CaliguyNYC wrote:
I think the biggest issue for the US3 will be the slump in business travel for the rest of 2020. Here in NYC a lot of the companies have already told employees that travel/conferences/off sites will be cut or severely restricted for financial reasons (a much easier may to cut some costs). Even if you can travel, I would imagine employees would think twice before booking last minute $3k domestic tix and $8k international. These types of business trips were the US3’s bread and butter. Look I want everything to return to normal asap. I just think 2020 will be a long road even after the doctors give the all clear. That said, I think 2021 should be much better because its a new financial year and as long as the economy is fine, companies will relax travel restrictions.


And don't forget the macro issues. 1/5 of small businesses permanantly closed already. Over 30% of tenants couldn't make their April rent. Yes the government is handing out stimulus checks, but for most families that's 1 extra month. Extra money is being added to unemployment. The feds are not doing this because they just like throwing money around; there is a real possibility that the economy could completely collapse.

And even if the feds print and distribute enough money to keep the economy afloat, not only is there a 1929 size hole to dig out of, but there is the possibility of a coronavirus relapse. Cruise lines live with norovirus because although it's ugly and ruins vacations, it kills very few people. Coronavirus kills about 3 to 5 percent of the people it infects. And makes most of the rest sick as dogs. For weeks. All travel industries will have to adapt to a new reality of keeping people separate. Measuring temperatures at the security checkpoint. Etc. Etc.

It's a new world. The new rules are not clear. Everything is in doubt (except cash). All the things a.netters think airlines should do needs to be prefaced with "if they survive until Jan 2022". I hope my friends and relatives in the airline business have jobs, or at least retirement packages with health care, 3 years from now.
 
Dalmd88
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Re: Delta plans to emerge a "smaller" carrier

Thu Apr 16, 2020 12:45 pm

slcdeltarumd11 wrote:
Airlines executives were buying their own stocks back to raise the stock prices for their own personal gain. . This has placed them in a much lower cash position then they should be in. Now those stocks have tanked and they need the cash but can't get it back. They knew this was a risk, but chose to buy back stock in way too large quantities.

Stock buybacks are not for executive personal gain.

They are to make Wall Street investors happy. When a investor group, say a huge teachers union, buys a companies stock they expect a return. If a company hordes large amounts of cash the return is very small. that investor group takes their investment money to another company that gives them a return. A stock buy back is one way to give a return on investment. After the buy pack there is less stock so the price goes up.

Another problem with hording cash. A company can be a takeover target. Someone like Carl Icahn can borrow money to buy a company using the companies assets as collateral against the financing. Someone coming in and buying your house with your equity. Then they kick you our and sell it off piecemeal to get all the value.

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