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panamair
Posts: 4327
Joined: Fri Oct 12, 2001 2:24 am

Re: Delta plans to emerge a "smaller" carrier

Thu Apr 16, 2020 2:23 pm

Dalmd88 wrote:
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.


Thank you for providing some logic in all of this discussion. If anyone has an issue with this, they should have an issue with our economic system, not the executives and managers. The execs are doing what they are supposed to do under such a system. And it's also easy to villify 'investors' or 'shareholders' without realizing that many investors are also John and Mary of Main Street USA or company rank-and-file employees.

As for Delta specifically, they have been pretty good about allocating their free cash flow - 50% back into the business (new planes and facilities, aircraft refurbishment, etc) ; 30% to employees (profit sharing etc), and 20% to shareholders (dividends, buybacks).
 
frmrCapCadet
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Re: Delta plans to emerge a "smaller" carrier

Thu Apr 16, 2020 3:49 pm

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


Grandkid just graduated and licensed as a dentist last summer. Now just got fired. No one is going to dentists except for emergencies. Kid is really resourceful and has found a solution. Primary care doctors have no patients, attempting to come up with phone/video virtual appointments. It may work, but in the short term. Disaster. Likewise any number of other specialty medical workers are seeing no one coming in their doors. Even emergency room doctors are seeing less.
Buffet: the airline business...has eaten up capital...like..no other (business)
 
FSDan
Posts: 3321
Joined: Mon Jan 03, 2011 5:27 pm

Re: Delta plans to emerge a "smaller" carrier

Thu Apr 16, 2020 4:26 pm

LAXdude1023 wrote:
flymco753 wrote:
FSDan wrote:

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.


:checkmark: The MSP and DTW hubs don't exist solely to provide connections - each is a large and lucrative O&D market in its own right. I don't remember the exact numbers that I saw posted a few months ago, but both MSP and DTW had a lower % of connections than most people thought they would have. IIRC, MSP was about 60% O&D and 40% connections in 2019, and DTW wasn't too different.
This is my signature until I think of a better one.
 
JAMBOJET
Posts: 293
Joined: Tue Dec 11, 2018 6:23 pm

Re: Delta plans to emerge a "smaller" carrier

Thu Apr 16, 2020 4:56 pm

panamair wrote:
As for Delta specifically, they have been pretty good about allocating their free cash flow - 50% back into the business (new planes and facilities, aircraft refurbishment, etc) ; 30% to employees (profit sharing etc), and 20% to shareholders (dividends, buybacks).


Are you including annual wage increases to get to the employee 30% number? I can't find a single year in the last 5 where employee profit sharing was anywhere close to the shareholder returns total, certainly not when it's averaged out over a few years. In 2019, for example, Delta returned $3B to shareholders and paid out $1.6B in profit sharing.
That was their old plan for 2020 as well.

They even stated their plan was for 70% of Free Cash Flow to go to shareholders, ~35% of operating cash flow.
Link to Delta's investor day: https://s2.q4cdn.com/181345880/files/do ... tation.pdf
 
gsg013
Posts: 560
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Re: Delta plans to emerge a "smaller" carrier

Thu Apr 16, 2020 5:01 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.



DTW is better positioned geographically, the terminal setup for DL is much more streamlined and efficient. I connect regularly through DTW out of BNA (It is only an hour flight). MSP is about 2 hrs and not nearly as easy of an airport to connect through. I have connected multiple times in MSP and find that MSP is just off the beaten path to connect through.
 
winginit
Posts: 2879
Joined: Sat Feb 23, 2013 9:23 pm

Re: Delta plans to emerge a "smaller" carrier

Thu Apr 16, 2020 5:34 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.”


That flies in the face of what literally every aviation analyst on Wall Street is saying. Both Hunter Keay and Jamie Baker have floated the possibility of AA needing another formal restructuring via bankruptcy while reiterating time and time again that DL and WN are the best suited of the larger carriers in the country to make it through this. Unless your 'rumors' are coming from those who know what they're talking about - they shouldn't be given much credence.
 
FSDan
Posts: 3321
Joined: Mon Jan 03, 2011 5:27 pm

Re: Delta plans to emerge a "smaller" carrier

Thu Apr 16, 2020 5:50 pm

gsg013 wrote:
I connect regularly through DTW out of BNA (It is only an hour flight). MSP is about 2 hrs and not nearly as easy of an airport to connect through. I have connected multiple times in MSP and find that MSP is just off the beaten path to connect through.


That depends entirely on where you're originating and where you're going. If you live in Nashville, sure, MSP is relatively out of the way unless you're bound for the Dakotas/Montana/Minnesota/Wisconsin, Western Canada, Alaska, or East Asia. But if you live in Boston or New York? MSP is a good gateway to most of the western half of the country. If you live in the Pacific Northwest? It's a great spot to connect to get to the Midwest or the Northeast. If you're in CA/NV/AZ/UT/CO, MSP is directly on the way to Europe. It's an intuitive stopover for Midwest-East Asia traffic.

It's all subjective depending on where you live. But as noted above, MSP was only approximately 40% connecting traffic for DL last year anyway. The other 60% is the large O&D traffic from a ~4 million CSA with many large corporations such as Target, BestBuy, UnitedHealth Group, 3M, Medtronic, US Bank, etc.
This is my signature until I think of a better one.
 
jordanh
Posts: 325
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Re: Delta plans to emerge a "smaller" carrier

Thu Apr 16, 2020 5:56 pm

millionsofmiles wrote:
The rumors I’ve been hearing are that Delta will be emerging the weakest of the US3.


You obviously shouldn't listen to rumors.

And I would bet your "millions of miles" aren't with Delta - right?
 
JAMBOJET
Posts: 293
Joined: Tue Dec 11, 2018 6:23 pm

Re: Delta plans to emerge a "smaller" carrier

Thu Apr 16, 2020 7:04 pm

winginit wrote:
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.”


That flies in the face of what literally every aviation analyst on Wall Street is saying. Both Hunter Keay and Jamie Baker have floated the possibility of AA needing another formal restructuring via bankruptcy while reiterating time and time again that DL and WN are the best suited of the larger carriers in the country to make it through this. Unless your 'rumors' are coming from those who know what they're talking about - they shouldn't be given much credence.


Funny you'd say that... In my view, an AAL Chapter 11 bankruptcy is one of the few scenarios where Delta would emerge among the weakest.
Delta's best case domestically (seems to go without saying that Delta's international strategy is a bit unknown right now) is AAL not restructuring and coming out of this with more debt to pay back than ever instead of making profits that can be spent on building up hubs, purchasing slots, enticing high-value customers, etc.

If AAL went into Chapter 11, airline bankruptcy history would suggest they might shed 1-2 hubs but would emerge with a much stronger cash-generating position due to a lower cost structure than Delta or United. It's not as though AAL would eliminate CLT or DFW, the two hubs that directly compete with Delta's cash cow, ATL.
That would essentially lead to the same luxury Delta has now: generating more cash than competitors and spending it on anything they want.

Obviously bad for AAL shareholders, but worse for Delta as a company in the long-run.

However, domestically, Delta is an obvious unusual position: IF (and only IF) the recovery is weighted toward nearby leisure and domestic travel, Delta has competitors with much better offerings and lower costs to operate those offerings at BOS, JFK (not NYC, just JFK), and SEA. If the recovery is slow, how will Delta compete against JetBlue and Alaska at those hubs. That does seem like a rather unique position to Delta.
 
tphuang
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Re: Delta plans to emerge a "smaller" carrier

Thu Apr 16, 2020 8:36 pm

Delta could actually emerge out of this doing really well even if they are smaller for a few years. A lot really depends on how the economy of midwest, especially around Detroit and Minneapolis, recovers coming out of a terrible recession.

AA will emerge out of this with a ton of debt and likely to shrink the most. I think they will have to be smaller by at least 1/3 by next summer vs 2019 and probably still at least 20% smaller 2 years from now. People have argued with me on this, but my position i they will be significantly smaller not only in JFK, but also LGA and LAX. With their high debt, they can't afford to maintain the same presence in their worst performing stations. A focus on DFW and CLT mean those two stations will see minimal cuts (let's 15% cuts here with mostly downgauging and lower frequencies). DCA will most likely see minimal cuts since it was their most profitable station and need to maintain those precious slots. Imo, their next most profitable hubs like ORD and PHX will have to be down around 30% in capacity. PHL and MIA, due to their reliance on international stuff, will have to be cut even more than that. JFK/LGA/LAX could see 50% cut in capacity a year from now (not necessarily 50% cut in flights, but a lot of downgauging too). Even 2 years from now, I'm not sure NYC and LAX come back as more than focus cities.

I see UA down 25 to 30% a year from now and still around 15% 2 years from now. It will probably have the least cuts at DEN and IAH. The coastal stuff will take large hits. That means reduced presence in SFO, EWR and especially IAD. I think LAX will be more of a focus city for them in short terms. They could also reduce ORD without hurting too much since AA will be a lot smaller at ORD.

I fully expect both AA and UA to lose LGA slots a year from now if FAA does not extend slot waivers past Oct.

So if Delta execs are looking at this, they have 2 giant opportunities right now at NYC and LA Basin. They could dominate both market coming out of this. You got the 4 core hubs which are clearly not going anywhere. Let's say DL needs to shrink by about the same size as UA. All the core hubs will downsize 15 to 20% through reduced frequency and downguaging. They will probably cut some smaller cities, but nothing too siginificant. They need to do this, since UA and WN will likely do minimal cuts to their middle of the country stations. For example, can they afford to cut down SLC or MSP when UA remains strong at ORD and DEN? Aside from that, they need to look at what to do with the coastal stuff.

Now, I know I'm biased toward B6, but hear me out here. The P2P stuff needs to go. CVG and RDU are going to get downsized a lot, let's say 50% cut at minimal. BOS needs to be downsized a lot, let's say 40 to 50% cut. No need to have a second TATL hub in Norhteast. SEA needs to be downsized a lot, let's say 1/3 cut. What this will allow them to do is to keep their presence up in NYC and LAX. In order to keep all its slots and grow again when AA is shrinking in NYC, it can't cut too much capacity. NYC's top dollars will be between UA and DL. Downgauging is necessary, but it needs to hold on to all its LGA slots and not cut many flights from JFK. I fully expect JFK to lose slot constraints after this. DL can come out of this completely dominating NYC even more than it does right now. By 2022, it could be back to the same size as 2019. I don't think UA will be back to 2019 size at EWR by then.

LA is where their opportunity really opens up. As I said, both AA/UA are going to shrink at LAX. DL's plan so far has been maintaining both LAX and SEA (both seeing about 50+ flights for May). What's point of that? If you have a chance to dominate LA, why wasting time and money on SEA? AS isn't going to collapse in PNW. This is a once in a decade opportunity to dominate LA Basin. WN is unlikely to shrink at LAX, but WN isn't going to capture the people that want to do a lot of international flying.
 
lavalampluva
Posts: 1433
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Re: Delta plans to emerge a "smaller" carrier

Thu Apr 16, 2020 9:20 pm

gsg013 wrote:
flymco753 wrote:
FSDan wrote:

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.



DTW is better positioned geographically, the terminal setup for DL is much more streamlined and efficient. I connect regularly through DTW out of BNA (It is only an hour flight). MSP is about 2 hrs and not nearly as easy of an airport to connect through. I have connected multiple times in MSP and find that MSP is just off the beaten path to connect through.

Not to get too far off subject, DTW fan boys have always been praying that MSP would just go away.
Remind me to send a thank you note to Mr. Boeing.
 
WidebodyPTV
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Re: Delta plans to emerge a "smaller" carrier

Thu Apr 16, 2020 9:25 pm

lavalampluva wrote:
Not to get too far off subject, DTW fan boys have always been praying that MSP would just go away.


I’d like to see you support that statement. I can think of several MSP fanboys who were open about their desires to see DTW closed, especially during the Great Recession, but I can’t think of a single DTW fanboy who openly wished the same for MSP.
 
strfyr51
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Re: Delta plans to emerge a

Thu Apr 16, 2020 9:35 pm

0newair0 wrote:
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.

while the 767 may be older? I'll bet it is fully amortized and the only payments Delta is making is for the upkeep of the airplane. So? they're flying on Profit potential. . They could Park them tomorrow and somebody else will pick them up for freighters and Make money with them. Either way? Delta can't LOSE!
 
UpNAWAy
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Re: Delta plans to emerge a "smaller" carrier

Thu Apr 16, 2020 9:57 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.



We are looking at maybe 5 years to just get back to 2019 levels, This is unprecedented, huge and will change worldwide travel forever!
 
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flymco753
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Re: Delta plans to emerge a "smaller" carrier

Thu Apr 16, 2020 10:55 pm

WidebodyPTV wrote:
lavalampluva wrote:
Not to get too far off subject, DTW fan boys have always been praying that MSP would just go away.


I’d like to see you support that statement. I can think of several MSP fanboys who were open about their desires to see DTW closed, especially during the Great Recession, but I can’t think of a single DTW fanboy who openly wished the same for MSP.
This goes back before even Northwest. Ever since Republic grew larger in DTW than MSP, fights ensued through Northwest. Now that they're about equal, they've eased off a little. It seems like these arguments are shifting from MSP & DTW to DTW & ATL and MSP & SLC.
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DeltaPSCFlyer
Posts: 77
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Re: Delta plans to emerge a "smaller" carrier

Thu Apr 16, 2020 11:55 pm

tphuang wrote:
Delta could actually emerge out of this doing really well even if they are smaller for a few years. A lot really depends on how the economy of midwest, especially around Detroit and Minneapolis, recovers coming out of a terrible recession.

AA will emerge out of this with a ton of debt and likely to shrink the most. I think they will have to be smaller by at least 1/3 by next summer vs 2019 and probably still at least 20% smaller 2 years from now. People have argued with me on this, but my position i they will be significantly smaller not only in JFK, but also LGA and LAX. With their high debt, they can't afford to maintain the same presence in their worst performing stations. A focus on DFW and CLT mean those two stations will see minimal cuts (let's 15% cuts here with mostly downgauging and lower frequencies). DCA will most likely see minimal cuts since it was their most profitable station and need to maintain those precious slots. Imo, their next most profitable hubs like ORD and PHX will have to be down around 30% in capacity. PHL and MIA, due to their reliance on international stuff, will have to be cut even more than that. JFK/LGA/LAX could see 50% cut in capacity a year from now (not necessarily 50% cut in flights, but a lot of downgauging too). Even 2 years from now, I'm not sure NYC and LAX come back as more than focus cities.

I see UA down 25 to 30% a year from now and still around 15% 2 years from now. It will probably have the least cuts at DEN and IAH. The coastal stuff will take large hits. That means reduced presence in SFO, EWR and especially IAD. I think LAX will be more of a focus city for them in short terms. They could also reduce ORD without hurting too much since AA will be a lot smaller at ORD.

I fully expect both AA and UA to lose LGA slots a year from now if FAA does not extend slot waivers past Oct.

So if Delta execs are looking at this, they have 2 giant opportunities right now at NYC and LA Basin. They could dominate both market coming out of this. You got the 4 core hubs which are clearly not going anywhere. Let's say DL needs to shrink by about the same size as UA. All the core hubs will downsize 15 to 20% through reduced frequency and downguaging. They will probably cut some smaller cities, but nothing too siginificant. They need to do this, since UA and WN will likely do minimal cuts to their middle of the country stations. For example, can they afford to cut down SLC or MSP when UA remains strong at ORD and DEN? Aside from that, they need to look at what to do with the coastal stuff.

Now, I know I'm biased toward B6, but hear me out here. The P2P stuff needs to go. CVG and RDU are going to get downsized a lot, let's say 50% cut at minimal. BOS needs to be downsized a lot, let's say 40 to 50% cut. No need to have a second TATL hub in Norhteast. SEA needs to be downsized a lot, let's say 1/3 cut. What this will allow them to do is to keep their presence up in NYC and LAX. In order to keep all its slots and grow again when AA is shrinking in NYC, it can't cut too much capacity. NYC's top dollars will be between UA and DL. Downgauging is necessary, but it needs to hold on to all its LGA slots and not cut many flights from JFK. I fully expect JFK to lose slot constraints after this. DL can come out of this completely dominating NYC even more than it does right now. By 2022, it could be back to the same size as 2019. I don't think UA will be back to 2019 size at EWR by then.

LA is where their opportunity really opens up. As I said, both AA/UA are going to shrink at LAX. DL's plan so far has been maintaining both LAX and SEA (both seeing about 50+ flights for May). What's point of that? If you have a chance to dominate LA, why wasting time and money on SEA? AS isn't going to collapse in PNW. This is a once in a decade opportunity to dominate LA Basin. WN is unlikely to shrink at LAX, but WN isn't going to capture the people that want to do a lot of international flying.


Based on it's current financial condition, I think AA is the weakest of the Big 3, and DL is the strongest. Of the 3, AA is the most likely to face Ch. 11 again, but depending on how long this goes on for, DL and UA may face it also. Let's hope all 3 can avoid it.

What eventually happens though will depend on the answers to these questions:
- What domestic industries will emerge stronger and which ones will fall away?
- What regions of the country will recover first vs. last, and at what rate?
- How soon will people get back to work and have enough confidence to want to travel, and with enough discretionary income to do it?
- What will the domestic airline industry look like competitively? Who might fail, merge (non-cash) and who stands to gain/lose the most as a result?
- What will the overseas economy look like, specifically, what regions will recover quicker? (Asia first, then Europe, Latin America largely unchanged)
- What will the international airline industry look like; specifically, who will fail, merge, etc? Impact on pre-virus alliances like Star, Sky Team, etc? Could some alliances fail and lead to new ones?
- How will the traveling experience change itself, both at the airport, on board, but also on cruise ships?

I guess it's fun to speculate, but there are so many variables at play here. How any one of these domestic airlines adapts to these factors will really determine their fate.
 
kavok
Posts: 833
Joined: Wed May 11, 2016 10:12 pm

Re: Delta plans to emerge a "smaller" carrier

Fri Apr 17, 2020 12:03 am

flymco753 wrote:
WidebodyPTV wrote:
lavalampluva wrote:
Not to get too far off subject, DTW fan boys have always been praying that MSP would just go away.


I’d like to see you support that statement. I can think of several MSP fanboys who were open about their desires to see DTW closed, especially during the Great Recession, but I can’t think of a single DTW fanboy who openly wished the same for MSP.
This goes back before even Northwest. Ever since Republic grew larger in DTW than MSP, fights ensued through Northwest. Now that they're about equal, they've eased off a little. It seems like these arguments are shifting from MSP & DTW to DTW & ATL and MSP & SLC.


In regards to your last statement, a large reason for that is much of the connecting redundancy that exists is actually between DTW and ATL, and between SLC and MSP. A lot of people just assume that because both DTW and MSP are in the Midwest, that clearly they are completing for connections. And while for some itineraries they are, if you dive deeper into the connecting flows you will see it is much more DTW competing with ATL (not MSP), and MSP competing with SLC (not DTW), counterintuitive as it may seem. Hence the arguments. That all being said, all four are great airports and huge assets to DL, and none of those 4 hubs are going anywhere.
 
slcdeltarumd11
Posts: 4756
Joined: Fri Jan 09, 2004 7:30 am

Re: Delta plans to emerge a "smaller" carrier

Fri Apr 17, 2020 12:55 am

Dalmd88 wrote:
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's. 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.


You are acting like it's all or nothing. Should they have bought some back yes did they buy too much yes.

Keep defending delta any way possible. I am sure they woulnt be any stronger right now with more cash on hand. You are right delta has never done anything wrong, ever. :white:

The executives cleaned up with delta stock going up:
employee stock options
 
0newair0
Posts: 417
Joined: Fri Jun 01, 2007 12:21 am

Re: Delta plans to emerge a "smaller" carrier

Fri Apr 17, 2020 1:01 am

slcdeltarumd11 wrote:

You are acting like it's all or nothing. Should they have bought some back yes did they buy too much yes.



One thing the "buy backs are bad" crowd is failing understand is that the cash position would be exactly the same if there were less or no buy backs. If the cash was not used to buy back stocks, it would have been used for something else. The cash would not have been sat on.

Buy back, or no buy back, Delta would be in the exact same cash position it is today.
That's not how this works! That's not how any of this works!
 
slcdeltarumd11
Posts: 4756
Joined: Fri Jan 09, 2004 7:30 am

Re: Delta plans to emerge a

Fri Apr 17, 2020 1:34 am

0newair0 wrote:
slcdeltarumd11 wrote:

You are acting like it's all or nothing. Should they have bought some back yes did they buy too much yes.



One thing the "buy backs are bad" crowd is failing understand is that the cash position would be exactly the same if there were less or no buy backs. If the cash was not used to buy back stocks, it would have been used for something else. The cash would not have been sat on.

Buy back, or no buy back, Delta would be in the exact same cash position it is today.


Wrong. That cash could have been used to buy assets that have value. Their own stock will naturally be no help if the company is in trouble.

Only a.net do people refuse to admit the airlines ever did anything wrong. It's unreal!!!

I'm in no way saying this pandemic is their fault or anything, but all US 3 legacy carriers went too far in stock but backs for their own personal gain.
 
0newair0
Posts: 417
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Re: Delta plans to emerge a

Fri Apr 17, 2020 1:46 am

slcdeltarumd11 wrote:
0newair0 wrote:
slcdeltarumd11 wrote:

You are acting like it's all or nothing. Should they have bought some back yes did they buy too much yes.



One thing the "buy backs are bad" crowd is failing understand is that the cash position would be exactly the same if there were less or no buy backs. If the cash was not used to buy back stocks, it would have been used for something else. The cash would not have been sat on.

Buy back, or no buy back, Delta would be in the exact same cash position it is today.


Wrong. That cash could have been used to buy assets that have value. Their own stock will naturally be no help if the company is in trouble.

Only a.net do people refuse to admit the airlines ever did anything wrong. It's unreal!!!

I'm in no way saying this pandemic is their fault or anything, but all US 3 legacy carriers went too far in stock but backs for their own personal gain.
I love this board so much.

I'm not wrong, I can assure you of that.
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

Fri Apr 17, 2020 4:04 am

:airplane: not implying that you don't! Have a Great Day :)
 
ordbosewr
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Re: Delta plans to emerge a

Fri Apr 17, 2020 12:46 pm

slcdeltarumd11 wrote:
0newair0 wrote:
slcdeltarumd11 wrote:

You are acting like it's all or nothing. Should they have bought some back yes did they buy too much yes.



One thing the "buy backs are bad" crowd is failing understand is that the cash position would be exactly the same if there were less or no buy backs. If the cash was not used to buy back stocks, it would have been used for something else. The cash would not have been sat on.

Buy back, or no buy back, Delta would be in the exact same cash position it is today.


Wrong. That cash could have been used to buy assets that have value. Their own stock will naturally be no help if the company is in trouble.

Only a.net do people refuse to admit the airlines ever did anything wrong. It's unreal!!!

I'm in no way saying this pandemic is their fault or anything, but all US 3 legacy carriers went too far in stock but backs for their own personal gain.


It is not necessarily an asset, but say if DL used the cash they used for buy-backs to pay down the debt they have. Then they would have entered this challenging time with much less debt and they could have gone to banks and taken on the debt to weather the storm. Instead, they have had to go to the federal government to get grants and debt to weather the storm.
That is one tangible way that DL, UA and AA could have made the situation very different for themselves by spending directly swapping buy-backs for debt payment.

Some facts, DL has over the past 10 years used ~$11B in stock buy backs (from here https://www.marketwatch.com/story/airli ... 2020-03-18) , if all of that was used to pay down the debt, the likelyhood of them having $14.17B in long-term debt (as of end 2019). is the issue. Let's say DL took half that paid down debt, then they could have had that (roughly) amount available to them today.
Now, I am not a person that subscribes to the no debt = good balance sheet. In the past few years we have been living in zero/low interest rates it is very cheap to take on debt and it is was more profitable to use the cash at higher profit. Meaning, by paying down the debt you are saving say 10 basis points, but it you took that cash and used it to buy 5 new airplanes that could make you 20 basis points per year going forward. it is easy math to "re-invest" in your business vs paying down debt.

Now, lets also raise another point another poster raised, which plays into the 'executive decision'. If they paid down all the debt and they started to sit on the cash they would vulnerable to many 'activist' investors that would demand changes and the some folks would have pushed for management to be out because they where not looking after the shareholders.
IMHO, it really comes down to a deep conversation (broader than just airlines) about shareholders vs stakeholders. Stakeholders are your employees AND your shareholders, neither is more important than the other. However, in the world of the financial markets they see the shareholders as the owners. Go read about what Benioff from Salesforce (stock ticker CRM) says about this.

It is a big discussion that can and should happen about many facets of this, but it needs to be done at a time of strength or stability. You can't have this discussion when everything is stressed, one will make a decision based on that stress not on the facts as they should be.
 
winginit
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Re: Delta plans to emerge a

Fri Apr 17, 2020 4:46 pm

0newair0 wrote:
slcdeltarumd11 wrote:
0newair0 wrote:

One thing the "buy backs are bad" crowd is failing understand is that the cash position would be exactly the same if there were less or no buy backs. If the cash was not used to buy back stocks, it would have been used for something else. The cash would not have been sat on.

Buy back, or no buy back, Delta would be in the exact same cash position it is today.


Wrong. That cash could have been used to buy assets that have value. Their own stock will naturally be no help if the company is in trouble.

Only a.net do people refuse to admit the airlines ever did anything wrong. It's unreal!!!

I'm in no way saying this pandemic is their fault or anything, but all US 3 legacy carriers went too far in stock but backs for their own personal gain.
I love this board so much.

I'm not wrong, I can assure you of that.


You're not wrong, but one thing you've left out is arguably the most important holding of any airline right now given the cash crunch: unencumbered assets.

It's not at all a stretch to say that without share buybacks, all airlines would be far more flush with unencumbered assets be those aircraft or what have you. Over the next few months (and you've seen it happen already), airlines will be mortgaging those assets to raise cash, so they're essentially as good as cash.
 
tphuang
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Re: Delta plans to emerge a

Fri Apr 17, 2020 5:07 pm

winginit wrote:
0newair0 wrote:
slcdeltarumd11 wrote:

Wrong. That cash could have been used to buy assets that have value. Their own stock will naturally be no help if the company is in trouble.

Only a.net do people refuse to admit the airlines ever did anything wrong. It's unreal!!!

I'm in no way saying this pandemic is their fault or anything, but all US 3 legacy carriers went too far in stock but backs for their own personal gain.
I love this board so much.

I'm not wrong, I can assure you of that.


You're not wrong, but one thing you've left out is arguably the most important holding of any airline right now given the cash crunch: unencumbered assets.

It's not at all a stretch to say that without share buybacks, all airlines would be far more flush with unencumbered assets be those aircraft or what have you. Over the next few months (and you've seen it happen already), airlines will be mortgaging those assets to raise cash, so they're essentially as good as cash.


They are not essentially as good as cash, since banks are clearly not treating it as such with the credit market options look really weak for airlines right now. If Delta has $20 billion in unencumbered asset, then how come it has only gotten the existing $3 billion in revolving credit + $1 billion in sale+leaseback + $2.6 billion in additional loans (that could be upped to $4 billion)? Clearly, airlines are not getting 100 cent on the dollar for the value that their accounting department has assigned to these assets. That's what happens when credit is low in the market and everyone is looking for more money. Those who have the money can dictate whatever the term they want to the airlines. Otherwise, airlines will not be looking for additional loans from federal gov't.

If you give airlines the option of having $3 billion in cash vs $4 billion in unencumbered assets, nobody is going to take the later right now.
 
winginit
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Re: Delta plans to emerge a

Fri Apr 17, 2020 5:12 pm

tphuang wrote:
winginit wrote:
0newair0 wrote:
I love this board so much.

I'm not wrong, I can assure you of that.


You're not wrong, but one thing you've left out is arguably the most important holding of any airline right now given the cash crunch: unencumbered assets.

It's not at all a stretch to say that without share buybacks, all airlines would be far more flush with unencumbered assets be those aircraft or what have you. Over the next few months (and you've seen it happen already), airlines will be mortgaging those assets to raise cash, so they're essentially as good as cash.


They are not essentially as good as cash, since banks are clearly not treating it as such with the credit market options look really weak for airlines right now. If Delta has $20 billion in unencumbered asset, then how come it has only gotten the existing $3 billion in revolving credit + $1 billion in sale+leaseback + $2.6 billion in additional loans (that could be upped to $4 billion)? Clearly, airlines are not getting 100 cent on the dollar for the value that their accounting department has assigned to these assets. That's what happens when credit is low in the market and everyone is looking for more money. Those who have the money can dictate whatever the term they want to the airlines. Otherwise, airlines will not be looking for additional loans from federal gov't.

If you give airlines the option of having $3 billion in cash vs $4 billion in unencumbered assets, nobody is going to take the later right now.


I should have used better wording - they are good for the raising of cash, albeit not at an equivalent value of their purchase price. The assumptions made earlier in the thread were that absent share buybacks cash balances would be the same as they are today. I agree with that, but what was discounted was what would likely be a higher balance of unencumbered assets that could, and can, and are, being used to raise cash.

The summary point is that if airlines were previously unable to buy back shares they would be better equipped to weather this storm.
 
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flymco753
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Re: Delta plans to emerge a "smaller" carrier

Fri Apr 17, 2020 5:16 pm

kavok wrote:
flymco753 wrote:
WidebodyPTV wrote:

I’d like to see you support that statement. I can think of several MSP fanboys who were open about their desires to see DTW closed, especially during the Great Recession, but I can’t think of a single DTW fanboy who openly wished the same for MSP.
This goes back before even Northwest. Ever since Republic grew larger in DTW than MSP, fights ensued through Northwest. Now that they're about equal, they've eased off a little. It seems like these arguments are shifting from MSP & DTW to DTW & ATL and MSP & SLC.


In regards to your last statement, a large reason for that is much of the connecting redundancy that exists is actually between DTW and ATL, and between SLC and MSP. A lot of people just assume that because both DTW and MSP are in the Midwest, that clearly they are completing for connections. And while for some itineraries they are, if you dive deeper into the connecting flows you will see it is much more DTW competing with ATL (not MSP), and MSP competing with SLC (not DTW), counterintuitive as it may seem. Hence the arguments. That all being said, all four are great airports and huge assets to DL, and none of those 4 hubs are going anywhere.
The DTW & MSP argument still persists but it's based on emotion rather than a factual context. As more Republic employees and older Northwest employees begin to retire, the feelings between them both will decrease. It's hard to completely get rid of it because those who have generations of family at the airport could carry it over.
...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
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Re: Delta plans to emerge a "smaller" carrier

Fri Apr 17, 2020 6:04 pm

Why do people even care, particularly about something involving a merger that happened 34 years ago? Is this real or just a.net lore.
I never understand these hub jealousy / bragging items that people can't even control.
 
ShinyAndChrome
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Re: Delta plans to emerge a

Fri Apr 17, 2020 6:08 pm

winginit wrote:
tphuang wrote:
winginit wrote:

You're not wrong, but one thing you've left out is arguably the most important holding of any airline right now given the cash crunch: unencumbered assets.

It's not at all a stretch to say that without share buybacks, all airlines would be far more flush with unencumbered assets be those aircraft or what have you. Over the next few months (and you've seen it happen already), airlines will be mortgaging those assets to raise cash, so they're essentially as good as cash.


They are not essentially as good as cash, since banks are clearly not treating it as such with the credit market options look really weak for airlines right now. If Delta has $20 billion in unencumbered asset, then how come it has only gotten the existing $3 billion in revolving credit + $1 billion in sale+leaseback + $2.6 billion in additional loans (that could be upped to $4 billion)? Clearly, airlines are not getting 100 cent on the dollar for the value that their accounting department has assigned to these assets. That's what happens when credit is low in the market and everyone is looking for more money. Those who have the money can dictate whatever the term they want to the airlines. Otherwise, airlines will not be looking for additional loans from federal gov't.

If you give airlines the option of having $3 billion in cash vs $4 billion in unencumbered assets, nobody is going to take the later right now.


I should have used better wording - they are good for the raising of cash, albeit not at an equivalent value of their purchase price. The assumptions made earlier in the thread were that absent share buybacks cash balances would be the same as they are today. I agree with that, but what was discounted was what would likely be a higher balance of unencumbered assets that could, and can, and are, being used to raise cash.

The summary point is that if airlines were previously unable to buy back shares they would be better equipped to weather this storm.


If they couldn't have bought back stock that money would've probably just gone out in dividends instead. They would've needed to spend even more to compensate investors to the same extent given how dividends are taxed higher too. You wouldn't have seen Delta or anyone else using it to but even more aircraft than they otherwise wanted (which they'd be using as collateral for pennies on the dollar anyway right now) or stuffed it under their mattresses.

In any case, Delta's already gotten a better handle on the debt relative to its peer set. Paying it down even further and ahead of schedule would've been hard to justify before the crisis without the benefit of hindsight on everything that's happened.
 
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NWAESC
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Re: Delta plans to emerge a "smaller" carrier

Fri Apr 17, 2020 6:57 pm

PSU.DTW.SCE wrote:
Why do people even care, particularly about something involving a merger that happened 34 years ago? Is this real or just a.net lore.
I never understand these hub jealousy / bragging items that people can't even control.


The Duck vs. Red Tail rivalry was a thing many years ago, but I honestly haven't heard a word about it in forever.
"Nothing ever happens here, " I said. "I just wait."
 
GalaxyFlyer
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Re: Delta plans to emerge a

Fri Apr 17, 2020 7:12 pm

ordbosewr wrote:
slcdeltarumd11 wrote:
0newair0 wrote:

One thing the "buy backs are bad" crowd is failing understand is that the cash position would be exactly the same if there were less or no buy backs. If the cash was not used to buy back stocks, it would have been used for something else. The cash would not have been sat on.

Buy back, or no buy back, Delta would be in the exact same cash position it is today.


Wrong. That cash could have been used to buy assets that have value. Their own stock will naturally be no help if the company is in trouble.

Only a.net do people refuse to admit the airlines ever did anything wrong. It's unreal!!!

I'm in no way saying this pandemic is their fault or anything, but all US 3 legacy carriers went too far in stock but backs for their own personal gain.


It is not necessarily an asset, but say if DL used the cash they used for buy-backs to pay down the debt they have. Then they would have entered this challenging time with much less debt and they could have gone to banks and taken on the debt to weather the storm. Instead, they have had to go to the federal government to get grants and debt to weather the storm.
That is one tangible way that DL, UA and AA could have made the situation very different for themselves by spending directly swapping buy-backs for debt payment.

Some facts, DL has over the past 10 years used ~$11B in stock buy backs (from here https://www.marketwatch.com/story/airli ... 2020-03-18) , if all of that was used to pay down the debt, the likelyhood of them having $14.17B in long-term debt (as of end 2019). is the issue. Let's say DL took half that paid down debt, then they could have had that (roughly) amount available to them today.
Now, I am not a person that subscribes to the no debt = good balance sheet. In the past few years we have been living in zero/low interest rates it is very cheap to take on debt and it is was more profitable to use the cash at higher profit. Meaning, by paying down the debt you are saving say 10 basis points, but it you took that cash and used it to buy 5 new airplanes that could make you 20 basis points per year going forward. it is easy math to "re-invest" in your business vs paying down debt.

Now, lets also raise another point another poster raised, which plays into the 'executive decision'. If they paid down all the debt and they started to sit on the cash they would vulnerable to many 'activist' investors that would demand changes and the some folks would have pushed for management to be out because they where not looking after the shareholders.
IMHO, it really comes down to a deep conversation (broader than just airlines) about shareholders vs stakeholders. Stakeholders are your employees AND your shareholders, neither is more important than the other. However, in the world of the financial markets they see the shareholders as the owners. Go read about what Benioff from Salesforce (stock ticker CRM) says about this.

It is a big discussion that can and should happen about many facets of this, but it needs to be done at a time of strength or stability. You can't have this discussion when everything is stressed, one will make a decision based on that stress not on the facts as they should be.


Capital is capital, but out tax code makes debt much better than equity. Debt is a tax deduction, equity (dividends) comes after taxes AND is then taxed again at the individual level. Stop that and a lot of problems are mitigated.
 
evank516
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Re: Delta plans to emerge a "smaller" carrier

Fri Apr 17, 2020 7:29 pm

Will this situation affect the strategy DL has for using A220s?
 
MartijnNL
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Re: Delta plans to emerge a "smaller" carrier

Fri Apr 17, 2020 8:24 pm

DDR wrote:
This whole "will emerge a smaller airline" is bullshit. (...) 3 years from now, DL will be operating more daily flights than they were prior to this outbreak.

UpNAWAy wrote:
We are looking at maybe 5 years to just get back to 2019 levels, This is unprecedented, huge and will change worldwide travel forever!

I think this is too early too tell. We simply don't know what the future will bring. Yes, the situation is certainly unprecedented. The United States are experiencing a 9/11 each day at the moment. It's terrible. Over 9,000 dead in three days. Let's all hope the world finds a way soon to make airline travel possible again.
 
PSU.DTW.SCE
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Re: Delta plans to emerge a "smaller" carrier

Fri Apr 17, 2020 8:49 pm

evank516 wrote:
Will this situation affect the strategy DL has for using A220s?

Its the only fleet type not having any aircraft put into storage. It will probably be the only fleet type that will have near pre-downturn levels of utilization when things start to recover.

Obviously the delivery schedule will be impacted, however the revised delivery schedule will ultimately be tied to how DL and Airbus negotiate the total package of future deliveries A220, A321CEO, A321NEO, A339, A359
Last edited by PSU.DTW.SCE on Fri Apr 17, 2020 8:52 pm, edited 1 time in total.
 
Alias1024
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Re: Delta plans to emerge a

Fri Apr 17, 2020 8:50 pm

ordbosewr wrote:

It is not necessarily an asset, but say if DL used the cash they used for buy-backs to pay down the debt they have. Then they would have entered this challenging time with much less debt and they could have gone to banks and taken on the debt to weather the storm. Instead, they have had to go to the federal government to get grants and debt to weather the storm.


I’m not sure lower debt going into this would have meant banks would lend more. Your argument would hold true in a typical downtown, but this is anything but typical. Revenue is off over 95%. The risk profile is massively different and the value banks are willing to risk on a company with essentially no revenue is bound to be different than for a company weathering a 15-20% downturn.
It is a mistake to think you can solve any major problems with just potatoes.
 
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NWAROOSTER
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Re: Delta plans to emerge a "smaller" carrier

Fri Apr 17, 2020 10:46 pm

QUOTING FLYMCO753.. The DTW & MSP argument still persists but it's based on emotion rather than a factual context. As more Republic employees and older Northwest employees begin to retire, the feelings between them both will decrease. It's hard to completely get rid of it because those who have generations of family at the airport could carry it over.

There are several reasons both MSP and DTW are NOT going away and it has NOTHING to due with former Northwest and Republic employees Before I go into that I might as well mention Delta picked up SLC, Salt Lake City, from Western Airline when Delta acquired that Airline in December, 1986 after a failed attempt by Western with Continental Airlines. SLC was a primary hub of Western Airlines from about 1925 when it began carrying mail to LAX to and from SLC, and Delta chose to keep it. So SLC is not going away.
Now between MSP an DTW. Northwest became involved with MSP about the time of WWII. I also used Holman Field, named after Speed Holman Northwest chief pilot who was killed in Omaha, Nb flying in a stunt show, in St. Paul, MN, STP, which is where Northwest had a heavy maintenance operation and hangers. It was and still is St. Paul, MN Downtown airport just across the Mississippi River which has a habit of flooding it out in the Spring thaw. It also has a spectacular Art-Deco Terminal that should be unless it is on the National Historical Buildings list. In the 1950s Northwest started building a new maintenance facility of five hangers and headquarters to replace those at Holman Field due to the coming of the jet age and Holman Field could not handle the jets as more runway was needed. It also replaced a mismatch of hangers at MSP that could handle the jets. Northwest's headquarters was also moved from the St. Paul midway areato MSP in the green windowless building for two reasons. Donald Nyrop supposedly did not want the employees looking out the windows and it also reduced any noise from the jets operating in close proximity to it. When the 747s and DC-10s were coming Northwest added two large hangers south and attached to hanger 5, which was a 727 maintenance hanger. Hanger 7 was a 747 overhaul hanger and hanger 6 was a overnight hanger that could hold a 747 or two DC-10 if one was backed in. Hanger 4b was the DC-10 heavy maintenance hanger and when the 757s came hanger 4a was the 757 heavy maintenance hanger. After the merger between Northwest Airlines and Republic Airlines in which the final details were worked out in a restaurant named the Cherokee Sirloin Room in St. Paul, MN, Northwest acquired a maintenance facility that could handle narrow body maintenance in three hangers and one hanger that could handle DC-10 and 757 maintenance. It was originally built and sat unfinished by Republic Airlines to handle two 767s but Republic could not complete the hanger originally due to their acquiring Hughes Air West in a poor merger in which Republic paid about 25 million dollars and assumed about 100 million dollars in long term debt that Hughes Air West had along with numerous aircraft that were poorly maintained. This almost bankrupted Republic which also had acquired Southern Airlines earlier based in ATL which also was not in that good a shape. The acquisition of Southern resulted in North Central changing the airline's name to Republic. Before I move on it should be noted that two large hangers were but onto the Former Republic maintenance facility for use as 747 hangers. This almost eliminated Northwest Airlines nee d for their original maintenance except for overnight work.
Due to the fact that the Metropolitan Airports Facility,MAC, wanting to use most of the space occupied by originally occupied Northwest for offices and maintenance to build a hotel at MSP hangers one through five and the offices were torn done before the merger with Delta. The two 747 hangers five and six are along with the the large engine shop were left intact and are still used by Delta. Delta has a very large maintenance facility when you include the original Republic facility and it's newer 747 hanger which can handle all wide body aircraft used by Delta.
A large about of money has been put into MSP to update the airport and it is is recognized as one of the best in existence.
DTW and Memphis, MEM, were acquired by Northwest along with ATL when the merger with Republic happened. Northwest decided to keep DTW along with MSP as there was great benefit to DTW being used as hub. It steered some flights away from the congestion of JFK and ORD. A quantity of money and effort was put into DTW. It adds to the benefits of Northwest's original decision to blanket the Midwest. DTW is also a world class airport and has served both Northwest and Delta very well. Delta, I think does have one hanger DTW which allows Delta to do some overnight maintenance. What I am saying is NOT because I am a retired Northwest mechanic of 37 years. If Delta abandons either or both MSP or DTW it will open the abandoned airport the ability of another airline to establish and Delta will loose it's lock on that airport. Delta would need to fight to regain a foot hold at any abandoned airport. The Flying public would be more than happy about using another airline that would provide the service wanted at the price wanted.
Before I close, I should state that when Richard Anderson, then CEO of Delta, promised in congressional hearings about the proposed merger of Delta and Northwest that Delta would never abandon MEM. He never kept his word about MEM and Delta basically left MEM to wither on the vine. So Delta will do whatever it wants whether it is the correct decision or not. :old:
Procrastination Is The Theft Of Time.......
 
FSDan
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Re: Delta plans to emerge a "smaller" carrier

Fri Apr 17, 2020 11:20 pm

NWAROOSTER wrote:
Richard Anderson, then CEO of Delta, promised in congressional hearings about the proposed merger of Delta and Northwest that Delta would never abandon MEM. He never kept his word about MEM and Delta basically left MEM to wither on the vine.


Did he really promise that DL would never dehub MEM? I'm guessing that as a seasoned corporate veteran, he likely said something wishy-washy along the lines of "we have no plans to drop any hubs", which may well have been true at the time, even if only as a technicality. DL did briefly try out a few adds at MEM after the merger, such as AMA and LBB, before reversing course and drawing the operation down.
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alfa164
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Re: Delta plans to emerge a "smaller" carrier

Sat Apr 18, 2020 12:53 am

NWAESC wrote:
The Duck vs. Red Tail rivalry was a thing many years ago, but I honestly haven't heard a word about it in forever.


Herman! I wonder what Herman is doing now....

It would be cool ( but silly, I know) to see a rendering of Herman on the tail of a current Delta plane.... I am trying to imagine if there is any way to make it look like it would "fit in" there...

;)
I'm going to have a smokin' hot body again!
I have decided to be cremated....
 
WidebodyPTV
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Re: Delta plans to emerge a "smaller" carrier

Sat Apr 18, 2020 1:47 am

PSU.DTW.SCE wrote:
Why do people even care, particularly about something involving a merger that happened 34 years ago? Is this real or just a.net lore.
I never understand these hub jealousy / bragging items that people can't even control.


For the same reason that a large group of users routinely fabricate rumors; e.g. DL is unhappy with the A359 and a B787 purchase is imminent -- much of the participation within these forums is based on fantasy, not facts. The DTW vs. MSP argument largely ended a decade ago, when the NW network was integrated into the larger DL network and traffic flows changed. Both DTW & MSP are smaller (in terms of DL hub operations) today than they were at the time of the merger. At the time of the merger, ATL lacked service to many of the former NW stronghold "Heartland" markets, but today is the largest connection point for many of the (relatively) larger markets. Times have indeed changed... DTW now competes mainly with ATL and NYC for traffic flows within the DL network, whereas MSP competes mainly with SLC and SEA. While DTW and MSP are both Midwestern hubs, MSP's location makes it unable to offer as many connection opportunities for Lower Midwestern and Northeastern markets as DTW. Really, the days of the MSP vs. DTW argument are and should be over, as constant comparisons to the market (throughout this thread) should be.

That said, I took exception to a previous posting that said DTW fanboys have long wished MSP would be de-hubbed. I am unaware of any DTW fanboy who ever said or even remotely implied that, and I challenge the poster who made the claim to backup that assertion. OTOH, MSP has long had one of the largest factions of fanboys within this forum, and multiple users had been explicit in the past about their desires to see DTW dehubbed (at least three still actively participate here). Alas, it was a long time ago and presumably they matured, and I was surprised to see the situation even brought up.
 
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NWAROOSTER
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Re: Delta plans to emerge a "smaller" carrier

Sat Apr 18, 2020 2:45 am

FSDan wrote:
NWAROOSTER wrote:
Richard Anderson, then CEO of Delta, promised in congressional hearings about the proposed merger of Delta and Northwest that Delta would never abandon MEM. He never kept his word about MEM and Delta basically left MEM to wither on the vine.


Did he really promise that DL would never dehub MEM? I'm guessing that as a seasoned corporate veteran, he likely said something wishy-washy along the lines of "we have no plans to drop any hubs", which may well have been true at the time, even if only as a technicality. DL did briefly try out a few adds at MEM after the merger, such as AMA and LBB, before reversing course and drawing the operation down.

Richard Anderson or Richard as he prefers to be called was asked several times during congressional hearings about keeping Memphis open and always answered that MEM would be kept open and viable as a hub. These questions were asked of Richard as MEM is only 331 air miles from ATL. If Richard has indIcated that MEM would be seriously cut back the merger would have been more difficult to happen. I remember that distinctly as having worked for Northwest and knowing Richard I made it a point to keep track and up to date on the hearings and the progress of the completion of any merger between Delta and Northwest. Basically, Delta now only operates MEM flights to it's major hubs and NYC. Under Northwest KLM had non stop flights between MEM and AMS which no longer exist.
MEM was a hub that Republic developed and Northwest continued to use without significant reductions in service. Delta began eliminating flights at MEM soon after the merger and officially DeHubed MEM on Labor Day of 2013. Other airlines have stepped in with some being one stop flights to a final destination. :old:
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NWAROOSTER
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Re: Delta plans to emerge a "smaller" carrier

Sat Apr 18, 2020 3:09 am

[quote="PSU.DTW.SCE"]Why do people even care, particularly about something involving a merger that happened 34 years ago? Is this real or just a.net lore.

People care about something that happened 34 years ago because it is history. Northwest acquired Republic Airlines in 1986. Delta acquired Western Airlines in 1987. Delta acquired Northeast Airlines in about 1972 after Northwest backed out of a merger with Northeast Airlines. Northwest Airlines tried merging with Air West back about the same time and that turned into a real mess and Northwest threw in the towel. Without those mergers and those that occurred earlier Delta Air Lines would NOT be what it is today.
I worked with a mechanic that hired once into an airline, I think Bonanza, and would up working for five different airlines due to mergers. :old:
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nwadeicer
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Re: Delta plans to emerge a "smaller" carrier

Sat Apr 18, 2020 5:17 am

So, word around the water cooler this week. If you've got 15 years or less of seniority as of 10-01-2020 you will enjoy the benefits of unemployment. Delta is looking at shaving 50% of its below and upper wing employees as well as outsourcing those cities with mainline employees on one level and outsourced employees on the other (mainline above wing, DGS below, etc). If true, fun times ahead for all!
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DL777200LR
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Re: Delta plans to emerge a "smaller" carrier

Sat Apr 18, 2020 5:39 am

nwadeicer wrote:
So, word around the water cooler this week. If you've got 15 years or less of seniority as of 10-01-2020 you will enjoy the benefits of unemployment. Delta is looking at shaving 50% of its below and upper wing employees as well as outsourcing those cities with mainline employees on one level and outsourced employees on the other (mainline above wing, DGS below, etc). If true, fun times ahead for all!


I don’t see how this rumor could possible be true at this point when no one has any idea what the economy will look like October 1. Way too early for any speculation.
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winginit
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Re: Delta plans to emerge a "smaller" carrier

Sat Apr 18, 2020 5:46 am

nwadeicer wrote:
So, word around the water cooler this week. If you've got 15 years or less of seniority as of 10-01-2020 you will enjoy the benefits of unemployment. Delta is looking at shaving 50% of its below and upper wing employees as well as outsourcing those cities with mainline employees on one level and outsourced employees on the other (mainline above wing, DGS below, etc). If true, fun times ahead for all!


Complete nonsense given, unlike American and United, we haven't even seen Delta roll out retirement packages yet. I suspect that will be quite aggressive, and they're no doubt learning from the contrasts between the programs of their competitors where American is offering payouts and United isn't.

To unilaterally chop your newer, cheaper employees would be foolish. At the very least the first thing you do is incentivize the old timers to retire, and they may well be inclined to do so given the days of generous annual pay increases and profit sharing are over for the foreseeable future.
 
LightningZ71
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Re: Delta plans to emerge a "smaller" carrier

Sat Apr 18, 2020 7:19 am

Offering buy outs or generously attractive early retirement packages to long time employees is a short term pain, and coupled with keeping the lower paid, but still well compensated younger employees around, does nothing to stop the short term cash bleed.

If, instead, you appease your unions for those under contract and generally focus on short term cash flow, you retain your most seasoned employees, don't offer them early retirement, and dump your younger, lower seniority workers, you immediately realize a drop in cash bleed while avoiding some of the problems associated with loosing gobs of experience.

Remember, the airlines are looking at long term traffic drops and have a need to stop the hemorrhaging as soon as possible to survive until traffic starts to come back in volume.
 
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Phosphorus
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Re: Delta plans to emerge a "smaller" carrier

Sat Apr 18, 2020 7:27 am

winginit wrote:
nwadeicer wrote:
So, word around the water cooler this week. If you've got 15 years or less of seniority as of 10-01-2020 you will enjoy the benefits of unemployment. Delta is looking at shaving 50% of its below and upper wing employees as well as outsourcing those cities with mainline employees on one level and outsourced employees on the other (mainline above wing, DGS below, etc). If true, fun times ahead for all!


Complete nonsense given, unlike American and United, we haven't even seen Delta roll out retirement packages yet. I suspect that will be quite aggressive, and they're no doubt learning from the contrasts between the programs of their competitors where American is offering payouts and United isn't.

To unilaterally chop your newer, cheaper employees would be foolish. At the very least the first thing you do is incentivize the old timers to retire, and they may well be inclined to do so given the days of generous annual pay increases and profit sharing are over for the foreseeable future.


Buyouts require immediate cash outlays, while lowering future projected costs.
Furloughs require no immediate cash outlays, while increasing future projected unit costs.

If the situation requires a cash conservation mode, they may choose option 2. Sometimes, people burn furniture, if that's what it takes to stay warm.
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jfklganyc
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Re: Delta plans to emerge a "smaller" carrier

Sat Apr 18, 2020 11:25 am

nwadeicer wrote:
So, word around the water cooler this week. If you've got 15 years or less of seniority as of 10-01-2020 you will enjoy the benefits of unemployment. Delta is looking at shaving 50% of its below and upper wing employees as well as outsourcing those cities with mainline employees on one level and outsourced employees on the other (mainline above wing, DGS below, etc). If true, fun times ahead for all!



There is no way to tell what October will look like

There’s another guy upthread talking about a 5 year recovery...like he knows what will be happening over the next 1826 days.

Let’s all take a chill pill and see how the next month or two unfold
 
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NWAROOSTER
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Re: Delta plans to emerge a "smaller" carrier

Sat Apr 18, 2020 1:40 pm

jfklganyc wrote:
nwadeicer wrote:
So, word around the water cooler this week. If you've got 15 years or less of seniority as of 10-01-2020 you will enjoy the benefits of unemployment. Delta is looking at shaving 50% of its below and upper wing employees as well as outsourcing those cities with mainline employees on one level and outsourced employees on the other (mainline above wing, DGS below, etc). If true, fun times ahead for all!



There is no way to tell what October will look like.

There’s another guy upthread talking about a 5 year recovery...like he knows what will be happening over the next 1826 days.

Let’s all take a chill pill and see how the next month or two unfold.


If and when Delta lays off employees before or after September, 2020 layoffs do not have to go by seniority as all employees except the pilots and flight dispatches are non union employees and seniority has little if any merit or value. They are at will employees and will be laid of how Delta sees fit. Management does like you or has another grudge even though you may be a good worker. You are too old which could bring in age discrimination and the government. Age discrimination goes away when you become seventy years old. The pilots and flight dispatches would have to be laid off in reverse seniority as they have union representation, a union contract and a union seniority list. Maybe the flight attendants now wish they voted in a union. I have NO opinion on that. If Delta does not accept any government grants layoffs could start immediately. :old:
Last edited by NWAROOSTER on Sat Apr 18, 2020 1:45 pm, edited 1 time in total.
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NWAESC
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Re: Delta plans to emerge a "smaller" carrier

Sat Apr 18, 2020 1:43 pm

nwadeicer wrote:
So, word around the water cooler this week. If you've got 15 years or less of seniority as of 10-01-2020 you will enjoy the benefits of unemployment. Delta is looking at shaving 50% of its below and upper wing employees as well as outsourcing those cities with mainline employees on one level and outsourced employees on the other (mainline above wing, DGS below, etc). If true, fun times ahead for all!


Maybe, but I don't see that happening w/o a massive Early Out offer. Our company may be in fire drill mode, but I'm sure someone has costed out the idea of having a bunch of us Red Tailers being the last people standing. TBH, I see a lot of cities going to 4 Hour rule as being more likely than the wholesale farming out of everything. I guess we'll see. Either way, everyone should have a plan for life after Labor day.
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B757Forever
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Re: Delta plans to emerge a "smaller" carrier

Sat Apr 18, 2020 2:05 pm

NWAROOSTER wrote:
jfklganyc wrote:
nwadeicer wrote:
So, word around the water cooler this week. If you've got 15 years or less of seniority as of 10-01-2020 you will enjoy the benefits of unemployment. Delta is looking at shaving 50% of its below and upper wing employees as well as outsourcing those cities with mainline employees on one level and outsourced employees on the other (mainline above wing, DGS below, etc). If true, fun times ahead for all!



There is no way to tell what October will look like.

There’s another guy upthread talking about a 5 year recovery...like he knows what will be happening over the next 1826 days.

Let’s all take a chill pill and see how the next month or two unfold.


If and when Delta lays off employees before or after September, 2020 layoffs do not have to go by seniority as all employees except the pilots and flight dispatches are non union employees and seniority has little if any merit or value. They are at will employees and will be laid of how Delta sees fit. Management does like you or has another grudge even though you may be a good worker. You are too old which could bring in age discrimination and the government. Age discrimination goes away when you become seventy years old. The pilots and flight dispatches would have to be laid off in reverse seniority as they have union representation, a union contract and a union seniority list. Maybe the flight attendants now wish they voted in a union. I have NO opinion on that. If Delta does not accept any government grants layoffs could start immediately. :old:


Delta has honored seniority across all work groups in every downsizing for the 31 years I've been there. Why change now?
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