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Lufthansa
Topic Author
Posts: 2639
Joined: Thu May 20, 1999 6:04 am

The End Of The Deltaflot?

Sun Jul 17, 2005 8:12 am

Hi Guys and Gals.....

I write today to discuss the mighty DAL.... Delta Airlines Inc... and to see if we can all together collectively shed some light on what is likely to happen to the carrier.

Firstly, at least from the outset, as far as the financial press is concerned, DAL is in trouble. 2nd quarter results are starting to come out and it seems WN has beat anaylists expectations and posted a nice $150m.... and we see yesterday that DAL led the industry by raising the fair cap for its most expensive fully flexible domestic fares by $100. The industry followed suit, and the market welcomed the move...but...this little move is probably only worth $20m extra to Delta annually.... which given the heavy losses is just not enough.

The market is convinced Chapter 11 bankruptcy is certain.

Some stats:
- DAL's market capitalisation (fri 15 july) $553.04m (Virginblue is worth many many times more! Sad)

- CASH FLOW from operations (in other words...profit from flying activities without the effect of depreciation etc...)
last quater $ -651M

- Total Debt: $14.07B

I'm lazy but there are plenty more if you are interested...just type DAL into google.

Anyway, the thing is, about 40% of delta's debt is with about 3 major banks, which are also institutional shareholders.
Will they let DAL fail? If we can figure out the likely outcome, we all could stand to make a bit of money here trading on DAL options

So... Insiders... can delta stem its current loss making operations? Have any major improvements been made this quarter to suggest that DL can be turned around. The reason why I ask is obviously the banks are going to try and recover their money....and if they can keep DL flying and get it profitable again, in a few years they could sell their shareholding and recover their loans this way. BUT...if DL is going to continue losing money like there is no tomorrow, and it lost $5 Billion last year.... well...there has to come a point where they say 'no more' and write off their loss... DL's aircraft get sold and the whole show is over. (see Eastern, Pan Am, Ansett Australia, Braniff, Air Europe, Dan Air, Peopleexpress, Swissair, Sabena etc etc)

So ladies and gents...what do you all think.... can we shed some light onto what exactly is going on inside delta today, and what is likely to happen.
 
AeroWesty
Posts: 19551
Joined: Sat Oct 30, 2004 7:37 am

RE: The End Of The Deltaflot?

Sun Jul 17, 2005 8:35 am

Quoting Lufthansa (Thread starter):
Will they let DAL fail? If we can figure out the likely outcome, we all could stand to make a bit of money here trading on DAL options

When I used to work on Wall Street, the speculative option traders were my favorites--cash cows, the lot of them. I don't find the premiums on either the DAL puts or calls attractive at the moment unless part of an arbitrage strategy, although it appears the last few trades on the calls were on the buy side, seeing as the closing prices were either at or close to the Ask prices rather than the Bid prices.

Caveat Emptor.
International Homo of Mystery
 
Lufthansa
Topic Author
Posts: 2639
Joined: Thu May 20, 1999 6:04 am

RE: The End Of The Deltaflot?

Sun Jul 17, 2005 8:45 am

Well... its not just DAL that whatever happens to DAL will effect right?

If we can figure DAL out...it may give us some opportunities over at say AMR or CAL...... but that's beside the point... I'm hoping we can all use our collective knowledge here to paint a better picture of the "real" delta situation today.
 
AeroWesty
Posts: 19551
Joined: Sat Oct 30, 2004 7:37 am

RE: The End Of The Deltaflot?

Sun Jul 17, 2005 8:54 am

Quoting Lufthansa (Reply 2):
I'm hoping we can all use our collective knowledge here to paint a better picture of the "real" delta situation today

I just hope you aren't asking for insider information on which to base trades, especially on a public forum, because that would be, um, illegal.  Smile

You might want to rephrase your question.

Cheers.
International Homo of Mystery
 
Lufthansa
Topic Author
Posts: 2639
Joined: Thu May 20, 1999 6:04 am

RE: The End Of The Deltaflot?

Sun Jul 17, 2005 9:01 am

No inside information at all!

Just...well... do ppl think they can stem their losses... for example, we could find out that DL has a new policy of replacing 2 732 flights with 1 757 flight to improve yields etc...and thus ppl think they could stem those losses.

Besides... I'm a fricken foreigner...they can't get me!
 
BigGSFO
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RE: The End Of The Deltaflot?

Sun Jul 17, 2005 9:01 am

Oh how the mighty have fallen. I do not think DL will cease operations regardless of their financial woes, but I do expect them to reallocate their resources and probably shrink. I wouldn't be surprised at all if AA starts the 757 across the pond from JFK that the competition will result in DL decreasing their operations there. I think AA is better poised to now capture the NYC-Europe market than DL especially with their huge FF base, new terminal, better financial sheet, and the fact AA is the #1 U.S. carrier in the most coveted transatlantic route - JFK-LHR. I predict the NYC-Europe market will eventually be between AA in JFK and CO in EWR.

Which isn't to say DL will not focus overseas - I just think they will concentrate on international service at ATL and CVG and let their SkyTeam partners do the rest. DL's window of opportunity for an expanded presence in Asia, where the bigger yields are, seems to have closed for now.

DL however does have a lot of capacity domestically which will need to be examined. I think they have the most 767's, 777's and 757's on domestic routes, even short-haul. Is that an efficient use of their aircraft when there is so much over-capacity in the US?
 
Lufthansa
Topic Author
Posts: 2639
Joined: Thu May 20, 1999 6:04 am

RE: The End Of The Deltaflot?

Sun Jul 17, 2005 9:08 am

BigGSFO

This is good. This is what we all ought to do...lets examin every little piece of delta and see if we can understand where the grand old duck is headed.

So NYC is as gooder place as any to start. Looks like they've missed the boat from NYC by the sounds of things...but that is hardly surprising because if I were an econ pax from NYC... and loyal to skyteam, I'd be either on KLM or Air France, or Continental.

How about Salt Lake City. I used to live up that way at a ski resort not too far and I used old SLC a lot (usually on UA but DL 45% of the time) and DL always seemed extremely busy. Like there was some strength in that western hub. what do you guys think?
 
LawnDart
Posts: 867
Joined: Fri May 20, 2005 11:33 pm

RE: The End Of The Deltaflot?

Sun Jul 17, 2005 12:52 pm

Quoting BigGSFO (Reply 5):
I think AA is better poised to now capture the NYC-Europe market than DL especially with their huge FF base, new terminal, better financial sheet,

With the exception of the mentioned JFK-LHR route, AA is not that big from NYC to Europe (though that could change)

Delta's NYC FF base is pretty strong...I'd wager that it is just as strong, or stronger, than AA's. Don't forget, DL has the Shuttle, the European operation out of JFK, one of the largest operations at LGA, a low-fare product (Song), and an alliance with Continental at EWR that customers can redeem frequent-flier miles on.

Yes, they made some pretty stupid moves strategically...like dropping the JFK-NRT service. And yes, the WorldPit at JFK is in need of a bulldozer (it's getting a makeover instead). On a similar note, I wish they had given the good fight @ DFW against AA a long time ago. CVG and SLC are probably not all that profitable, and a one-hub airline is at a disadvantage in a geographically large country like the U.S.

A lot of the moves that Delta has made recently should help it recover: the continuous hub operation in ATL is foremost among them. They will eventually streamline their fleet, and the refurbishing of the cabins is on track. If all goes according to plan, the SimpliFares should generate revenue, especially with the cap raised by $100 recently. And they are adding a lot of point-to-point service with the RJ fleet.

Which brings up what I believe to be a huge problem...the RJ fleet. If the way to survival is through low cost, then having hundreds of the highest cost aircraft (per ASM) is a liability. I would like to see more point-to-point service on mainline jets. And I believe Delta could counter low-cost carriers like WN by offering that service out of airports like JFK and BOS, instead of ISP and MHT.

Hopefully, DL can pull out of their tail-spin...maybe a merger is in the cards (although those are tough to pull off, and I'm somewhat sceptical of the "benefits"). Maybe another carrier will invest (AF, possibly?). Maybe DL can approach Boeing or Airbus and cut a deal like HP/US...replace the 450 odd M88s, 757s, 767s with 737NG/787 or A320/A350s.

And the cost of oil could go down...and the U.S. could stop taxing the crap out of all their carriers (not just DL). And maybe the ATC system will get a complete overhaul so that flights don't have to fly from Altanta to the northeast by way of (I kid you not) Indiana because there's a thunderstorm somewhere in the Washington center...the fuel wasted by all airlines because of the ATC system on a daily basis is just incredible.

Time will tell, but time may be is running out...
 
jetdeltamsy
Posts: 2688
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RE: The End Of The Deltaflot?

Sun Jul 17, 2005 1:27 pm

i think it is very unlikely that delta will cease to exist. but i agree that time is quickly running out.

what has happened at United is going to happen at Delta. The company will file bankruptcy, our work rules will change and our pay will be slashed. The company may end up merging with another large carrier.

personally i wish the changes would start tomorrow. the sooner we get underway making the necessary changes, the sooner the company will become profitable again. the uncertainty about our future is very stressful.
Tired of airline bankruptcies....EA/PA/TW and finally DL.
 
OttoPylit
Posts: 2259
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RE: The End Of The Deltaflot?

Sun Jul 17, 2005 3:03 pm

Quoting BigGSFO (Reply 5):
DL however does have a lot of capacity domestically which will need to be examined. I think they have the most 767's, 777's and 757's on domestic routes, even short-haul. Is that an efficient use of their aircraft when there is so much over-capacity in the US?

The 757 aircraft was designed and built to replace the 727 on short to medium haul flights, FYI. The reason that DL has the most 767's on domestic routes is because those routes support them. Keep in mind that Delta is arguably the largest carrier in the US in terms of passengers carried. That is in part due to those domestic widebodies. Delta is the largest carrier in many of the cities they serve and use the widebodies to maintain that presence. And you would be surprised to see that they can fill them. Cities like JAX-ATL, MSY-ATL, RSW-ATL, etc. always seem to fill those widebodies on city pairs that we really don't think would warrant it on most times of the year. There is overcapacity in the skies over the US, I agree, but DL is able to fill those 767's and 777's on lucrative markets where, if they were replaced by other planes, those aircraft would just sit on the ground and not make any money.

Quoting LawnDart (Reply 7):
CVG and SLC are probably not all that profitable, and a one-hub airline is at a disadvantage in a geographically large country like the U.S.

CVG is actually a very profitable hub, partly to Delta's fortress hub there. It was CVG where Simplifares were rolled out and Delta quickly saw a 30% increase in traffic almost immediately. Not sure about SLC these days, though.

Quoting LawnDart (Reply 7):
A lot of the moves that Delta has made recently should help it recover: the continuous hub operation in ATL is foremost among them.

True. Delta was recently praised by the FAA for streamlining the hub operation that is sure to eliminate most long taxi delays or groundstops for outstations. It helps the company, as far as customer satisfaction, saves fuel, saves unnecessary work, etc. Makes things go a lot smoother.

Quoting LawnDart (Reply 7):
the way to survival is through low cost, then having hundreds of the highest cost aircraft (per ASM) is a liability. I would like to see more point-to-point service on mainline jets.

True, but I think many people don't get the point on RJ's. Sure, if you want to try and focus an airline purely on numbers, then RJ's aren't a good idea. But you have to look at it another way; RJ's are easier to fill and make money, even though they do cost more to operate on a seat by seat basis. For example, back in 2000, DL tried starting JAX-LGA with 2 MD-88's a day. Those flights never garnered more than 50-70 seats a flight and lost money. So they replaced them with 4 RJ's, which has now been increased to 5, I believe, as well as flights to JFK, but those flights sell out and make money, even though, as stated, they do cost more to operate on a seat by seat basis. Delta is able to use RJ's on flights where they would only be able to sell 50 or so seats, making an RJ profitable, but mainline equipment a loss.

Quoting LawnDart (Reply 7):
And the cost of oil could go down...and the U.S. could stop taxing the crap out of all their carriers (not just DL). And maybe the ATC system will get a complete overhaul so that flights don't have to fly from Altanta to the northeast by way of (I kid you not) Indiana because there's a thunderstorm somewhere in the Washington center...the fuel wasted by all airlines because of the ATC system on a daily basis is just incredible.

Amen. Don't get me started on ATL ATC, my face will turn red and start twitching, especially after the past couple of weeks, outside of a hurricane. It is truly a clusterf*ck!


Otto
I don't have a microwave, but I do have a clock that occasionally cooks shit.
 
BOS2LAF
Posts: 353
Joined: Wed Sep 22, 2004 8:21 am

RE: The End Of The Deltaflot?

Sun Jul 17, 2005 10:41 pm

Quoting Lufthansa (Reply 4):
Besides... I'm a fricken foreigner...they can't get me!

Watch out, they could lock you up in Guantanamo indefinitely.  duck 

Back on topic though, it was mentioned that DL uses 777's domestically on short haul routes. Couldn't these planes be reallocated to higher yielding international routes?? Sure they can fill these planes on these domestic routes, but they have got to be lower yielding than international routes. But this begs the question, what international routes do they or could they operate that could fill these planes? To me, it just seems wasteful to fly a 777 ATL-MCO.
 
padcrasher
Posts: 1815
Joined: Tue Aug 10, 2004 6:17 am

RE: The End Of The Deltaflot?

Sun Jul 17, 2005 10:49 pm

The777's go to Florida for maintenance. That is really the only reason you see them on these domestic routes.

Delta has changed to the schedule recently to reduce domestic widebody flights and get these aircraft back out on International routes rather than have them continue on to the West Coast.
 
jacobin777
Posts: 12262
Joined: Sat Sep 11, 2004 6:29 pm

RE: The End Of The Deltaflot?

Sun Jul 17, 2005 11:17 pm

Quoting Lufthansa (Thread starter):
Will they let DAL fail? If we can figure out the likely outcome, we all could stand to make a bit of money here trading on DAL options

spoken like a true options trader... tumbsup 

I'm in...

Quoting AeroWesty (Reply 3):
You might want to rephrase your question.

lol..the whole question about insider trading is iffy....but your correct, even though LH is not in the United STates, it would be better to rephrase the questions/comments to prevent any "problems".

Quoting BigGSFO (Reply 5):
and the fact AA is the #1 U.S. carrier in the most coveted transatlantic route - JFK-LHR. I predict the NYC-Europe market will eventually be between AA in JFK and CO in EWR.

quick question..who is the largest carrier (in terms of pax and revenue) in the New York metro/London metro service? I would think it might be BA

Quoting LawnDart (Reply 7):
one of the largest operations at LGA,

true, but AA is no slouch there either, and with B6 starting operations there..its going to be tough for DL to get good yields, especially when there will be competing routes.

Quoting LawnDart (Reply 7):
Yes, they made some pretty stupid moves strategically...like dropping the JFK-NRT service.



Quoting Jetdeltamsy (Reply 8):
i think it is very unlikely that delta will cease to exist. but i agree that time is quickly running out.

what has happened at United is going to happen at Delta. The company will file bankruptcy, our work rules will change and our pay will be slashed. The company may end up merging with another large carrier.

I just see it difficult as to how they will be able to pay their bills given the current price of oil and insufficient cost cutting (they got more to do) .......my take is that they will survive as an entity, but they will probably file for bankruptcy..hence making the current DAL stock worthless.....

selling some calls and buying some puts might be the more aggressive strategy here...of course, it would have been better if one started out on this when DAL stock was north of $7/share..
"Up the Irons!"
 
padcrasher
Posts: 1815
Joined: Tue Aug 10, 2004 6:17 am

RE: The End Of The Deltaflot?

Sun Jul 17, 2005 11:52 pm

Delta has a costing cutting program in place that will deliver a sub 7 cent non-fuel mainline CASM by the end of the year. You can compare that to Southwest that has a 6.27 cent non-fuel CASM. By far and away the lowest CASM of the full service carriers.

[Edited 2005-07-17 16:54:09]
 
avek00
Posts: 3261
Joined: Mon Oct 25, 2004 5:56 am

RE: The End Of The Deltaflot?

Mon Jul 18, 2005 12:39 am

Quoting Jetdeltamsy (Reply 8):
what has happened at United is going to happen at Delta. The company will file bankruptcy, our work rules will change and our pay will be slashed.

A bankruptcy filing would mean the death of Delta Air Lines.

The bottom line is that Wall Street is simply not interested in getting further involved in airline bankruptcies. US Airways was forced to file its 2nd bankruptcy without DIP money, and cobble together a merger using non-traditional funding sources to avoid liquidation, while United continues to struggle in finding the billions necessary to emerge from bankruptcy intact. As Delta itself has indicated, the company would be unlikely to secure meaningful financial support in the event of a bankruptcy filing because all of its assets have already been pawned, and the increase in cash burn that inevitably accompanies a bankruptcy filing means that the airline would likely head into liquidation in short order.
Live life to the fullest.
 
FlyPNS1
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RE: The End Of The Deltaflot?

Mon Jul 18, 2005 12:45 am

Padcrasher,

I think you are going to be disappointed when you see DL's CASM. But even if DL's cost cutting is as successful as you think, DL also has an extremely low-yielding network and will be trailing the industry in RASM improvement.

Plus, DL's moves in the past two years make it clear that DL is really only interested in catering to the low-yield leisure traveler. DL continues to reduce first class seating and reduce premium amenities.

I think the biggest question DL needs to answer, is what kind of airline does Delta want to be?

If DL wants to be a true low-cost carrier, that's fine. Convert the mainline planes to Song, dump small-town low-yield RJ service and be a real LCC.

If DL wants to be a real premium network carrier, that's fine. Upgrade the domestic product (particularly in F) and create a product that appeals to business travelers.

Right now, DL is stuck somewhere in between and the strategy isn't working.
 
777STL
Posts: 2770
Joined: Mon Dec 13, 2004 8:22 am

RE: The End Of The Deltaflot?

Mon Jul 18, 2005 1:06 am

Quoting BOS2LAF (Reply 10):
Back on topic though, it was mentioned that DL uses 777's domestically on short haul routes. Couldn't these planes be reallocated to higher yielding international routes?? Sure they can fill these planes on these domestic routes, but they have got to be lower yielding than international routes. But this begs the question, what international routes do they or could they operate that could fill these planes? To me, it just seems wasteful to fly a 777 ATL-MCO.

The T7s only fly to Florida in their down time between arriving and leaving for Europe and Tokyo. Also I believe they allocate three 777s for the Tokyo route, one westbound, one eastbound and a spare. The spare also goes back and forth from Florida when it's not needed.
PHX based
 
luv2fly
Posts: 11056
Joined: Tue May 13, 2003 2:57 am

RE: The End Of The Deltaflot?

Mon Jul 18, 2005 1:18 am

Quoting 777STL (Reply 16):
The T7s only fly to Florida in their down time between arriving and leaving for Europe and Tokyo. Also I believe they allocate three 777s for the Tokyo route, one westbound, one eastbound and a spare. The spare also goes back and forth from Florida when it's not needed.

You are exactly right........
You can cut the irony with a knife
 
LawnDart
Posts: 867
Joined: Fri May 20, 2005 11:33 pm

RE: The End Of The Deltaflot?

Mon Jul 18, 2005 1:42 am

Quoting OttoPylit (Reply 9):
Sure, if you want to try and focus an airline purely on numbers, then RJ's aren't a good idea. But you have to look at it another way; RJ's are easier to fill and make money,

At this point, I think Delta must focus purely on numbers. The reason RJs make money is that it is GUARANTEED in the contract between the supplier and the mainline airline. However, on a segment/cost basis, they are money-losers. Look at Independence - they've lost buckets of money as a stand-alone carrier. Your point is a good one when the strategy is to serve small communities to feed the larger network...to a point. I've brought up the value of service to Hickory, NC before.

Quoting OttoPylit (Reply 9):
Amen. Don't get me started on ATL ATC, my face will turn red and start twitching, especially after the past couple of weeks, outside of a hurricane. It is truly a clusterf*ck!

Couldn't have said it better myself. And it's not just ATL ATC, it's everywhere. Don't get me wrong - my hat's off to the controllers, it's the outdated equipment they've got to work with. Thank God the airline industry is so heavily taxed, the new ATC system should be rolling out shortly. And the check's in the mail.

Quoting Padcrasher (Reply 11):
The777's go to Florida for maintenance. That is really the only reason you see them on these domestic routes.

The 777s fly a couple of rotations between ATL and MCO purely for pilot time. The ATL-NRT route and the ones to Europe do not afford flight crews the opportunity to take-off and land, so a couple of short hauls are thrown in. And the flights are nearly always full. It was the same when DL flew MD11s on the route.

Quoting Jacobin777 (Reply 12):
and with B6 starting operations there..its going to be tough for DL to get good yields

NYC to south Florida has never been a high-yielding market. And how, exactly, did B6 get slots to operate at LGA? The same way they got slots to operate out of JFK...they were handed slots by politicians. And as long as politicians keep helping the newer airlines, the established carriers will pay the price.

Quoting FlyPNS1 (Reply 15):
I think the biggest question DL needs to answer, is what kind of airline does Delta want to be?

Bingo.

Quoting FlyPNS1 (Reply 15):
If DL wants to be a true low-cost carrier, that's fine. Convert the mainline planes to Song, dump small-town low-yield RJ service and be a real LCC.

If DL wants to be a real premium network carrier, that's fine. Upgrade the domestic product (particularly in F) and create a product that appeals to business travelers.

Southwest is a true low-cost carrier, and is making profits. Midwest is a (shell of it's former self) premium carrier, and is losing money. Which should Delta emulate? And transforming into a low-cost carrier doesn't mean your premium cabin can't be premium, and cater to the business traveler. I agree with your statement that DL continues to reduce premium amenities, but when most "premium" customers are using upgrades, the cost/revenue benefits are reduced. Granted, major carriers hooked their frequent fliers on upgrades to the detriment of the first-class revenue potential, so they have only themselves to blame.
 
luv2fly
Posts: 11056
Joined: Tue May 13, 2003 2:57 am

RE: The End Of The Deltaflot?

Mon Jul 18, 2005 1:48 am

Quoting LawnDart (Reply 18):
Southwest is a true low-cost carrier, and is making profits. Midwest is a (shell of it's former self) premium carrier, and is losing money. Which should Delta emulate? And transforming into a low-cost carrier doesn't mean your premium cabin can't be premium, and cater to the business traveler. I agree with your statement that DL continues to reduce premium amenities, but when most "premium" customers are using upgrades, the cost/revenue benefits are reduced. Granted, major carriers hooked their frequent fliers on upgrades to the detriment of the first-class revenue potential, so they have only themselves to blame.

excellent post and this goes for all airlines.
You can cut the irony with a knife
 
N160LH
Posts: 264
Joined: Tue Aug 10, 2004 5:28 pm

RE: The End Of The Deltaflot?

Mon Jul 18, 2005 2:29 am

Quoting Padcrasher (Reply 11):
The777's go to Florida for maintenance. That is really the only reason you see them on these domestic routes.

I have never heard that.... And I do not believe the T7's even spend enough time in MCO for that to be possible....

Quoting 777STL (Reply 16):
The T7s only fly to Florida in their down time between arriving and leaving for Europe and Tokyo. Also I believe they allocate three 777s for the Tokyo route, one westbound, one eastbound and a spare. The spare also goes back and forth from Florida when it's not needed.

Correct about the NRT spare.... However there is only one flight a day for the T7 to MCO, and unless things have changed the aircraft comes back to ATL and (unless another T7 breaks) terminates for the day...

Quoting LawnDart (Reply 18):
The 777s fly a couple of rotations between ATL and MCO purely for pilot time. The ATL-NRT route and the ones to Europe do not afford flight crews the opportunity to take-off and land, so a couple of short hauls are thrown in. And the flights are nearly always full. It was the same when DL flew MD11s on the route.

Also never heard that about the flight crews.... However that does make sense!

LONG LIVE MOTHER DELTA.....
N160LH
"I do alright up in the air, its down on the ground that I tend to mess up..."
 
padcrasher
Posts: 1815
Joined: Tue Aug 10, 2004 6:17 am

RE: The End Of The Deltaflot?

Mon Jul 18, 2005 4:57 am

Quoting FlyPNS1 (Reply 15):
I think the biggest question DL needs to answer, is what kind of airline does Delta want to be?

Pure hogwash. You can contemplate all you want what Delta wants to be. I'll take CASM dropping like a stone, beating AA/CO in the latest JD Powers customer service surveys, being award best inflight service by Readers' Digest, being voted by Travel and Leisure magazine has having one of the top products in the sky (again out ranking AA/CO). All in the last 6 Months.

Next year Delta will outrank Southwest in customer service.. Gee...I wonder what we want to be? Have low costs and a good product?
 
airlinelover
Posts: 5287
Joined: Thu Jun 07, 2001 8:03 am

RE: The End Of The Deltaflot?

Mon Jul 18, 2005 5:20 am

Deltaflot can not have an end, as there is no airline in existance called Deltaflot. Something has to have a beginning before it can end..

Chris
Lets do some sexy math. We add you, subtract your clothes, divide your legs and multiply
 
srbmod
Posts: 15446
Joined: Tue Mar 20, 2001 1:32 pm

RE: The End Of The Deltaflot?

Mon Jul 18, 2005 5:36 am

When I first saw the title of this thread, my initial thought was a new DL livery rumor.

Delta will probably have to enter Chapter 11 bankruptcy some time in the next six months. Delta's cost cuttings to this point have helped, but nobody could have predicted the rise in fuel prices. The deals made to stave off Chapter 11 last times were made prior to the rise in fuel prices. Delta is filling up flights, it's just after they fill up their flights, they're losing money. If Delta Connection Inc. isn't sold off or spun off soon, it could become the collateral for loans to help get DL reorganized. Chapter 11 does not necessarily mean the end of a company, it's just an opportunity for a company to restructure itself into a profitable company. This is not Eastern Air Lines redux, they were doomed to fail because of the activities of a corporate raider and staunt union buster. The chances of Delta going Chapter 7 are slim, as they'd probably be in a merger as a last resort.


Here we are in the busiest summer travel season since 9/11, but many airlines are still losing money due to not only the increase in fuel prices, but also due to competition, and not just from LCCs. AA and US over the last year have begun to add flights aimed not only at the LCCs, but also at the other legacy carriers. AA's flights between LGA and ATL and US's flights between DCA and ATL are such examples.
 
padcrasher
Posts: 1815
Joined: Tue Aug 10, 2004 6:17 am

RE: The End Of The Deltaflot?

Mon Jul 18, 2005 5:56 am

Never happen. As long as Delta is continuing to lower costs as planned the financing will be there. Delta's operating performance is essentially cash neutral now. As the CEO has said, there is no advantage in bankruptcy. There are no unencumbered assets. They would be giving up over 1 Billion in tax credits. They have not tapped additional labor cuts. Not to mention US Airways and Indy coming capacity cut backs.
 
padcrasher
Posts: 1815
Joined: Tue Aug 10, 2004 6:17 am

RE: The End Of The Deltaflot?

Mon Jul 18, 2005 6:00 am

Quoting Srbmod (Reply 23):
AA and US over the last year have begun to add flights aimed not only at the LCCs, but also at the other legacy carriers. AA's flights between LGA and ATL and US's flights between DCA and ATL are such examples.

You need to go back to the traffic reports of these two airlines and tell us again who is adding domesitc capacity and who is not. AA and US are shrinking capacity not adding it. And for every ATL-LGA and ATL-DCA I can name twenty Delta markets these two have pulled out of.
 
FlyPNS1
Posts: 5535
Joined: Wed Dec 01, 1999 7:12 am

RE: The End Of The Deltaflot?

Mon Jul 18, 2005 6:47 am

Quoting Padcrasher (Reply 21):
Next year Delta will outrank Southwest in customer service.. Gee...I wonder what we want to be? Have low costs and a good product?

But will Delta outrank Southwest in profitability? I doubt it. Projections for next year have Southwest bringing in a profit of $500 million while DL will lose $500+ million.

Most of these customer surveys are garbage and you know it. Take a look at these surveys that DL scores so highly in....they are just interviewing a bunch of leisure travelers who fly once a year and pay $99 each way. Look at the surveys of business travelers and see how DL fairs...they don't even register on the scale.

And because DL still has high costs (sorry you can't just ignore fuel) and is catering to leisure travelers, DL will continue to bleed red ink.

Quoting Padcrasher (Reply 25):
You need to go back to the traffic reports of these two airlines and tell us again who is adding domesitc capacity and who is not. AA and US are shrinking capacity not adding it.

In the case of AA, it's because AA has realized that dumping more domestic capacity into the market isn't going to help them. It'll just dilute yields more....DL hasn't figured it out yet. However, AA is growing in one region of the country...the Southeastern US. AA has quickly been able to invade many Southern markets and take DL customers.
 
dl757md
Posts: 1483
Joined: Mon May 24, 2004 9:32 am

RE: The End Of The Deltaflot?

Mon Jul 18, 2005 6:48 am

Quoting Padcrasher (Reply 11):
The777's go to Florida for maintenance.

Absolutely untrue. All Dl 777 MX above a layover ck is done in ATL.

Quoting 777STL (Reply 16):
The T7s only fly to Florida in their down time between arriving and leaving for Europe and Tokyo. Also I believe they allocate three 777s for the Tokyo route, one westbound, one eastbound and a spare. The spare also goes back and forth from Florida when it's not needed.

This is the real reason. Utilization of A/C that are otherwise sitting waiting for an overseas flight. There isn't time to use them on additional long haul routes between they're Intl flights but there is time for a short hop to FL and back.

Quoting LawnDart (Reply 18):
The 777s fly a couple of rotations between ATL and MCO purely for pilot time. The ATL-NRT route and the ones to Europe do not afford flight crews the opportunity to take-off and land, so a couple of short hauls are thrown in. And the flights are nearly always full. It was the same when DL flew MD11s on the route.

The pilot thing is nothing more than a side benefit. Marketing doesn't determine aircraft usage based on the opportunity for pilots to easily acquire more take-offs and landings. Rather they look at the revenue potential of the equipment.

Dl757Md
757 Most beautiful airliner in the sky!
 
padcrasher
Posts: 1815
Joined: Tue Aug 10, 2004 6:17 am

RE: The End Of The Deltaflot?

Mon Jul 18, 2005 6:52 am

Quoting FlyPNS1 (Reply 26):
In the case of AA, it's because AA has realized that dumping more domestic capacity into the market isn't going to help them. It'll just dilute yields more....DL hasn't figured it out yet.

You've got it wrong again. DL's increase in ASMs came by increasing utilization rates only. The fleet is smaller, the workforce is smaller, yet ASM's are up. The LCC plan in action. There is no "dumping" here.

Boy you learn the hard way.
 
padcrasher
Posts: 1815
Joined: Tue Aug 10, 2004 6:17 am

RE: The End Of The Deltaflot?

Mon Jul 18, 2005 6:58 am

Quoting FlyPNS1 (Reply 26):
But will Delta outrank Southwest in profitability

The last bastion of a basher that's been embarrassed..Yes costs are going lower, yes the product seems to be getting good outside reviews....oh shit, well, huh, Southwest makes more money, so there!....LOL.
 
FlyPNS1
Posts: 5535
Joined: Wed Dec 01, 1999 7:12 am

RE: The End Of The Deltaflot?

Mon Jul 18, 2005 7:03 am

Quoting Padcrasher (Reply 28):
You've got it wrong again. DL's increase in ASMs came by increasing utilization rates only. The fleet is smaller, the workforce is smaller, yet ASM's are up. The LCC plan in action. There is no "dumping" here.

I never said where the capacity came from and quite frankly it doesn't matter. Even if DL is delivering more seats at a lower cost, it won't matter unless that cost is low enough for DL to make money. And guess what, the costs aren't low enough.

You'll learn the hard way in a few days when DL posts another huge loss. Of course, you'll try to ignore those losses by telling us how great Song is doing against WN on two measly routes.

You're the kind of person who would be standing in the middle of a burning house, but instead of noticing the whole house going up in smoke, you'd spend all your time talking about how great the curtains are.
 
padcrasher
Posts: 1815
Joined: Tue Aug 10, 2004 6:17 am

RE: The End Of The Deltaflot?

Mon Jul 18, 2005 7:06 am

Quoting Dl757md (Reply 27):
Absolutely untrue. All Dl 777 MX above a layover ck is done in ATL.

I stand corrected I thought widebody MX was done in TPA or MCO.
 
FlyPNS1
Posts: 5535
Joined: Wed Dec 01, 1999 7:12 am

RE: The End Of The Deltaflot?

Mon Jul 18, 2005 7:21 am

Quoting Padcrasher (Reply 29):
The last bastion of a basher that's been embarrassed..Yes costs are going lower, yes the product seems to be getting good outside reviews....oh shit, well, huh, Southwest makes more money, so there!....LOL

I'm not embarassed, I just live in reality unlike you. If you weren't aware, the primary goal of any business in a capitalist market is to make money. Southwest is making money and Delta isn't. I know you believe that DL can lose money forever and everything will be alright, but that's not the case.

As for your other claims, they are false too. DL's costs are not lower, they are in fact higher....they are only lower if you exclude fuel. Apparently, in your magic world, airlines don't need fuel.

Actually, the Delta product isn't getting good reviews. Song is getting good reviews, the rest of Delta is a mess. But since you are so fond of garbage surveys, here's the AQR survey results: Delta was 11th out of 16, Comair was 15th out of 15 and ASA was dead last. Southwest was 3rd.
 
padcrasher
Posts: 1815
Joined: Tue Aug 10, 2004 6:17 am

RE: The End Of The Deltaflot?

Mon Jul 18, 2005 7:34 am

pns you've confused yourself again

Here is Delta's cost including fuel from the 1Q. They did go down, as they will go down even more so (with fuel) this Quarter.

"Operating Cost Per Available Seat Mile - excluding special items


10.75 10.96 -1.9%
 
padcrasher
Posts: 1815
Joined: Tue Aug 10, 2004 6:17 am

RE: The End Of The Deltaflot?

Mon Jul 18, 2005 7:44 am

pns?

pns?

Could I at least get a "yea, but Southwest makes more money"?...LOL
 
positiverate
Posts: 1543
Joined: Thu May 05, 2005 10:35 pm

RE: The End Of The Deltaflot?

Mon Jul 18, 2005 8:13 am

Quoting Jetdeltamsy (Reply 8):
personally i wish the changes would start tomorrow. the sooner we get underway making the necessary changes, the sooner the company will become profitable again. the uncertainty about our future is very stressful.

And what do you think had been going on all this time? The company has removed 6 billion in costs from the company!! You think that management is just sitting idly by hoping for the best? I presmume you are an employee, pay a little more attention about what is going on at your company.
 
jetdeltamsy
Posts: 2688
Joined: Tue Nov 14, 2000 11:51 am

RE: The End Of The Deltaflot?

Wed Jul 20, 2005 8:38 am

Quoting Positiverate (Reply 35):
You think that management is just sitting idly by hoping for the best?

I don't think they're sitting "idly", but i do think there is an error in judgement somewhere in the chain of command that is delaying the inevidable; a bankruptcy filing.

Quoting Positiverate (Reply 35):
I presmume you are an employee, pay a little more attention about what is going on at your company.

I am an employee. I can retire in 15 years. I hope to have a company left to retire from.

You can't imagine the stress the financial uncertainty puts you under.
Tired of airline bankruptcies....EA/PA/TW and finally DL.

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