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pu
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RE: Delta Suing Republic Over Canceled Flights

Thu Oct 08, 2015 4:03 am

Quoting delimit (Reply 8):

If Republic signed a contract to provide capacity, they've got all the leg they need.
Quoting delimit (Reply 14):
Bad analogies are bad. Republic overextended themselves after signing the contract. How is Delta responsible for that

If contracts were as simple as this there would never be lengthy lawsuits or huge lawfirms.

The great thing* about contracts is that there's all kinds of ways to get out of them. If it becames impossible for either party to perform their obligations, they are not necessarily going to suffer a judment against them for breaking the contract. 1000s of times contracts have been held legally invalid because of some material change in economic conditions, market turbulence, commodity price changes, etc.

If there are simply no pilots it may be in practical terms impossible to meet obligations - no one can be forced to honor a contract that means suicide or is now impossible to satisfy.




Pu.





* contracts are merely a product lawyers sell. Conveniently, they also sell a service that in many cases gets you out of a contract.
 
wjcandee
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RE: Delta Suing Republic Over Canceled Flights

Thu Oct 08, 2015 4:35 am

Quoting Yakflyer (Reply 48):

I'm surprised that after 46 replies on one has mentioned what I think the bottom line is for Delta. I don't think Delta was particularly interested in the 50 seat flying provided by Republic. IMHO what drove the contract renewal was Delta would not lose money on the 50 seat flying with present fuel prices and being very aware of the staffing issues at Republic, Delta could disrupt the new E-175 flying Republic contracted for with AA & UA by renewing the contract for 50 seat flying. Delta isn't so interested in having Republic fly 50 seaters for them as they are interested in limiting or disrupting the 175 flying of their main competitors. I don't think Delta is trying to put Republic out of business, but it would hurt the others much more if that happened.

I believe Delta is in very good legal shape and because their contracts were negotiated before the most recent contracts with AA & UA, the Delta contracts will be given superior status in litigation.

The senior management at Delta is amoral and will viscously enforce their contracts and provisions of those contracts if they feel like the other party has in some way wronged them. Delta has completely played Bedford and he never saw it coming.

They are suing for damages, not to make Republic do anything. So I don't understand your point.
 
wjcandee
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RE: Delta Suing Republic Over Canceled Flights

Thu Oct 08, 2015 4:45 am

Quoting pu (Reply 50):
If it becames impossible for either party to perform their obligations, they are not necessarily going to suffer a judment against them for breaking the contract.

Impossibility is a disfavored and limited defense. If the inability to perform was a forseeable possibility, or if the party seeking to be released of its obligations caused the impossibility, in most states the defense goes away.

Could Republic have settled their pilot issues sooner?
If Republic had not taken the United contract, would it have had enough pilots to service its obligations?
Could Republic have foreseen what would happen if DL exercised its option to extend?
Could Republic have undertaken less work for other carriers in order to service its obligations to DL?

The issue here is whether Republic is on the hook for money damages to DL. They say they haven't breached their contact, so defenses aren't yet an issue. We will see when the cards are out on the table.
 
n7371f
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RE: Delta Suing Republic Over Canceled Flights

Thu Oct 08, 2015 4:57 am

It serves Delta no purpose to walk away from Republic whether it's 145 or E75 flying. No other carrier can pick that up in a short amount of time.

What you have here, in part, is a former prosecutor - Richard - who is as cocky as ever, and for good reason, and he's living it up. Trust me on that - the industry honchos are talking about him like that.
 
wjcandee
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RE: Delta Suing Republic Over Canceled Flights

Thu Oct 08, 2015 5:36 am

Quoting n7371f (Reply 53):
What you have here, in part, is a former prosecutor - Richard - who is as cocky as ever, and for good reason, and he's living it up.

Or maybe, like many prosecutors, he believes in right and wrong, doing the right thing, keeping one's word...that kind of stuff.
 
strfyr51
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RE: Delta Suing Republic Over Canceled Flights

Thu Oct 08, 2015 6:28 am

Quoting ty97 (Reply 4):
This has the potential to actually cut both ways for DL. All three legacy majors use Republic and all three (I presume) are impacted to some extent by the pilot issues. If DL were to successfully dump Republic, that would actually help DL's competitors AA and UA to have less of a Republic pilot issue.

The Only way this would work out for Delta is of they caused Republic to cease operations as a conglomerate and renegotiate their contract on a piecemeal basis. With the E170's and E-175's being flown for the other Majors Delta might still lose out if they can't get pilots to fly those smaller airplanes for what they want to pay, Without offering the Pilots a path to a Main Line "Ride" Which I SERIOUSLY doubt that Delta might Do. In this case?? Republic does not have the horsepower to settle this I believe. The amount of Pilots to be replaced with the FAA Hours required? Isn't going to be resolved easily. This should have been resolved sooner than this but Republic and the other Regional Airlines I believe sat on their Hands until it got critical like it is now . They were Long on flying and short on training. There's no Excuse for the reason they came to BE in the Mess they have now of Not for them being short sighted.
I came up via the Regional Airline route and It really wasn't that way before the Regional Airlines took on Mainline colors.
I admit that was 35 years ago but It appears the regional airlines of today would Starve were it not for the Mainline from which to "suckle". This has Not been that good of an experiment. And it seems what goes around, Has now Come Around
The regional airlines might have to Again fly their Own Colors with "stand Off" arrangements. Or be absorbed By the Majors they fly for under the corporate umbrella which is a whole 'nuther can of worms..
 
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b727fa
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RE: Delta Suing Republic Over Canceled Flights

Thu Oct 08, 2015 6:29 am

Essentially DL had first right of refusal on new/extended flying. DL could get 50 seat lift at "X" amount with CQ/S5 rates and the "re-upped" on the deal. BB banked on parking the 145's and ended the CQ ops. RAH leveraged the farm on dumping the 50 seat flying to bid on new 170/175 frames for other codeshares. But hey--DL said, "We'll take it!" Now there's a "pants-down" scenario (again) for RAH.

DL can't replace the lift overnight. RAH is dumping all the UA (by S5) flying onto the Republic side with INVOL displacements. But by RAH's own statements, they have 12-18 months to cross over all S5 crews to RW. Thats assuming they need (can hold) DL flying to hold the certificate.

It's not pretty. But BB overplayed his hand, again. He and his management team are squarely responsible for this. He tried to cut out one to many parts of the watch so it couldn't function. The demise of CQ/RAH is on BB and his cronies.

Sad. I have a lot of friends there.
My comments/opinions are my own and are not to be construed as the opinion(s) of my employer.
 
stlAV8R
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RE: Delta Suing Republic Over Canceled Flights

Thu Oct 08, 2015 8:21 am

I think there are a number of good points here and a lot of wild accusations. The biggest takeaway so far is that everyone can agree that DL wasn't likely to renew the E145 contract, however, market conditions changed and fuel has maintained a level that allows DL to continue serving cities that only really support the E145. So, as most have said, of course DL said let them fly. Now, S5, who just like every other airline operator did not see the market conditions coming so they were blindsided by it. As I do agree that you should take care of your existing clients, it would be foolish on Republic's part not to grow the business. Yes, there may be staffing issues but you don't leave money on the table based solely on that. Any CEO with any kind of business sense would have done the same.

Now, in order for DL to have "plotted" this a long time ago, they would need a crystal ball telling them that, and correct me if I'm wrong, Republic would have order planes to ensure they got some AA flying as the AA owned planes went elsewhere and they would had to have known that UA would award S5 flying. I just see that being too far reaching of an idea.

As many I think would agree, Republic is a well oiled machine on most accounts. I think the biggest mistake they made here was not taking care of their labor contracts. When it comes down to it, a company like Republic flying arguably the best regional jets in the US market should have no problems with staffing compared to other operators. They should have seen THIS coming and prepared accordingly.

Now back to DL for a minute. DL is not stupid here. This contract is set up with an easy out from DL's side. The problem is not how does DL get out of flying that it doesn't want, it's what do you do with the planes? If DL walks away, S5 can stick it to them. I would imagine that DL really doesn't want to sue. They want to settle. But you don't walk into the room showing all of your cards. I would bet that soon we'll see that DL and S5 will mutually walk away, S5 will pay an undisclosed penalty, and will not exercise its put option that forces DL to take on the planes and subsequently the leases associated with them. Where DL is smart is they see a good way out of a contract that in hindsight they probably didn't want but were stuck with. I'm sure that there's something going on inside the GO that is forecasting rising fuel or some market condition that makes the E145 flying undesirable again and they are chomping at the chance to get out of it unscathed.
 
IPFreely
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RE: Delta Suing Republic Over Canceled Flights

Thu Oct 08, 2015 11:00 am

Quoting DTWPurserBoy (Reply 43):
DL needs to be able to rely on their affiliates and if they can't meet the contract it is time to rebid the contract elsewhere.

They went with the lowest bidder and they're getting what they pay for. Considering that their marketing department is spouting nonsense about 100 days without any cancellations while they're suing Republic over cancelling huge numbers of flights, DL is looking more and more like a dysfunctional disaster of an airline.
 
flyDTW1992
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RE: Delta Suing Republic Over Canceled Flights

Thu Oct 08, 2015 11:40 am

Quoting IPFreely (Reply 58):
, DL is looking more and more like a dysfunctional disaster of an airline.

  
Right. Sure. Okay.
Now you're flying smart
 
PSU.DTW.SCE
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RE: Delta Suing Republic Over Canceled Flights

Thu Oct 08, 2015 11:43 am

Major companies like DL have huge departments responsible for contract management. Contractual disputes, resolution, and amendments area way of life and a daily occurrence.

99% of contract disputes never get to the point of litigation to resolve via the judicial system.
Even when they do, often many get settled before actually going to trial.
 
wjcandee
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RE: Delta Suing Republic Over Canceled Flights

Thu Oct 08, 2015 12:46 pm

Quoting PSU.DTW.SCE (Reply 60):
Major companies like DL have huge departments responsible for contract management. Contractual disputes, resolution, and amendments area way of life and a daily occurrence.

99% of contract disputes never get to the point of litigation to resolve via the judicial system.
Even when they do, often many get settled before actually going to trial.

Exactly.

And when the other party to the contract says, "We checked, and we're in full compliance," as Republic apparently did, that's when you start drafting the Complaint.
 
eugdjinn
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RE: Delta Suing Republic Over Canceled Flights

Thu Oct 08, 2015 2:07 pm

Quoting stlAV8R (Reply 57):
Now back to DL for a minute. DL is not stupid here. This contract is set up with an easy out from DL's side. The problem is not how does DL get out of flying that it doesn't want, it's what do you do with the planes? If DL walks away, S5 can stick it to them. I would imagine that DL really doesn't want to sue. They want to settle. But you don't walk into the room showing all of your cards. I would bet that soon we'll see that DL and S5 will mutually walk away, S5 will pay an undisclosed penalty, and will not exercise its put option that forces DL to take on the planes and subsequently the leases associated with them. Where DL is smart is they see a good way out of a contract that in hindsight they probably didn't want but were stuck with. I'm sure that there's something going on inside the GO that is forecasting rising fuel or some market condition that makes the E145 flying undesirable again and they are chomping at the chance to get out of it unscathed.

Wow, that is some kool-aid they serve at Republic/Shuttle!

Delta has a long history of burning a contractor who actively screws them. Let's look at your scenario for a moment though:

Supposing the ultimate out is indeed that Delta and Republic part ways and despite which side triggers it, the contract requirement for Delta to take over all the aircraft is triggered...
- ERJ 145s on the market are pretty cheap - United just radically reduced lease/values on the fleet in ExpressJet hands
=that makes that fleet pretty cheap to swallow and turn over to ? - well, ExpressJet who are setting up to make a mint on controlling the world's supply of used parts - something that is frustrating TSA I suspect.

- the E170s that Shuttle doesn't really want, or says they don't want... but I'll just bet they are dependent on for a substantial amount of CPA block hours... Oh, and that 170s aren't highly valued at present.
= and again, Delta could take all of them in one swell foop and hand them over to Compass, or SkyWest - or even more interestingly, also give them to ExpressJet who could finish adding the 170/175 to their certificate and probably have pilots ready about two months after getting them

- the 175's - same as the 170s

And with all of those planes, magically yanked out from under Republic and a sworn enemy in the form of Delta - how secure do you really think life would be there??

Now add that the judge is likely to determine that Republic did willfully breach the contract and exact maximum penalties? What does the judgement do to the supply of new pilots in the door at Republic? How does it affect the thinking at AA and UA when contracts need deciding?

In short, you are looking at this clause as a poison pill for Delta, and you are mistaken. This clause exists so that Mama Delta can be darned sure NOBODY else can ask Republic to fly those planes for them. Delta has deep pockets. Republic will lose those fleets - and Delta will hold Republic to the terms that require those aircraft to be in mint condition on receipt.

Up side for Republic? It will solve your pilot shortage, you'll have so many fewer frames overnight!
(Clearly, Bedford will deserve a bonus!)
 
stlAV8R
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RE: Delta Suing Republic Over Canceled Flights

Thu Oct 08, 2015 2:30 pm

Quoting eugdjinn (Reply 62):
Wow, that is some kool-aid they serve at Republic/Shuttle!

I don't work there or have any stake in them if that's what you're implying...

Quoting eugdjinn (Reply 62):
ERJ 145s on the market are pretty cheap - United just radically reduced lease/values on the fleet in ExpressJet hands
=that makes that fleet pretty cheap to swallow and turn over to ? - well, ExpressJet who are setting up to make a mint on controlling the world's supply of used parts - something that is frustrating TSA I suspect.

That's a terrible move that I'm sure shareholders would not be happy about. And who is to say XJ wants them? That's presumptuous.

Quoting eugdjinn (Reply 62):
the E170s

...are explicitly excluded from the clauses that govern the E145s and E175s.

Quoting eugdjinn (Reply 62):
the 175's

Who says DL wants to fully part ways with S5. I think this is focused more toward the E145s. Since DL can't walk away as easily from the E170s (unless there is more than what is provided in the post above) as they can the others, they may as well just leave the E175s too.

Quoting eugdjinn (Reply 62):
In short, you are looking at this clause as a poison pill for Delta, and you are mistaken. This clause exists so that Mama Delta can be darned sure NOBODY else can ask Republic to fly those planes for them. Delta has deep pockets. Republic will lose those fleets - and Delta will hold Republic to the terms that require those aircraft to be in mint condition on receipt.

Do you think that DL controls all the Embraers in the world? If DL took them from S5 they can go get more. There are plenty to be had. S5 would gladly give DL the planes and the applicable leases. I think you are mistaken that DL wants to spend money on the planes. It's not about deep pockets. That's how businesses go bankrupt. It's about the value in spending money and DL doesn't want to spend money on this. Obviously all this is speculation but I'm willing to bet that this will eventually turn into another F8 situation. They just have to be smart about it. Remember, DL lost the first time the went up against F8 so everything is more calculated this go around.
 
C767P
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RE: Delta Suing Republic Over Canceled Flights

Thu Oct 08, 2015 3:20 pm

Quoting eugdjinn (Reply 62):
the E170s that Shuttle doesn't really want, or says they don't want... but I'll just bet they are dependent on for a substantial amount of CPA block hours... Oh, and that 170s aren't highly valued at present.
= and again, Delta could take all of them in one swell foop and hand them over to Compass, or SkyWest

They would have to buy them from Republic, as Delta doesn’t own those airplanes.

No regional can take the 30 170/175s that S5 has operating for DL. Not even the do-no-wrong SkyWest.
 
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pu
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RE: Delta Suing Republic Over Canceled Flights

Thu Oct 08, 2015 3:30 pm

Quoting wjcandee (Reply 52):
Could Republic have settled their pilot issues sooner?If Republic had not taken the United contract, would it have had enough pilots to service its obligations?Could Republic have foreseen what would happen if DL exercised its option to extend?Could Republic have undertaken less work for other carriers in order to service its obligations to DL?

All those are good points but you are focused on the Republic side.

I have no dog in this hunt but some other questions would be to look at the Delta side. Is DL so large and bossy that the parties are inherently unequal? Then the contract could be void or modified. Did DL act maliciously in seeking a contract which it knew would be very difficult to meet? Did DL act in such a way in its flying or relation with other partners that make the contract difficult for Republic satisfy?

There are plenty of things DL could have done that invalidate the contract or would allow Republic to reduce its obligations - again most people assume a contract is written words on a paper but these are just the beginning of any later discussion.

Quoting wjcandee (Reply 52):
Impossibility is a disfavored and limited defense

The point is that unlike what most people think a contract is not written in stone. It is a snapshot of an agreement at a moment in time. The further in time away from the date of signing and the more the parties and overall situations change, the more avenues open up for getting out of a contract. Again, contracts are just a selling point to keep lawyers in business. They do not give nearly as much protection to either party as commonly imagined.



Pu.
 
eugdjinn
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RE: Delta Suing Republic Over Canceled Flights

Thu Oct 08, 2015 6:56 pm

Quoting pu (Reply 65):
There are plenty of things DL could have done that invalidate the contract or would allow Republic to reduce its obligations - again most people assume a contract is written words on a paper but these are just the beginning of any later discussion.

What you are suggesting is that Delta should have, against its own best interests, allowed one of it's Delta Connection carriers to abrogate a contract early so that they would have pilots available to provide NEW service, on a new contract to one of Delta's competitors. Seriously? Why on earth would Delta have any interest in doing that. That's what a lot of people in this thread seem to think Delta should have done. Once again, all of the Delta contracts pre-date the United and American contracts, and the option to extend the 145 flying was Delta's option all along. Delta was always entitled to enact that provision of the standing contract. Suggesting Delta should help Republic screw over Delta so as to win/secure and fly new planes for it's competitors is ridiculous.

Quoting C767P (Reply 64):
They would have to buy them from Republic, as Delta doesn’t own those airplanes.

No regional can take the 30 170/175s that S5 has operating for DL. Not even the do-no-wrong SkyWest.

Yes, I fully understand and stated that Delta could (note, Delta has deep pockets, good credit and plenty of cash on hand) force the issue and BUY all those planes to keep Republic from contracting to fly them for another major carrier. In fact, they would be negligent to allow RAH to hold onto any of them. (My quiet suspicion and desired outcome in the following is to see Delta then serve as broker and resell them all to SkyWest Inc. and I rather suspect that would be arranged before hand between Delta and SKW.)

And yes, if the provision was timed just right, I think SkyWest Inc, in the form of ExpressJet could take every single one of them and operate them. Keep in mind, ExpressJet is looking at the imminent parking of another major tranche of ERJ145s from the United Express contract in 2016, and it's not unlikely that a deal could be struck to park them all in January 16.

Also remember that one of the subtle gotchas in that is that those planes have to be in near mint condition on handoff if that provision is enacted - so RAH is on the hook for any deferred maintenance items. (Last time I saw a S5 or YX release, that was more than two pages of items - and while they were small items - translate that workload onto the entire list of planes we are talking about. There's some not insignificant hours involved there... and all occur while the contract provisions requiring flights on each plane continue. So, if I read right, after the end of flying under DCI contract, RAH would have two months to see to handing off clean aircraft? That would leave 60 days for transition and acceptance of aircraft, concommitant with transitions training for crew to fly them. And if the deal were prepped for, starting now, the combined resources of SkyWest Inc could very well see all of those aircraft turned right around into SkyWest owned, ExpressJet operated aircraft in time for Easter and the late spring pickup of flying. Force Republic to carry through December 31, then burn the house down, and use the two quiet months to be ready.

Actually, were I at Delta, I'd go a little farther. I'd sign now for as many more CRJ900s as Bombardier can produce between now and March 2016, (Sign, that is, an agreement for ExpressJet to fly them for 10 years.) And do so in exchange for SkyWest Inc ordering them immediately. I'd use that capacity, spare 200's pulled back from the desert and cleaned up for service, and any 700s that appear on the market that ExpressJet can get hold of to support the DCI system while things transition in January and February. I'd also see if I could lay hands on ERJ 145s no longer in UAX service from previous reductions but able to fly for another year, and get a short lease on them and a new paint job to run service in the Northeast by ExpressJet 145 crews with a quick Delta service lesson. (One of the side pluses to this is that the ERJ side of ExpressJet already has a EWR base and using that base to support LGA flying would be an asset to the DCI system.)

And I'd remind Compass and GoJet that contract performance for DCI is important, really, really important. (Wait, are those vultures circling overhead?)
 
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northwestEWR
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RE: Delta Suing Republic Over Canceled Flights

Thu Oct 08, 2015 7:51 pm

Quoting eugdjinn (Reply 66):

I hadn't thought about those possibilities....... The ExpressJet ERJ flying will certainly leave a surplus of crews at EV come early 2016. Delta is very pleased with the progress that EV has made in turning it's operation around lately.

It does sound like the kind of grand scheme plan that Delta would try. VERY interesting.
Northwest Airlines - Now You're Flying Smart
 
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enilria
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RE: Delta Suing Republic Over Canceled Flights

Thu Oct 08, 2015 8:03 pm

Quoting OMNI435 (Thread starter):
I think we all understand the value of a contract, and certainly these capacity purchase agreements between major and regional airlines aren’t simply crafted devices, but while it may legally be DL’s recourse to act in this manner, it’s short-sighted. Litigation won’t help Republic’s pilot situation, nor will whatever their incentive payments are be adjusted to correct for what is sure to be a substantially higher flight ops cost for RP. They’re offering signing bonuses in fact to recruit pilots.
Quoting OMNI435 (Thread starter):

I figured this was only a matter of time. Republic has been canceling nearly 10% of their schedule every day due to pilot shortages.

I apologize if somebody else said this above, BUT here is my suspicion as to what is really going on based upon DL suing partners in the past...

This came immediately after RJET got their new contract offer out there and DL got to see the terms of it. My guess is that DL is required to reimburse crew costs through some contractual backdoor on the E145 contract (tell me if I'm wrong) and they saw the new rates and realized it would raise their costs quite a bit. I think DL decided to go after them on this issue as leverage to try to push back some of the increased crew cost on Republic if this pay deal goes forward...or just end the deal completely. The timing is too coincidental.

Quoting eugdjinn (Reply 10):
he might have survived this. But no, he chose to prioritize the sexy flying of E170/E175s

I'm no fan of BB, BUT also keep in mind BB wants the E170 flying because those pilots are much less likely to leave because of the higher pay rates. It is both in RJET's interest and the pilots interest for him to cater to the 70 seater contracts.
 
eugdjinn
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RE: Delta Suing Republic Over Canceled Flights

Thu Oct 08, 2015 9:02 pm

Quoting enilria (Reply 68):
My guess is that DL is required to reimburse crew costs

I seriously doubt it. That has never, ever been the case in any of the CPA (Capacity Purchase Agreements).

Typically, the simple version is that Regional Carrier, (RC from here and not anyone's actual code) agrees to fly a CRJ200 with 50 seats from AAA to BBB for $X under the branding and according to the schedule as set by Mainline Carrier, (MC).

These are also often called Fee for Departure or FFD flights. Should the flight leave late due to something under the RC's control, the RC is penalized, often rather severely, losing up to a full third of the agreed upon fee. The RC, out of said fee, is responsible for aircraft, safety, maintenance, regulatory compliance, crew costs, cleaning, and maintaining the service standards of the MC. The MC is responsible for catering, fuel, handling fees, landing fees, and marketing. The MC collects and KEEPS all collected ticket revenue and sets the schedule with only limited input from the RC.

So, no. What Republic negotiated with its unions is up to Republic, and its crew costs are up to its own management and do not bear at all on Delta. Republic contracted to fly for a set fee, Delta pays that fee. If Republic can no longer make a profit at that price, then that is not Delta's issue. Similarly, when the maintenance costs of keeping the Q400 fleet VASTLY exceeded what was budgeted in the FFD negotiated by RAH management, that was on RAH to resolve. The Q400 was widely known to be a maintenance intensive aircraft (read, hangar queen) well before they bid to operate it. This was nothing more nor less than bad bidding, and bad management. (Er, they got snookered!)

So too, if this agreement is untenable (unprofitable) with the new labor agreement between RAH and its pilots, then the fault is in the boardroom not at Delta, but at RAH. They have been working on a flawed assumption that they could count on Delta letting them out of the 145 flying. And you do not make assumptions like that lightly with Delta.
 
C767P
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RE: Delta Suing Republic Over Canceled Flights

Thu Oct 08, 2015 9:23 pm

Quoting eugdjinn (Reply 66):
And yes, if the provision was timed just right, I think SkyWest Inc, in the form of ExpressJet could take every single one of them and operate them.

A year ago the entire idea would have been great, the staffing existed. The 145 side of EV does not have excess pilots to staff the flying now. I would be surprised if UA were to agree to park the remaining 145s (even at a benefit to them having another operator pick them up at a lower cost) to help XE operate 170s for Delta.

The L-EV side is pretty top heavy and therefore expensive. Doubt Inc. will hand them anything, and DL only wants a cheap operator (proven by giving CR9s to G7).

What *needs* to happen is all 170/175/CR9 flying to go at the mainline level and a middle pay rate from what it is now and what DL has the CR9 on the pay scale for. Regionals can be regionals again, operating 50 seat and CR7s.
 
wjcandee
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RE: Delta Suing Republic Over Canceled Flights

Thu Oct 08, 2015 11:18 pm

Quoting pu (Reply 65):
They do not give nearly as much protection to either party as commonly imagined.

You'd be surprised, I think, at least as regards contracts governed by the laws of New York, Texas, and D.C. (the three jurisdictions in which I am licensed to practice law).
 
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enilria
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RE: Delta Suing Republic Over Canceled Flights

Thu Oct 08, 2015 11:43 pm

Quoting eugdjinn (Reply 69):
I seriously doubt it. That has never, ever been the case in any of the CPA (Capacity Purchase Agreements).
Quoting eugdjinn (Reply 69):
Typically,
Quoting eugdjinn (Reply 69):
So, no.

It sounds like you haven't seen the agreement and if you haven't you don't know. There are also commonly provisions that are tied to profit margins by the operator and if they are either too high or too low one carrier reimburses the other, so that one carrier isn't making a killing while the other isn't. That could be the type of backdoor I'm talking about.
 
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pu
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RE: Delta Suing Republic Over Canceled Flights

Fri Oct 09, 2015 12:59 am

Quoting eugdjinn (Reply 66):
What you are suggesting is that Delta should have,

I'm not suggesting anything about what Delta should or should not have done. All I'm saying is that a contract is governed by far far more than the words in the contract. Either party has ways out - we would have to know exactly what was going on behind closed doors, what the true intention of both parties were etc. to make any kind of rational judgment as to who has a stronger legal case here.

In any event, this legal move by Delta isn't a legal move at all, it's a business move. Companies can and do voluntarily break contracts and pursue legal theories they know are less likely to succeed - for many reasons, not least of which is the situation when they have far deeper pockets than their adversary.

Quoting wjcandee (Reply 71):
You'd be surprised, I think, at least as regards contracts governed by the laws of New York, Texas, and D.C. (the three jurisdictions in which I am licensed to practice law)

I've been involved in litigation in these places and around the world for 4 decades.

I've seen Texas courts invalidate oil and gas contracts because the price of oil moved drastically, I've seen New York courts invalidate contracts because interest rates moved drastically and all jurisdictions around the world are more manipulated by the litigant with deeper pockets than a poor/nearly-bankrupt opponent.

The legal system is just a business tool, but in any event my point remains that contracts can and do get broken every day with no liability suffered by the party who stopped performance.




Pu.
 
mcg
Posts: 1001
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RE: Delta Suing Republic Over Canceled Flights

Fri Oct 09, 2015 1:46 am

Quoting wjcandee (Reply 39):
Republic could easily have gone to Delta and arranged for a written termination of deltas right to renew the agreement. That's what any sensible person would do before putting oneself the position that they found themselves. This was a gamble that they lost.

Exactly, they didn't have to gamble.
 
wjcandee
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RE: Delta Suing Republic Over Canceled Flights

Fri Oct 09, 2015 3:09 am

Quoting pu (Reply 73):
The legal system is just a business tool

On this we agree. It's a tool to bring people to reason so that they can make a deal. But if they can't, it's a system that will provide a final resolution that at least one party won't like. Which is why it's an effective tool. That said, a larger percentage of my cases, which are business cases, have gone to trial than one might imagine.
 
n7371f
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RE: Delta Suing Republic Over Canceled Flights

Fri Oct 09, 2015 4:42 am

Whatever happened to the years-long court battle between SkyWest and Delta? I'm mostly certain it was solved. SkyWest sued Delta for several millions for not paying for performance goals - and the lawsuit continued even while both airlines signed new CPA's. Must've been rolled into those.
 
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pu
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RE: Delta Suing Republic Over Canceled Flights

Fri Oct 09, 2015 12:55 pm

Quoting wjcandee (Reply 75):
On this we agree. It's a tool to bring people to reason so that they can make a deal. But if they can't, it's a system that will provide a final resolution that at least one party won't like. Which is why it's an effective tool. That said, a larger percentage of my cases, which are business cases, have gone to trial than one might imagine.

Isn't it nice when people can agree? especially on this forum?

With that said, the tendency to see litigation as a viable business option is more prominent in America (not saying whether that is good or bad). In other countries bringing a lawsuit is often the very last resort when another party is acting close to criminally. In America it might be merely an economic decision.

Quoting n7371f (Reply 76):
SkyWest sued Delta for several millions for not paying for performance goals - and the lawsuit continued even while both airlines signed new CPA's

The real issue here is this unstable system of US majors and their regional partners. It really can't work for very long, it seems to me. If United agrees to join the party and buy its own regionals maybe this whole circus will come to an end.



Pu.
 
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enilria
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RE: Delta Suing Republic Over Canceled Flights

Fri Oct 09, 2015 12:58 pm

Quoting n7371f (Reply 76):
Whatever happened to the years-long court battle between SkyWest and Delta? I'm mostly certain it was solved. SkyWest sued Delta for several millions for not paying for performance goals - and the lawsuit continued even while both airlines signed new CPA's.
Quoting n7371f (Reply 76):
Must've been rolled into those.
Quoting enilria (Reply 68):
I think DL decided to go after them on this issue as leverage to try to push back some of the increased crew cost on Republic if this pay deal goes forward...or just end the deal completely. The timing is too coincidental.

Correct, DL has used this method before as a tool to renegotiate or extricate themselves from a regional contract. I suspect the same is at play here. DL is quite shrewd.
 
ceb20816
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RE: Delta Suing Republic Over Canceled Flights

Fri Oct 09, 2015 2:44 pm

Quoting FlyASAGuy2005 (Reply 28):
Remember Freedom? They sued them for sn almost identical case and won. Everyone thought DL was full of balony and the case wouldn't go anywhere.

Actually the Freedome/Mesa suit was slightly different. DL did indeed sue for excessive cancellations. But the majority of those were "Commanded Cancels," flights that DL ASKED Mesa to cancel system for optimization (e.g., weather requires a reduction in flights and rather than have to cancel a larger plane Mesa was asked to cancel a 50 seater and leave room for a larger plane). Mesa obliged and then DL sued claiming that these commanded cancels gave it the right under the contract to terminate the contract. A court agreed that in the absence of a definition of a qualifying cancel they were within their rights.

Another option has to be entertained: that DL was fully intent on letting the E145 flying end but saw in the cancellations a way to cancel the contract without incurring the penalty from the Put option.
 
eugdjinn
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RE: Delta Suing Republic Over Canceled Flights

Fri Oct 09, 2015 3:35 pm

Quoting ceb20816 (Reply 79):
Another option has to be entertained: that DL was fully intent on letting the E145 flying end but saw in the cancellations a way to cancel the contract without incurring the penalty from the Put option.

Alright, so you are suggesting that by naturally letting the E145 contract expire with no extension, Delta would have been on the hook for the aircraft?

I was reading the "Put option" as a safeguard for Republic in the event of an early termination leaving it with leased aircraft it could not find flying for, and perhaps I was reading into it that the 145 fleet must have lease terminations coming up to coincide with the expected end of the contract. If that's that case, (that letting the contract end on its own would not have forced Delta to take the airplanes) then we are again suggesting that Delta should be happy to let Republic out of the E145 flying and use those pilots to support the new contracts with United and American.

And that's why I still maintain that Delta saw in Republic's new contracts a lack of interest in DCI flying from RAH, and a failure to safeguard the existing DCI contracts. Looking at the options, Delta realized they could force the issue by extending the contract for the E145 flying the allowed 5 years and make it clear to RAH management that Delta would not be a patsy. RAH overextended, and they have not been able to meet their obligations. They will have to pay the price.
 
ceb20816
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RE: Delta Suing Republic Over Canceled Flights

Fri Oct 09, 2015 4:39 pm

Quoting eugdjinn (Reply 80):
I was reading the "Put option" as a safeguard for Republic in the event of an early termination leaving it with leased aircraft it could not find flying for, and perhaps I was reading into it that the 145 fleet must have lease terminations coming up to coincide with the expected end of the contract.

I agree that the Put Option was a safeguard for RJet. But if they weren't exposed on the lease tails why was this safeguard in the contract? It would be a moot point.

Agreed that Rjet was remiss in assuming that the contract would lapse. Especially as DL has acquired a reputation for being a difficult partner
 
durangomac
Posts: 427
Joined: Fri Dec 08, 2006 5:18 am

RE: Delta Suing Republic Over Canceled Flights

Fri Oct 09, 2015 5:18 pm

Quoting n7371f (Reply 76):
Whatever happened to the years-long court battle between SkyWest and Delta? I'm mostly certain it was solved. SkyWest sued Delta for several millions for not paying for performance goals - and the lawsuit continued even while both airlines signed new CPA's. Must've been rolled into those.

The lawsuit was settled and apparently in SkyWest, Inc's favor, Delta paid SkyWest an undisclosed amount from what I heard.
 
wjcandee
Posts: 8326
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RE: Delta Suing Republic Over Canceled Flights

Fri Oct 09, 2015 5:45 pm

Quoting ceb20816 (Reply 79):
Another option has to be entertained: that DL was fully intent on letting the E145 flying end but saw in the cancellations a way to cancel the contract without incurring the penalty from the Put option.

As I read the annual report's descriptions of the contract, the put option only exists if DL exercises its right to cancel the E145 agreement early (other than for cause), not if it lets it terminate at its contractual end.

I also note what a great customer DL is for RAH: it extended the contractual period regarding the E170/5 jets well into the future and added jets to the agreement. This gives RAH a predictable income stream (subject to cancellation whereupon DL mitigates the capital risk). The agreement also puts to DL virtually all the business risk of the arrangement: fuel prices are paid by DL, insurance is passed through, and on and on and on. All RAH has to do is to staff the aircraft and run them on time. That's no small feat, but it's a much smaller feat than to try to price its service in an uncertain market for fuel and insurance. Maintenance can be contracted out if RAH chooses, providing complete predictability as to the price of major maintenance.

One reason that profit margins are thin on this regional business is the fact that the major risk factors are largely-mitigated. And once you have an agreement with your unions in place, if you make it coextensive with the term of your client agreements, most of that risk is mitigated as well.

[Edited 2015-10-09 10:47:09]
 
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par13del
Posts: 9777
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RE: Delta Suing Republic Over Canceled Flights

Fri Oct 09, 2015 6:10 pm

Quoting eugdjinn (Reply 66):
What you are suggesting is that Delta should have, against its own best interests, allowed one of it's Delta Connection carriers to abrogate a contract early so that they would have pilots available to provide NEW service, on a new contract to one of Delta's competitors. Seriously? Why on earth would Delta have any interest in doing that.

When Republic cancels / delays flights being operated for DL, do those pax complain to DL or do they hold Republic responsible?
If the pax blame Republic and refuse to fly them any more because of poor service then DL has no interest in ensuring that the partner airline can reasonable fulfill their obligations as per the contract as it does not reflect on DL or its level of service, simply sue them in court for poor service.
 
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Moose135
Posts: 3086
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RE: Delta Suing Republic Over Canceled Flights

Fri Oct 09, 2015 6:46 pm

Quoting par13del (Reply 84):
When Republic cancels / delays flights being operated for DL, do those pax complain to DL or do they hold Republic responsible?

I doubt no more than a handful of passengers would even know who Republic is. They booked their flight through the Delta web site, they showed up at the Delta terminal, and the airplane says "Delta" on it...if there's a problem, Delta will hear about it.
KC-135 - Passing gas and taking names!
 
IPFreely
Posts: 2525
Joined: Sun Dec 24, 2006 8:26 am

RE: Delta Suing Republic Over Canceled Flights

Fri Oct 09, 2015 6:57 pm

Quoting Moose135 (Reply 85):
I doubt no more than a handful of passengers would even know who Republic is. They booked their flight through the Delta web site, they showed up at the Delta terminal, and the airplane says "Delta" on it...if there's a problem, Delta will hear about it.

But Delta is perfect. Just ask their marketing department:

 
N1120A
Posts: 26542
Joined: Sun Dec 14, 2003 5:40 pm

RE: Delta Suing Republic Over Canceled Flights

Fri Oct 09, 2015 7:19 pm

The pilot shortages are largely the US3's fault anyway. They didn't hire for YEARS and now are on a hiring spree, which means there is less of a pool willing to take the garbage the regionals pay. Further, the forced race-to-the-bottom in these agreements have never helped anything, as they make poverty wages for pilots a necessity.
Mangeons les French fries, mais surtout pratiquons avec fierte le French kiss
 
strfyr51
Posts: 4312
Joined: Tue Apr 10, 2012 5:04 pm

RE: Delta Suing Republic Over Canceled Flights

Fri Oct 09, 2015 7:48 pm

Quoting eugdjinn (Reply 69):

These are also often called Fee for Departure or FFD flights. Should the flight leave late due to something under the RC's control, the RC is penalized, often rather severely, losing up to a full third of the agreed upon fee. The RC, out of said fee, is responsible for aircraft, safety, maintenance, regulatory compliance, crew costs, cleaning, and maintaining the service standards of the MC. The MC is responsible for catering, fuel, handling fees, landing fees, and marketing. The MC collects and KEEPS all collected ticket revenue and sets the schedule with only limited input from the RC.

So, no. What Republic negotiated with its unions is up to Republic, and its crew costs are up to its own management and do not bear at all on Delta. Republic contracted to fly for a set fee, Delta pays that fee. If Republic can no longer make a profit at that price, then that is not Delta's issue. Similarly, when the maintenance costs of keeping the Q400 fleet VASTLY exceeded what was budgeted in the FFD negotiated by RAH management, that was on RAH to resolve. The Q400 was widely known to be a maintenance intensive aircraft (read, hangar queen) well before they bid to operate it. This was nothing more nor less than bad bidding, and bad management. (Er, they got snookered!)

So too, if this agreement is untenable (unprofitable) with the new labor agreement between RAH and its pilots, then the fault is in the boardroom not at Delta, but at RAH. They have been working on a flawed assumption that they could count on Delta letting them out of the 145 flying. And you do not make assumptions like that lightly with Delta.

you seem to make a LOT of assumptions. #1) That Republic or Expressjet can actually CREW said airplanes at what Delta wishes to pay in this present time with regional pilots jumping to majors like rats off a sinking ship. OR? Taking their skills Overseas to Asia or the middle East to fly heavy equipment and rack up thousands of hours, And? For Good Money at that! American Pilots are not going to be flying for peanuts with the new FAA rules in place and ALPA is NOT going to stand By and let the Regional Airline Assn. roll back the "clock" if the Regional airlines want pilots? they're going to have to be PAID. and that will really up the cost for Delta and other Majors who are trying to hold on to 50 seat jets.
Delta can want whatever they SAY they want. But ?? How in hell do they enforce it when the pilots are not allocated to what they want? Threatening and Bullying is one thing, But What do you do if the Bullied say's "Screw You" and stands to back it up?? And that's what this is looking like. RAH is flying bigger equipment for other Airlines, and it appears Delta might have lost their advantage with Republic and subsidiaries. I mean Republic will make it look GOOD. But Delta will be getting the burned end of the Stick in this case. What they Do about it?? I shudder to guess...

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