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glbltrvlr
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Delta CEO On Intl Route Cuts And Hedging

Mon May 02, 2016 8:46 pm

Rather amazing statements in this recent Bloomberg interview. Should provide lots of fodder for a.net discussion:

- Rising fuel prices (up 59% since January) are causing Delta to consider international route cuts
- Considering capacity cuts to reverse declining passenger revenue
- No plans to hedge, Delta has lost $4B over the last eight years on hedges
- Asia hub is moving from Tokyo to Shanghai

http://www.bloomberg.com/news/articl...to-hold-off-on-oil-hedging-for-now
 
flyDTW1992
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RE: Delta CEO On Intl Route Cuts And Hedging

Mon May 02, 2016 8:58 pm

Is it just me, or do these bullet points make it sound like the airline's much worse off than it really is?
Now you're flying smart
 
tortugamon
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RE: Delta CEO On Intl Route Cuts And Hedging

Mon May 02, 2016 8:58 pm

Quoting glbltrvlr (Thread starter):
- Asia hub is moving from Tokyo to Shanghai

To me this is the primary noteworthy 'statement'. It makes sense given their investment in China Eastern and the changes at NRT/HND but I don't think we have heard this exact overture. "Bastian said he’s committed in the long term to making Shanghai, instead of Tokyo, the center of Delta’s Asian operations. "

tortugamon
 
Rdh3e
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RE: Delta CEO On Intl Route Cuts And Hedging

Mon May 02, 2016 8:59 pm

Quoting glbltrvlr (Thread starter):
- Rising fuel prices (up 59% since January) are causing Delta to consider international route cuts

I don't know what kind of math he's using, but according to the EIA indeed they did trough on Jan 20 at $0.804 but that was for one day. A two week average there would yield higher prices for comparison. Even then, today's prices are only 46% higher than the 12-year low at $1.175. This is clear sensationalism to help justify any route cuts they want to make.
 
MaverickM11
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RE: Delta CEO On Intl Route Cuts And Hedging

Mon May 02, 2016 9:09 pm

Quoting glbltrvlr (Thread starter):
- No plans to hedge, Delta has lost $4B over the last eight years on hedges

Even if Trainer is profitable it's a rounding error in the overall strategy. Wow.

Quoting glbltrvlr (Thread starter):
- Rising fuel prices (up 59% since January) are causing Delta to consider international route cuts

I think DL is much more exposed internationally. It may dominate their hubs, but the local markets are much smaller, so it is more exposed to competition in the flow markets, whereas domestically it seems to retain much more pricing power vs UA/AA.

Quoting glbltrvlr (Thread starter):
- Asia hub is moving from Tokyo to Shanghai

That's a nice idea but how much freedom does it have to do that given its Chinese state run partners?
I don't take responsibility at all
 
dc10lover
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RE: Delta CEO On Intl Route Cuts And Hedging

Mon May 02, 2016 9:09 pm

- Considering capacity cuts to reverse declining passenger revenue

Is the whole industry affected like this? What about the other airlines?
Why endure the nightmare and congestion of LAX when BUR, LGB, ONT & SNA is so much easier to fly in and out of. Same with OAK & SJC when it comes to SFO.
 
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LAXintl
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RE: Delta CEO On Intl Route Cuts And Hedging

Mon May 02, 2016 9:15 pm

Quoting tortugamon (Reply 2):
"Bastian said he’s committed in the long term to making Shanghai, instead of Tokyo, the center of Delta’s Asian operations. "

Could be 5-10-20 years. Really depends on so many factors not even in Delta's hands.

Also Shanghai hardly ideal spot due rather South geography, split airport ops with MU, and airport logistical challenge in actually making connections.

Quoting Rdh3e (Reply 3):
I don't know what kind of math he's using,

Don't forget the crack spread. East coast spread has gone from about $3 in early Feb to about $9 today.

Forget EIA figures. Look at Delta's actual end of day cost to DL, which also reflect foreign currency effects.
From the desert to the sea, to all of Southern California
 
Flighty
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RE: Delta CEO On Intl Route Cuts And Hedging

Mon May 02, 2016 9:20 pm

Quoting glbltrvlr (Thread starter):
- No plans to hedge, Delta has lost $4B over the last eight years on hedges
Quoting MaverickM11 (Reply 4):
Even if Trainer is profitable it's a rounding error in the overall strategy. Wow.

A "rounding error" but still an emotion-driven, egghead policy that deserves to be outed as a complete fail.

It cost them as much as 100 airplanes.

[Edited 2016-05-02 14:20:52]
 
Rdh3e
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RE: Delta CEO On Intl Route Cuts And Hedging

Mon May 02, 2016 9:33 pm

Quoting LAXintl (Reply 6):
Forget EIA figures. Look at Delta's actual end of day cost to DL, which also reflect foreign currency effects.

EIA figures are for Jet Fuel, which would therefore include the spread. Also, while the dollar has weakened recently it's not enough to swing their full enterprise fuel price by that much.

It's clear that he was just scrounging for a justification. Fuel is the same price now as it was in early December and he wasn't blustering about it being too high then.
 
panamair
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RE: Delta CEO On Intl Route Cuts And Hedging

Mon May 02, 2016 9:37 pm

Quoting Flighty (Reply 7):
It cost them as much as 100 airplanes.

How has Trainer cost them as much as 100 airplanes?



Quoting dc10lover (Reply 5):
- Considering capacity cuts to reverse declining passenger revenue

Is the whole industry affected like this? What about the other airlines?

Compared to its closest peer group AA and UA, DL is overall in better shape with respect to unit passenger revenue - e.g., DL is projecting Q2 2016 PRASM to be down in the 2.5 to 4.5% range, while both AA and UA are projecting down 6 to 8%.
During Q1, DL's PRASM was down 4.6% while UA's was down 7.4% and AA's was down 7.5%


[Edited 2016-05-02 14:57:42]
 
jetlanta
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RE: Delta CEO On Intl Route Cuts And Hedging

Mon May 02, 2016 9:49 pm

Quoting flyDTW1992 (Reply 1):
Is it just me, or do these bullet points make it sound like the airline's much worse off than it really is?

I'd recommend watching the interview rather than reading bullet points that some wrote for an a.net post.
 
MIflyer12
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RE: Delta CEO On Intl Route Cuts And Hedging

Mon May 02, 2016 9:49 pm

Quoting dc10lover (Reply 5):
Considering capacity cuts to reverse declining passenger revenue

Is the whole industry affected like this? What about the other airlines?

See year-over-year PRASM figures for all U.S. public carriers. DL's decline was smaller than AA's or UA's.
 
Flighty
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RE: Delta CEO On Intl Route Cuts And Hedging

Mon May 02, 2016 9:55 pm

Quoting panamair (Reply 9):
How has Trainer cost them as much as 100 airplanes?

My apologies I thought the comment was a response to the $4 billion number. I agree Trainer hasn't had such a big impact but disagree that it's necessarily a rounding error. Might be a couple of billion by now.

The hedge comment is meaningful because that was an involved debate for years. Results in. Panicked hedging does nothing but cost money.
 
panamair
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RE: Delta CEO On Intl Route Cuts And Hedging

Mon May 02, 2016 10:02 pm

Quoting Flighty (Reply 12):
I agree Trainer hasn't had such a big impact but disagree that it's necessarily a rounding error. Might be a couple of billion by now.

Trainer was bought for $150m, followed by $100m of further investments, for a total of $250m. Profits from Trainer from 2012 through 2015 have totaled $207m, not including any positive crack spread mitigation it has had on Delta's operations.
 
deltaguy767
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RE: Delta CEO On Intl Route Cuts And Hedging

Mon May 02, 2016 10:15 pm

Quoting panamair (Reply 13):
Trainer was bought for $150m, followed by $100m of further investments, for a total of $250m. Profits from Trainer from 2012 through 2015 have totaled $207m, not including any positive crack spread mitigation it has had on Delta's operations.

Even factoring in cost of capital discounting of the future cash flows, you're approaching breakeven. Throw in an allowance for the liquidation value of the assets (in the event of a sale) and you're there already. Barring some kind of operational meltdown, Trainer looks more and more like it was a savvy investment by DL (especially being judged as a stand-alone BU, the merits of that standard are questionable at best).

Considering DL has been burned by some pretty rough hedging patterns over the last several years, it doesn't surprise me that they leaning towards adopting a pure market exposure strategy. With Trainer as a partial real-option, it lessens the need for financial hedges from a risk management perspective. Time will tell whether this turns out to be an effective strategy.
A Good Landing is one you walk away from! Any comments made on this board are my own and do not reflect the opinions or actions of my employer.
 
SonomaFlyer
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RE: Delta CEO On Intl Route Cuts And Hedging

Mon May 02, 2016 10:15 pm

Keep in mind that this could also be a card played in the F.U.D. (fear, uncertainty and doubt) game with the pilot's union in their ongoing contract negotiations. They aren't really close at this point and the pilots union is hanging tough on such things as joint venture scope (which tends to outsource international flying) as well as profit sharing among other issues.

DL lost their shirt on hedging yet has still made HUGE profits AND they've paid down debt AND achieved investment grade status AND have returned a lot of capital to investors. The management team is adept at multi tasking and they will seek to leverage all of their opportunities to grow the business while minimizing risk.

The equity investments in foreign airlines given them a perfect opportunity to seamlessly ticket DL passengers to far flung places and the use of joint ventures means they can use whichever airline/aircraft that is cheapest to move their passengers around the world.

Fuel prices have climbed some but are still nowhere near the cost we saw at the peak. There are some pressures at certain points with RASM due to competition but that is the normal ebb and flow of the market. DL is still in a better position than almost any airline financially and that won't change in the foreseeable future.
 
glbltrvlr
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RE: Delta CEO On Intl Route Cuts And Hedging

Mon May 02, 2016 10:20 pm

Quoting jetlanta (Reply 10):
I'd recommend watching the interview rather than reading bullet points that some wrote for an a.net post.

Or you can read the transcript of the interview using the link provided. The bullets are an accurate summary.
 
Rdh3e
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RE: Delta CEO On Intl Route Cuts And Hedging

Mon May 02, 2016 10:30 pm

Quoting deltaguy767 (Reply 14):
Even factoring in cost of capital discounting of the future cash flows, you're approaching breakeven. Throw in an allowance for the liquidation value of the assets (in the event of a sale) and you're there already.

The breakeven would now be ~$450M in profits + asset value using a 15% ROIC assumption.
 
peanuts
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RE: Delta CEO On Intl Route Cuts And Hedging

Mon May 02, 2016 10:53 pm

Basically: Brace yourselves...but we know this. When the economics in certain areas are a house of cards so can entire companies be affected by it.

Also: When a CEO does an interview, he wants to lace it with hidden messages to work it to his advantage. Put pilots on notice. Put NRT on notice ("we want HND, dangit!"). Put DC on notice. Put Wall Street on notice. Put Boeing on notice. And it goes on and on. So really not much to see here.
 
MSPNWA
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RE: Delta CEO On Intl Route Cuts And Hedging

Mon May 02, 2016 11:29 pm

Quoting dc10lover (Reply 5):
- Considering capacity cuts to reverse declining passenger revenue

Is the whole industry affected like this? What about the other airlines?

The whole industry has been affected somewhat by unit revenue declines, but this sounds like CEO speak--making it sound worse than it is to justify cuts. I wasn't a fan of cutting capacity a couple years ago, and it's a highly questionable move today. You'll likely lose market share and lower your overall profit for the sake of higher margins.
 
incitatus
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RE: Delta CEO On Intl Route Cuts And Hedging

Mon May 02, 2016 11:34 pm

Quoting MaverickM11 (Reply 4):
Even if Trainer is profitable it's a rounding error in the overall strategy. Wow.

Exactly. It is like getting auto insurance that pays out up to $300 in case of a crash.
I do not consume Murdoch products including the Wall Street Journal
 
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usdcaguy
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RE: Delta CEO On Intl Route Cuts And Hedging

Mon May 02, 2016 11:39 pm

Quoting peanuts (Reply 18):
Put NRT on notice ("we want HND, dangit!").

There's really no putting NRT on notice, because those days have been over for quite some time. RA wanted a PVG hub, and Ed Bastian is going to want the same thing. They've already cut LAX-NRT to make way for LAX-HND, and I'm sure we'll be seeing more. I can't see US business travelers loving a hub in PVG, but I suppose time will tell.
 
stlgph
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RE: Delta CEO On Intl Route Cuts And Hedging

Mon May 02, 2016 11:45 pm

Quoting glbltrvlr (Thread starter):
- Asia hub is moving from Tokyo to Shanghai

no surprise here. Bastian and Anderson held an editorial meeting in 2013 and said this was in their 5 year plan.
a heavy investment in China is in their vision.
i remember getting laughed at when i mentioned it here.
if assumptions could fly, airliners.net would be the world's busiest airport
 
BestWestern
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RE: Delta CEO On Intl Route Cuts And Hedging

Mon May 02, 2016 11:54 pm

Quoting LAXintl (Reply 6):
Also Shanghai hardly ideal spot due rather South geography, split airport ops with MU, and airport logistical challenge in actually making connections.


I couldn't think of a poorer major airport in Asia for a hub.

Biggest issue is punctuality, followed by zero fifth freedoms and a partner that cannot be relied on to take commercial rather than political decisions.

The last city in Asia I would consider transiting through would be Shanghai.
Greetings from Hong Kong.... a subsidiary of China Inc.
 
commavia
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RE: Delta CEO On Intl Route Cuts And Hedging

Tue May 03, 2016 12:04 am

Quoting LAXintl (Reply 6):
Could be 5-10-20 years. Really depends on so many factors not even in Delta's hands.

  

Quoting LAXintl (Reply 6):
Also Shanghai hardly ideal spot due rather South geography, split airport ops with MU, and airport logistical challenge in actually making connections.
Quoting BestWestern (Reply 23):
I couldn't think of a poorer major airport in Asia for a hub.

Biggest issue is punctuality, followed by zero fifth freedoms and a partner that cannot be relied on to take commercial rather than political decisions.

To Bastian's point, PVG is ideal given its population, wealth and connectivity into China.

Unfortunately, PVG is suboptimal for a wide variety of other reasons.

ICN seems like the best balance - but, alas, we know that comes with obvious complications for Delta, too.

Quoting usdcaguy (Reply 21):
There's really no putting NRT on notice, because those days have been over for quite some time.

  

No real news on this front - Delta/Northwest has been declining at NRT for well over a decade.
 
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VCEflyboy
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RE: Delta CEO On Intl Route Cuts And Hedging

Tue May 03, 2016 1:37 am

I think this is a way to show the music has change while also allowing Anderson to save face.
Anderson was overall and excellent CEO, but the Seattle Asia hub has been a failure and it's good to move on.
 
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mercure1
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RE: Delta CEO On Intl Route Cuts And Hedging

Tue May 03, 2016 1:45 am

Too bad Delta is married to MU, but if it would change this to CZ it could have its China hub at future Beijing Daxing airport where CZ will be the prime tenant.

Coming from the U.S., Beijing it much better located as connection point than the father South Shanghai.

Quoting BestWestern (Reply 23):
The last city in Asia I would consider transiting through would be Shanghai.

 checkmark 

PVG is indeed terrible airport indeed for international transit passenger. Its a run around and hope you have airline staff with you that can help. Its almost like entering/exiting China. It seem neither airport was designed to facilitate connections, nor does it seem the airport/national authorities quite understand it. Simple process made very hard.

[Edited 2016-05-02 18:56:49]
mercure f-wtcc
 
usairways85
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RE: Delta CEO On Intl Route Cuts And Hedging

Tue May 03, 2016 2:07 am

Quoting glbltrvlr (Thread starter):
- Rising fuel prices (up 59% since January) are causing Delta to consider international route cuts

I know it's all relative to the current economy, but this statement makes it sound like oil is at $125/gallon, not $45, and it was ~$65 this time last year
 
BigGSFO
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RE: Delta CEO On Intl Route Cuts And Hedging

Tue May 03, 2016 3:43 am

Quoting tortugamon (Reply 2):
To me this is the primary noteworthy 'statement'. It makes sense given their investment in China Eastern and the changes at NRT/HND but I don't think we have heard this exact overture. "Bastian said he’s committed in the long term to making Shanghai, instead of Tokyo, the center of Delta’s Asian operations. "

Somewhat telling about their relationship with KE and that they aren't moving it to ICN.
 
Sightseer
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RE: Delta CEO On Intl Route Cuts And Hedging

Tue May 03, 2016 3:56 am

Quoting VCEflyboy (Reply 25):
I think this is a way to show the music has change while also allowing Anderson to save face.
Anderson was overall and excellent CEO, but the Seattle Asia hub has been a failure and it's good to move on.

SEA isn't going anywhere. It is a solid compliment to DTW. That said, there is a huge role for an Asian partner to play in DL's network, just like JL and NH do for AA and UA, and for reasons I wish I understood better they have been unable to persuade KE to fill that role and are going with MU instead.
 
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LAXintl
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RE: Delta CEO On Intl Route Cuts And Hedging

Tue May 03, 2016 4:16 am

Another hick up with PVG hub -- slots. Good luck trying to get them, let alone at the times you want.

Quoting BigGSFO (Reply 28):
Somewhat telling about their relationship with KE and that they aren't moving it to ICN.

This weeks Airline Weekly had interview with Ed Bastian, and he had following to say about KE....

As for Asia, Bastian explained what he considers the main reason why Delta’s relationship with its SkyTeam partner Korean Air soured: Korean was once Delta’s primary way to offer Asia to its passengers. But the relationship soured when Delta became a rival Pacific power buy merging with Northwest. It then soured further when Delta nearly bought Korean Air’s rival Japan Airlines. Bastian hopes for friendlier times ahead, however, and thinks mutual threats from changes in the Tokyo market could be a catalyst to warming relations.
From the desert to the sea, to all of Southern California
 
tortugamon
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RE: Delta CEO On Intl Route Cuts And Hedging

Tue May 03, 2016 4:18 am

Quoting deltaguy767 (Reply 14):
Even factoring in cost of capital discounting of the future cash flows, you're approaching breakeven.

To make $200 Million in profit from a $250 Million investment in three years its not even close to 'approaching breakeven'; its a resounding success.

Many acquisitions are done at 8-9 times EBITDA. Look at AS purchase of VX with its $36 million of net income in Q1 and its ~$4B in acquisition price.

tortugamon
 
lutfi
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RE: Delta CEO On Intl Route Cuts And Hedging

Tue May 03, 2016 4:54 am

Another "wtf" on PVG as a hub. Terrible operational issues
 
rta
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RE: Delta CEO On Intl Route Cuts And Hedging

Tue May 03, 2016 5:10 am

Its a shame they had to go with PVG before ICN. Will be interesting to see how this plays out.
 
wjcandee
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RE: Delta CEO On Intl Route Cuts And Hedging

Tue May 03, 2016 6:10 am

Quoting glbltrvlr (Thread starter):
No plans to hedge, Delta has lost $4B over the last eight years on hedges

Most of that is being on the wrong side when the oil price went down.
 
wjcandee
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RE: Delta CEO On Intl Route Cuts And Hedging

Tue May 03, 2016 6:12 am

Quoting glbltrvlr (Thread starter):
Rising fuel prices (up 59% since January) are causing Delta to consider international route cuts

So they are up from January. They are still less than HALF of what they were at the peak. They are now at $45-ish a barrel, a level that is still one that people could only have dreamed of a couple of years ago.
 
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N717TW
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RE: Delta CEO On Intl Route Cuts And Hedging

Tue May 03, 2016 9:04 am

Quoting VCEflyboy (Reply 25):
I think this is a way to show the music has change while also allowing Anderson to save face.
Anderson was overall and excellent CEO, but the Seattle Asia hub has been a failure and it's good to move on.

i can't really comment on the TPAC flows from Seattle but generally the buildup at SeaTac has been positive for DL. Indications actually signal that domestic traffic into Seattle has been strong for DL indicating what many here have said for a long time about SEA being underserved as a destination. Im not going to say the operation as a whole is profitable, as I have no basis for that (and actually doubt it). But what I have seen shows DL pulling a) strong loads and b) maintaining an overall average fare within a few percentage points of the airport as a whole. Considering that they are dumping a lot of capacity (going from 30-odd flights a day connecting hubs plus Hawaii to 125 flights connecting over 30 cities) in the span of three years without completely trashing fares shows they have some strength in the market place.

They aren't going anywhere anytime soon. It would take a major economic downturn for them to pull down SeaTac in the short term and you would see them yank expansion plans and the new lounge as signals of any shut down.

Back to hedging. Given the experiences DL had early in the decade with fuel
http://fortune.com/2014/06/02/secret-club-kate-kelly/
it makes sense they want to stay away from hedging.
 
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IrishAyes
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RE: Delta CEO On Intl Route Cuts And Hedging

Tue May 03, 2016 2:22 pm

Quoting LAXintl (Reply 30):
As for Asia, Bastian explained what he considers the main reason why Delta’s relationship with its SkyTeam partner Korean Air soured: Korean was once Delta’s primary way to offer Asia to its passengers. But the relationship soured when Delta became a rival Pacific power buy merging with Northwest. It then soured further when Delta nearly bought Korean Air’s rival Japan Airlines. Bastian hopes for friendlier times ahead, however, and thinks mutual threats from changes in the Tokyo market could be a catalyst to warming relations.

And?? When UA merged with CO, it became a much larger stronger across the Atlantic, as well as gained a valuable presence in the NYC-LON corridor, yet that didn't seem to upset Lufthansa.

Don't really follow this logic.
 
Flighty
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RE: Delta CEO On Intl Route Cuts And Hedging

Tue May 03, 2016 2:48 pm

Quoting panamair (Reply 13):
not including any positive crack spread mitigation it has had on Delta's operations.

I think crack spread mitigation was the main purpose of it. At a minimum, if spreads become egregious then DL will "profit" directly at Trainer.

I don't have access to the relevant spread over time for that region but it would be interesting if DL made an impact.
 
delimit
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RE: Delta CEO On Intl Route Cuts And Hedging

Tue May 03, 2016 2:51 pm

Quoting IrishAyes (Reply 37):
And?? When UA merged with CO, it became a much larger stronger across the Atlantic, as well as gained a valuable presence in the NYC-LON corridor, yet that didn't seem to upset Lufthansa.

UA has a JV with Lufthansa. DL and KE do not.
 
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mercure1
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RE: Delta CEO On Intl Route Cuts And Hedging

Tue May 03, 2016 3:12 pm

Quoting IrishAyes (Reply 37):
And?? When UA merged with CO, it became a much larger stronger across the Atlantic, as well as gained a valuable presence in the NYC-LON corridor, yet that didn't seem to upset Lufthansa.
Don't really follow this logic.

Its pretty easy logic.

First you should not compare LH as its has ATI JV with UA. Merging with CO benefits the JV as it gives more market share across Atlantic, so its not the same situation as DL playing game of KE vs JL.

A better example would be if UA and LH did not have a JV but were still primary partners for each other in their regions, and UA overnight decided to go become best friends with AFKL Group or BA/IAG and steal them away from current alliance. LH would then likely would feel threatened, and wonder what the benefits of its decade long relationship with UA was worth.

Also consider Delta actions to chase after JAL has cultural ramifications, especially in Asia where there is the loss of face. Business and life is conducted with more decorum and things like loyalty are very important components.
mercure f-wtcc
 
Osubuckeyes
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RE: Delta CEO On Intl Route Cuts And Hedging

Tue May 03, 2016 3:20 pm

Quoting LAXintl (Reply 30):
Bastian hopes for friendlier times ahead, however, and thinks mutual threats from changes in the Tokyo market could be a catalyst to warming relations.

I would be shocked if this were the case. KE has all the leverage in any negotiation of JV or deeper codeshare negotiations. DL is in a precarious position compared to AA and UA over the Pacific. PVG is less than ideal as already stated multiple times in this thread.

Quoting mercure1 (Reply 40):
Business and life is conducted with more decorum and things like loyalty are very important components.

So much this. For Bastian to suggest that changing dynamics in Tokyo could be a catalyst between DL & KE is silly. KE won't forget DL's past actions.
 
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enilria
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RE: Delta CEO On Intl Route Cuts And Hedging

Tue May 03, 2016 3:29 pm

Quoting glbltrvlr (Thread starter):
- No plans to hedge, Delta has lost $4B over the last eight years on hedges

That is easily DL's biggest management misstep of the last 5 years and it's a huge one.

Quoting glbltrvlr (Thread starter):
- Asia hub is moving from Tokyo to Shanghai
Quoting tortugamon (Reply 2):
To me this is the primary noteworthy 'statement'. It makes sense given their investment in China Eastern and the changes at NRT/HND but I don't think we have heard this exact overture. "Bastian said he’s committed in the long term to making Shanghai, instead of Tokyo, the center of Delta’s Asian operations. "
Quoting MaverickM11 (Reply 4):
Quoting glbltrvlr (Thread starter):
- Asia hub is moving from Tokyo to Shanghai

That's a nice idea but how much freedom does it have to do that given its Chinese state run partners?
Quoting LAXintl (Reply 6):
Could be 5-10-20 years. Really depends on so many factors not even in Delta's hands.
Quoting commavia (Reply 24):
To Bastian's point, PVG is ideal given its population, wealth and connectivity into China.

Unfortunately, PVG is suboptimal for a wide variety of other reasons.

ICN seems like the best balance - but, alas, we know that comes with obvious complications for Delta, too.
Quoting lutfi (Reply 32):
Another "wtf" on PVG as a hub. Terrible operational issues

1) I understand the transit visa change of a few years ago, BUT I don't think you can run an effective hub like that in a place where Americans need a visa. Also, plenty of people avoid connecting in China because of the visa issue even if it wouldn't affect them.
2) The airport process in PVG for connecting passengers is ridiculously bad compared to AMS or NRT. It does not offer a product that will be competitive for connects into Southeast Asia.
3) The geography of PVG is sub-optimal compared to somewhere further North or East like NRT/ICN for Americans connecting to SE Asia.
4) The product and customer service experience on MU and CZ is fairly poor compared to other Asian carriers and even Delta.
5) The airport and airline product strains under the lack of English-speaking focus in the culture, unlike pretty much all the other Asian countries where English is very common.
6) MU and CZ are not considered as operationally reliable as most other Asian airlines in the Big 3 alliances.

This will be a setback for DL. I think if the rumors are true that DL will end LAX-NRT, then it may be a lot closer than we think.

Quoting LAXintl (Reply 30):
As for Asia, Bastian explained what he considers the main reason why Delta’s relationship with its SkyTeam partner Korean Air soured: Korean was once Delta’s primary way to offer Asia to its passengers. But the relationship soured when Delta became a rival Pacific power buy merging with Northwest. It then soured further when Delta nearly bought Korean Air’s rival Japan Airlines. Bastian hopes for friendlier times ahead, however, and thinks mutual threats from changes in the Tokyo market could be a catalyst to warming relations.

That's not what I've heard, although I suppose this could be the same thing said a different way... I've heard that KE and DL both want control of the partnership/JV or whatever it might have been and neither is wiling to give much control to the other because they both think they are smarter than the other. Also, KE wants to grow and DL believes in strict capacity discipline. Then KE put an A380 into ATL and that was a mushroom cloud.
 
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IrishAyes
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RE: Delta CEO On Intl Route Cuts And Hedging

Tue May 03, 2016 3:39 pm

Quoting delimit (Reply 39):
UA has a JV with Lufthansa. DL and KE do not.

Right, but what was stopping DL and KE from formulating a JV?
 
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LAXintl
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RE: Delta CEO On Intl Route Cuts And Hedging

Tue May 03, 2016 3:40 pm

Quoting enilria (Reply 42):
I think if the rumors are true that DL will end LAX-NRT, then it may be a lot closer than we think.

DL updated its LAX-HND flight over the weekend in GDS. Its timed exactly to the minute as the LAX-NRT service.

So unless DL will fly 2 777s wingtip to wingtip, its safe to say the NRT flight ends when HND transition to daytime schedule on October 29th.

This was posted along with schedule in the Haneda route case thread.
From the desert to the sea, to all of Southern California
 
Rdh3e
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RE: Delta CEO On Intl Route Cuts And Hedging

Tue May 03, 2016 3:45 pm

Quoting LAXintl (Reply 44):
So unless DL will fly 2 777s wingtip to wingtip, its safe to say the NRT flight ends when HND transition to daytime schedule on October 29th.

If I'm the DOT in this situation, I could only conclude that it would be a net-negative to US consumers for DL to receive a HND slot for this operation. Other airlines are continuing their NRT operations, making HND net-new capacity, whereas DL is only replacing existing capacity.
 
FlyPNS1
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Joined: Wed Dec 01, 1999 7:12 am

RE: Delta CEO On Intl Route Cuts And Hedging

Tue May 03, 2016 3:55 pm

Quoting Osubuckeyes (Reply 41):
KE has all the leverage in any negotiation of JV or deeper codeshare negotiations.

Not totally. If KE continues down their current path, they will lose out on much of the U.S.-Asia transpac growth as the Chinese carriers, as well as the other Japanese carriers with their U.S. partners, overfly ICN. You'll notice that new flights between the U.S. and Asia (mostly China) are being added, KE's growth in the U.S. has been weak to put it nicely.

Quoting enilria (Reply 42):
Also, KE wants to grow

They aren't growing that much right now in the U.S.
 
michman
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RE: Delta CEO On Intl Route Cuts And Hedging

Tue May 03, 2016 4:13 pm

Quoting Rdh3e (Reply 3):
I don't know what kind of math he's using, but according to the EIA indeed they did trough on Jan 20 at $0.804 but that was for one day. A two week average there would yield higher prices for comparison. Even then, today's prices are only 46% higher than the 12-year low at $1.175. This is clear sensationalism to help justify any route cuts they want to make.

Did you actually read the article ??

"Jet-fuel prices have increased 59 percent since hitting a 12-year low on Jan. 20, according to data compiled by Bloomberg."

The 59 percent figure came from Bloomberg, not Bastian.
 
UAL-Fan
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RE: Delta CEO On Intl Route Cuts And Hedging

Tue May 03, 2016 4:21 pm

OMG, my Hero Richard Anderson the CEO rock-star has only been gone a few months and the place is already falling apart! How will Delta ever survive without you at the Helm?
 
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tlecam
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RE: Delta CEO On Intl Route Cuts And Hedging

Tue May 03, 2016 4:37 pm

As a business traveler and a general fan of DL (primarily due to the fact that they fly to my desitnations more than AA and UA, but also because I like the product - wifi originally aligned me with them when i was a free agent from an airline / alliance standpoint), I will look at other options than a Shanghai Asian hub. Not going to happen. If DL worked with KE to make Seoul that hub, they'd have my 10k+ fare 9 times out of 10.
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