Any "Latest & Greatest" about Delta?
12-05-2011, 11:51 AM
Senior by choice
Joined APC: Mar 2008
Posts: 425
Originally Posted by alfaromeo
I read Boyd's analysis and he makes some glaring errors. First he claims that no other carriers have defined benefit costs. That is wrong, Delta and United both have defined benefit plans even though they are frozen. Frozen does not equal free. Boyd also says that airlines don't need Chapter 11 to drop unprofitable flying. They can drop a route anytime but there are costs left behind even if they drop the route (gates, aircraft, etc.). Bankruptcy allows you to drop out of markets and get rid of those fixed costs.
Boyd's analysis shows AMR spending $700-800 million a year in interest expense which he touts as the largest non-operating cost. Delta has interest expense exceeding $1 billion per year. If American gets rid of 20% of their debt (which is probably unattainable, but I will be generous) they will reduce their interest expense about $140-160 million per year. They are going to lose $1,400 million this year. So get rid of the $150 million in interest and where does the rest of the $1,250 million or so come from? Labor? No way. That hole is too big. Their pension expense is about $500 million per year. Even if they terminate every defined benefit plan they still don't get there.
American's debt is pretty much in line with Delta's on a relative size basis. They will get some temporary relief in Ch 11. They can scrape off all of their teeny (less than 50 seat) rj's. They can get a little in lease costs and accelerating MD-80 retirements. They will get their piece of labor but it won't be $1 billion or more. I still see them having a giant hole in the P+L that can only be filled by more revenue.
What Boyd doesn't address is why Delta gained 11% PRASM and American is about half that at 5.8%. Carl doesn't address it either. Why are we able to pay for our rising fuel costs and American can't. That is not about debt that is about revenue. American has always been an industry leader in RASM performance and now they are close to last place. What has changed in the last five years to make that happen?
So I am not trashing Boyd, but his analysis is superficial and factually incorrect in many facets. How can Delta support a debt load and pension expense that is larger than American's (proportionally the same size) and yet be doing quite well? Is it really debt and pension, or are those just the things you can attack in Chapter 11? Without revenue gains those won't be enough to make American profitable.
Boyd's analysis shows AMR spending $700-800 million a year in interest expense which he touts as the largest non-operating cost. Delta has interest expense exceeding $1 billion per year. If American gets rid of 20% of their debt (which is probably unattainable, but I will be generous) they will reduce their interest expense about $140-160 million per year. They are going to lose $1,400 million this year. So get rid of the $150 million in interest and where does the rest of the $1,250 million or so come from? Labor? No way. That hole is too big. Their pension expense is about $500 million per year. Even if they terminate every defined benefit plan they still don't get there.
American's debt is pretty much in line with Delta's on a relative size basis. They will get some temporary relief in Ch 11. They can scrape off all of their teeny (less than 50 seat) rj's. They can get a little in lease costs and accelerating MD-80 retirements. They will get their piece of labor but it won't be $1 billion or more. I still see them having a giant hole in the P+L that can only be filled by more revenue.
What Boyd doesn't address is why Delta gained 11% PRASM and American is about half that at 5.8%. Carl doesn't address it either. Why are we able to pay for our rising fuel costs and American can't. That is not about debt that is about revenue. American has always been an industry leader in RASM performance and now they are close to last place. What has changed in the last five years to make that happen?
So I am not trashing Boyd, but his analysis is superficial and factually incorrect in many facets. How can Delta support a debt load and pension expense that is larger than American's (proportionally the same size) and yet be doing quite well? Is it really debt and pension, or are those just the things you can attack in Chapter 11? Without revenue gains those won't be enough to make American profitable.
12-05-2011, 12:02 PM
Banned
Joined APC: Aug 2011
Posts: 474
Originally Posted by Carl Spackler
It is THE issue that brings them to bankruptcy court. Period. Create all the tortured arguments you wish, but bankruptcy court's only purpose is to shield you from the CREDITORS to which you owe DEBT. Spin all you want, but those are the facts.
You have that right. I have the right to post actual data and analysis. Unfortunately, alfaromeo also has opportunity to spin and deflect arguments to shield the MEC from it's obvious incompetence. All while on full FPL.
Carl
You have that right. I have the right to post actual data and analysis. Unfortunately, alfaromeo also has opportunity to spin and deflect arguments to shield the MEC from it's obvious incompetence. All while on full FPL.
Carl
What I hear you saying Carl is that CH11 is used to protect the company from creditors and restructure obligations/contracts (debt in one form or another).
What I hear Alfa saying is that even if they get relief from this "debt", it's insufficient to turn AMR around in a meaningful and sustainable way because they have a revenue problem that CH11 can not address.
IMO, these are not mutually exclusive statements. They could both be right.
Pure speculation warning, but what may be ominous for AMR, is that CH11(reducing debt) may not be enough, which might mean the "house of pain" for AA employees above and beyond wage a benefit cuts. Possible scenarios include significant restructuring of their network (capacity cuts/loss jobs etc.). Possible asset sales in less than profitable markets, or non-core markets, possibly NYC/LAX among others. Possible fragmentation or merger where the employees will be synergized.
If I remember correctly, what Parker wanted to do with DAL was keep us in BK longer, so that he could use the courts to strong arm the synergies out of the DAL end of the merger.
12-05-2011, 12:33 PM
Gets Weekends Off
Joined APC: Jul 2006
Position: Boeing Hearing and Ergonomics Lab Rat, Night Shift
Posts: 1,724
...speaking of Parker:
Randy Babbitt, FAA Chief, Arrested For Drunken Driving, Placed on Leave Of Absence
http://atwonline.com/international-a...+Daily+News%29
Cheers
George
Randy Babbitt, FAA Chief, Arrested For Drunken Driving, Placed on Leave Of Absence
http://atwonline.com/international-a...+Daily+News%29
Cheers
George
12-05-2011, 12:49 PM
Gets Weekends Off
Joined APC: Jan 2010
Posts: 1,503
Originally Posted by georgetg
...speaking of Parker:
Randy Babbitt, FAA Chief, Arrested For Drunken Driving, Placed on Leave Of Absence
FAA administrator arrested, placed on leave | ATWOnline
Cheers
George
Randy Babbitt, FAA Chief, Arrested For Drunken Driving, Placed on Leave Of Absence
FAA administrator arrested, placed on leave | ATWOnline
Cheers
George
Well, perhaps Donald Lee will be offered the spot. Perhaps not.
More likely, that was the last Ex ALPA official you will see at the top of the FAA.
12-05-2011, 01:13 PM
Line Holder
Joined APC: Feb 2009
Position: Mecca320B
Posts: 94
After four hours working on VA paperwork, doing honey do's for another 2 hours, I needed a distraction from my friends on L&G. Yikes! too much AA bankruptcy talk. Finally, "I love Chocolate." Finally some illustrations. Thank you friends. And babbitt. Good news finally.
12-05-2011, 01:46 PM
Gets Weekends Off
Joined APC: Apr 2008
Posts: 581
I guess I don't "get it"...
My impression is Randy Babbitt was a better FAA Administrator than most, who are typically clueless political appointees. I don't know the man personally, but I find his arrest for DUI sad.
I don't find humor or joy in his misfortune....
My impression is Randy Babbitt was a better FAA Administrator than most, who are typically clueless political appointees. I don't know the man personally, but I find his arrest for DUI sad.
I don't find humor or joy in his misfortune....
12-05-2011, 01:55 PM
Banned
Joined APC: Jul 2006
Position: Space Shuttle PIC
Posts: 2,007
Originally Posted by TheManager
Well, perhaps Donald Lee will be offered the spot. Perhaps not.
More likely, that was the last Ex ALPA official you will see at the top of the FAA.
More likely, that was the last Ex ALPA official you will see at the top of the FAA.
12-05-2011, 02:18 PM
Banned
Joined APC: Jul 2006
Position: Space Shuttle PIC
Posts: 2,007
Someone just sent me this.....great
By Terry Maxon/Reporter
[email protected] | Bio
11:54 AM on Mon., Dec. 5, 2011 | Permalink
Southwest Airlines chairman and chief executive officer Gary Kelly offered some surprising observations Monday about his three biggest competitors:
• The old, legacy carriers, Delta Air Lines and United Airlines, don't exist anymore. They've been replaced by better versions with lower costs.
• American Airlines won't survive if it doesn't convert itself as they did.
• Southwest has to find a way to overcome the lower costs of its competitors.
In a letter to employees and in a separate hotline, Kelly said Southwest will have to fight to keep its competitive spot against major competitors who have transformed themselves, like United or Delta, or will transform themselves, as American must do.
In the letter he said:
"American isn't the only airline not to survive without bankruptcy. Let's look back to 1989, the year Southwest became the newest member of the old major airline club, based on annual revenues.
"All the majors from 1989 have gone bankrupt. Pan Am. Eastern. Braniff. Continental. America West. TWA. US Air. United. Delta. Northwest. And now, American. Every single one failed.
"Why? Not because of Customer Service, but because of high costs. Great Customer Service cannot overcome high costs. That is the imperative I wrote about a decade ago: low costs."
On the hotline, he added about American Airlines:
"I am sure they will shrink. I am sure they will be forced to reduce their costs or else they will be shut down and liquidated. It'll be long. It'll be painful for them. Along the way, they lost their way. As the world changed over the last decade, they were simply not able to adjust and especially with their labor contracts."
"In the near term, they'll be very distracted. That may be somewhat good for us. It may be very good for us in some markets.
"But I can assure you, over the longer term, we're going to face a more formidable opponent, just like we now face with United, who is performing the best they have in 20 years, and also Delta, also performing very well and in some ways better than Southwest Airlines."
Southwest has to "get our costs down through increased productivity to compete against these new legacy airlines," Kelly said on the hotline.
"Their costs are much lower than they were. Their labor costs are lower than ours. Actually, they aren't what you would call legacy airlines. They are new. They are different. The old legacy airlines are dead and buried," he said.
[email protected] | Bio
11:54 AM on Mon., Dec. 5, 2011 | Permalink
Southwest Airlines chairman and chief executive officer Gary Kelly offered some surprising observations Monday about his three biggest competitors:
• The old, legacy carriers, Delta Air Lines and United Airlines, don't exist anymore. They've been replaced by better versions with lower costs.
• American Airlines won't survive if it doesn't convert itself as they did.
• Southwest has to find a way to overcome the lower costs of its competitors.
In a letter to employees and in a separate hotline, Kelly said Southwest will have to fight to keep its competitive spot against major competitors who have transformed themselves, like United or Delta, or will transform themselves, as American must do.
In the letter he said:
"American isn't the only airline not to survive without bankruptcy. Let's look back to 1989, the year Southwest became the newest member of the old major airline club, based on annual revenues.
"All the majors from 1989 have gone bankrupt. Pan Am. Eastern. Braniff. Continental. America West. TWA. US Air. United. Delta. Northwest. And now, American. Every single one failed.
"Why? Not because of Customer Service, but because of high costs. Great Customer Service cannot overcome high costs. That is the imperative I wrote about a decade ago: low costs."
On the hotline, he added about American Airlines:
"I am sure they will shrink. I am sure they will be forced to reduce their costs or else they will be shut down and liquidated. It'll be long. It'll be painful for them. Along the way, they lost their way. As the world changed over the last decade, they were simply not able to adjust and especially with their labor contracts."
"In the near term, they'll be very distracted. That may be somewhat good for us. It may be very good for us in some markets.
"But I can assure you, over the longer term, we're going to face a more formidable opponent, just like we now face with United, who is performing the best they have in 20 years, and also Delta, also performing very well and in some ways better than Southwest Airlines."
Southwest has to "get our costs down through increased productivity to compete against these new legacy airlines," Kelly said on the hotline.
"Their costs are much lower than they were. Their labor costs are lower than ours. Actually, they aren't what you would call legacy airlines. They are new. They are different. The old legacy airlines are dead and buried," he said.
12-05-2011, 02:23 PM
Gets Weekends Off
Joined APC: Jul 2011
Posts: 273
Originally Posted by Carl Spackler
When? 3 years from now? Maybe? Or do we only need to touch 50% for an extremely short period of time, then an entirely new 3 year period of unbalance can begin?
This is such a typical example of an MEC administrator dude only telling half the story. Why not tell the whole story alfaromeo? Do you not know it? Why don't you tell us that you were so proud of the language that the whole MEC voted for it? Oh wait...
Clearly many of us see this for the lie that it is. We're also troubled that these lies and half truths keep coming from the permanent MEC bureaucracy whose lifestyle depends on the continued placation of management.
Carl
This is such a typical example of an MEC administrator dude only telling half the story. Why not tell the whole story alfaromeo? Do you not know it? Why don't you tell us that you were so proud of the language that the whole MEC voted for it? Oh wait...
Clearly many of us see this for the lie that it is. We're also troubled that these lies and half truths keep coming from the permanent MEC bureaucracy whose lifestyle depends on the continued placation of management.
Carl
Fast forward to the JPWACBA where it became a 50/50 with KLM and AF not just against our previous KLM numbers like our CBA language. We get half of the combined KLM and AF numbers, then they added a third airline to their side of the JV and we still retained 50 percent or all the flying while the three of them are dividing up their side of flying into thirds now.
NW 50% KLM
new DL 50% KLM and AF
mou DL 50% KLM and AF and Alitalia
DL 50% | AF/KLM/AZ 50%
new DL 50% KLM and AF
mou DL 50% KLM and AF and Alitalia
DL 50% | AF/KLM/AZ 50%
Is our half of four airlines total Atlantic flying bigger than their half they are dividing by three?
12-05-2011, 02:42 PM
veut gagner à la loterie
Joined APC: Apr 2008
Position: Light Chop
Posts: 23,286
Originally Posted by Bill Lumberg
How about Sulley? I would think he would fight for pilots. Honestly, he would be a good choice.
Thread
Thread Starter
Forum
Replies
Last Post
