Originally Posted by
gloopy
I still don't get how paying another airline above market value for our airplanes keeps it "debt free" when we could just lease directly from a leasing company anyway. How is the first not considered debt but the second one is? Either way we sign long term, pretty much iron clad agreements to pay but in the case of a SKYW lease laundering scheme we have to pay them a premium in addition to what we otherwise would have paid. Then years into it the lightbulb goes off and some analcyst makes up a new "real debt" metric and all that fake advantage is gone and we're stuck with paying more for our planes.
Trust me, I agree, but the Harvard MBA does not. It now is a cash flow issue.
Look at some of the business moves DAL has made all in the name of getting debt off the books.
-Selling CPS for 20 million
-Selling Mesaba for another pitiful amount.
-Selling the OH headquarters for four million when the debt was 30 million.
These guys think that moving this stuff off the books is a good thing for the business. They say it saves them money in "debt service'" with the debt we still keep.
To add to this:
DAL has had and still has a debt issue. They want the network we see today, and as a result, they are striving to have third party operators help expand that network. DCI plays a huge role in this. We can go back to the first salvo on RJ's and see what it was a response to; Airlines like LUV and the desire to maintain market presence. DAL bought the RJ's then sold many of them to the third part operators. They kept the debt off of their balance sheet and kept the "market share." The error in the thinking was the floors these contracts had, the commitments that DAL had to maintain to these operators, and the fact that market share did not lead to the RASM offset that they wanted. In fact, everyone followed suit and market share was status quo with a higher CASM. The difference was that during that time, they could only cut so much off of these ridged CPA's. The accumulator became our low end flying.
Now move a head a decade, and realize that the benefits of outsourcing the debt are still very adventurous for DAL. DAL wants to get to a certain debt and debt service number which will give them a specific free cash flow number. By having these operators own the debt, and jets under a long term contract, it allows DAL's network to still have the scope and presence they desire without the hit to DAL's debt service and debt rating. It is an operational expense that the business can cash flow.
Why I think we may see something new and yet untried is, DAL get that scope is beyond a sore point for its pilots, but DAL may still want the benefits of an operator like SKW, who gets better rates, and has the cash to hold a lease and or note, own these aircraft. For this reason alone, I would not be surprised to see someone else own the jets under a 25+ year agreement that gives that operator a quarter of a point on the rate as their service fee for such a deal. DAL will operate them though the third party operator with DAL seniority listed pilots. Complicated yes, but the one way that they can get the benefits they have determined they "need" without starting an all out war with their pilots. It is always about the money, and DAL has become a bottom line drive corporation to a fault.
I believe that they also know that are approaching the limit on Alliances and as a result are doing as much as they can prior to section 6. The threat of widebody flying being flown off this list is very real, and effects the most senior pilots as well as the most junior. That is why scope and a effective solution is a deal that effects every pilot on this list.