Originally Posted by slowplay

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Using your logic, if the 717's are coming anyway, then we get well above the trigger for 3-1 exchange for 76 seat RJ's. Management would be able to go all the way up to 255 76 seaters. The contracts for the 70 seaters begin expiring in 2014 and are essentially ended in 2019. This deal allows them to retain 70 CRJ-700 that they'd have to park, and add 76 seaters early. The number of permitted 76 seaters goes down from 255 to 223. At the same time those 76/70 seaters get management out of contracts for 186 50 seaters by the end of 2015.

Management has three choices as I see it:

1. Do this deal. Also do a deal with the DCI companies. Save 50 seat RJ costs (contract and maintenance) and improve revenue by swapping 76/70 seaters for 50 seaters, Upgauge mainline to backfill DCI seating cuts shifiting block hours from a ratio of about 1.2 mainline -DCI to 1.75 mainline-DCI.

2. Don't do the deal. Spend money on 50 seat engine maintenance and fly the aircraft they are financially committed to. Burn lots of cash due to the fact they negotiated to pay fuel on these 50 seaters which are quickly eating into the bottom line.

3. Dont do the deal. Don't spend money on 50 seat maintenance and park the aircraft, paying the a/c financing and contractual penalties to DCI carriers that they are committed to.

They'll do a math problem. They've already done choice 3 on some Comair aircraft.

Small narrowbodies have to come if they get 76 seaters. DCI has to shrink if they get 76 seaters. Block hour ratios protect us on the downside if they get 76 seaters. No more we shrink/stagnate, DCI growing circumstances.