Originally Posted by
JungleBus
The renegotiated CPA with Pinnacle, although in effect until 2022, reportedly inserted a clause that allows for its early cancellation if the leases on those airplanes are terminated. That would seem to indicate Pinnacle's CRJ operation will be gone if Bombardier agrees to eat those leases in exchange for CRJ9 orders (Embraer could just as easily assume CRJ leases for a E175 order, I suppose).
Some background: PCL provides about 4.5% of Delta's system capacity and 1/3 of DCI capacity. In general, PCL flies the newest and most "desirable" CRJ-200 in DCI's fleet. These are the ones Delta would prefer to retain, and the new ASA has 140 under contract.
You might want to look at the bankruptcy court documents to see if what you heard is correct. It's all in the DIP (Exhibit E, which was modified by a sealed document at DIP approval). The PCL CRJ-200 was extended until lease/financing expiration (from 12/31/17 and now at individual dates through 2022). There are a bunch of other provisions in there. Delta does have the right to replace 16 CRJ-200 aircraft under PCL contract one for one with 70+ seat aircraft. Strange that PCL is rejecting 16 CRJ-900. Dot?
Originally Posted by
JungleBus
The really interesting thing of all this is that most of it could easily be done, if the company were so inclined, without scope relief. Comair and Chautauqua airplanes can be parked without breaking CPAs or eating leases. Bombardier would gladly eat the Pinnacle CRJ leases in exchange for a C-series order, to be flown at mainline. That takes your 50-seaters down to 159. The company could solve its 50 seat problem without needing the pilots' help. In my opinion, needing the extra 76 seaters to be able to park 50 seaters is a red herring. Wanting to outsource more 76 seaters was the real impetus for the TA. The fact that these talks suddenly kicked into high gear as Pinnacle went into bankruptcy is not a coincidence, in my opinion.
Chatauqua does have a lease rejection clause, it's in the Delta 10-K under Notes. Even though Comair is owned by Delta, the CRJ-200 in its fleet have ownership costs even if they're parked. The only savings are DCI ASA costs.
Your timeline leaves a big problem for Delta. PCL is in bankruptcy. If they quit operating Delta loses 4.5% of its capacity. No plan of reorganization will be approved by the court that doesn't leave PCL a survivable entity (at least on paper). The rest of the creditors (including a deceased Colgan family estate, ALPA and the Steelworkers) wouldn't sit around and let Delta carve up the PCL carcass just for itself. They would fare better in a liquidation. That's their nuke aimed at Delta...mutual assured destruction (PCL annihilated as you describe, Delta unprofitable until it can recover the feed).
Next is a replacement aircraft timing problem. The C series is a paper airplane that isn't proposed to be in revenue service until 2015/6 (remember the 787 delay). In your scenario Delta needs lift tomorrow. The first 717 doesn't show up until 2nd half 2013. They come at 3 per month after that. Again, you're talking about getting creditors to agree to immolate for Delta's benefit, and doing it over the next 2 years.
Originally Posted by
JungleBus
In an alternate universe where Delta actually prefers to have its own pilots fly its passengers, here's how this goes down. Delta parks Comair and Chautauqua's birds, and gets Bombardier to take back Pinnacle's 144 CRJ2s in exchange for a 70-airframe C-series order to be flown at mainline. This reduces DCIs fleet count to 159+102+153= 414...with far fewer ASMs than present, and significantly less than under the TA. Mainline grows by 70 C-series plus 88 717s, offset by the remaining DC9s and some older 88s/757s. Mainline-DCI block hour ratios would be well over 2:1.
At least somebody is finally looking at potential management plan B/C/D/E should this TA go down and see the amount of leverage that's actually available. Unfortunately this scenario isn't remotely realistic, but there are several others that are real world possible. Dot?
