Originally Posted by
sailingfun
Its odd that the company would agree to a block hour ratio if they are in a permanent shrinkage mode. Very strange also in that most of management compensation is in stock and single most important factor in stock price is growth. I suspect we will not see any growth as long as the economy is horrible. If it gets better I think you will see a lot of growth.
I pulled this from articles from July of last year but for reference here is one of them:
Delta's results "fell short of Wall Street profit estimates as fuel costs grew at a higher rate than revenue, and its shares fell to a new year low."
The response: Delta Air Lines will further reduce capacity this year… the company plans to "retire 140 aircraft by the end of 2012, including the entire DC-9 fleet and Saab turboprop fleet as well as sixty 50-seat regional jets. Half of the aircraft will exit the fleet this year, resulting in an estimated $250 million in maintenance savings."
And then the key part: "We will resize the airline to new flying levels and reduce the size of our fleet, staff, and facilities," CEO Richard Anderson is quoted as saying on a conference call. Anderson says such moves are necessary as the carrier adapts to "a permanent high-fuel-price environment."
"We're very focused on being certain that the flying we do produces positive cash flow -- it's that simple," Anderson is quoted as saying by The Wall Street Journal.
The Journal adds that Anderson made a point to say that Delta is more concerned about profitability than winning market share.
Notice the trend? We missed
expectations which was met with reductions in fleet, staff and facilities as we remain focused on positive cash flow and profitability over winning market share. I still got a profit sharing check from 2011, but we missed expectations was enough to start more cutting.
Shrink to profitability. It's the opposite of SWA's grow for profitability but SWA based that growth on cheap tickets. We have no problem selling $1,200 tickets for a 1:15 flight in a CRJ-200 operated by an airline that refuses to be on time.
http://travel.usatoday.com/flights/p...earns/178842/1
http://www.reuters.com/article/2011/...iness+News%29: