Originally Posted by
Bartok
It's going to be hard to convince me that Delta didn't do all this on purpose, but it really doesn't matter how we got here, we are here now.
I don't think Delta plans on shrinking 9E or shutting it down. Look at what 9E is now, an ultra-streamlined Regional with capped pilot rates for the next 7 years. There isn't another Regional in the country that is as pared down as a company as Endeavor is now.
The two big weights on Endeavor's books right now are the fences and training costs and there are over 600 pilots on the payroll with over 10 years longevity. They are correcting the fences and the training will wind down one day and as soon as Delta starts hiring they can take a chunk of those 10 year plus guys and move them to Delta.
Why would they destroy the jewel of the industry, there is too much they can do as a threat alone, Delta pilots, other regionals etc.
And I've thought about Delta building Pinnacle up and selling them, but they have done something interesting here: There are no backoffice systems that are not on the Delta backbone. Endeavor is nothing more than a sub-Department of Delta now. Run by the Delta machine.
A buyer would have to add all those departments and people back into the company and it would lose some of its appeal. Not that someone wouldn't buy it, just that it doesn't look packaged to sell.
I agree and have the same line of thought as you, but as a small business owner I can see an advantage for putting the 'sub-department' company on the market. If I were buying a company I wouldn't want one that came with a bunch of overhead. If I already run a similar company and have these departments in place I would simply boost my current operation. I honestly believe if Delta were to sell Pinnacle, which I'm not sold on that yet, that it would be an asset sale only. Asset purchases are much more lucrative to investors rather than ones that come with a bunch of pieces. Essentially, anyone who buys Pinnacle will buying airplanes and pilots and it will be up to them for when/if they increase to properly managed the newly acquired assets.
Hiring people to boost your operation is no big deal. Start them at the bottom with bottom pay and don't worry about paying a 10 year dispatcher what they're worth.
Think outside the pilot box. Would you want to buy a whole airline, payroll and all, if you already had the departments in place? We see how well that has worked out for Pinnacle and SkyWest.