Originally Posted by
gloopy
So its just a tax advantage then? Because it still changes nothing in the end regardless of where they put the so called profits. The mother ship still only makes a certain amount at the end of the day/quarter/year and how DL costs itself has no bearing on that (other than tax advantages I guess, but I don't know the rules on that).
Yes and No, at the end of the day it's all together, however, the share price is based off of Delta profits, CapEx doesn't affect the share price like the bottom line. When you report more profits at the end of each quarter, under normal circumstances, the share price increases. For instance, shifting $850 million in ongoing expenses to capital expenditures from the cash Delta already has on hand from years ago, boosts earnings per share by $1. Does that make sense?
Delta has over a dozen businesses to shift money around including companies in the Cayman Islands. You can play the shell game all day long.
Joint Ventures work in a similar way. Delta takes its free cash on hand, and buys stock in the company it is about to code share with. The joint venture company then sees a capacity increase, and profit increase from the Delta partnership. The stock in the joint venture company goes up, and Delta reports that as investment profits. Skymarks could be the next target as Delta could acquire 49% of that company, pull it out of the ditch, and bank billions in profits.