Originally Posted by
Sink r8
True, but they're already financing billions. So the only reasons (that I can think of) you would finance these (and thus repay some other debt) would be that a) you can't get good terms on these two, b) you want to reduce your current profits.
The notion that this is for balance sheet rebuilding doesn't make sense to me. Sure, you're not adding to debt, but you're also depleting your cash by an equivalent amount.
My guess is that Delta wants to show just enough profit to satisfy investors, but not so much they have to share with labor right away. We'll be "profitable" as soon as we sign contracts while we're "not profitable".
Page 3-16 (PWA Sect. 3.I.)shows that we will see profit sharing based from dollar zero and up. If there is a PTIX profit, we get paid. See page 3-2 (PWA Sect. 3. A. 10.)lines 13 through 22 to see what constitutes PTIX for the pilots....Spoiler alert: it doen't include writedowns for "one-time/special items"!!
Knowing your contract is fun!
Less debt expense paid to banks increases DAL revenue/profit.
Less debt allows DAL to act more freely to increase its business and withstand downturns.
More cash in the bank gives us something to "point at" in negotiations.
This will only strengthen our position to ask for more, A LOT MORE come 2012.