mikea72580

Paul Jacobson-

​​​​​​- Revenue in June Quarter down 10 Billion
- Delta is able to cut costs by 50% in June Quarter. 5 Billion

Rough math- We usually make 2 Billion in profit in June Quarter. So, 3 Billion dollar loss in June Quarter

- We will emerge as a much smaller airline. Will have the chance to grow again over time to reach previous levels.


Opinion: It sounds like there will be no V shaped recovery for airlines. Probably a 3-4 year recovery period. Probably 5 years till we are a lean machine again. I think early retirement offers are pretty much guaranteed now. In rough math, we will lose 12-15 Billion a year with our current cost structure. That is not sustainable. No job will be back filled and very little chance they won’t have to reduce staffing levels. I feel really bad for this management team, they have worked for the past 10 years to build an unbelievable machine, the likes that have never been seen before in air travel. Our business was a juggernaut, with enormous advantages over our competitors. They worked so hard to create this beautiful thing and I think they really became enamored with it. It became their life’s work and it was better than they ever imagined. And like a Jenga game, a piece was pulled from the bottom and the entire structure collapsed. This is a massive gut punch and they have to be stunned as they look at their pile of ash. Will Delta be able to re-establish dominance, who knows? But the power and efficiency of the enterprise they ran may never be matched.

They were leading 7-1 at the bottom of the 9th inning, with the trophies being brought to the field. And now they find themselves back in the first inning 0-0, with aching shoulders and dirty uniforms.

I can’t help but feel someone is going to pick up the bat and decide that we’re winning this double header, whatever it takes. I think we return to profitability in 2022 with a balance sheet similar to 2004, and we start to buildout the most profitable airline in the world again.

DMEarc

You sound like you’ve been hanging around too many new hire flight attendants.

Don’t forget management will walk away multi-millionaires. They don’t have to worry about unemployment and paying the bills.

Not volunteering that they are had people, but to hear you say you feel bad for them is pathetic. They don’t need this iob, YOU do.

Tailhookah

As for now don’t expect an early buy out program. That would require cash up front, unless done like the AA early out program. Even then it will require huge training costs. Right now Delta is preserving cash. This could all change next month.

captainchipotle

Buybacks...

I don’t feel bad for them.

your post is like saying “the airplane had an engine fire and I felt bad for the pilots”.

Nope, don’t feel bad for us, that’s what we train for and prepare for. That’s our job, to right the ship when it’s wrong, mitigate threats, trap errors, and keep the airplane headed in the right direction.

management should always be prepared for a downturn. That’s one of their jobs. I’ll give them some margin for that fact that this happened so fast but we still should have been somewhat prepared.

stock buybacks only depleted our ability to be prepared.

everyone fly safe and stay healthy.
CC

ERflyer

Thanks for the update.

If it doesn’t kill you it will make you stronger.
Kinda like a virus.

mikea72580

For sure, not a single one of them have to work another day in their life. I don’t at all sympathize with their own personal financial situations. Which even now, leaves them adequately rewarded, if not overly compensated on account of their own self dealing. But these individuals have worked hard to do their share in building this company, only to see it crumble through no fault of their own. Their ability to wisely rebuild the corporate machine that makes my way of life possible will be crucial over the next 5 years. Putting aside the topic of corporate compensation schemes, I sympathize to see a man’s work destroyed.

JulesWinfield

"No fault of their own." HAHA, right.

Scoop

Well maybe they are not at fault per se but they did in fact contribute negatively to our current situation. If they cared so much about seeing what they built remain in place and not crumble they should have put more consideration into the foundation then the game room.

Borrowing money to fund stock buybacks? Not even sure the media are up to speed on this detail yet.
Not even having 6 months rainy day fund for emergencies?

I can't decide if its irony or Karma - perhaps both. The very avarice that drove our management to excessively buy back our stock to drive up the stock price is greatly contributing to the stock plummeting we are now experiencing. How different it would be if the news reports were as follows: Most airlines only have a couple of months to sort this out but Delta has over 6 months since it was much more conservative with its free cash flow.

I get that nothing they might have done may end up having been enough, but it would be nice to have a few more months of cash on hand to buy us some more time. Finally if the company turns down offers of aid from the government then they obviously don't need DALPAs help.

Scoop

gloopy

From what I've read so far (which is only a little as this is still developing) is that what's being offered are only loans, possibly with significant strings attached. That will not be enough in any case. Especially if our plan is endless lockdown unti we achieve zero point zero percent viral eradication.

IMO all these band aids to buy a couple months are fine, whatever. Meanwhile we're still defending the "allies" from the Soviets and China makes all our medications.

mikea72580

So.... Bastian developed a novel virus pandemic in the bio-warefare lab in his basement? Where are you going with this?

If you want to blame management for not having a page ready in their playbook for staying profitable during a global pandemic, the scale of which hasn’t been seen in 102 years, then go ahead and live in that world. 80% of bookings disappeared in 21 days. How could they not see that coming? Bunch of losers, right.

Maybe consider coming off the high horse and giving some honest thought to the real impact of Buybacks.

If they had not done buybacks and instead built a war chest like tech companies do, then for sure it would have guaranteed Delta’s survival and resulted in us coming out of this with a healthier balance sheet.

What it would not have done is prevent Delta from being the most profitable airline in the world in the first quarter to losing 3 Billion dollars in the second quarter.

It would also not have prevented Delta from emerging as a much smaller airline. Buybacks had absolutely no impact on government restrictions or consumer confidence in flying, Those are the real problems.

The need to take government loans to ensure our survival is on their hands, but the collapse of the aviation industry overnight is not. But you know that.

So go ahead and stick with Management bad, Me good....if it helps you sleep at night.