sailingfun

Your hypothetical is not our fleet so meaningless. Management has stated many times they like having a accumulator fleet that can be parked at low cost. They have used as it as such in the past. You can go with what they state and have done in the past or make up your own reality.
As to the start of this discussion airlines rarely park aircraft they have ongoing leases or mortgages. They will try and get out of leases however that tends to be difficult when capacity is declining. The only other options is a chapter 11 filing. They are more than willing to park aircraft with low or no monthly costs.

Han Solo

I'll let you handle being management's mouthpiece, you seem to have it under control.

sailingfun

Strange how when pilots can’t argue with facts they go to personal attacks.

Han Solo

No, you just choose to pick and choose what you respond to. First you claim the block hour program is driven by marketing and that jet fuel prices drive marketing. But now apparently a leased plane vs. a paid for plane is what's important in the decision on which planes to park and which to fly. You conveniently overlook the fact that while the 88s are indeed paid for; they are not efficient, they are uncomfortable for passengers, they are costly to maintain, and do not have the technology to fly everywhere DAL would like to fly them.

As for personal insults, I disagree. You stated that you're just repeating what management has said, that is the very definition of a mouthpiece. If you don't like the accurate characterization then change the behavior that earned it.

sailingfun

[QUOTE=Han Solo;2632423]No, you just choose to pick and choose what you respond to. First you claim the block hour program is driven by marketing and that jet fuel prices drive marketing.

But now apparently a leased plane vs. a paid for plane is what's important in the decision on which planes to park and which to fly.

Can you tell me how these two statements contradict each other? One deals with why a airline might want to slow growth or reduce capacity and the other with how they would do it.

As far as managements mouthpiece I am simply stating what they publically put out. In fact at one of the road shows they had a PowerPoint slide saying “MD88, the accumulator fleet”. I suspect you were not around when they used it that way.

As far as the start of this discussion Delta can make more rapid capacity changes the UAL or American. When you decrease capacity you incur a rise in cost per seat mile. Delta can do it for a lower increase by virtue of our fleet makeup.

JamesBond

No, I definitely see that as advantageous. What I don't understand is why it is not MORE advantageous than is reflected in enterprise value. Institutional investors, while mostly having a herd mentality are not stupid. DAL trades in a $5 channel.. has for months. If, as you say, the fleet makeup is advantageous, and we can draw down gas guzzlers easily whereas UAL and AAL are running up debt with new airplanes, why is that not reflected in value? Your argument makes no sense when comparing legacy airlines. We have (something like)$4B in debt. AAL has close to $30B and a highly leveraged fleet. Oil is going up and Wall Street doesn't see the difference. Makes zero sense.

JamesBond

[QUOTE=sailingfun;2632430]Please fix the quote

sailingfun

AMR market value: 16.9 billion
UAL market value: 19.0 billion
Delta market value: 34.5 billion.

Seems like wall street thinks there is a difference.

m3113n1a1

Han Solo is right. You fly whatever aircraft you can make the most money on. If I had two houses for rent, one paid off that earned 3000 a month cash flow and another with a mortgage that earned 2000 a month cash flow, and I can only have one tenant, am I going to let the paid off house sit empty or the mortgaged house?

The reason md88s will be parked is because of higher operating costs due to fuel/mx, not because of how the debt is structured.

JamesBond

Not really. Those numbers have been relatively consistent for quite some time. And no I don't have proof, but I do follow the industry. It would seem to me that as these numbers have not changed for awhile, we would start to see DAL separate from that herd.

Market cap does beg the question though as to what determines the 'world's largest airline'.