I'm no accountant, so someone with or pretending to have expertise please back me up. Does Delta not have built-in cost savings approaching, with the massive replacement of top-end wage-earners (retirees) by low-end wage-earners (new hires)? The percentage of the pilot group pulling in 12-year+ pay has to be on the verge of plummeting, does it not?

 

For those of you with limited investment expertise like me, I thought this was a good quick read. I believe Delta stock IS undervalued, but don't think this buy-back is warranted. Perhaps the hope is to prop investors back up after they lay eyes on a truly historic C2015???

http://www.investopedia.com/articles...e-buybacks.asp

 

It's a very valid point.

 

Duly noted and subsequently blown off by whomever at Dalpa is actually negotiating on our behalf.

 

The buy backs mean Delta has too much money. You never want to be in a situation where the company's assets exceed the market value of a public company. The best route would have been to return the $6billion to the employee group in terms of back pay restoration for the bankruptcy concessions. Most shareholders are institutions that jumped on the bandwagon lately, and received a 300% gain, meanwhile employees still are down 50% on their investment in the company(concessions) during the lost decade. Also, why can't they buy surfaces for Endeavor pilots, Jesus!

 

Excellent Analysis^^^^. Let me ask you a question. Why are Delta's Liabilities so high? The number reminds me of a situation that involves a person making $50k dollars a year and buying a $1Million dollar house. Something makes my stomach feel upset when I look at this. I always hear MGMT bragging about lowering the debt, but in reality, if you look deep, you will see Mr. Anderson has our TOTAL liabilities increasing year by year. UAL is in the mid 30s and AA is 41.

Total Liabilities 45,308,000


TEN

 

That is a very salient point. Please repost this the day after the TA arrives in the mail. Pilots need reminders.

 

Oh no, you shouldn't feel upset over that number. Delta does not have $45 billion in debt, it has $7.4 billion in debt. Although, $15 billion of that is pension debt, but that's another issue. Liabilities are the cost of doing business paid for by revenue, or the delivery of a service. In other words, if I buy a ticket from you for say October of this year, it becomes a liability till you fly me to where I'm going. There is a breakdown of just what it all is in the SEC filings. The key number is the $7.4 billion because that must be paid.

 

More or less. A 64 year old max scale pilot costs the company more than a new hire in pretty much every way. Pay, vacation, sick time, health insurance all cost more for the older pilot. On the other hand the 64 year old pilot isn't being replaced by a new hire, he's being replaced by a 60 year old pilot who is also on max scale and who also cost the company more than the new hire in every way.

When a pilot at the top of the scale retires it starts a chain of (training) events. In reality, the new hire is replacing another first officer but the demographics are such that the new hire still costs considerably less than the guy he is replacing.

I'd guess that when you factor everything in from the savings of hiring a younger employee to the costs of training associated with it, there is a marginal savings. The real savings comes from growing the pilot group. Delta has hired over 1,000 straight growth pilots entirely on the narrow-body side of the company. There isn't nearly the training churn for growth new-hire pilots and each new hire lowers the average pilot cost.

 

The average age of a new hire has increased right? Less total service over lifetime=increased training costs. Also possible crankiness with management due to a secondary pension. Maybe more sick calls as well. (Desert dust)