tsquare

That's not at all funny.

vprMatrix

That's what I was thinking. It's another way to get debt off our books. We fund RAH via lucrative fee-for-departure agreements so that they can buy, at good rates, aircraft that we want that RAH then sub lease to Delta.

acl65pilot

Wasn't meant to be funny. I suspect that if they join our JV the ratios will not be 50-50. According to this article they will just be joining an alliance. That is an important point.

acl65pilot

That is what I have been pointing to on the L and G thread. Those carriers get better rates than we do on debt and it allows this debt to be an operational expense for DAL not part of their debt figure.

iaflyer

So why can't Air France or KLM buy some airplanes then lease them to us? Wouldn't that take the debt off our books? Or create some sort of "dry lease" where they buy them, we use our crews (pilot and FA), they pay for the gas and we pay them? We're all part of a big happy Skyteam and JV family right? The company spends a lot of effort taking flying away from us, why don't they put some effort into allowing us to fly the metal.

tsquare

Meaning what?

gloopy

More like everyone below a seniority number of 300-500. If we allow anything larger than the current 76 seaters in size or weight or range or anything (which BTW are really 90 seaters installed with first class which is what management wanted all along) then a lot more than the bottom 3-4000 pilots will see backwards movement. Bumped down in category, lineholder to reserve, downgrades, senior lineholders down to junior lineholders, etc.

There is really nothing they can even offer us to entice us to do something that stupid anyway. SWA pay for narrowbodies and up from there for larger planes only puts us in line with a super low cost carrier that's profitable to the point of being the historical envy of the industry. They also have the best scope for the flying they do.

We would need to tighten scope significantly and get SWA pay rates just to break even with a scrappy profitable darling of an LCC. That puts us in the realm of 30-40% increases on day one, plus COLA increases after that for the life of the contract. Then management would have to offer up significant pay raises above that just for us to consider it from a purely monetary perspective. So we would be looking at closer to double pay with the return of fantasy triple dipping work rule fantasies and maybe an A fund on top of it for their offer to even be viewed as serious. On top of that, they would have to come up with a truly "iron clad" no furlough clause, which no one would trust anyway, and even if anyone did believe in it, all it would even promise anyway would be guaranteed endless stagnation.

We all know they won't even come calling with that, and anything less won't even come close to getting 50%+1 because we all know allowing larger narrowbodies to be outsourced would gut a ton of our "mainline" narrowbody flying to the point where it would be negative movements all through the list. Even widebody line holding captains would feel it pretty hard.

They would then, merely for asking, not only set a hostile tone that the most cultish "constructive engagement" proponent couldn't ignore but would also reduce their credibility with the mediators...especially when all we're asking for is parity with the darling LCC of the universe...

acl65pilot

An alliance is not metal neutral, but a coordination of reservation sales. A JV shares profit and de-incentives any member airline from flying their own metal because the profits are shared.

gloopy

How can they get better rates than us with a tiny fraction of the revenue, plus their only credible income or collateral are the long term agreements they sign with us in the first place?

Does anyone really think if we went to EMB or Bombardier or Mitsu or whoever and offered to put them on the map with the single biggest vote of confidence in their product they could ever get that we couldn't manage to get a net better deal than some fake virtual airline no one's ever heard of outside their corporate headquarters city could get?

And even if they could get a very, very slightly better finance rate, I doubt that they could negotiate as good a price as we could in the first place. There is no way some fake virtual airline can get a better deal on planes than we can when their only reason for being approved for the transaction in the first place would be us giving them a long term iron clad contract for the same products, at a higher price and with lost margins to pay their guaranteed profits over and above that.

Then we seriously have to ask ourselves how long wall street will actually be hoodwinked into thinking long term iron clad agreements is somehow different from debt? Gee, look at Delta, they are so smart!!! They are debt free!! Weeeeeeee! How do they do it!!! Wow all those other airlines sure are stoopid!!!! Let's issue an upgrade!!!!! Wait, what? What do you mean everyone else is now doing it and Delta no longer has any advantage? And They are on the hook for another company's debt 100%? Plus they are paying more? Well that's dumb. Let's issue a downgrade and upgrade America's darling LCC because they had the financial genius to pay less for their planes!

Sorry, I acknowledge that this meaningless trickery might be viewed in a quarterly report as "debt free" but there is no way we will see a long term advantage from it unless we end up outsourcing all or most of the other stuff along with it.

Not only that, but why does it have to be a fake airline that "orders" these jets? What about a leasing company or financial institution ordering them? We then sign long term iron clad agreements with them for the "magically delicious" debt free parlor trick? Why can an ACMI "air group" reap this "advantage" but no other financial organization can?

And while we can say we are paying for the higher cost of doing magic tricks this way out of cash flow, if we didn't do it this way we could direct the cash flow to any number of things, like paying down the cost of the airplanes in question, or a dividend, or at least massive bonuses to attract "executive talent" or even give it to charity.

If lease laundering was such a free money boon why aren't all the airlines doing it with 100% of their planes?

gloopy

Not to mention, how can we be 100% sure these little tricks won't end up with a forced merger arbitration? Its one thing if its planes smaller than anything we fly, but if we are flying "their" planes, we could get destroyed in an arbitration. Is that something we really want to risk signing off on just for the illusion of fake debt relief all for the bonus of paying more to service the financing? Talk about high risk, low reward. RAH has 100% holding company scope by the way, and the ones that don't have that today can get it tomorrow. The "separate certificate trick" may be slippery enough to get around our scope but it doesn't get around their scope. Think about it.