Yeah...like why they tried to dump 9e at the start of this whole merger...just take the bogey next time Trenary.:D

none of it will ever make sense. i mean comair has people on furlough yet all I think all the DCI guys have at least 2 of comairs 200's to fly around. So they furlough from comair and give other airlines their planes to fly around when comair could do it since they had the planes to begin with. now we are taking those comair 200's and flying them in jfk and lga where they were flying before but now with pinnacle pilots instead of comair pilots.

It wasn't Anderson that came up with that plan from what I saw on CNBC...RA said he never planned to cut them...

With being wholly owned, can they just yank aircraft at will from Comair and Mesaba? No ASA to protect you?

Basically yes. Delta would still have to pay the leases for them while parked but pay no other penalty. That's why Comair has been dumping every CRJ that's lease comes up ( and even parking some others waiting for the lease to end) and why all the Saabs are being opted out with the early termination clause on the leases that were put in with the bankruptcy.

How is the deal cut with ASA and their 900's going to work?

They agreed to take out 20 CRJ-200's in exchange for 10 CRJ-900's. That deal was made months ago, and another deal has not been made sense.

If DAL goes through its plan to park most of the 50 seat RJs, most of the DCIs whether WO or not will continue to shrink. XJ only has 17 CRJ200s so even if they are all parked in the near future that is nowhere near as catastrophic as it would be for Comair, SkyWest, or Pinnacle which has in excess of hundreds of CRJ200s.

DAL will probably park all Saabs by the end of 2011 but after this year's cut, XJ is only left with 28 Saabs, and it looks like CRJ200s from all DCIs will not be safe from the chopping block. I think current DAL CEO is in a bit of a quandry due to errors made by previous CEO. Because 10 plus DCI contracts were signed away by previous management, DAL risk expensive legal battles if it tries to cancel DCI contracts with SkyWest/ASA, Pinnacle or CHQ. But his beancounters and legal advisors may give him the green signal to cancel them one at a time if the cost of getting sued is actually cheaper than going through with the continuing DCI agreements.

Current DAL CEO has said many times he wants to keep most of the DCI flying inhouse in the future. Whether he will be able to do so is a big question mark.

Pinnacle's nwa contract was signed by the same people who moved from nwa to delta. Pinnacle's delta contract was signed while RA was in office. So there was no error by the previous leaders. This is exactly what he wants. The contracts they want to cut are coming up and wont be renewed. The wholly owneds are going to take the biggest slash. RA doesn't want the regional flying in house. That is the problem. He cant do it in house cheaper than he can by contracting it out.

It was all set up before he left. While he was ceo we got a new contract with nwa good till 2017. He left nwa and went to united health care. Pinnacle then switched to united healthcare for insurance when he became ceo. then he leaves united health care and we drop them as our insurance provider and switch to cigna. just a little after he steps into office at delta we get a 900 contract. Pinnacle has been following RA around for several years now.

Remember: Current DAL CEO was NWA CEO just a few years ago. This stuff is years in the making.

We shall see. I guess we agree to disagree. I find it interesting that you think 9E will be safe from the CRJ200 chopping block. Granted 9E is much cheaper to operate than XJ but the bottom line is DAL does not keep all the profit from 9E operation. XJ has gotten expensive with the very top heavy pilot roster but DAL gets to keep all the profit. Until some DAL beancounter shows us the number breakdown, you can't make such a blanket statement that DAL cannot do it cheaper inhouse. At any case even if contract carriers can do it cheaper, that saving is wiped out if you have to pay them guaranteed profit per contract.

Some of the things may have been in the making for the past few years or so but the next short term tenure of RA is a different ball game. Different dynamics and economic situations makes it for a different strategy.

I just hope I move on before the next big roller coaster ride.

no i agree. I never said pinnacle was safe from the chopping block. But I can say that them sourcing it out is cheaper than doing the flying themselves. If not they (all airlines) would have stopped years ago and brought everything in house to save money. They haven't and they dont want to. They sold ASA and still gave them a contract to fly because it was cheaper if Skywest took the company and they just paid skywest some money and let them handle running the airline. Comair has had a for sale sign in their front yard for a long time. Remeber Pinnacle was wholly owned by northwest and we were sold off. It cost more to manage, run, and handle the everyday business of an airline than it is to just pay a contract fee and handle it themselves.

How many other major airlines own their own regionals? Is Delta the only one? There is a reason for that.

I see what you are saying and you make a very good point. I guess we agree on most points. You might have just convinced me my position on WO was all wrong. I do think it is very possible if RA can sell XJ or CZ for profit, he'll do it without any hesitation.

Absolutely. If someone walked in with the cash to buy comair, compass, or mesaba Delta would sign and begin the transition before the ink is dried. And in doing so the buying company would make sure they had work to do and would get delta to agree to a flying contract while taking the company off their hands. Its been that way for a long time. Unload them, get some money for the sale, and then start cutting their flying when the contract is up. Once the airline has been brought to its knees and is worth nothing the major will buy them back up, give them tons of flying and use that as leverage against the other contract carriers and then sell them off again for a profit. Rinse and repeat.

Someone like SkyWest? Don't be surprised if an announcement is made very soon...

And what happens when the contract runs out and no one wants them? A lot of regionals are about to find out the next couple of years. That's why everyone is using their cash reserves to strike under the table deals.

ASA has a 10 years left in a 15 year agreement. All they have to do is buy them and merge them into ASA...

the answer to your question is in my post. get them down to where no one wants them and then buy them back up for pennies on the dollar. Give them more flying and make them look really good and then sell them again.

Delta sold ASA to Skywest because they needed the cash not because it's cheaper. And they gave Skywest/ASA a great long term contract to facilitate the sale. Delta needed the money for the BK.

I did not see a For Sale sign at Comair:)

Delta needs the W/O for flexibility. They can increase and decrease the flying as they wish. You will never get that kind of flexibility with a contract carrier. Even if Delta wants to sell the W/O, they will have a very tough time finding a buyer. The days of guaranteed fee for departure are long gone. The contract carriers will have to share the risk with major carrier on any new contracts to be signed. Sharing expenses and risk is not a good thing for contract carriers. IMHO, you will see a couple of W/O and 2 contract carriers flying for DCI.

IDK...seems like they'd be better off in house than having 9 diff. regionals. THink about it...they are supporting operations for 9 other companies...that's 9 different upper level mgmt teams (MILLIONS per team), with 9 diff. physical locations/offices, 9 diff. ops/sched. groups...cannot make financial sense to have so many...maybe 3 makes sense for stability/cost control. 9 is chaos and waste.

There won't be 9 when it is all said and done. And they don't pay management salaries. They pay a set fee. How management decides to spread that money throughout the company is their business.

They are also not supporting the operations. You all have to remember the most important thing here. The contract carriers get their payment. What the contract carrier does with that money is their own business. The contract carrier has to run their own HR. They have to hire their own people. They have to have all the things it takes to run an airline and they have to do it on just the money they get for their contract. That is why they want to pay ground workers nothing. That is why they fight pilots on contracts. If it's not in the contract with the major they are out of luck. I promise you no major is just giving money away to regional's to help them stay afloat. If one regional isn't able to keep their business running on the money they are making off the contract then they aren't able to fulfill their contract and the major pulls out.

That is why Delta nor any other major want to own their own regional's. If they own a regional whose costs are out of control then they have to eat the losses. If they have a contract carrier who isn't performing and meeting the goals on the already agreed to terms of payment then they cut them off and find someone who is willing to do the work. Pinnacle nor any other regional doesn't get paid extra to cover all those things you listed. They get paid what they are entitled to in the contract and not a dime more.

This is also why Delta is getting rid of their ground workers. It is so much more cheaper for them to outsource the work and pay a flat fee than it is to take on the additional burden of more employees with more needs. They pay the ground service company a flat fee and the ground service people hire employees at 6 bucks an hour than 10 or 11 that mainline used to pay.


Remember the key here is Delta is not supporting any of their regional's except for the wholly owned. They told ASA, SkyWest, Pinnacle, etc here is your contract. It is only good for X amount of money. Then those companies take those payments and run their airlines how they see fit. If you hire one employee at Delta and pay them $40,000.00 a year the real cost to delta is more like $65,000.00 once benefits and all the other federally mandated programs are paid for per each employee. If you give the money to a contractor who doesn't offer retirement, medical, pass, or any of those other benefits or they offer cheap versions of them then the company can hire that person for $40,000.00 a year and the real cost will be closer to $50,000.00 for the outsourced company. That is how bids for contracts are won. Who can do it cheaper than we can. And so far in the U.S. you can do it cheaper almost anywhere else than here. That is how the majors see it and thats why none of this will change. If they can outsource it then they will. That means no pensions, no benefits, no hr headaches. If the people they outsource to want to offer that stuff then so be it. If they don't the major doesn't care. They aren't going to pay them anymore than if they did. Outsourcing is all the rage in this country right now and there is no end in sight.

Doesn't American essentially own Eagle? How about Horizon and Alaska?

I have a hard time believing that the extra costs involved in being able to whipsaw labor outweighs the savings of combining 9 companies into one. Delta is an airline, they are in the business of flying airplanes. At what point does Delta just become a shell of a company with no real employees? Although the contract carriers overhead costs are not directly paid by Delta, the money still needs to come from somewhere to pay for the management team, the buldings, the HR people and all other costs. You don't think it would be cheaper to have one management team and one building to pay rent on verses 9? Delta doesn't want to keep the profits from their own flying? I'm sure it is already a nightmare managing all these airlines that they don't own and trying to bring one level of service. Think of the resources Delta needs now to manage all these regional operations that they don't own and collect no profit from and have no flexibility. If airlines are all about cost cutting there has to be some huge costs to cut here. One wholly owned and one contract, that is all it takes to keep labor in line.

I understand they pay a set fee, but the money still flows to the other companies...theoretically, they could cut cost by keeping it in the family. Indirectly, through the contract, they are paying for all those things...a business has to bid the contract with those costs accounted for... Delta would be cost neutral on many of those items that are unique to individual companies. I realize they don't "pay the rent" but they pay the people who pay the rent enough to pay it and make a profit. If they do it themselves, they can use their own teams/facilities/people without causing 9 diff. companies to profit.
I've owned a couple businesses and grew up in an entrepreneurial family with a successful business...we used contractors at times, but only when it made sense...ie>too much work at the time but not sure if it will continue into slower seasons/can't keep up with hiring demands. Long term, it made no financial sense unless you are using them for leverage. Even then, you are paying a premium for their services. Sure, you get rid of some headaches by using another company, but you pay a price. I can't imagine having as many as Delta does. It cannot possibly make sense long term.

Delta may be about to rid themselves of all wholly owned regionals. Apparently they do not agree that it is best to own all their own Regionals.

Delta may be about to rid themselves of 5 contract carriers...:rolleyes:

Guys... or it could be the fact that they don't want 50 seaters anymore and that it has nothing to do with being wholly owned or not. Just a thought.

Correct.
Delta buys the fuel for the connection flights.
50 seat RJs made sense with oil at $40. They lose big money with oil at $80.
Its pure economics. Doesn't matter who owns them. 50 seat RJs are no longer profitable.

Lots and lots of misinformation on how the agreements with the regionals work. Here are the facts.

All of the regionals (WO and contract) work under a cost plus arrangement. They get reimbursed for the costs of operating the flight, plus a set margin, assuming they hit the pre-determined performance targets. Period. As long as regional airline X hits the completion/A14 numbers, regional X makes money. Period.

Here is why it is makes sense to use a contract carrier rather than a wholly owned: Assume you have two carriers, X (WO) and Y (contract). Both hit all the targets. Both are flying under an agreement that Delta will pay them cost plus 10%.

Now assume that Both operate a flight from ATL - MCO and Delta sells $1500 worth of tickets to fly on each flight. Carrier X has higher labor costs, and it costs them $1500 to operate the flight, so Delta pays Carrier X $1500 plus $150 margin or $1650 to operate the flight. Overall, Delta loses $150 to operate that flight. Carrier Y, however, is a "bottom feeder" and Delta only has to pay their costs of $1200 plus $120 margin or a total of $1320 to operate the flight. Now Delta makes $180 to operate the flight.

It is that simple. Either make $180 or lose $120 to operate the flight is a no-brainer. That is why the "keep it in the family" argument does not work.

Actually 86 and 88 seats.

I agree with this.

They would need to dress OH A LOT to sell them. No one is that dumb. Their costs are out of control due to the cuts.

I agree that we will see a few WO and a few contract carriers. A lot of these contract will either not be renewed or they will be changed to risk sharing at the checkpoints.

Did something happen that I don't know about? I thought it was 14 including a spare?

Doesn't the $245,000,000 bond give them an incentive to keep Comair, Mesaba and Compass WO. My understanding the need to keep them under the payroll to avoid this payment on demand.

I could see this happening.

I agree that one or two of the WO might be on the block to be sold if they can be sold at profit but I seriously doubt it will be to SkyWest. I don't think DAL wants SkyWest to get any bigger than it is. SkyWest already does a big share of DAL connection flying out SLC. That would be putting most of your eggs in one basket and DAL has learned its lesson from Comair back in 2000.

If WO is sold it would probably be to a third party investment holding corporation. However, I don't see that happening any time soon in this economy.

Very good explanation, but the wholly owned's are actually cheaper than some of our contract carriers at this point, so it could go either way. In any case it was stated they want to dump 50 seaters, not an entire regional..but hell it's all just a pull on a slot machine.

Really? Can a non union airline go on strike?

Thats not what we are hearing here at SkyWest. There is even a certain WO being named an awful lot. Not saying its true Im just saying I am hearing an awful lot about it.

Hearing an awful lot does not mean anything without confirmation from the top management. Pilots are the last ones to find out, especially FOs.

We've been hearing alot about getting CRJ 7s but that's just another rumor like the one you say you are hearing about.

[edit: removed flamebait / insult] My point is DAL would not want one particular DCI to get bigger than the rest for obvious reasons. Strike is not the only way a DCI can extort DAL. SkyWest is already bigger than XJ, CZ, Comair combined.

I agree with Acl65 that when it is all said and done, there will be few WOs and a couple of DCIs left flying for DAL.

OMG! OMG! No Way! Who is it!??? :rolleyes: