Originally Posted by Bug Smasher (Post 798968)

Now 18 not 16.

Originally Posted by jayray (Post 800020)

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.

Originally Posted by Captain Tony (Post 799892)

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

Originally Posted by dba74 (Post 800657)

I could see this happening.

Originally Posted by skywatch (Post 800127)

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.

Originally Posted by Lighteningspeed (Post 800750)

That would be putting most of your eggs in one basket and DAL has learned its lesson from Comair back in 2000.

Originally Posted by Lighteningspeed (Post 800750)

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.

Originally Posted by WAVIT Inbound (Post 801221)

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.

Originally Posted by Captain Tony (Post 801194)

Really? Can a non union airline go on strike?

Originally Posted by WAVIT Inbound (Post 801221)

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.