Forbes Article on Trainer

[FrugalFlyerv2.0]

EU law does not permit public bailouts of airlines.

On paper 100% true, EU law does not allow public bailout of corporations.
In reality, the situation is different.
 

speaking of CP, wasn't AA involved in that airline? was that a, uh, strategic failure?

In the sense that AMR (along with Onex Corp.) was unable to buy CP then merge it with AC and bring the resulting carrier from * to 1-world - yes, it was a 100% failure. (It was a long shot, Canadian law would not allow AMR to own >25%. Using Onex Corp. to circumvent the law did not fool a judge so the deal was off and AC under pressure was forced to purchase CP instead of letting it die).

At the same time thought, CP switched to Sabre, and AMR over the course of ~10 years nicely recovered it's 25% investment in CP.

Too early to judge, but DLs purchase of VS may turn out to be a similar success or failure. It isn't exactly the same thing, but there certainly are similarities.

 

let's be clear, though. You are looking for anything you can to find reason to argue that DL's fuel strategy is a failure.

No. All I've done was
i) ponder whether the purchase of the refinery could be analogous to UALs strategy in forming Allegis Corp. in the 1980s, and
ii) point out what was written about the refinery purchase by others - mainly that it is a mistake.

 

[WorldTraveler]

DL's strategy with VS has already generated far more revenue for DL than any other airline partnership has for any other airline in the same period of time. again, DL more than doubled its presence at LHR and got a JV in return for its investment so DL's revenues - both on its own and thru the JV have increased dramatically.

and, as has been noted, Allegis was a horizontal strategy in which UA tried to own everything (or most of the key segments) along the travel chain.

DL's refinery purchase and ownership is about controlling a key expense by eliminating a profit center at the refinery AND BY increasing the amount of jet fuel on the market which pushes down the crack spread.

DL never said that it intended to keep other carriers from benefitting from DL's fuel strategies.

DL has indeed benefitted in reduced fuel costs far more than it spent on the refinery. Because of DL's revenue premium to the industry, reduced costs for everyone (which hasn't entirely happened because even the author acknowledged that DL did get a fuel cost advantage) in a strong pricing environment gave DL a profit advantage.

 

[FrugalFlyerv2.0]

DL's strategy with VS has already generated far more revenue for DL than any other airline partnership has for any other airline in the same period of time. again, DL more than doubled its presence at LHR and got a JV in return for its investment so DL's revenues - both on its own and thru the JV have increased dramatically.

I don't think anybody doubts DL JV with VS is working in generating additional revenue and that is was a great investment in LHR slots.  However, unless you provide some numbers (from other JVs ) then ... ... ...

 

 

[WorldTraveler]

there are comments that are made about JVs in airline earnings calls and statements.

DL's equity investments in Gol, Aeromexico, and Virgin Atlantic have yielded and will continue to yield solid results for DL.

but again, this discussion is about Trainer - and if you are as serious about having data to justify a position, then you can't agree with the article and its conclusions about Trainer because the article's conclusions aren't even close to being supported by facts.

 

[topDawg]

no, what DL paid for ASA and Comair had nothing to do with DL's BK.

DL like every other airline that filed for BK did so based on OPERATIONAL costs, not capital costs.

I happen to have a lot of knowledge about DL's performance in the eastern US before and after BK. You have yet to acknowledge that the real reason for DL's leisure based strategy failing is because of a collapse in yields post 9/11 alongside DL's high operational costs. It doesn't matter what carrier DL had used, the results required removing capacity and operating at a lower cost base.

the reason why airline within airline strategies haven't worked is because all airlines recognized that the mainline airline in entirety has to be competitive with low fare carriers and not just a subset of markets. The European carriers and AC will come to the same conclusion but they don't have other options at this point so they will use what they have to do to kick the can down the road for a few years.

Delta also had a high debt load with high interest rates. Guess what for?
 
Saying' failures like Song and OH had nothing to do with BK is a joke.  

 

[FrugalFlyerv2.0]

there are comments that are made about JVs in airline earnings calls and statements.

DL's equity investments in Gol, Aeromexico, and Virgin Atlantic have yielded and will continue to yield solid results for DL.

but again, this discussion is about Trainer - and if you are as serious about having data to justify a position, then you can't agree with the article and its conclusions about Trainer because the article's conclusions aren't even close to being supported by facts.

 
As many threads do, this one has gone off topic too.
 
Nevertheless, you made the comment that the DL-VS JV has "generated far more revenue for DL than any other airline partnership has for any other airline in the same period of time."
 
If you're going to make that statement, then show some numbers.  Otherwise people will remain very skeptical about that claim.  All I've asked for was some revenue numbers from the DL-VS JV compared to other JVs.  I'm assuming you're talking only trans-Atlantic?  Or not?  You don't specify and more importantly you don't provide any data to support your claim.  At least not yet. 
 
For all we know, you may be 100% correct - but instead of providing the data to silence your skeptics you squirm by now mentioning GOL, AM and make the very vague comment about statements made in airline earnings.  If you're going to convince people that DL-VS is generating more revenue in a certain period of time than all other airline partnerships have done, show the data (not only the DL-VS data but also the data from the other airline partnerships).  I dare you to!  Afterall, aren't you the one that is always yearning to discuss serious industry issues.

 

[WorldTraveler]

you don't have to accept my statement if you don't want to. That is ok with me.

You still would have to find an airline that increased its revenues in a specific market by $200M as a result of a JV in the first year.

let me know if you find one but I'm quite sure you won't.

Delta also had a high debt load with high interest rates. Guess what for?
 
Saying' failures like Song and OH had nothing to do with BK is a joke.

DL also had over 3 billion in unsecured debt when it filed for BK.

you do realize that DL and NW were the last two airlines to file for BK until AA filed - and AA had already done an out of court restructuring in 2003.

The reason why DL had more debt is because it stayed out of BK for nearly 4 years after 9/11.

DL's high interest rates were due to living on borrowed money for 4 years after 9/11 and that money became increasingly expensive.

DL finalized its ownership of Comair in 1999. IN that year the US airline industry was at its highest level of profitability until recently.
DL started its relationship with OH in 1986 and developed OH alongside its growth of CVG. Both strategies lasted for about 20 years and were supplanted by the NW merger which allowed redeployment both of the CVG hub an of the use of 50 seat RJs on DL's network.

You clearly DO have an ax to grind because you don't understand that the concept of owning Comair and ASA was all about controlling regional carriers at a time when regional carriers were the means by which legacy carriers could operate multiple hubs across the country.

It is very easy to have 20/20 vision looking back and say what a waste it was to own regional carriers - but they delivered tens of millions of passengers at a time when the legacy carriers were highly fragmented before mergers and consolidation and when jet fuel was much lower.

DL's strategy with RJs, just as it was for AA and UA made sense in the proper time.

what you and others cannot admit is that strategies are NOT life-long inflexible plans which will last forever.

it is precisely because companies survive that specific strategies do not.

Successful strategies are used for a period and then retired in favor of some other strategy.

the fact that DL has been as quick to undo the small RJ part of its operation and bring back regional carrier flying to mainline says that DL saw the changes coming and adapted to them faster and better than its peers.

That is precisely the same point with the refinery.

 

[FrugalFlyerv2.0]

Statement / Claim:

DL's strategy with VS has already generated far more revenue for DL than any other airline partnership has for any other airline in the same period of time

 
Challenge for data to backup claim:

I don't think anybody doubts DL JV with VS is working in generating additional revenue and that is was a great investment in LHR slots.  However, unless you provide some numbers (from other JVs ) then ... ... ...

 
First deflection / attempt to find some wiggle room:

there are comments that are made about JVs in airline earnings calls and statements.

DL's equity investments in Gol, Aeromexico, and Virgin Atlantic have yielded and will continue to yield solid results for DL.

 
2nd request for data to back up claim:

If you're going to make that statement, then show some numbers.  Otherwise people will remain very skeptical about that claim.  All I've asked for was some revenue numbers from the DL-VS JV compared to other JVs. 

 
And the cop out:
 

you don't have to accept my statement if you don't want to. That is ok with me.

 

[WorldTraveler]

I'm not copping out.

I am telling you that I have listened to enough earnings conference calls to know that no one has said they have received as much of a return in the first year of a JV as DL has with VS.... but given that DL invested in VS, they clearly knew there was value.

I'm not going to pour thru conference calls to find the comments.

You are free to believe it or not.... but if you want to argue that someone has done better, you will have to come up with the data.

 

[topDawg]

you don't have to accept my statement if you don't want to. That is ok with me.

You still would have to find an airline that increased its revenues in a specific market by $200M as a result of a JV in the first year.

let me know if you find one but I'm quite sure you won't.


DL also had over 3 billion in unsecured debt when it filed for BK.

you do realize that DL and NW were the last two airlines to file for BK until AA filed - and AA had already done an out of court restructuring in 2003.

The reason why DL had more debt is because it stayed out of BK for nearly 4 years after 9/11.

DL's high interest rates were due to living on borrowed money for 4 years after 9/11 and that money became increasingly expensive.

DL finalized its ownership of Comair in 1999. IN that year the US airline industry was at its highest level of profitability until recently.
DL started its relationship with OH in 1986 and developed OH alongside its growth of CVG. Both strategies lasted for about 20 years and were supplanted by the NW merger which allowed redeployment both of the CVG hub an of the use of 50 seat RJs on DL's network.

You clearly DO have an ax to grind because you don't understand that the concept of owning Comair and ASA was all about controlling regional carriers at a time when regional carriers were the means by which legacy carriers could operate multiple hubs across the country.

It is very easy to have 20/20 vision looking back and say what a waste it was to own regional carriers - but they delivered tens of millions of passengers at a time when the legacy carriers were highly fragmented before mergers and consolidation and when jet fuel was much lower.

DL's strategy with RJs, just as it was for AA and UA made sense in the proper time.

what you and others cannot admit is that strategies are NOT life-long inflexible plans which will last forever.

it is precisely because companies survive that specific strategies do not.

Successful strategies are used for a period and then retired in favor of some other strategy.

the fact that DL has been as quick to undo the small RJ part of its operation and bring back regional carrier flying to mainline says that DL saw the changes coming and adapted to them faster and better than its peers.

That is precisely the same point with the refinery.

All those words yet so much crap. 
 
I wont even go quote by quote to tell you how wrong you are, however I will again say that failures like Song, DLX and overpaying for ASA and OH (because AMR took BEX right out from under Delta's feet) played a part in BK. 
 
but as normal, you want it to be all Labors fault. sad really

 

[WorldTraveler]

pull up DL's debt at the end of each year and you will see why you are wrong.

where did I say that it is labor's fault? honestly you carry a mighty big chip on your shoulders.

I said the losses were due to operational losses post 9/11 - specifically the drop in yields and traffic. Labor had nothing to do with that.

ASA and Comair had nothing to do with DL's issues post 9/11. If anything, having them allowed DL to remain in many markets that no longer justified mainline.

they served a purpose and DL moved on.

unfortunately, you still can't accept that strategies end and new strategies are implemented so that a company can adapt and survive.


and more importantly, you can't acknowledge that DL has NOW adapted to the changed business environment better than any other carrier

 

[FrugalFlyerv2.0]

Again, a claim but with no data:
 

The reason why DL is doing as well in the NYC-Florida markets today including LGA-MIA where DL grew to average fare parity with AA and has a 40% share of the local market is because LGA-MIA is part of DL's overall strategy for NYC and not just a response to try to protect market share with low fares.
 

 
Challenge:

As of 1Q2014, DL had 29.4% of the local market between LGA and MIA, not 40%.

Your post said "LGA-MIA," but in case you meant to say "NYC-MIA," you'd still be wrong, as DL has 32.0% of the JFK-MIA local market, not 40%.

Perhaps you have more current data that shows a 40% local share?

 
Rebuttal:

date for the 3rd quarter of 2014 is available and on a combined basis, DL's share of the LGA/JFK - MIA market was 38.1%. If you get heart burn out of rounding 38.1% to 40%, I'll be happy to stand corrected.

 
Let's assume that WT's claim is correct. 
Doing a really quick search on the www at work (delta.com, google, DOT and wiki) I found this:
For Oct.13 - Sept. 14 there were approx. 1 252 000 passengers between NY and MIA (LGA-MIA @ 763000 and 489000 for JFK-MIA). 
AA and DL are the only carriers that serve this route.
If DL does indeed have 40% then it would mean that DL's load factor on these flights would be approx. 91-93%.
I base this on DL using a MD-88 on the route with a seating capacity of 149 passengers, 10 daily flights [6-LGA 4-JFK to MIA].
Is a 40% market share possible?  Sure.
But DL's average load factor - either historical system-wide average or at the airports in question (LGA, JFK, MIA) has never been higher than 85%.  Perhaps NY-MIA is a kickass route for DL, who knows?
 
So what is the meaning of all this?
Just to point out in case there are any new persons reading these forums, you should take the data WT presents (fabricates?) with a chunk of salt.
 
Again, the numbers I got were obtained using a really quick 10 minute search during lunch at work and ofcourse I realize that the accuracy is not 100%.  But I think they do indeed highlight that certain posters do tend to significantly round up the data (gee, so as if to fit a certain narrative).  If somebody does have the accurate data, please do share/post, as my numbers are only estimates.

 

[WorldTraveler]

time out.

DL has a 38% of the LOCAL market. Load factor for AA and DL includes connecting traffic of which AA carries far more than DL with AA's hub in MIA. DL carries its LGA to Latin America traffic largely over ATL while AA does it over MIA.

DL has never operated LGA-MIA or any other route with one type of aircraft for any length of time.

ATL-DAL and the Shuttle are two of the only high profile routes I can think of right now which have the same aircraft today and into the future.

I'm not sure what your point is with the exercise but you your quick search was inaccurate based on flawed assumptions and data mismatches between the schedules and the reporting period for the LOCAL passengers carried.

 

[FrugalFlyerv2.0]

I'm not copping out.

I am telling you that I have listened to enough earnings conference calls to know that no one has said they have received as much of a return in the first year of a JV as DL has with VS.... but given that DL invested in VS, they clearly knew there was value.

I'm not going to pour thru conference calls to find the comments.

You are free to believe it or not.... but if you want to argue that someone has done better, you will have to come up with the data.

 
Well, if one wants to have an intelligent conversation, it would help to bring some data/facts to the table.  If DLs JV with VS already brings in $200 million, great.  Now provide the data to show that other airline JVs, for the same period of time brought in less than $200 million.  This is the claim you made, but now you can't back it up.
 
Good day.
 

 

[FWAAA]

date for the 3rd quarter of 2014 is available and on a combined basis, DL's share of the LGA/JFK - MIA market was 38.1%. If you get heart burn out of rounding 38.1% to 40%, I'll be happy to stand corrected.

38 ain't 40. In my book, that's called exaggeration. Others call it lying. But not the first time you've over-stated the LGA-MIA local share obtained by DL, so nothing out of the ordinary for you. As discussed over a year ago, when you last exaggerated the DL share of LGA-MIA, DL managed to get some of the local share by offering low fares that were equivalent to jetBlue's rock-bottom NYC-FLL prices. Good to see that DL has been able to raise its fares somewhat since then.
 

but are you honestly defending that even 29.4% is an acceptable share percentage for DL to have gained in a market which it only started serving with the slot deal - using the slots that Parker gave DL?

I'm defending nothing. I'm just pointing out your exaggerations/lies. Nothing more, nothing less.

If you want a gold star for DL's achievement, then ask your mommy.