2014 Investor Day presentation

[WorldTraveler]

two million per aircraft.

UA like AA but unlike DL is also not intending to keep any domestic 757s beyond the next couple years.

There is no doubt that the 739 saves costs relative to the 757 but it is also because the 757 is so capable that DL will have 19 more seats on the 757s it keeps in domestic config compared to the 739.

for DL, there is a point at which more seats on the 757s and lower debt costs intersect at higher profits.

notice that DL said they are on track to reduce borrowing costs by $1 billion per year compared to 2009.

that should also give you an idea how much more other carriers pay in debt service than DL even in today's relatively low interest rate environment.

 

[topDawg]

two million per aircraft.

UA like AA but unlike DL is also not intending to keep any domestic 757s beyond the next couple years.

There is no doubt that the 739 saves costs relative to the 757 but it is also because the 757 is so capable that DL will have 19 more seats on the 757s it keeps in domestic config compared to the 739.

for DL, there is a point at which more seats on the 757s and lower debt costs intersect at higher profits.

notice that DL said they are on track to reduce borrowing costs by $1 billion per year compared to 2009.

that should also give you an idea how much more other carriers pay in debt service than DL even in today's relatively low interest rate environment.

Delta isn't happy with the performance hit they would take if they dumped the 757 like UA is doing.
 
I talked to one person about it who said they would have to order at least 20 more high powered 73Gs or 319s to be able to really have the flexibility to replace the 757.  321/739 just don't have the get up and go to operate a route like ATL-SNA. 

 

[WorldTraveler]

yet AA is doing exactly that.

DL isn't willing to spend the money or lose the capacity.

and let's be clear that part of the equation is for DL to grow the airline faster than other carriers are doing.

it is part of how DL is keeping CASM down and also negating the merger benefits from AA/US.

and there are some rumors that DL is indeed looking for used 73Gs or 319s again.

 

[Kev3188]

Translated: You're not clearly not smart enough to understand finance-speak, Kev...

No kidding. But what would I know?

After all, I just pick things up & put them down all day... 🙄
 
 

Kev is the one that asked for different language.

I simply said this is the language for the target audience for this event.

No, I'd like it to stay in English; I just want the words to reflect a little more every day use, and a little less "jargon monoxide."

 

[Kev3188]

I like how the most responsibly run airline still has $12B in net operating loss carryforwards so they can continue to avoid paying taxes.

...Or the other shoe seriously drops come 2017...

At the same time, I have to give them credit for their extremely ambitious goal of 80% funded pension liabilities by 2020. You'd think that they could hold back some of that 40% in free cash going back to shareholders and top off the pension liabilities.

...Or pay down some debt...
 
 

Things like west coast growth, changing some of the hubs like SLC to all 2-class RJs...... etc. etc.

You're likely right; I just want to see how it all plays out...

 

[WorldTraveler]

...Or the other shoe seriously drops come 2017...


...Or pay down some debt...
 
 

You're likely right; I just want to see how it all plays out...

so does everyone else.

including the competition.

Can you tell us what Amazon will be doing in 2017? Apple?

Investors get that mgmt. understands the changes ahead of them.


 

No kidding. But what would I know?

After all, I just pick things up & put them down all day... 🙄
 
 

No, I'd like it to stay in English; I just want the words to reflect a little more every day use, and a little less "jargon monoxide."

and with all due respect and not condescension, you are not the audience for the presentation today.

I am not either.

neither is anyone else who has participated in this discussion.

if any of us want to sit like a fly on the wall and listen it and can understand what is going on, DL makes it available for us to do.

 

[LD3]

kev, be careful closing the bin door, i'd hate to see your dunce cap get snatched off your noodle........ 

 

[WorldTraveler]

I think that's a nurse cap, actually.

 

[LD3]

cap or hat can be used, but does it really matter? You'll stop at nothing to degrade anyone on this board...

 

[BABABOOY]

SEA domestic profitable
NRT maintains profitability
NY is fully profitable
JV with virgin expected to increase to $200 M in 2015 from
$125-150 m in 2014

 

[WorldTraveler]

baba,


nice summary.

and DL IS increasing its pension contributions above what is legally required.


the haters will hate.

 

[topDawg]

yet AA is doing exactly that.

DL isn't willing to spend the money or lose the capacity.

and let's be clear that part of the equation is for DL to grow the airline faster than other carriers are doing.

it is part of how DL is keeping CASM down and also negating the merger benefits from AA/US.

and there are some rumors that DL is indeed looking for used V2500 powered 321s..... 

FIFY  😉

 

[WorldTraveler]

any guesses as to where those 321s might come from?

insight into the used 737-700 or 319 rumors? they've been around before so I presume DL is returning to the same sources where the potential aircraft could have been found in the past.

 

[topDawg]

any guesses as to where those 321s might come from?

insight into the used 737-700 or 319 rumors? they've been around before so I presume DL is returning to the same sources where the potential aircraft could have been found in the past.

no idea. I would look and see if some of the early NEO airlines have any 321s..... 
 
The only time i have heard a rumor on more little buses is when they were pushing the 717 carrot TA. The "rumor" was Delta was going to get 40 or so 319s if the pilots didn't agree to the scope cave. I personally called BS on that for a few reason, airlines like United and Southwest are very, very, very actively looking for any airplane in the size range and seem to do better than a few at a time(at best) but some how Delta found 40 of em? and Management has said the 319 doesn't have the CASM they would like. So we don't like the costs of the airplane.......but we are going to add 40 of them basically just to spite the pilots. IMHO it was a very tactically started rumor and nothing more. (kind of like management literally telling employees the 338/339 was completely out, 789/350 only....25 339s here we are. (and they guy who picks out the airplanes saying the airplane was coming as soon as AB launched))
I won't say they lie but I think think that sometimes they do tactical things.
 
On the 73G, we have always been told that if Delta were to add them to the fleet they would likely be new builds not used birds. The Delta 73G is a very high powered model and they are fairly rare to find outside of Delta. (generally the worlds 73G fleet have 24K motors for example) Getting a few used 73Gs that aren't the same as the pocket rockets would make fleet planning a little but a pain.
 
 
 
I have also talked to some people who said some other interesting things have been said so at some point I will listen to the call (all like 3 hours of it) and try and get some notes. I have been hoping for a transcript but have yet to find one. 

 

[FWAAA]

perhaps you missed the notices that AA wants to REDUCE its pension contributions while DL is increasing them by $250 million per year.

why would AA which is raking in so much money want to cut its pension contributions?

maybe the unicorns don't do that in Texas?

Meanwhile, back in Reality; from the AA 3rd Quarter 10-Q:

Pension Funding Obligation

We are required to make minimum contributions to our defined benefit pension plans under the minimum funding requirements of Employee Retirement Income Security Act of 1974 (ERISA), the Pension Funding Equity Act of 2004, the Pension Protection Act of 2006, the Pension Relief Act of 2010 and the Moving Ahead for Progress in the 21st Century Act of 2012. In the first nine months of 2014, we have made our aggregate minimum required contributions for 2014 of $168 million, and have made $613 million in supplemental contributions to our pension plans, above and beyond the $168 million of minimum required contributions.

Currently, our minimum funding obligation for our pension plans is subject to temporary favorable rules that are scheduled to expire at the end of 2017. Upon expiration of these rules, our funding obligations are likely to increase materially. The amount of these obligations will depend on the performance of our investments held in trust by the pension plans, interest rates for determining liabilities and our actuarial experience.

AA has contributed an extra $613 million beyond the minimum contributions for 2014. AA isn't lobbying to "cut its pension contributions" as you misleadingly posted. AA is lobbying for a change in law so that will be treated exactly the same as Delta. AA wants the long-term flexibility to have the same low required minimum contributions for the same period of time as DL enjoys.