Delta 20% Pay Cuts Next Week

[invtrade]

after chatting with some colleagues at Delta it is now apparent that they will come back for more pay cuts.

oil is killing them. the original recovery plan did not count on $65 per barrel oil.

[post="287544"][/post]​

What is your take on whether DAL is talking to creditors to restructure its debt load ?

 

[TheDog2004]

What is your take on whether DAL is talking to creditors to restructure its debt load ?

[post="287552"][/post]​

Don't know about that. These are former colleagues.

What I do know is that there is some dissent as to whether or not to file Chapter 11. I think Jerry wants to avoid it at all costs while others want to go ahead and file.

 

[Bob Owens]

Don't know about that. These are former colleagues.

What I do know is that there is some dissent as to whether or not to file Chapter 11. I think Jerry wants to avoid it at all costs while others want to go ahead and file.

[post="287594"][/post]​

Why wouldnt they wait until after the squeeze more out of the pilots? If they get relief now the pilots may turn around and say that they dont need anymore from them.

 

[invtrade]

Don't know about that. These are former colleagues.

What I do know is that there is some dissent as to whether or not to file Chapter 11. I think Jerry wants to avoid it at all costs while others want to go ahead and file.

[post="287594"][/post]​

You seem to imply that GG is the only one holding back the BK move (not that he can actually achieve it). I heard Palumbo had been an ally on the anti-BK issue. I don't know about Bastian. Is Bastian GG's choice of CFO or a result of a compromise with the pro BK group ? It is difficult to read what has been really going on behind the door but WallStreet certainly act like BK is a foregone conclusion.

 

[Bob Owens]

It is difficult to read what has been really going on behind the door but WallStreet certainly act like BK is a foregone conclusion.

[post="287610"][/post]​

Yea they acted that way in 2003 with AA. The stock was down to $1 & change then within a few weeks, after they suckered the employees into massive concessions it went up to $17, now its $13.40.

 

[TheDog2004]

You seem to imply that GG is the only one holding back the BK move (not that he can actually achieve it). I heard Palumbo had been an ally on the anti-BK issue. I don't know about Bastian. Is Bastian GG's choice of CFO or a result of a compromise with the pro BK group ? It is difficult to read what has been really going on behind the door but WallStreet certainly act like BK is a foregone conclusion.

[post="287610"][/post]​

I liked Palumbo. His departure was a surprise. I'm totally speculating but he may have just not wanted to deal with the b/s anymore. I only got to see him give one presentation and he impressed me. He seemed to have an understanding of what Delta was up against and what they needed to become.

Delta's problem right now is that with oil at $65+ per barrel they simply don't have many options left. I THINK GG may want to try to get one more round of pay cuts to avoid bankruptcy, but it may be too little too late. I think he believes that the employees will be far better off avoiding bankruptcy - just ask most American employees if they would rather be where they are now or in United or US Airways' shoes.

In the end they may not have a choice, and I think that's what Wall Street is betting.

 

[WorldTraveler]

There is no doubt that creditors want DL to cut costs even further; they can legitimately claim that DL employees are paid more than other carriers although I would imagine that DL employees are still more productive than others (although I haven't seen or calculated productivity based on summer 2005 financials, DL has historically been in the top tier of the legacy sector in productivity). Creditors want to ensure any investment they make is as safe as possible and they are absolutely in the driver's seat now.
I think you do have to factor in the domino effect that a DL filing will have. Creditors have got to be scared stiff at the prospect of DL filing followed shortly thereafter by NW and then CO. I'm not sure how long any creditors can support an unsustainable business model which is what all of the legacies are operating but they also have got to be very nervous about the prospect of getting hundreds of planes handed back to them and having lots of debt rejected. Not sure why the creditors all the sudden caved on UA's request for concessions but it does seem to say that when push comes to shove, maybe the airlines do have some control after all.

It sounds like the executive turnovers and departures at DL are in high season. I'm sure there are some people that just want to head for the exits but I can't help but think that Mr. G realizes there are some serious thought process problems that are keeping DL from rebounding faster. Bringing in a former CO network guru says that Mr. G believes that DL should be doing much more w/ its resources. I too thought Palumbo was one of the sharper guys at DL but money isn't enough to compensate some people for their work. I still think Grinstein is motivated by a horrendous guilt for letting Mullins group get DL into this situation. If that's the case, I hope he remains guilt-ridden until the ship is righted.

 

[invtrade]

Yea they acted that way in 2003 with AA. The stock was down to $1 & change then within a few weeks, after they suckered the employees into massive concessions it went up to $17, now its $13.40.

[post="287615"][/post]​

This is a side issue. A lot of people compare DAL price behavior today with AMR back in 03. I'm not so sure I would buy that. One major difference is the volume. If you look at AMR at that time in 03, despite of the low price, the trading volume in those few days were quite average compared with the historical average volume. That just meant that a lot of investors still believed at that time that AMR could pull that off and it did. Likewise, if you look at DAL in October 04, you see the same pattern, not a lot of volume with a low price whereas today, the trading volume is frightening. This kind of price action and trading volume should indicate an imminent BK as it shows a complete collapse of investors' confidence.

However the BK has not happened yet (maybe it will happen next Monday but I doubt it). I have been searching various info sources (mostly public, I admit) and I found no clear signs of typical actions company takes, or should take prior to imminent BK (maybe someone can correct me on this). For example, I have heard no creditor committee forming, no sign of DAL's engaging BK lawyers, no sign of DAL threatening debt holders, no sign of requesting last minute labor concession, no sign of requesting covenents removal,..etc. I would imagine GG will try everything before the final BK decision is made. I have not seen any desparate attempts yet other than some executive changes to improve the operation (I'm sure GG knows that those operational decisions are not going to help DAL in the next two to three months.) According to my own calculation, their cashflow should not become dire until at least in the middle of the 4th quarter. Therefore, the conclusion I may draw is that DAL probabily has not reached the dire situation yet after all right now it is still the peak season.

Then what is the fuss ? Why is the sell-off now ? The sell-off was triggered by the infamous internal memo, exacerbated by the Washington Post's article about the 10/17 deadline, then credit card processor issue, the downgrade by ML, and then the run-away crude price. Think about these five events. The real threatening one is probabily the credit card processor issue. To me, the internal memo does not sound that BK is imminent. WashingtonPost's article is not based on the first party info meaning it just repeated the conclusion from some no name "experts" speculating. ML's downgrade is merely a summary of what everybody already knows in the past few months. The run-away crude price should affect DAL the way it affects very other airlines. Some people believe the credit card issue is the whole reason for the sell-off, but for me, it is a big issue but it is not big enough to justify this kind of massive sell-off. At most, the stock should have behaved the way it behaved last October prior to the pilot concession, i.e. a sell-off but with a much smaller volume.

I can perhaps picture two possible senarios as a result. I have no idea which one is going to the one. Maybe neither one is the one. Just my personal view ! The obvious one, Wallstreet knows something about DAL that we don't know. i.e. the BK is a foregone conclusion. This is easy. Second, the dubious one, some hedge funds took advantage of the internal memo and tried to skin average investors by triggering the sell-off and gradually building their positionss at a much lower price (don't forget a lot of institutional investors can not hold penny stocks for too long and DAL is a penny stock for a while). When all the bad news started fading away, they will start some noticeable buying to trigger a small rally and then you know what will happen next. I'm talking about a couple of weeks timeframe and 1 to 2 dollar range here, but for hedge fund, you probabily are talking about doubling their money in a couple of weeks (and even if DAL does file for BK in the 4Q, they are already long gone.)

In fact, I think next Monday may be the day for the rally to begin if there is any small positive development on the credit card issue Having said that, don't count me on this. I have no info to verify who have been selling and buying in the past few weeks. I wish I had the access to that info but unfortuntely I don't so this is just a pure speculation on my side.

 

[TheDog2004]

AA was on the courthouse steps when their pilots finally caved. I read that they had to call them to tell them not to file.

 

[WorldTraveler]

The 10Q is to be filed by Mon unless DL seeks another extension. We'll know alot more by then. Wall Street is very skittish these days but depressing a stock so severely can become a self-fulfilling prophecy. Remember, though, that the sentiment was very much that DL would file for bankruptcy a year ago but they did not. The answer is simply whether creditors will continue to work with Delta to restructure its obligations and provide the cash needed not only for the credit card processor but also for the operating needs that DL has coming up later this year.

 

[Fly]

Considering all the crap that WorldTraveler has flung at us for the last few years......this is going to be soooo entertaining!!!

Don't forget....World says that MOST airlines don't survive bankruptcy!!!! Drat! Buh bye.

 

[Raizin_Cain]

Delta, which is based in Atlanta, is holding discussions with lenders like GE Commercial Finance, which provided it restructuring money last year and could do so again, in or out of bankruptcy, these people and others in the financial community said. A spokesman for GE Commercial declined to comment.

The airline is also exploring the sale or refinancing of its two commuter lines, Comair and Atlantic Southeast Airlines. And it is looking for more savings from employees, who have already taken $1.4 billion a year in wage and benefit cuts, although it does not plan to reduce wages.

:unsure:

 

[luv2fly]

Considering all the crap that WorldTraveler has flung at us for the last few years......this is going to be soooo entertaining!!! 

Don't forget....World says that MOST airlines don't survive bankruptcy!!!!  Drat!  Buh bye.

[post="287950"][/post]​

Glad you take so much amusement in other peoples misfortune. Are you taking lessons on posting from mrfish now? :down:

 

[Fly]

You are right Luv (and I'm sorry). He has taken such pleasure at our expense these last years that I just wanted to throw it back in his face. To all the fine folks at Delta, I wish you luck. To WorldTraveler, you are a JERK!

 

[artiefufkin]

Malone isn't going anywhere. He will most likely be the next president of ALPA. That is one thing you can take to the bank.
:down:

[post="287277"][/post]​

Right. Now that Malone has been ousted, do you have anything else we can "take to the bank?"