- Dec 5, 2003
- 21,709
- 10,721
Delta's 1st quarter numbers certainly aren't anything to crow about but there are some encouraging signs. No, this isn't pollyanna speaking.
Non-fuel costs are coming down although fuel is very much a part of the airline business. It does say that the transformation plan is underway.
There was positive cash flow including additional lending. Debt and pension benefits were paid during the quarter.
Charges do constitute a significant portion of the total loss and must be separated out.
Unit revenue growth is at the back of the pack for the industry but is expected since DL is adding capacity as part of its plan to reduce unit costs but most of the capacity is being added in the highly competitive (fare depressed) east coast.
Revenue should be increasing through the summer due to very strong traffic throughout the industry and a number of fare increases during the past couple months.
DL reported CASM using a number of exclusions - one of which excludes pension costs. Not sure of the motive but it could be DL is trying to show its costs relative to US and UA which have partial or complete pension terminations. One of Georgia's senators just co-sponsored legislation that would reduce the solvent four legacies' pension costs by spreading out catch up funding.
In summary, DL clearly is making progress but there is much more to go, particularly since fuel is and will be a significant component of the cost equation. DL and the whole industry needs a strong summer but cost control will have to kick up another notch going into the fall. Given that DL is largely non-union, they have the opportunity to implement changes faster than other carriers. When in survival mode, all factors have to be considered.
The US-HP merger discussions show that it does not take a great balance sheet to be supported by investors in merger discussions. DL, like HP, doesn't have a very pretty balance sheet but could very well play an active role in consolidation if it succeeds in getting costs down. Based on DL's report which reflects just three months of their transformation plan, costs will continue to come down throughout the year and at least match what other cost conscious legacies like AA and CO have. However, outright mergers are not as necessary as close marketing and operational coordination - not unlike what existed in the industry between majors before deregulation.
Non-fuel costs are coming down although fuel is very much a part of the airline business. It does say that the transformation plan is underway.
There was positive cash flow including additional lending. Debt and pension benefits were paid during the quarter.
Charges do constitute a significant portion of the total loss and must be separated out.
Unit revenue growth is at the back of the pack for the industry but is expected since DL is adding capacity as part of its plan to reduce unit costs but most of the capacity is being added in the highly competitive (fare depressed) east coast.
Revenue should be increasing through the summer due to very strong traffic throughout the industry and a number of fare increases during the past couple months.
DL reported CASM using a number of exclusions - one of which excludes pension costs. Not sure of the motive but it could be DL is trying to show its costs relative to US and UA which have partial or complete pension terminations. One of Georgia's senators just co-sponsored legislation that would reduce the solvent four legacies' pension costs by spreading out catch up funding.
In summary, DL clearly is making progress but there is much more to go, particularly since fuel is and will be a significant component of the cost equation. DL and the whole industry needs a strong summer but cost control will have to kick up another notch going into the fall. Given that DL is largely non-union, they have the opportunity to implement changes faster than other carriers. When in survival mode, all factors have to be considered.
The US-HP merger discussions show that it does not take a great balance sheet to be supported by investors in merger discussions. DL, like HP, doesn't have a very pretty balance sheet but could very well play an active role in consolidation if it succeeds in getting costs down. Based on DL's report which reflects just three months of their transformation plan, costs will continue to come down throughout the year and at least match what other cost conscious legacies like AA and CO have. However, outright mergers are not as necessary as close marketing and operational coordination - not unlike what existed in the industry between majors before deregulation.
