DL Sees Possible Job Cuts Ahead

[chipmunn]

Reuters wrote: The bigger hub-and-spoke carriers of the future will be transnational, he said, with operations based in two or more countries. Today's alliances may be a mating dance toward this reality, but they will not necessarily predetermine the outcome, Reid said. Reid conceded that big U.S. airlines like No. 3 Delta are facing a very serious cost challenge.

Chip comments: If UA can get its house in order, Reid is going to see major problems for DL with US on its way to recovery, the UA & US alliance, and possibly more.

Chip

 

[chipmunn]

[P][A href=http://biz.yahoo.com/rc/020918/airlines_delta_hubs_1.html]http://biz.yahoo.com/rc/020918/airlines_delta_hubs_1.html[/A][/P]

 

[chipmunn]

[A href=http://biz.yahoo.com/rb/020918/airlines_delta_1.html]http://biz.yahoo.com/rb/020918/airlines_delta_1.html[/A]

 

[chipmunn]

I find it interesting Fred Reid would make these comments the day after Siegel's speech in Washington and US gets all unions on board with the restructuring plan.

Now DL's target appears to be UAL.

Chip

 

[luv2fly]

[blockquote]
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On 9/18/2002 12:00:19 PM chipmunn wrote:

Chip comments: If UA can get its house in order, Reid is going to see major problems for DL with US on its way to recovery, the UA & US alliance, and possibly more.

Chip
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[/blockquote]
That is a mighty big if.
Reid has simply stated the obvious problem with the industry. Intervention by government that only encourages bad business by supporting poorly run,and debt stricken airlines like U. Your trip to BK and massive industry concessions will only serve to drag down the rest of the industry. The government has now created an environment that tilts the competitive edge to airlines that were otherwise unable to compete. Kudos to you. The thing that disturbs me Chip, is that you appear to take great pride in such happenings. I am not faulting you for your desire for U to survive but, you continually fault DL in its attempts to compete with U. Some might call that hypocritical. You wish the DOT to deny DL's ability to respond to the proposed U/UA alliance by denying the proposed CO/NW/DL alliance, all the while seeking massive concessions from labor, and operating under BK protection.
You also to go to great length to make DL appear anti-competitive, when in fact every strategic move made by DL as of late, has been in direct response to an attack made by U. These responses are warranted by DL because DL is now forced to compete with an airline, that for all intensive purposes is the weakest of the herd. Your ethics escape me.

 

[MCORORES]

Chip...if you put it realisticaly...for many years U competed with everyone...now with U on the road to recovery all other airlines will have to compete with us. Kind of a nice feeling if you think about it.

 

[UAL777flyer]

It's almost an early bird gets the worm industry in that the airline that recognizes the changes in the industry and adapts to them first, gets a leg up on everyone else who will inevitably scramble to follow suit. However, mix that in with an industry (at least among the U.S. majors, minus WN) that rarely deviates from the tried-and-true norm of the post-deregulation era because of the risk involved.

For years, US Airways Senior Mgmt and Union leadership failed to recognize that there was no way to sustain their high cost structure without a significant re-structuring of the company and network. High costs at a predominantly short-haul carrier is suicide. But the years went on without the problem being addressed. Instead, the problems were disguised with window dressing during the Wolf/Gangwal years. As is usually the case with major problems, prolonging them and forgetting them doesn't mean they go away. They just hide below the surface to eventually become a problem again, only bigger. Fast forward to early last year when the economy began to stall. Then factor in 9/11, and all of a sudden the wheels have come off this industry's bus and carriers like US Airways and UA are deeply exposed due to their high cost structure and numerous internal problems. So US Airways is the first major airline to begin a major restructure of the company. While not out of the woods yet, they now appear headed for a successful restructuring and emergence from Ch.11. They will be leaner, more efficient and certainly more competitive. And UA is right behind them. If both companies can do what must be done with success, their codeshare will pose a considerable threat to the rest of the industry and you will see the other majors be forced to do a major restructure of their own in some fashion.

So the bottom line is that while the situation is painful for all US employees, US is doing it first. When they're done, they'll be better off while the rest of the industry now must follow suit. That is why I'm tired of all the wasted time at UA. If we're going to go through bankruptcy, let's just file and get it done with and let us move on and restructure this company so we can become profitable again and hopefully grow down the road when the economy rebounds.

 

[The Ronin]

Post Deleted by Moderator


Moderator's note: The Ronin, if you want to include reflective quotes in your posts, that's fine. But please do it so that the post also includes a thought or opinion on the topic at hand. Otherwise, these quotes will continue to be deleted.

 

[luv2fly]

Well Chip?

 

[WNjetdoc]

[blockquote]
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On 9/18/2002 1227 PM MCORORES wrote:

Chip...if you put it realisticaly...for many years U competed with everyone...now with U on the road to recovery all other airlines will have to compete with us. Kind of a nice feeling if you think about it.
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[/blockquote]
Hope U comes out of Bankruptcy and stays healthy, key word being, stay. CAL went through it TWICE and they have costs that keep creeping up higher and higher. They are not too far behine NWA now. Goodluck guys.

 

[Oliver Twist]

DL sees what is coming down the pike and dosen't like it- a steam roller headed right for DL. Welcome to the new world of aviation.

 

[DLFlyer31]

[blockquote]
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On 9/19/2002 1057 AM Oliver Twist wrote:

DL sees what is coming down the pike and dosen't like it- a steam roller headed right for DL. Welcome to the new world of aviation.
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[/blockquote]

What DL sees is bad gov't policy at its best. DL is forced to compete with a company that in most other industries would have been put out of business.

Welcome to America, reward the stupid....punish the smart.

 

[chipmunn]

Luv2fly:

Although I find your comments interesting, I disagree with the text of your argument.

Dave Siegel correctly accused DAL of its anticompetitive behavior. I will not go into the details, but DAL was behind the House movement to change the loan guarantee program through the emergency spending bill, was the impetus behind the ACAA objection to the UA-US code share plan and the open docket filing, and some other issues I will not discuss in an open forum.

According to Reuters Delta's strategy is built on one basic element: US Airways' failure, Siegel said.

In response to the two alliances, the DL, NW, and CO alliance covers approximately 40 percent of the market and has an enormous antitrust issue in New York, the NW equity investment in CO, and the NW agreement to control a CO change of control, plus the three partners not offering to meet antitrust issues of joint pricing, joint scheduling, and joint sales functions, at least publicly.

On the other hand, the UA-US alliance will have about 25 percent of the market, or 10 percent more than AA, and has only 2 percent overlap. Per their filing, the parties have said they do not intend to have joint pricing, joint scheduling, and joint sales functions, thus eliminating the antitrust concern. The UA-US application is identical to NW-CO except US-US will not have an equity investment.

Siegel referred to the proposed DL, NW, & CO alliance as the Axis of Evil and Mullin Dr. Evil. I wonder why?

Also noteworthy, today’s announcement by the DOT that it has extended its review of two code-share proposals for 30 days, now until October 23, has likely more to do with the three-way partnership than the UA-US deal. Van de Water’s comment of “We have concluded that we need additional time to analyze the issues presented by the agreements, likely indicates the problem with the three-way alliance, the confidential portion of the UA-US agreement, and what could occur if UA files bankruptcy, which many observers believe is likely restructuring path.

In regard to a formal restructuring, the federal government created legislation to permit viable company's to restructure, which is considered a legitimate way to adjust your business model in a changing environment. In fact, the New York Times called the US plan the template for a restructuring and Bob Crandall said US would become a strong competitor, which in my opinion is your concern.

By the way, whom do you work for?

Chip

 

[luv2fly]

[blockquote]
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On 9/19/2002 12:54:33 PM chipmunn wrote:

By the way, whom do you work for?

Chip



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[/blockquote]

I think you know. But if you must ask, I work for Delta. As least until I get furloughed.

 

[DLFlyer31]

[blockquote]
----------------
On 9/19/2002 12:54:33 PM chipmunn wrote:

Luv2fly:

Although I find your comments interesting, I disagree with the text of your argument.

Dave Siegel correctly accused DAL of its anticompetitive behavior. I will not go into the details, but DAL was behind the House movement to change the loan guarantee program through the emergency spending bill, was the impetus behind the ACAA objection to the UA-US code share plan and the open docket filing, and some other issues I will not discuss in an open forum.

In response to the two alliances, the DL, NW, and CO alliance covers approximately 40 percent of the market and has an enormous antitrust issue in New York, the NW equity investment in CO, and the NW agreement to control a CO change of control, plus the three partners not offering to meet antitrust issues of joint pricing, joint scheduling, and joint sales functions, at least publicly.

On the other hand, the UA-US alliance will have about 25 percent of the market, or 10 percent more than AA, and has only 2 percent overlap. Per their filing, the parties have said they do not intend to have joint pricing, joint scheduling, and joint sales functions, thus eliminating the antitrust concern. The UA-US application is identical to NW-CO except US-US will not have an equity investment.

By the way, whom do you work for?

Chip
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[/blockquote]

DAL's behavior toward U is not anti-competitive whatsoever and Siegel knows it. If it was truly anti-competitive, U would be at the DOJ as we speak. He's just crying because DAL is being COMPETITIVE. If the shoes were reversed, Siegel would be doing the same things that Mullin is doing...unless Siegel was a really crappy CEO. Of course DL is going after U....duh, they are DL's biggest competition.

You want anti-competitive, try abusing the bankruptcy system which is what U is doing. Is it good for competition, that other airlines have to compete with a BK airline...whose only reason for being BK is bad management and a bad business model??? Is it good for competition that U relies on the gov't to back its loans because the company's track record is so poor??


As for the alliances part, obviously the CO/NW/DL alliance is targeted at US. The U/UA alliance was targeted directly at DL and US doesn't deny that.

I would hardly call the overlap in NYC enormous. The domestic overlap does exist and I'm sure there are routes that will be cut out. Internationally, there is minimal overlap. CO has flights from EWR to Asia and Latin America....DL has none of these. Even in Europe the two airlines don't overlap on that many routes...seven to be exact. And of course, NW is only a tiny player in the NYC market.