DL's Efforts to gain investment grade

[jcw]

Interesting analysis of moving toward investment grade and how hard it is - it does a nice job of illustrating progress and the challenges of going the last mile
 
http://www.fool.com/investing/general/2015/01/02/does-delta-deserve-an-investment-grade-credit-rati.aspx

 

[topDawg]

Two things about this, 
one now we see why Anderson has talked about getting net debt down to zero. (because even if it is at 0 Delta is still going to have a huge load with the pension plan) 
also, it is sad but accountants are killing pension plans simply because it makes a balance sheet look less sexy. All in all the cost of a pension to a 401K plan with a sold match doesn't end up really helping the company. It does however take a big burden off the balance sheet. 
 
Oh and damn ALK is posting some amazing numbers. I have long believed that Delta and Alaskan have the best leadership teams. 

 

[jimntx]

Minor point:  It's Alaska Airlines, not Alaskan.  I have a friend who flies for them.  They take it personally if you call their airline Alaskan.  And, yes they are an incredibly well-managed airline.

 

[WorldTraveler]

this article highlights that legacy US airlines created a business model well back during the deregulated era that was not conducive with investment grade ratings.

I have repeatedly stated and the article notes that better investment ratings combined with the total level of debt makes a big difference in the total costs for an airline.

DL's commitment to reducing debt, including pension debt, is the difference of what DL has committed to doing wholeheartedly differently compared to other legacy carriers.

as for WN, they never had defined benefit plans because they had problematic elements years ago....

as for AK, they have rapidly grown on the west coast which helped immensely to keep costs very low even though they are a legacy airline. Their low costs and high fares because they have dominated SEA are precisely a major reason they have done so well financially. WN has not been as far away from the legacies compared to AS but their success is due to some of the same factors.

the big 3 legacy airlines are all generating billions of dollars per year so there is no excuse not to transform their financial situations if they believe that is something that needs to be done.

 

[topDawg]

Minor point:  It's Alaska Airlines, not Alaskan.  I have a friend who flies for them.  They take it personally if you call their airline Alaskan.  And, yes they are an incredibly well-managed airline.

I have no idea why I did that. 
Sorry AS people.