Government Airline Aid Estimates

genejockey

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Aug 22, 2002
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Delta in line for biggest federal bailout check

By RUSSELL GRANTHAM
Atlanta Journal-Constitution Staff Writer

Delta Air Lines will be the biggest beneficiary of the industry''s second government bailout in less than two years, according to one analyst''s estimates. The Atlanta airline''s share of more than $2 billion in taxpayer cash to be doled out this spring will add up to $422 million, estimated Sam Buttrick, veteran airline analyst for UBS Warburg.

Delta will also benefit from another $91 million, Buttrick said in a note to investors, during a four-month security fee tax holiday starting June 1.

The cash grants are part of $3.8 billion in airline aid Congress included in its war spending bill totaling almost $80 billion, approved by the House and Senate over the weekend. President Bush is expected to sign it today.

The bill also includes executive pay limits added after reports that Delta and some other airlines awarded bonuses and other executive perks in 2002 despite huge losses, job cuts and frequent appeals for taxpayer aid.

American Airlines will be the second-largest aid recipient, said Buttrick, who based his estimates on each airline''s share of enplanements by domestic passengers.

Delta handles more passengers than any other airline, although it is considered the third-biggest carrier. American and United log more revenue passenger miles, due to more long-range routes.

The security fees, which are added to each ticket, are $2.50 for each leg of a flight, or $10 for a typical round-trip flight connecting through a hub airport.

The aid package would reimburse $100 million of airlines'' cost to reinforce cockpit doors, divvy up $2.3 billion in relief based on airlines'' past collections of security fees, extend government-funded war-risk insurance and extend unemployment benefits for airline workers.

Delta got $668 million from the first aid package in late 2001, so it will have gotten nearly $1.1 billion after the latest payments.

The second dose of cash will be timely for airlines, which are reporting wider losses for the first quarter ended March 31. Continental Airlines on Tuesday said it lost $221 million, citing the impact of the war in Iraq, high fuel prices and concerns over a deadly respiratory disease that originated in Asia.

Northwest Airlines releases first-quarter results today, followed by Delta on Thursday.

Wall Street analysts recently boosted loss estimates for several airlines. They expect Delta to report a $433 million loss before one-time charges, second only to its $486 million loss in the fourth quarter of 2001, just after the terrorist attacks.

The aid package requires most big airlines that accept aid to freeze their top two executives'' cash compensation for one year at 2002 base salary levels. That stipulation appears to require Delta''s No. 2 executive, President and Chief Operating Officer Fred Reid, to forgo any cash bonus for 2003.

A spokesman for Delta said the airline has no comment on the pay limits.

Delta Chief Executive Leo Mullin already announced he will give up a bonus and other compensation this year, following heated criticism in Congress and elsewhere over the airline''s bonus payments for 2002.

Mullin got a $795,000 salary and a $1.4 million bonus in 2002. Reid''s 2002 salary and bonus were $700,000 and $1.2 million, respectively. The airline, which lost $1.3 billion last year, also doled out six-figure bonuses to another 58 executives under a retooled formula focused more on cash flow than profit. It also spent $25.5 million funding bankruptcy-proof trust funds for top executives'' pensions.

Delta said the moves were aimed at holding its management team together.
 

delldude

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Oct 29, 2002
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why doesn''t the government just buy all the air carriers,pay everybody what weWERE due,call it amtrackair,expand AFSCME to untold membership,then FIX all that ails everyone and we''ll all live happily everafter.
tweetle dee dee tweetle dee dumb
 

gilbertguy

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Aug 29, 2002
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On 4/17/2003 2:11:36 PM gilbertguy wrote:

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On 4/17/2003 7:42:15 AM genejockey wrote:

Aid estimates
Expected cash reimbursement for airlines:
Delta: $422 million
American: $410 million
Southwest: $304 million
United: $268 million
Northwest: $221 million
US Airways: $206 million
Continental: $190 million
Source: UBS Warburg

http://www.accessatlanta.com/ajc/business/...3/16airaid.html


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Is this bailout on top of the $1 billion loan already given by taxpayers, I mean the gov''t???

At a loss of $2 million a day by US, this gives them about 103 days to.....a)make a profit b)loss more money c)downsize to profitability?
 

gilbertguy

Senior
Aug 29, 2002
368
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On 4/17/2003 7:42:15 AM genejockey wrote:

Aid estimates
Expected cash reimbursement for airlines:
Delta: $422 million
American: $410 million
Southwest: $304 million
United: $268 million
Northwest: $221 million
US Airways: $206 million
Continental: $190 million
Source: UBS Warburg

http://www.accessatlanta.com/ajc/business/...3/16airaid.html


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Is this bailout on top of the $1 billion loan already given by taxpayers, I mean the gov''t???
 

bigbusdrvr

Senior
Mar 2, 2003
366
12
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On 4/17/2003 2:18:10 PM gilbertguy wrote:

----------------
On 4/17/2003 2:11:36 PM gilbertguy wrote:

----------------
On 4/17/2003 7:42:15 AM genejockey wrote:

Aid estimates
Expected cash reimbursement for airlines:
Delta: $422 million
American: $410 million
Southwest: $304 million
United: $268 million
Northwest: $221 million
US Airways: $206 million
Continental: $190 million
Source: UBS Warburg

http://www.accessatlanta.com/ajc/business/...3/16airaid.html


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Is this bailout on top of the $1 billion loan already given by taxpayers, I mean the gov''t???

At a loss of $2 million a day by US, this gives them about 103 days to.....a)make a profit b)loss more money c)downsize to profitability?

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Actually this is a reimbursment of the money thar was forcibly removed from the airlines pockets (read employees) to pay for the securrity that is suppose to be paid for by the taxpayer!! If you can''t understand this concept then we will need to send you a bill for the armed forces that provide the rest of your security!!
 

iflyjetz

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Oct 2, 2002
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On 4/17/2003 11:13:15 PM bigbusdrvr wrote:

Actually this is a reimbursment of the money thar was forcibly removed from the airlines pockets (read employees) to pay for the securrity that is suppose to be paid for by the taxpayer!! If you can''t understand this concept then we will need to send you a bill for the armed forces that provide the rest of your security!!

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Well stated. I''ll ignore the spelling errors; I suspect that you were as enraged about this thread as I am.
Tailwinds,
Iflyjetz
 

N786P

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Nov 8, 2002
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I quess it''s time for us to take another pay cut, lets see...round two or three, "in all this excitement I can''t remember how many bullets I fired, do we feel lucky"
 

airlineorphan

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Aug 20, 2002
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Let''s watch and see if this gives US Airways a 2Q pre-tax profit. That would automatically trigger a repayment of the 5% pay deferral. I guess it''s time for the Crystal Palace to figure out how much money they need to lose.

Another thing to watch out for is Title IV Section 408 of the legislation that provides for this bailout. This section, as I mentioned elsewhere, requires any airline that receives aid to cut its operating costs by either 10% or by the amount of the aid received, whichever is greater.

The good news is that this is based upon June 2002 operating costs, so US Airways employees have already given way more than that, but who knows how management will mess with the math.

-Airlineorphan
 
Dec 21, 2002
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Playing devils advocate here, but since the sec. fees were originally collected from the public''s pockets in the price of their tickets, shouldn''t the "refunds" be going back to them, not the airlines? Remember those annoying refund voucher credits from the mid 90s that everyone who flew in the late 80s early 90s received??

Perhaps I am misunderstanding where the source and justification of this bailout is coming from.!?????!??!?!?!?!?!!?
 

cavalier

Veteran
Aug 28, 2002
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www.usaviation.com
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On 4/18/2003 9:13:30 AM Severed-N-Happy wrote:

Playing devils advocate here, but since the sec. fees were originally collected from the public''s pockets in the price of their tickets, shouldn''t the "refunds" be going back to them, not the airlines? Remember those annoying refund voucher credits from the mid 90s that everyone who flew in the late 80s early 90s received??

Perhaps I am misunderstanding where the source and justification of this bailout is coming from.!?????!??!?!?!?!?!!?

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OK, I’ll explain; YOU and ME and every working soul will pay unemployment and retraining costs, food stamps vouchers, psychiatric care and every other thing that will need to be paid should the airline industry fail in this country. Pay now or Pay bigger later.
 

gilbertguy

Senior
Aug 29, 2002
368
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On 4/18/2003 9:13:30 AM Severed-N-Happy wrote:

Playing devils advocate here, but since the sec. fees were originally collected from the public''s pockets in the price of their tickets, shouldn''t the "refunds" be going back to them, not the airlines? Remember those annoying refund voucher credits from the mid 90s that everyone who flew in the late 80s early 90s received??

Perhaps I am misunderstanding where the source and justification of this bailout is coming from.!?????!??!?!?!?!?!!?

S-N-H, you''ve hit the nail right on the head. Look at the cost of any tix and 25% of it is taxes.....sales, facility charges, fuel in some cases and security.....it is the pax'' money.
 

MrAeroMan

Veteran
Dec 29, 2002
895
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On 4/18/2003 9:31:42 AM gilbertguy wrote:


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On 4/18/2003 9:13:30 AM Severed-N-Happy wrote:

Playing devils advocate here, but since the sec. fees were originally collected from the public''s pockets in the price of their tickets, shouldn''t the "refunds" be going back to them, not the airlines? Remember those annoying refund voucher credits from the mid 90s that everyone who flew in the late 80s early 90s received??

Perhaps I am misunderstanding where the source and justification of this bailout is coming from.!?????!??!?!?!?!?!!?

S-N-H, you''ve hit the nail right on the head. Look at the cost of any tix and 25% of it is taxes.....sales, facility charges, fuel in some cases and security.....it is the pax'' money.

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The taxes that have increased since 9-11 have not been passed on fully to the pax. The majority of those taxes have come at the expense of the airlines bottom line. No airline has been able to raise fares to cover the costs of the additional federal security requirements therefore those costs have come off the existing fares.