July Report - Restructuring Pays Off

[WorldTraveler]

You might want to read what the analysts have said about CO's 2nd quarter results - the ones that had CO having the second lowest operating profit margin, right above UA. They also noted that CO's costs were the fastest growing among network carriers.

The shine is coming off of CO. CO's strategy was obviously based on monopolizing its hub markets and now that DL is providing a little competition, CO isn't quite the golden child it used to be.

We'll find out DL's monthly performance in a few weeks but I'll go out on a limb and say that DL will outperform CO. It's a limb I'm pretty sure I'll have no problem staying on.

 

[ClueByFour]

because that pension program is ensured by the PBGC and US bankruptcy laws allow pensions to be terminated if it is impossible for the company to successfully restructure w/o the termination.

If DL has a huge operating profit this quarter, then that line of thinking is pretty well bunk.

 

[WorldTraveler]

Operating profits even in the hundreds of millions of dollars will not necessarily save the pilot pension plan which has a lump sum distribution provision that cannot ever be funded fast enough to meet the demand for early retirement. DL's financial advisers testified on Friday that Delta cannot obtain exit financing should the plan be retained because no investor will be willing to live with the risk of thousands of pilots retiring which will cost the plan billions of dollars.

You also should be aware that the PBGC has not filed an objection to DL's plans to terminate the plan nor has the largest group representing DL retirees and ALPA agreed as part of its most recent contract to not object to the termination either. There is only one small group of retired pilots that is objecting and DL's financial advisers have filed pages of objections to their assumptions.

All of it can be found on DL's bankruptcy website.

 

[LGA Fleet Service]

because that pension program is ensured by the PBGC and US bankruptcy laws allow pensions to be terminated if it is impossible for the company to successfully restructure w/o the termination.

But weren't they claiming just a few short months ago they couldnt restructure without a second round of concessions from the pilot group?

So they secured the second round of concessions from the pilots and lo and behold the mantra of "We cannot restructure without ________" is trotted out again in a few short months.

Whats next, "We cannot sucessfully restructure without the death of every firstborn male child"?

 

[WorldTraveler]

the substantive portion of the last round of pilot concessions was an agreement from ALPA that they would not object to termination of the pension plan. The RJ cap was raised to a relatively small number of 76 seaters but the bulk of the last round of concessions was to make permanent what had previously been temporary. In return, DL is giving some small increases starting as early as this winter, IIRC.