diamondcutter
Veteran
- Joined
- Apr 11, 2007
- Messages
- 640
- Reaction score
- 618
http://www.ap.org/
Revenue lower than normal
- Thread starter diamondcutter
- Start date
Your link is no good. Here are some that provide the news:
http://www.forbes.co...artner=yahootix
http://www.bizjourna....html?ana=yfcpc
http://news.investor...n=yahoocp,yahoo
http://blogs.barrons...od=yahoobarrons
http://finance.yahoo.com/news/delta-may-revenue-comes-lower-161359182.html
Ruh-roh. Looks like DAL just gave back all those gains that WT was touting the other day.
http://www.forbes.co...artner=yahootix
http://www.bizjourna....html?ana=yfcpc
http://news.investor...n=yahoocp,yahoo
http://blogs.barrons...od=yahoobarrons
http://finance.yahoo.com/news/delta-may-revenue-comes-lower-161359182.html
Ruh-roh. Looks like DAL just gave back all those gains that WT was touting the other day.
eolesen
Veteran
- Joined
- Jul 23, 2003
- Messages
- 15,959
- Reaction score
- 9,375
Airline sector got hammered accordingly on Monday. DAL is trading $2 lower than they were last Thu when it hit a 52wh of $12.25.
Guess ALPA figured out what's really going on, which is why they pushed for more fixed and less variable comp.
Wouldn't it be ironic if DL's 2012 contract turns out like DL's 2000 contract with ALPA, i.e. unsustainable within 2 years of signing? With their exposure to the Euro via Skyteam, it could quickly wind up that way.
Guess ALPA figured out what's really going on, which is why they pushed for more fixed and less variable comp.
Wouldn't it be ironic if DL's 2012 contract turns out like DL's 2000 contract with ALPA, i.e. unsustainable within 2 years of signing? With their exposure to the Euro via Skyteam, it could quickly wind up that way.
Kev3188
Veteran
Could very well wind up that way, E.
I hope not, since it'd likely mean the rest of us paying for it...
I hope not, since it'd likely mean the rest of us paying for it...
WorldTraveler
Corn Field
- Joined
- Dec 5, 2003
- Messages
- 21,709
- Reaction score
- 10,662
Yes, the airline sector got hammered with the network carriers taking the biggest hit based on DL's statement that it missed its RASM target by 1% (7 to 6%) based on "competitor fare actions"
There were analysts yesterday saying the reaction was overrated and the details come out in looking at this report
http://www.thestreet.com/story/11568546/1/delta-traffic-report-panics-investors-perhaps-unreasonably.html
This statement is key
"After digging through several weeks of individual fare filings, it appears that Southwest disproportionately targeted Atlanta with sharply lower, promotional walk-up fares" in a May 18 fare action, Baker wrote, in a report issued shortly before the close. Of 200-plus affected markets, he said, 46 involved Atlanta, which is Delta's largest hub..."
So the question is why WN needed to disproportionately target ATL and the answer becomes apparent when you look at the list of markets which include BWI and LAX, markets which WN started under their own metal, taking frequencies away from FL and delinking them from the FL hub in ATL, since FL and WN do not codeshare.
So the question is why needed to WN priced its key focus city markets from ATL at 10 cent yields (below cost) for near walkup traffic.
I think it says far more about the success - or lack thereof - of WN trying to establish itself in ATL than it does about DL, esp. considering that WN has already realized that its plan of pulling out routes to WN's key markets is hurting revenue at the FL hub and WN plans to return some of those routes to FL colors later this year.
But even if DL took a hit defending its hub from WN, how much did it cost and what was it worth?
DL said that it expects its RASM growth to continue during the summer, presumably when WN will have enough traffic that it does not need to hyperstimulate its markets.
One percent of DL's revenue on a monthly basis is about $30M.
If WN's fare actions cost DL good walkup revenue because it chose to be competitive w/ WN's fares, then the price is about $30M.
In contrast, a couple weeks ago, DL announced it was cutting TATL capacity again this winter by about 5% with smaller amounts in the Pacific and elsewhere. DL stock also took a dive after that announcement and took the rest of the airline industry with it.
But within days after that, DL's stock price reached its 52 week high only to start unwinding from that level with the rest of the market over the past 4 days in response to weak jobs data from the Obama administration plus poor economic news in China and Europe.
Airline stocks have been pulled up by falling oil prices which are off healthy double digits. On an annualized basis, DL's fuel bill has been cut by more than $1B based on the decline in crude and similar declines in jet fuel.
So, yes, the selloff in network carrier stocks was overblown. DL provided enough information to help identify where the revenue problem actually is originating. And the decline in jet fuel prices has the potential to reduce costs far more than the loss in revenue which DL has inflicted depending its ATL market.
When you consider that DL had already pulled capacity out of its system in May and was able to push LF up slightly, then it is possible that DL's RASM may have suffered but its absolute revenue actually did not fall as fast as absolute costs.
ALPA could not have known of the impact of the WN fare action when it chose to negotiate for less variable and more fixed pay. That's what their people said they wanted and DL gave it to them. And hearing the same thing from non-contract employees, DL did the same thing for them as well.
There were analysts yesterday saying the reaction was overrated and the details come out in looking at this report
http://www.thestreet.com/story/11568546/1/delta-traffic-report-panics-investors-perhaps-unreasonably.html
This statement is key
"After digging through several weeks of individual fare filings, it appears that Southwest disproportionately targeted Atlanta with sharply lower, promotional walk-up fares" in a May 18 fare action, Baker wrote, in a report issued shortly before the close. Of 200-plus affected markets, he said, 46 involved Atlanta, which is Delta's largest hub..."
So the question is why WN needed to disproportionately target ATL and the answer becomes apparent when you look at the list of markets which include BWI and LAX, markets which WN started under their own metal, taking frequencies away from FL and delinking them from the FL hub in ATL, since FL and WN do not codeshare.
So the question is why needed to WN priced its key focus city markets from ATL at 10 cent yields (below cost) for near walkup traffic.
I think it says far more about the success - or lack thereof - of WN trying to establish itself in ATL than it does about DL, esp. considering that WN has already realized that its plan of pulling out routes to WN's key markets is hurting revenue at the FL hub and WN plans to return some of those routes to FL colors later this year.
But even if DL took a hit defending its hub from WN, how much did it cost and what was it worth?
DL said that it expects its RASM growth to continue during the summer, presumably when WN will have enough traffic that it does not need to hyperstimulate its markets.
One percent of DL's revenue on a monthly basis is about $30M.
If WN's fare actions cost DL good walkup revenue because it chose to be competitive w/ WN's fares, then the price is about $30M.
In contrast, a couple weeks ago, DL announced it was cutting TATL capacity again this winter by about 5% with smaller amounts in the Pacific and elsewhere. DL stock also took a dive after that announcement and took the rest of the airline industry with it.
But within days after that, DL's stock price reached its 52 week high only to start unwinding from that level with the rest of the market over the past 4 days in response to weak jobs data from the Obama administration plus poor economic news in China and Europe.
Airline stocks have been pulled up by falling oil prices which are off healthy double digits. On an annualized basis, DL's fuel bill has been cut by more than $1B based on the decline in crude and similar declines in jet fuel.
So, yes, the selloff in network carrier stocks was overblown. DL provided enough information to help identify where the revenue problem actually is originating. And the decline in jet fuel prices has the potential to reduce costs far more than the loss in revenue which DL has inflicted depending its ATL market.
When you consider that DL had already pulled capacity out of its system in May and was able to push LF up slightly, then it is possible that DL's RASM may have suffered but its absolute revenue actually did not fall as fast as absolute costs.
ALPA could not have known of the impact of the WN fare action when it chose to negotiate for less variable and more fixed pay. That's what their people said they wanted and DL gave it to them. And hearing the same thing from non-contract employees, DL did the same thing for them as well.
WorldTraveler
Corn Field
- Joined
- Dec 5, 2003
- Messages
- 21,709
- Reaction score
- 10,662
As the NYSE closed, the publicly traded US network carriers DL, UA, and US all gained around 3.4-3.9% on a day when the DJIA was flat. DAL remains the largest US airline based on market cap by at over $1B with the same general size relationships between US airlines unchanged over recent months.
metopower
Veteran
- Joined
- Nov 28, 2006
- Messages
- 932
- Reaction score
- 313
Only problem with that statement is that contract 2000 lasted until it was finished. No pay cut or changes until it was over and Leo the idiot was gone.At that point ALPA negotiated what turned out to be the first of many pay cuts.But I do agree that contracts are only sustainable if they are coverd by another contract. Contract 2000 covered UAL contract but that lead them into BK. Amr turned down DL plus 5% trying to get more in section 6 only to NEVER get a payraise because of 911.My only point is that DL honored (to my amazement )that contract while asking for modification. ALPA would not modify under LEO the idiot for good reason.What DL ALPA is doing is basically moneyball ...get singles and doubles not go for homeruns. To me it is working.
2BlacknBlue
Senior
- Joined
- Oct 4, 2007
- Messages
- 327
- Reaction score
- 47
Sooooooo, how many feet are going to hit the pavement in order to fund the July 2012 pay increase and the January 2013 pay increase?
Kev3188
Veteran
I'm sure we'll see plenty of employees
jimntx
Veteran
eolesen
Veteran
- Joined
- Jul 23, 2003
- Messages
- 15,959
- Reaction score
- 9,375
Both of those are much friendlier than the old AMR standby of "pursuing other interests"...
DL has also just filed schedule adjustments in 7 or 8 RJ markets ex-MEM, reducing a couple down to one and two frequencies (sure to win favor with the business traveler). That should fund a couple pay increases.
If PNCL moves its HDQ to MSP, that might fund a few more. Or not.
DL has also just filed schedule adjustments in 7 or 8 RJ markets ex-MEM, reducing a couple down to one and two frequencies (sure to win favor with the business traveler). That should fund a couple pay increases.
If PNCL moves its HDQ to MSP, that might fund a few more. Or not.
southwind
Veteran
- Joined
- Jan 22, 2008
- Messages
- 7,709
- Reaction score
- 3,928
Another way to put it: "they were made available to the wider job market."
If your so sure that will happen and upset about it, tell Delta you don't want the raise !
I look at it as typical union mentality, will even find something to b!tch and moan about when getting a raise/pay restoration! LAST PART WAS ADDED FOR YOU KEV !
Guess you've seen the light Kev and have finally acknowledged that you are really getting a raise next month !
Kev3188
Veteran
What raise? I must've missed the memo; my overall compensation won't be increasing next month, and it'll have to be a sizeable boost in January (why haven't they announced the amount, anyway?) in order to move the needle.
WorldTraveler
Corn Field
- Joined
- Dec 5, 2003
- Messages
- 21,709
- Reaction score
- 10,662
Specific to the topic of revenue, all carriers that report RASM change have now reported, and notably, AA has begun reporting RASM change on a monthly basis.
AA had the highest RASM change at +7.3% with their most notably capacity change coming on the Atlantic with capacity down 12%, the largest capacity change for a US carrier on the Atlantic. Latin capacity was up 2.6%, the largest absolute increase in Latin capacity by US carriers.
B6, up 3-4% on RASM, capacity up 5%, largest capacity change for domestic.
DL, RASM up 6% with largest capacity increase on Pacific at +16%, largest capacity change for the Pacific. Atlantic was down 5%.
UA, RASM change 0-1%, Pacific was up 6%.
US, RASM change was up 6% with Latin capacity up 2.6%.
Airline stocks have taken significant hits in the past couple weeks as concern that revenue is softening, esp. in Europe and China will have a greater effect than the decreased price of fuel.
AA had the highest RASM change at +7.3% with their most notably capacity change coming on the Atlantic with capacity down 12%, the largest capacity change for a US carrier on the Atlantic. Latin capacity was up 2.6%, the largest absolute increase in Latin capacity by US carriers.
B6, up 3-4% on RASM, capacity up 5%, largest capacity change for domestic.
DL, RASM up 6% with largest capacity increase on Pacific at +16%, largest capacity change for the Pacific. Atlantic was down 5%.
UA, RASM change 0-1%, Pacific was up 6%.
US, RASM change was up 6% with Latin capacity up 2.6%.
Airline stocks have taken significant hits in the past couple weeks as concern that revenue is softening, esp. in Europe and China will have a greater effect than the decreased price of fuel.
southwind
Veteran
- Joined
- Jan 22, 2008
- Messages
- 7,709
- Reaction score
- 3,928
The raise next month has absolutely nothing to do with the raise in January and the profit sharing adjustment !
Sorry your raise won't increase your overall compensation, trying to figure that one out........but mine will !
More than likely it was ex-union peeps, like you, that were polled by Delta and wanted to see 'Mo money in their paychecks, rather than wait until profit sharing checks were issued !
Watch out for what you ask for, you might just get it....................and people like you will never be happy anyways. Must be like beating your head against a tree stump, being so miserable !
