Song Article - Atlanta Journal Constitution


Aug 20, 2002
West Palm Beach, FL
Found on the Yahoo - DAL stock board:

The Atlanta Journal-Constitution
Published on: 02/10/04

Delta Air Lines' Song offshoot is being "soundly trounced" by JetBlue Airways on some competing flights to Florida, according to a Raymond James analyst who estimates that Song is losing thousands of dollars per flight.

Analyst James Parker estimated that, on four Florida routes from New York's John F. Kennedy International airport, Song's operating losses in the third quarter last year were $4,042 to $7,944 per one-way flight. JetBlue made an operating profit on the same four routes, Parker said, because it had lower operating costs, got higher average fares and filled more seats on its smaller planes.

Delta executives have said Song, launched last year, is making a slight profit and holding its own against JetBlue and other discount carriers. But Delta has also effectively put Song's previously rapid growth on hold amid a strategic review by new Chief Executive Officer Gerald Grinstein.

"I don't think Delta is going to shut down Song," said Parker. But he added, "It does not appear that they're going to expand it."

Parker disclosed that his employer handled JetBlue's initial public offering in 2002 and subsequent investment banking work. Delta is not a client of Raymond James.

Parker's estimates on the key Florida routes were based on traffic and revenue statistics reported to the U.S. Department of Transportation, plus unit cost figures from their public statements. He said Song's results were probably modestly better than his estimates, in part because his estimates don't include revenue from passengers on connecting flights or from food sales.