This airline could collapse.

[deltawatch]

A few points from Holly Hegeman's Planebusiness Banter

Delta finally announced earnings last week, not sure the adage "better late than never applies here. It probably would have been better if the airline had simply skipped this quarter, all things considered. For the quarter, the airline posted a net loss of $1.13 billion.

Big red flag ... The airline ended the quarter with only $1.4 billion in unrestricted cash. Going into the bleak winter months, this is not a lot of money. For the first nine months of the year, Delta has now lost $2.6 billion.

The situation at Delta is much worse than the situation we have at Northwest or at United Airlines. The situation at Delta runs deep and it runs throughout the airline's management ranks. And it certainly runs through the airline's revenue management group.

This airline, as it has proven over the last year, does not know how to make money.

The airline finds itself with aging airplanes with aging interiors, a fractured brand, thanks to Song, huge regional jet exposure, and no clue as to how to make money. Oh, and let's not forget that because management waited so long to file for Chapter 11, there are no more assets to collateralize.

This airline could collapse. And it could collapse pretty quickly. Bottomline, this airline is in deep trouble. On many fronts.

Not much to like in Delta's third quarter numbers. Worse yet, don't see indications anywhere that management knows how to improve the situation.

 

[local 12 proud]

.......and $325 million from DALPA is going to turn DAL into a profitable airline?

 

[autofixer]

About like the 350 Million from US Airways ALPA did!

 

[CapnCockroach]

But to get back on thread, there has to be great fear that DAL is really not that far away from collapse. Lots of basic reasons. A management team totally at a loss for which direction to take.

DL has an intransigent (sp?) pilot group - the rest don't have an option.

DL is pumping cash out of the femoral artery.

...and a BK judge who cracks stupid jokes, does a little name calling, then insists the two sides "talk". Yeah, that'll do it.

Braniff revisited. Different causes maybe - but some morning soon we are, more likely than not, to suddenly wake up to ramps full of empty, silent DL airplanes.

 

[WorldTraveler]

Holly Hegeman has got the credibility of Ann Landers. PLEEZ.

 

[CapnCockroach]

Yep.

On second thought, that must be it.

 

[TechBoy]

While Delta is in a very weak position, it is nowhere near collapse. Now if Delta suddenly terminates the leases on 100-150 RJs and 50 real jets (beyond the currently planned one), then I would start to worry. Delta, like NW, needs to cut large numbers of unprofitable routes, possibly close a hub, and merge with a carrier that can bring higher yielding traffic to the party. Unfortunately, DL+NW would make for a fleet with total uncommonality.

 

[RowUnderDCA]

I can't get the idea of AA/DL out of my head. I think I must be coming down with something!

The combined system would want to retain 100% of ATL; most of FL operations with some reduction in NE to FL; 100% of STL; some reduction in transcon; basic closure of CVG; and (to make it work) massive retirement of small jets, especially in the NE.

The government might go for that because the plethora of small jets in the NE is what is causing so much of the inefficiencies. My impression is that JFK ops would not need to be scaled back much internationally, but the combined carrier could upgauge away from RJs. LGA might require the marginal reduction of mainline slots, but primarily the removal of small jets in favor of large mainline. BOS might require some marginal reductions.

I think fleet commonality would be pretty good.

 

[Deleted by Moderator]

I highly doubt the government would allow AA to acquire DL if ANY other carrier showed interest in the routes.

 

[RowUnderDCA]

While I think the feds might have concern over local market domination (and limited international rights), I don't think that any combination of two so-called legacy carriers has any 'national' concerns, considering the development of new entrants and Lccs.

 

[MMB]

This article was written in 2003 so is a little dated, but the information is good and the predicions for the period 2003 to now aren't, for the most part, too far off.

http://wc.wustl.edu/airline_conf/Levine.pdf

Opinions?
MB

 

[FWAAA]

I can't get the idea of AA/DL out of my head. I think I must be coming down with something!

I can't seem to get the idea of DL/UA out of my head. Years ago, UA had a thing for DL but was rebuffed. Now's the time. UA gains strength in ATL and Florida.

I still see AA/NW happening in the next year to 18 months. That would finally give AA roughly equal access to China and NRT as enjoyed by UA without having to wait years and years to get new authorities as the DOT dribbles them out one city or two per year. Fleet commonality isn't there, but perhaps AA could find someone else interested in the incompatible aircraft. Close MEM, downsize MSP and keep DTW. Move many of the Asian flights to ORD and to the west coast (primarily LAX but maybe some to SFO).

 

[NewHampshire Black Bears]

Well FWAAA, I'm with you.

NW is THE ONLY co. AA would consider mergeing/acquiring with
(well, possibly AS)

DL is the LAST co. on the list of company's that AA would not merge with !!!

NH/BB's

 

[RowUnderDCA]

well.. maybe my frame of reference is too domestic oriented, but WHY whould any airline want a route system with DTW, ORD, MSP, DFW and MEM. Also, JAL joined oneworld and NW is Tokyo oriented not so much China, right? OK, I could see AMR buying NWA and then divesting the domestic system, including all airbuses and 9s to say LCC. But then there would still be 'room' for DL's system.

 

[corl737]

Holly Hegeman has got the credibility of Ann Landers. PLEEZ.

Don't discount the message just because you don't like the messenger.