Has anyone heard anything about what Delta is doing to conserve its cash reserve? Have they made any cuts in the corporate fat, other then employee pay and benefits? Sounds a bit like the rest. Extort all you can from the workers and then maybe go after the waste in the system.
What Is Delta Doing To Conserve Cash
- Thread starter FA Mikey
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FA Mikey-
In case you hadn't noticed, Delta has cut almost $3B in expenses since 2001. We've made significant progress in our efforts to reduce expenses, generate more revenue, and operate more efficiently. In reality, fuel neutral and pilot pay removed, we're a very lean company. As our strategy review moves forward we will introduce additional means to cut expenses and operate more efficiently.
In case you hadn't noticed, Delta has cut almost $3B in expenses since 2001. We've made significant progress in our efforts to reduce expenses, generate more revenue, and operate more efficiently. In reality, fuel neutral and pilot pay removed, we're a very lean company. As our strategy review moves forward we will introduce additional means to cut expenses and operate more efficiently.
LaBradford22
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You know, if only we didn't have to buy fuel or pay our pilots ... we'd be a really lean company!
No offense but if pilot pay is the last cut you have to make and you are digging in to cash reserves to fund the operation. How lean can you be? How much time does a pilot pay cut offer Delta from going to BK?
luv2fly
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flyhigh said:
Very lean? I wouldn't call 20 bilion plus in debt, very lean. How about those self financing RJ's we keep buying?
Your strategic review? The so called plan we have been waiting on for months now and keeps getting pushed back? How long has Jerry been on the BOD?
luv-
The review hasn't moved at all...Where do you guys get your info? from the beginning it was slated to be presented to the executives early august (already happened) and to the board mid-late aug (can't remember exact date)...hasn't changed one bit.
La Bradford...that's how you need to measure things. While we will still look for ways to cut in all areas, you need to see where you are uncompetitive. Nobody is saying don't pay pilots, but pay them a wage that is comensurate with what the market is willing to bear...today, not in 2000-2001.
Mikey-
It buys a lot of time because as pilot pay gets in line with today's market we can improve our negotiating position with suppliers on contracts that still need to be adjusted. Before any of you begin to say that I said we're lean and shouldn't have to do this, it is relative. A lot of progress has been made in these areas...reality is that there is still room to improve. Most of that room is dictated by being able to show suppliers/creditors that we have a cost structure we can support....
luv-
the amount of debt was mainly racked up right after 9/11...things are much different at this point...
The review hasn't moved at all...Where do you guys get your info? from the beginning it was slated to be presented to the executives early august (already happened) and to the board mid-late aug (can't remember exact date)...hasn't changed one bit.
La Bradford...that's how you need to measure things. While we will still look for ways to cut in all areas, you need to see where you are uncompetitive. Nobody is saying don't pay pilots, but pay them a wage that is comensurate with what the market is willing to bear...today, not in 2000-2001.
Mikey-
It buys a lot of time because as pilot pay gets in line with today's market we can improve our negotiating position with suppliers on contracts that still need to be adjusted. Before any of you begin to say that I said we're lean and shouldn't have to do this, it is relative. A lot of progress has been made in these areas...reality is that there is still room to improve. Most of that room is dictated by being able to show suppliers/creditors that we have a cost structure we can support....
luv-
the amount of debt was mainly racked up right after 9/11...things are much different at this point...
luv2fly
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It was my understanding that the strategic review was supposed to have been completed in June, and I seem to remember the company acknowledging that it had been pushed back. If I am wrong... my apologies, I will try to track it down.
I also apologize for the tone in my previous message. Even though I believe those are legitimate questions, it was uncalled for.
I also apologize for the tone in my previous message. Even though I believe those are legitimate questions, it was uncalled for.
WorldTraveler
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It is not a slam on the pilots, but simple truth, that Delta’s non-pilot costs are really very competitive among network carriers. Nonetheless, the yardstick can no longer be network carriers alone since not one of them has attained consistent profitability in three years – although many of the LCCs have. DAL has said they will begin rolling out results of the strategic review soon after the BOD meeting in mid-August so we are very close to some likely significant news.
Keep in mind also that DL had a very solid cash position for two years after 9/11 even though its overall costs were well above other network carriers such as AA, UA, and US which restructured since 9/11 and CO and NW who were more efficient going into 9/11. DAL and NWA both stashed the cash right after 9/11 and thus have had the hardest time getting costs down since the sense of urgency has not been present as long as DL has had a wad of cash in the bank. DL management has engaged in a very intentional plan to reduce cash reserves to the place where all stakeholders, including the pilots realize the urgency of the situation and the need to cut costs. In a sense, DL had to quit conserving cash in order to propel the company’s restructuring forward – and that is what they have done. Debts have to be paid and money is being lost but it has been a liability having a decent bank account.
We are at the crisis moment for Delta where the cost problem will be addressed – in my opinion in the next 30-60 days. At the same time, the strategic initiative will begin to be made known in the same time period, meaning Delta could well be a substantially different company in a very short period of time.
Keep in mind also that DL had a very solid cash position for two years after 9/11 even though its overall costs were well above other network carriers such as AA, UA, and US which restructured since 9/11 and CO and NW who were more efficient going into 9/11. DAL and NWA both stashed the cash right after 9/11 and thus have had the hardest time getting costs down since the sense of urgency has not been present as long as DL has had a wad of cash in the bank. DL management has engaged in a very intentional plan to reduce cash reserves to the place where all stakeholders, including the pilots realize the urgency of the situation and the need to cut costs. In a sense, DL had to quit conserving cash in order to propel the company’s restructuring forward – and that is what they have done. Debts have to be paid and money is being lost but it has been a liability having a decent bank account.
We are at the crisis moment for Delta where the cost problem will be addressed – in my opinion in the next 30-60 days. At the same time, the strategic initiative will begin to be made known in the same time period, meaning Delta could well be a substantially different company in a very short period of time.
aislehopper
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The issue of cost reduction was discussed in the last webcast. It is available for a few more days. Follow this link.
Delta Webcast available through August 19
You are invited to listen to Gerald Grinstein, Chief Executive Officer, and Michael Palumbo, Executive Vice President and Chief Financial Officer, present Delta's 2nd Quarter 2004 Financial Results via webcast July 19, 2004, 2pm ET. The replay will be available through August 19, 2004.
ah
Delta Webcast available through August 19
You are invited to listen to Gerald Grinstein, Chief Executive Officer, and Michael Palumbo, Executive Vice President and Chief Financial Officer, present Delta's 2nd Quarter 2004 Financial Results via webcast July 19, 2004, 2pm ET. The replay will be available through August 19, 2004.
ah
The issue is not how much the pilots are being paid, it's how ridiculous the fares are. The highest loads in history, the highest fuel costs in history, with the lowest fares ever. Pilot pay is NOT the problem. $4 more per ticket X 250,000 flight /day is $1million more per day! Charge more for a quality product.
kiowa said:
You're not saying that all Delta needs to do is add $4 per ticket, are you?
Because you're probably not gonna get each and every other airline to go along, are you? And if the others don't match, suddenly DL will be more costly in every fare class tan all the others. And revenue would dry up.
And even if you could get $1 million per day more revenue, that pales in comparison to the cuts demanded of the pilots. DL wants $1 billion per year from the pilots; that's closer to $3 million per day, so better increase each ticket by almost $12. Just to give to the pilots. Ain't gonna happen.
Even after the pilots accept their $1 billion per year haircut, their payscale is still gonna be near the top.
Of course revenue is the problem. But it ain't coming back like it was during 1997-2000, no matter how hard everyone wishes it so.
The $4 number is just that, a number for comparison. The point is that there is no crime in employees making a good living. A six figure income for quality, licenced professionals is not wrong. The fares are wrong. A local cardiologist makes $5 million / year. He does not charge people less than it costs for his product. He makes a profit and yes, health costs are high. second point- northwest usually does not go along with fare increases and now they are whining to their pilots that they need to take a pay cut also. You can't turn down revenue for everyone and then cry that your employees make too much money. Hopefully the labor groups at northwest will tell their management to pound sand.
aislehopper
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I think that ridiculously low fares are here to stay, and are becoming the market norm. IMHO, all labor groups everywhere are finding that we serve at the whims of the market. The public has said that they want low cost air transportation. The innovators in the market, the LCC's, have sprung up to meet that demand. They have business plans that allow them to service this need and still remain profitable. They are expanding at our expense.
Those of us at the legacy carriers can thrash about, but it does not change the bottom line. The LCC's are making money, and we are not. One part of the profitability puzzle is that there is a market rate for pilots, flight attendants, mechanics, etc. and it is somewhere below what we are making now.
Personally, I think Jerry is sharpening the axe. When the strategic review is over, we will find a plan in place that will allow us to successfully compete with the LCC's in this market on their terms and with high oil prices. More will be impacted than just labor cost.
Everyone, contract and non contract, is going to take a substantial hit. The hints can be found in all of the communications that we are getting. It not like reading tea leaves. We can all see where this is heading.
Our pilots will come to an agreement, either in or out of bankruptcy. They will provide the 1B that Jerry wants. The rest of us are going to have to undergo some painful concessions of our own. Those of us still here are in this boat together and pointing fingers are any one group, either the pilots or the remaining management people, is counterproductive and not going to solve our problems.
We need to focus on the here and now, and try to put the past behind us. Otherwise, ex-Delta employees will be scattered to the wind like those of Eastern, Braniff and all of the others that could not evolve to compete in a changing marketplace.
Those of us at the legacy carriers can thrash about, but it does not change the bottom line. The LCC's are making money, and we are not. One part of the profitability puzzle is that there is a market rate for pilots, flight attendants, mechanics, etc. and it is somewhere below what we are making now.
Personally, I think Jerry is sharpening the axe. When the strategic review is over, we will find a plan in place that will allow us to successfully compete with the LCC's in this market on their terms and with high oil prices. More will be impacted than just labor cost.
Everyone, contract and non contract, is going to take a substantial hit. The hints can be found in all of the communications that we are getting. It not like reading tea leaves. We can all see where this is heading.
Our pilots will come to an agreement, either in or out of bankruptcy. They will provide the 1B that Jerry wants. The rest of us are going to have to undergo some painful concessions of our own. Those of us still here are in this boat together and pointing fingers are any one group, either the pilots or the remaining management people, is counterproductive and not going to solve our problems.
We need to focus on the here and now, and try to put the past behind us. Otherwise, ex-Delta employees will be scattered to the wind like those of Eastern, Braniff and all of the others that could not evolve to compete in a changing marketplace.
