forgot to bid

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So the world has not gone completely mad.

newKnow

What was mad was that he got away with that crap so long. Those guilty's are for a lot of people.

Bucking Bar

"No answer" is an answer of sorts.

slowplay

No, past CapEx is not included in the analysis. We are where we are. I can't change where we've been. Costs looking forward were included and disadvantaged mainline (DCI already has infrastructure to support Embraer/Bombardier products).

Some points, though. One of the best performing assets in the NWA pension plan was PCL stock placed in the plan in lieu of a cash contribution (pre-bankruptcy).

PCL's bankruptcy was not induced by Delta but by bad management decisions. The PCL CRJ-200 and Mesabah CRJ-900 contracts were profitable. Delta is making 12.5% on the DIP financing it has provided PCL and has moved itself up the food chain for claims on assets should PCL not reorganize.

Arguably the worst business transaction Delta entered into was for ASA, with a premium purchase price and fire sale sales price. The capital extracted provided just barely enough to get Delta through bankruptcy. I'm sure CMR is a close second, but the asset stripping, BK car wash and depreciation probably helped the bottom line more than ASA, even including the strike. That's just a guess on my part.

Bucking Bar

Thank you for the candid response.

But how can we look at repeated failure in the billions and say "m'eh, that's in the past" while dealing with current failures which are costing Delta money?
Like the example of JT8D reliability, "unscheduled" engine removals are a cost and eventually get averaged in. My friends who underwrite Delta's risk management program consider our carrier a "bad risk" due to the losses they have sustained as a result of obligations to DCI carriers who were under our risk management program. Those sorts of factors clearly impact our Company's bottom line and management are FOOLS if they do not consider these costs. We are one crash away from being in the same Dog House FedEx was in when they crashed two MD11's, a 727 and put an A300 in Subic Bay all in one policy year. "hello, Mohammed... I mean Prince ... I understand you're our insurer now? Why won't you pay our claims? Oh you say we can't force a sovereign King to pay? But you charged us twice what Lloyds wants ..."

ALPA should be pointing out that flawed logic... LOUDLY!

Beating up DCI pilots for further concessions will not be enough to fix what's wrong with the model. There just is not enough money to be had from that source (besides the hypocrisy of our union participating in such a scheme). DCI, to survive, is going to experience escalating costs which Delta is going to have to pay. Call it unexpected if you want, but mark my words, the current model is unsustainable at current rates. GoJets is a time (longevity) bomb, just as Mesa was.

How much can pilot wages offset ?

• Redundant & parasitic Owners
• Redundant & parasitic Management
• Redundant & parasitic back office staff
• Maintenance operations
• Flight operations
• The inefficiencies of aircraft and resource utilization caused by scheduling 6 incompatible airlines over the top of one another

At DCI the Next Gen CRJ900 and E175 are not two fleet types. They are eight, thanks to pilots, mechanics, managers and operations people who can not work across certificates. It is a complete waste of money.

Boomer

This is exactly accurate in my experience. Delta doles out the DCI flying as if one RJ is the same as any other.

The rub is when they have five daily flights in/out of DFW and one is Comair, one is Pinnacle, one is Compass, and two are ASA.

Delta gives Comair the 9am arrival, and the 7pm departure. Two crews idle (one done for the day before breakfast, and one starting the day after dinner) and an aircraft parked all day long.

Delta gives Compass the noon arrival and the 11am departure. So there is a crew and aircraft idle in DFW for 23 hours of every day.

Delta gives Pinnacle the 11pm arrival and the 6am departure. Less than 8 on the ground, so the crew winds up having a 31 hour overnight and another unpaid day away from home.

The two ASA flights are on the ground for 45 minutes, and those guys are DFW commuters and would love the 31 hour overnight the Pinnacle guys got.

What Comair, Compass, and Pinnacle wind up doing is leaving aircraft on the ramp and Deadheading crews on each other's metal, bumping Delta commuters and passengers in the process.

Very cost effective on paper, I'm sure.

Bucking Bar

Thanks Boomer ...

Bill Lumberg

Pinnacle Airlines halts labor negotiations to focus on larger planes
Memphis Business Journal by Andy Ashby, Staff writer
Friday, June 22, 2012

Pinnacle Airlines Corp. is pausing labor union negotiations as it reformulates its business plan to focus on operating larger airplanes.

President and CEO John Spanjers wrote a letter to employees Friday, filed with the U.S. Securities and Exchange Commission , that said the company is focusing on larger aircraft in the face of increased competition among regional carriers for fewer flights.

A large part of Pinnacle’s Chapter 11 bankruptcy reorganization is focused on renegotiating labor contracts.

Recent discussions with Delta Air Lines Inc. officials have led to the delay, according to Spanjers.

Delta recently reached a tentative agreement with the Air Line Pilots Association International union, which would require a reduction in the number of 50-seat CRJ-200 and ERJ-145 planes in the company’s network.

After it emerges from bankruptcy protection, 140 of Pinnacle’s 181 aircraft will be CRJ-200s. The remaining 41 would be CRJ-900s, which have 76 seats as configured.

The same agreement allows Delta to expand its 76-seat regional jets by 70 as it adds additional mainline aircraft to its fleet.

“As you can see, this agreement — if ratified by Delta pilots — presents both a challenge and an opportunity for this organization,” Spanjers wrote. “Clearly our business plan will need to be reformulated in response.”

Pinnacle leases its CRJ-200s from Delta. Pinnacle owns 16 CRJ-900s and plans to sell those aircraft. The company leases the remaining 41 CRJ-900s from Delta.

The airline industry has been favoring larger planes, especially as fuel prices have risen.

Delta has received bids from other regional carriers which were below what they pay for Pinnacle’s CRJ-900 flights. Pinnacle representatives have said the company would fly exclusively for Delta once it emerges from bankruptcy protection.

“It’s clear that we are competing with carriers that have significant cost and pilot seniority advantages over Pinnacle,” Spanjers wrote.

The company plans to replace CRJ-200 aircraft with more 76-seat aircraft, which means Pinnacle must reduce its cost structure even more than originally planned in order to be competitive, according to Spanjers.

“It’s safe to assume that if competing regional airlines in the Delta network are more cost-effective than Pinnacle, they’re also in a better position to go after future flying contracts with United, US Airways or any of the other mainline carriers,” Spanjers wrote. “Our ability to reduce costs is ultimately about our future. Every mainline carrier has made it clear that the ever-shrinking pie of new flying contracts will be awarded based on which regional provider can offer the most competitive costs.”

Spanjers pointed to Delta’s recent awarding of aircraft growth to GoJet and Compass, two Pinnacle competitors.

“From our discussions with Delta, we now know that our current 76-seat cost structure would not allow us to effectively compete with GoJet or Compass for future growth opportunities,” he wrote.






Who else thinks we at mainline can compete with these guys and their lower costs for the 76 seaters???

DLpilot

The cheaper it is to operate those 76 seaters, the more advantageous to replace mainline flying.

Boomer

Luckily there is a hard cap at 153/255.