Elvis90

Well Bar, durable goods orders (like aircraft) dropped significantly in August, because businesses don't know what their tax rates will be. These are just facts. This management team likes to have all the analysis done and everything settled before they make a big decision, and I personally think that's a smart idea.

Election Uncertainty Slowed Business Orders in August

Bucking Bar

How does that go, again?

Elvis90

Elvis90

The latest AP article about Alaska's order says 2/3's of the new ones will replace existing aircraft, so it's really a net plus of ~17.

forgot to bid

Bar, I have to agree with Elvis with the economy. If two people running for President are promising you different directions and the race is close then businesses (not Delta) will wait until after the election to determine their direction. I mean why throw your money in one direction or another if you don't know what's going to happen?

Same with Delta, why would they spend the money to increase seat inventory until they know what everyone else is going to do? I don't think they would increase capacity and hope people come, but rather, hold capacity down until it costs them money and then grow.

Which at this airline a jump in seat inventory would probably require GDP to jump from it's current 1.3% to 9% before they'd consider increasing capacity over increasing price.

forgot to bid

Ah, good to know.

But shouldn't that be an increase of around 25 jets (1/3 of 75 new firm orders) over their current 120?

Which would be about a 21% increase or kind of like us adding 150 jets to our fleet. That'd be reallllly nice.

Elvis90

Yep - you're right. 2/3's of the 75 on order (which includes this 50).

Doug Masters

So Alaska gets 17 additional 737s and Delta loses 17 DC-9s?
Wait a minute.....

flyallnite

Guy kicking sign... FTB... that's funny. Laughed out loud.

The economy...

I wouldn't be in a big hurry to buy new airplanes, expand, pay for new gates and routes if I were an airline exec. Delta is making all the right moves right now. Giving up ATL-BCN sucks, yes it does. But Spain is currently at 25% unemployment and it's going to get worse before it gets better. The only reason we're making money and not bleeding red ink and furloughing is because of our capacity management. Flying bigger planes into our partners hubs makes sense right now because it limits our exposure to the economic crisis in Europe.

The IMF just released a forecast a few days ago. It's not pretty. They claim the threat of a double dip recession is increasing. Growth estimates for the entire world, including Asia have been slashed.

Fedex just announced a restructuring that includes fleet reduction, and employee reduction. That alone should tell you what the world economy is doing.

China, supposedly growing at about 8% a year, is stagnating. Some economists say that the growth numbers out of there have been exaggerated by the government (shocking). One thing you can't fake is the annual electrical consumption factor. This has grown steadily until recently, and is now flat for China.

Bottom line is this. Yes, we need to protect our flanks via scope. But new airplanes are easily ordered, and pilots easily hired when things pick up. When they do, we'll be ready. But for now, I'm glad we're taking a conservative approach and storing up those acorns, and still making investments in things passengers want like nice interiors, global internet, sky clubs and decent terminals. Keep an eye on scope, but this AK order is really nothing but a refreshing of a fleet that is in need of it. With all the Hawaii flying they do, having non ETOPS -400's in the mix makes equipment swaps and the like much more challenging. This was a good business decision for them.

BlueMoon

Then there will be the "Fiscal Cliff"

There will always be something.