Any "Latest & Greatest" about Delta?
05-11-2013, 06:03 AM
Gets Weekends Off
Joined APC: May 2010
Posts: 109
Ok.. Trying to look at all this objectively, what has changed in the last 6 months? Profit projections etc are all the same, but the difference is that company is trying to reward shareholders by taking some of that profit and returning it to them.
The goal of a corporation as I remember from "bidness" school, is to "increase shareholder wealth." It appears that is what Delta is trying to do. (Wonder what they may have planned once the stock increases as many deals tend to involve stock)
So, the pie if you will, appears to be about as projected but it is all about what the company, or any company does with it. Look at companies that are sitting on 25 billion is cash.. Why are they not giving it to their employees? Why are companies like UPS who have make much more than Delta, not just sending it to the pilots? Why have the pilots or other employees not been able to demand it by just not doing xy or z?
Why do you not pay the kid that cuts your grass more? Certainly most of you could afford to pay him a lot more, but you don't... Why? (Just an analogy as I cut my own grass)
Where is the leverage to "force" the company to give us that cash? No emotional banter, give me the plan and real world airline examples in the last 15 years.. I see FedEx, ups, southwest, all profitable but no huge gains. I see Spirit who actually went on strike, but didn't hit a home run.
So again thinking of the mission of a corporation, yes there is a point where paying employees does create value for the shareholders and there is a point where it does not. Nobody ever knows for sure exactly where the CEO is willing to go (except for the folks on here) in that balancing act, but there certainly is a point where the CEO is willing to say "no" no matter what the leverage.
Don't get me wrong, I want all I can get, but it ain't as easy as some on here make it appear and there certainly is not a "do xyz" and the cash comes rolling in. Now, there may be a different strategy than DALPA's constructive engagement and I am ok with that as well, but you will have show me the examples, tell me how it would work here before I get too excited.
The goal of a corporation as I remember from "bidness" school, is to "increase shareholder wealth." It appears that is what Delta is trying to do. (Wonder what they may have planned once the stock increases as many deals tend to involve stock)
So, the pie if you will, appears to be about as projected but it is all about what the company, or any company does with it. Look at companies that are sitting on 25 billion is cash.. Why are they not giving it to their employees? Why are companies like UPS who have make much more than Delta, not just sending it to the pilots? Why have the pilots or other employees not been able to demand it by just not doing xy or z?
Why do you not pay the kid that cuts your grass more? Certainly most of you could afford to pay him a lot more, but you don't... Why? (Just an analogy as I cut my own grass)
Where is the leverage to "force" the company to give us that cash? No emotional banter, give me the plan and real world airline examples in the last 15 years.. I see FedEx, ups, southwest, all profitable but no huge gains. I see Spirit who actually went on strike, but didn't hit a home run.
So again thinking of the mission of a corporation, yes there is a point where paying employees does create value for the shareholders and there is a point where it does not. Nobody ever knows for sure exactly where the CEO is willing to go (except for the folks on here) in that balancing act, but there certainly is a point where the CEO is willing to say "no" no matter what the leverage.
Don't get me wrong, I want all I can get, but it ain't as easy as some on here make it appear and there certainly is not a "do xyz" and the cash comes rolling in. Now, there may be a different strategy than DALPA's constructive engagement and I am ok with that as well, but you will have show me the examples, tell me how it would work here before I get too excited.
Last edited by Ball Breaker; 05-11-2013 at 06:08 AM. Reason: Add
05-11-2013, 06:14 AM
Can't abide NAI
Joined APC: Jun 2007
Position: Douglas Aerospace post production Flight Test & Work Around Engineering bulletin dissembler
Posts: 12,038
Ron Ricco,
My concern about dividends, or stock buy backs, is that those choices mean there are no better choices to deploy that capital. That means upgrading the inefficient mainline narrow body fleet (and the 717 will, on date of arrival be near the bottom of the industry in efficiency). That means we aren't spending the money on right sizing our international fleet with an aircraft like the 777-300 in significant numbers. It means we are not going to make any competitive moves which might require an investment in that market. It means we will continue to pay interest on 10 billion dollars or so in borrowing. In other words, it means the Company has no better idea what to do with cash than to give it away, plus ~ 8% interest.
I am encouraged that Delta has the available cash flow to fund what would be a "capital project" in either a pre merger NWA or DAL.
IMHO this dividend is a bit like winning a yacht race. It is bragging rights to a couple of rich buddies, but doesn't sell widgets.
The one tin foil hat scenario that makes some sense is that we are pumping the stock price in advance of a stock-swap type acquisition. That potentially could be a smart use of throwing cash out the window, priming the pump to leverage the market to make an acquisition relatively cheaper on an exchange basis.
If that theory is actionable it does nothing good, or bad, for us in an SLI that I can see.
My concern about dividends, or stock buy backs, is that those choices mean there are no better choices to deploy that capital. That means upgrading the inefficient mainline narrow body fleet (and the 717 will, on date of arrival be near the bottom of the industry in efficiency). That means we aren't spending the money on right sizing our international fleet with an aircraft like the 777-300 in significant numbers. It means we are not going to make any competitive moves which might require an investment in that market. It means we will continue to pay interest on 10 billion dollars or so in borrowing. In other words, it means the Company has no better idea what to do with cash than to give it away, plus ~ 8% interest.
I am encouraged that Delta has the available cash flow to fund what would be a "capital project" in either a pre merger NWA or DAL.
IMHO this dividend is a bit like winning a yacht race. It is bragging rights to a couple of rich buddies, but doesn't sell widgets.
The one tin foil hat scenario that makes some sense is that we are pumping the stock price in advance of a stock-swap type acquisition. That potentially could be a smart use of throwing cash out the window, priming the pump to leverage the market to make an acquisition relatively cheaper on an exchange basis.
If that theory is actionable it does nothing good, or bad, for us in an SLI that I can see.
05-11-2013, 06:17 AM
Da Hudge
Joined APC: Oct 2006
Position: Poodle Whisperer
Posts: 17,473
Those were dire circumstances. We have a healthy company and are treated quite well in comparison. You don't go nuclear every time you get a bit upset.
05-11-2013, 06:18 AM
Can't abide NAI
Joined APC: Jun 2007
Position: Douglas Aerospace post production Flight Test & Work Around Engineering bulletin dissembler
Posts: 12,038
Right now we are just seeing astute managers run a business in a way that this business has not been run since before deregulation.
IMHO our government has silently backed off anti trust regulation in our industry and allowed the business to stabilize through a competitive oligopoly.
Originally Posted by Oligopoly
Profit maximization conditions: An oligopoly maximizes profits by producing where marginal revenue equals marginal costs.[2]
Ability to set price: Oligopolies are price setters rather than price takers.[2]
Entry and exit: Barriers to entry are high.[3] The most important barriers are economies of scale, patents, access to expensive and complex technology, and strategic actions by incumbent firms designed to discourage or destroy nascent firms. Additional sources of barriers to entry often result from government regulation favoring existing firms making it difficult for new firms to enter the market.[4]
Number of firms: "Few" – a "handful" of sellers.[3] There are so few firms that the actions of one firm can influence the actions of the other firms.[5]
Long run profits: Oligopolies can retain long run abnormal profits. High barriers of entry prevent sideline firms from entering market to capture excess profits.
Product differentiation: Product may be homogeneous (steel) or differentiated (automobiles).[4]
Perfect knowledge: Assumptions about perfect knowledge vary but the knowledge of various economic factors can be generally described as selective. Oligopolies have perfect knowledge of their own cost and demand functions but their inter-firm information may be incomplete. Buyers have only imperfect knowledge as to price,[3] cost and product quality.
Interdependence: The distinctive feature of an oligopoly is interdependence.[6] Oligopolies are typically composed of a few large firms. Each firm is so large that its actions affect market conditions. Therefore the competing firms will be aware of a firm's market actions and will respond appropriately. This means that in contemplating a market action, a firm must take into consideration the possible reactions of all competing firms and the firm's countermoves.[7] It is very much like a game of chess or pool in which a player must anticipate a whole sequence of moves and countermoves in determining how to achieve his or her objectives. For example, an oligopoly considering a price reduction may wish to estimate the likelihood that competing firms would also lower their prices and possibly trigger a ruinous price war. Or if the firm is considering a price increase, it may want to know whether other firms will also increase prices or hold existing prices constant. This high degree of interdependence and need to be aware of what other firms are doing or might do is to be contrasted with lack of interdependence in other market structures. In a perfectly competitive (PC) market there is zero interdependence because no firm is large enough to affect market price. All firms in a PC market are price takers, as current market selling price can be followed predictably to maximize short-term profits. In a monopoly, there are no competitors to be concerned about. In a monopolistically-competitive market, each firm's effects on market conditions is so negligible as to be safely ignored by competitors.
Non-Price Competition: Oligopolies tend to compete on terms other than price. Loyalty schemes, advertisement, and product differentiation are all examples of non-price competition.
Ability to set price: Oligopolies are price setters rather than price takers.[2]
Entry and exit: Barriers to entry are high.[3] The most important barriers are economies of scale, patents, access to expensive and complex technology, and strategic actions by incumbent firms designed to discourage or destroy nascent firms. Additional sources of barriers to entry often result from government regulation favoring existing firms making it difficult for new firms to enter the market.[4]
Number of firms: "Few" – a "handful" of sellers.[3] There are so few firms that the actions of one firm can influence the actions of the other firms.[5]
Long run profits: Oligopolies can retain long run abnormal profits. High barriers of entry prevent sideline firms from entering market to capture excess profits.
Product differentiation: Product may be homogeneous (steel) or differentiated (automobiles).[4]
Perfect knowledge: Assumptions about perfect knowledge vary but the knowledge of various economic factors can be generally described as selective. Oligopolies have perfect knowledge of their own cost and demand functions but their inter-firm information may be incomplete. Buyers have only imperfect knowledge as to price,[3] cost and product quality.
Interdependence: The distinctive feature of an oligopoly is interdependence.[6] Oligopolies are typically composed of a few large firms. Each firm is so large that its actions affect market conditions. Therefore the competing firms will be aware of a firm's market actions and will respond appropriately. This means that in contemplating a market action, a firm must take into consideration the possible reactions of all competing firms and the firm's countermoves.[7] It is very much like a game of chess or pool in which a player must anticipate a whole sequence of moves and countermoves in determining how to achieve his or her objectives. For example, an oligopoly considering a price reduction may wish to estimate the likelihood that competing firms would also lower their prices and possibly trigger a ruinous price war. Or if the firm is considering a price increase, it may want to know whether other firms will also increase prices or hold existing prices constant. This high degree of interdependence and need to be aware of what other firms are doing or might do is to be contrasted with lack of interdependence in other market structures. In a perfectly competitive (PC) market there is zero interdependence because no firm is large enough to affect market price. All firms in a PC market are price takers, as current market selling price can be followed predictably to maximize short-term profits. In a monopoly, there are no competitors to be concerned about. In a monopolistically-competitive market, each firm's effects on market conditions is so negligible as to be safely ignored by competitors.
Non-Price Competition: Oligopolies tend to compete on terms other than price. Loyalty schemes, advertisement, and product differentiation are all examples of non-price competition.
05-11-2013, 06:20 AM
Can't abide NAI
Joined APC: Jun 2007
Position: Douglas Aerospace post production Flight Test & Work Around Engineering bulletin dissembler
Posts: 12,038
05-11-2013, 06:21 AM
Gets Weekends Off
Joined APC: May 2010
Posts: 109
I agree 100%. Just citing examples of leverage utilized in last 15 years. In fact, tried to delete prior to be being quoted for exact reason as you stated.. As a mod, feel free.
Last edited by Ball Breaker; 05-11-2013 at 06:34 AM.
05-11-2013, 06:42 AM
Sho me da money!
Joined APC: Feb 2007
Position: B25, Left
Posts: 947
Ron Ricco,
My concern about dividends, or stock buy backs, is that those choices mean there are no better choices to deploy that capital. That means upgrading the inefficient mainline narrow body fleet (and the 717 will, on date of arrival be near the bottom of the industry in efficiency). That means we aren't spending the money on right sizing our international fleet with an aircraft like the 777-300 in significant numbers. It means we are not going to make any competitive moves which might require an investment in that market. It means we will continue to pay interest on 10 billion dollars or so in borrowing. In other words, it means the Company has no better idea what to do with cash than to give it away, plus ~ 8% interest.
I am encouraged that Delta has the available cash flow to fund what would be a "capital project" in either a pre merger NWA or DAL.
IMHO this dividend is a bit like winning a yacht race. It is bragging rights to a couple of rich buddies, but doesn't sell widgets.
The one tin foil hat scenario that makes some sense is that we are pumping the stock price in advance of a stock-swap type acquisition. That potentially could be a smart use of throwing cash out the window, priming the pump to leverage the market to make an acquisition relatively cheaper on an exchange basis.
If that theory is actionable it does nothing good, or bad, for us in an SLI that I can see.
My concern about dividends, or stock buy backs, is that those choices mean there are no better choices to deploy that capital. That means upgrading the inefficient mainline narrow body fleet (and the 717 will, on date of arrival be near the bottom of the industry in efficiency). That means we aren't spending the money on right sizing our international fleet with an aircraft like the 777-300 in significant numbers. It means we are not going to make any competitive moves which might require an investment in that market. It means we will continue to pay interest on 10 billion dollars or so in borrowing. In other words, it means the Company has no better idea what to do with cash than to give it away, plus ~ 8% interest.
I am encouraged that Delta has the available cash flow to fund what would be a "capital project" in either a pre merger NWA or DAL.
IMHO this dividend is a bit like winning a yacht race. It is bragging rights to a couple of rich buddies, but doesn't sell widgets.
The one tin foil hat scenario that makes some sense is that we are pumping the stock price in advance of a stock-swap type acquisition. That potentially could be a smart use of throwing cash out the window, priming the pump to leverage the market to make an acquisition relatively cheaper on an exchange basis.
If that theory is actionable it does nothing good, or bad, for us in an SLI that I can see.
05-11-2013, 07:35 AM
Gets Weekends Off
Joined APC: Jun 2009
Position: Captain
Posts: 830
I don't have time to get into a long drawn out debate, but to hit a few points..
I am not saying I agree with how they are spending all the cash, buy backs etc, but I guess in their opinion that contributes more to shareholder wealth than buying a new fleet of aircraft. Doesn't mean I don't want them to, but I, nor the union get to make those sorts of decisions at any airline.
As far as leverage, I agree that BOB and others have been effective tactical moves to make gains... Just as we have made gains during those times. I was talking more in the context of section 6 and the ability to extract all this "extra" money that would have certainly gone to us otherwise right? When comments are made about "no money left on the the table" what else is one to infer except that if we would have just done "x" they would have had to give it to us.(and I am certainly not saying they wouldn't, just I haven't seen many examples of that happening in recent section 6 otherwise we would already have several airlines to jump in 2015.)
Excuse the grammar, spelling etc... Typed from an iPhone.
I am not saying I agree with how they are spending all the cash, buy backs etc, but I guess in their opinion that contributes more to shareholder wealth than buying a new fleet of aircraft. Doesn't mean I don't want them to, but I, nor the union get to make those sorts of decisions at any airline.
As far as leverage, I agree that BOB and others have been effective tactical moves to make gains... Just as we have made gains during those times. I was talking more in the context of section 6 and the ability to extract all this "extra" money that would have certainly gone to us otherwise right? When comments are made about "no money left on the the table" what else is one to infer except that if we would have just done "x" they would have had to give it to us.(and I am certainly not saying they wouldn't, just I haven't seen many examples of that happening in recent section 6 otherwise we would already have several airlines to jump in 2015.)
Excuse the grammar, spelling etc... Typed from an iPhone.
05-11-2013, 07:43 AM
Gets Weekends Off
Joined APC: Aug 2010
Posts: 2,530
With pay at $150K, 2nd year, I would say UPS IS sending it to their pilots. How many years to make $150K at Delta? Now, factor in the time value of $$$$$ and you may just fall out of your chair.
05-11-2013, 07:49 AM
Gets Weekends Off
Joined APC: Jun 2009
Posts: 5,113
Sounds plausible to me. There are still two substantial major airlines that independent, a deepening ties with a re-emerging American, in ways that are designed to disadvantage us. One of them is very expensive in absolute terms, and both might be overpriced relative to our own market cap.
I'm not saying we will buy either, but if we were, we'd need to give their stockholders an appropriate (smaller) part of the combined equity.
I'm not saying we will buy either, but if we were, we'd need to give their stockholders an appropriate (smaller) part of the combined equity.
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