Any "Latest & Greatest" about Delta?
04-26-2010, 01:58 PM
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The difference between cash flow and profit in the quarter comes down to advanced bookings. If I buy a ticket in March for a June vacation, the cash flow shows up in the March quarter. The revenue for the ticket is not booked until the June quarter when I actually take the trip. You normally see cash flow beat profit in the first quarter as passengers book ahead for summer travel. In the September quarter, you usually see profit ahead of cash flow as those advanced bookings unwind but you still get the tail end of the summer travel surge.
An airline typically should generate massive amounts of operating cash flow, but most of that eventually needs to be poured back into aircraft purchases. Paying down debt is one way to prepare for that. Paying cash for new purchases is another.
And none of this directly affects net income. And that's where our sights should be when it comes to contract improvements in the coming years. An airline that is not profitable can't pay above industry average wages, regardless of what we deem to be "fair" or what we're "worth". It's never happened yet.
04-26-2010, 01:59 PM
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04-26-2010, 02:09 PM
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04-26-2010, 02:16 PM
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04-26-2010, 02:21 PM
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Someone say Lizard?
04-26-2010, 02:36 PM
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04-26-2010, 02:38 PM
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This is true, but other big differences include depreciation and capital expenditures. Paying cash for airplanes decreases total cash flow, but doesn't affect profits. Similarly, an airline can have negative earnings caused by depreciation, but positive cash flow for years as it's fleet ages. The problem is that eventually you gotta buy new airplanes.
An airline typically should generate massive amounts of operating cash flow, but most of that eventually needs to be poured back into aircraft purchases. Paying down debt is one way to prepare for that. Paying cash for new purchases is another.
And none of this directly affects net income. And that's where our sights should be when it comes to contract improvements in the coming years. An airline that is not profitable can't pay above industry average wages, regardless of what we deem to be "fair" or what we're "worth". It's never happened yet.
An airline typically should generate massive amounts of operating cash flow, but most of that eventually needs to be poured back into aircraft purchases. Paying down debt is one way to prepare for that. Paying cash for new purchases is another.
And none of this directly affects net income. And that's where our sights should be when it comes to contract improvements in the coming years. An airline that is not profitable can't pay above industry average wages, regardless of what we deem to be "fair" or what we're "worth". It's never happened yet.
PG;
A few questions to further the discussion and a point or to that I am sure you will follow up on:
1) Is it the job of labor to set its limits or goals to guarantee that the company will be able to do what you list above; renew its fleet and product?
2) I know you stated sights, but does that also include expectations and or demands? They are different. Sights leads me to beleive that is where you would "expect" the new PWA to fall, not where our expectations should be set.
I agree that as we always to it is wise to do an E FA on the company and what we see as realistic going in to any talks. Whether it be a LOA or section six, it is prudent to make sure we are getting the most bang for the buck. What I wonder out of this comment is if we are looking at Delta and taking our EFA to the table with a proposal that we assume is well with in the acceptable range. If that is the case maybe it is wise to start a lot higer than this to allow for wiggle room. (Fluff is you will in case we are actually off on the conservative side. I am not stating a C2K+ etc. I am just stating a position without a numerical value)
Knowing where we will end up is a wise decision. In the end it is a good guess. We do not know what the actions of the company leadership will be in terms of new debt, future debt retirement, projected revenue etc. It is their job to explain their limits to us and their reasoning for the dollar value attached to their proposal. Then we get to fact or crap it. Doing the EFA allows us to sharp shoot their range, but we should not be self limiting for the sake thereof.
04-26-2010, 02:39 PM
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Do I have to bring back the real lizard again????
04-26-2010, 02:40 PM
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04-26-2010, 02:47 PM
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