Any "Latest & Greatest" about Delta?
12-05-2011, 05:57 AM
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Alfa;
I am not one to give much credence to the talking heads, but his quotes were Associated Press re-printed in other papers.
I guess you posting on an anonymous web-board doesn't require any level of press reliability, but since most of us know your real world identity, this does smack of deflection.
Carl backed up his assertions as challenged by you. If this is all you got, the round goes to Carl.
Scambo (unbiased judge)
BTW, Carl says the problem is debt, you say the problem is revenue. What's the difference? Debits dont equal credits. If this is just a Johnson measuring contest please let me slip out of the way and you two just keep on comparing.
I am not one to give much credence to the talking heads, but his quotes were Associated Press re-printed in other papers.
I guess you posting on an anonymous web-board doesn't require any level of press reliability, but since most of us know your real world identity, this does smack of deflection.
Carl backed up his assertions as challenged by you. If this is all you got, the round goes to Carl.
Scambo (unbiased judge)
BTW, Carl says the problem is debt, you say the problem is revenue. What's the difference? Debits dont equal credits. If this is just a Johnson measuring contest please let me slip out of the way and you two just keep on comparing.
In the 3Q, AMR spent $171 million in interest expense on about $8.2 billion in debt. Delta spent $229 million in interest on about $12.5 billion in debt. American reported a net LOSS of $153 million and Delta reported a net PROFIT of $547 million, after all special items. Do the math, if a magic fairy comes along and wipes out all of American's debt and let's them keep all their airplanes, American still has a third quarter where their profit is $18 million. $18 million profit in the third quarter, you know the money quarter, summer travel, the one that is supposed to support you the whole year. $18 million if they eliminate ALL THEIR DEBT. Sure they don't have a revenue problem, it's all about debt.
With ZERO DEBT American would still lose money for the entire year, they would still lose money for next year, and the one after that. Is this really all about debt?
If debt is the problem, how come Delta spent more on interest and still reported a healthy 3Q while American sucked it once again?
Is American's debt double Delta's or not? I am not sure but when I went to elementary school, I learned that 8.2 was not double 12.5 but in fact 8.2 was less than 12.5. Maybe I am wrong.
In the third quarter Delta increased PRASM by 11% while American increased PRASM by 5.8%, but you know that has nothing to do with profitability, it's all about debt. It is completely unrelated to profit that Delta was able to raise fares to cover the run up in fuel prices while American lagged behind once again, revenue doesn't matter, it's all about debt.
So Delta has more debt, Delta pays more in interest every quarter than American. Delta also has been leading the industry in PRASM growth while American is the laggard. Delta makes a PROFIT in the third quarter while American has another LOSS. Delta will be solidly profitable this year and next while American is in bankruptcy.
Yes, Carl, proved it, it's all about debt. Revenue doesn't matter, it's all about debt. Hey, if some guy sitting on the desk at AP says it's so, it must be true.
Since we all know your true identity too, you are not an unbiased observer. But hey, let's not look at real numbers, they are just a deflection of the truth.
12-05-2011, 06:11 AM
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Wow, Carl, you are quoting the business press, excellent source of financial analysis. Go and read some financial analysis by people that make their living doing it. Is that really what you are standing on, the headline from the Fort-Worth Star Telegram? Is this a joke or are you seriously using the Fort-Worth Star Telegram as your source for financial analysis.
I also listed quotes from Time and the AP. The good thing about those guys is that they actually quote the company officers in their report. And again from the AP report quoting the company: AMR said it had $29.6 billion in debt and $24.7 billion in assets.
American only has a little over $1 billion in unsecured debt, I will answer the question but clearly you don't have any information beyond the Fort-Worth Star Telegram. Unsecured debt is just about all that gets wiped out in bankruptcy. The rest is secured, mostly by aircraft, so they will not be able to wipe it out.
American does not have double the debt load of Delta. American (about 8.2 billion) has less long term debt than Delta (about 12.5 billion), but they are a much smaller company now. Another Carlism that flies out the window with yesterday's Fort-Worth Star Telegram. American's chief problem is a revenue problem.
Since you are so into reading newspapers, Carl, why don't you go back two years and list out the PRASM performance of American vs. Delta. Show me how each airline has done in that time. Then tell me why there is a difference. Carl, you can bluster and attack, but you can't come up with a reason why American has underperformed Delta in the last few years.
Indeed. Press sources who quote company officials, or the personal opinion of an MEC bureaucrat.
Carl
12-05-2011, 06:14 AM
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They are in bankruptcy to:
1. Get rid of small aircraft 30-40 seats that lose money hand over fist
2. Accelerate MD-80 retirements
3. Fix productivity issues that weren't addressed in 2003
4. Freeze or terminate pensions
5. Hit labor one more time
6. Reduce debt as much as practical
7. Take a shot as vendors, airports, etc. to negotiate better contracts
8. Redo leases on aircraft they want to retain
Most of AA's aircraft and debt are in EETC's. Bundles of aircraft are secured by one EETC which is split in tranches and each tranche is sold to multiple buyers in varying amounts. It is impossible to unwind those EETC unless they give up all the aircraft. No airline has been able to crack the EETC problem in bankruptcy and I don't expect AA to be the first. They are designed that way to protect creditors, that is why the interest rates are lower.
As I said to Carl, the underlying issue for them is not costs but revenue. Sure they can in the short term push costs down to a level that will help them out, but in the end they are too small a player in a market that is increasingly getting crowded with Delta and United.
If you were a corporate travel manager for a global business, whom would sign a contract with? Look at where you can go with Delta and United and then look at American. They don't compete. We are everywhere in the world and American has gaping holes in their network. This is not theory, it is happening every day as Delta steals more and more high value customers away from American and US Airways. Airways survives only because their labor force has gone completely insane and they are now operating on essentially regional airline wages. At some point the merry go round stops for Airways too. Why else has Doug Parker put on his high heeled boots and low cut dress and hung out on every street corner saying "Buy me, please. Come on big fella, don't you want to get in bed with me." There is no long term future there.
The problem that both airlines have is that if they merge 1+1 = about 1.4. After you eliminate duplication, there is not enough left there to compete with Delta and United. Where do either of those airlines go west of the international date line? How about Africa? Middle East? Wait Airways goes to Cancun so they have that booming business market to fall back on.
So American will scrape some costs off in bankruptcy, but if that is all they do then they still have serious long term problems. Their network doesn't compete and they are getting their butts kicked every day by Delta and United. They need to get to bigger, they need to expand their network, they need to recapture high value business travelers that are the life blood of an international network carrier.
1. Get rid of small aircraft 30-40 seats that lose money hand over fist
2. Accelerate MD-80 retirements
3. Fix productivity issues that weren't addressed in 2003
4. Freeze or terminate pensions
5. Hit labor one more time
6. Reduce debt as much as practical
7. Take a shot as vendors, airports, etc. to negotiate better contracts
8. Redo leases on aircraft they want to retain
Most of AA's aircraft and debt are in EETC's. Bundles of aircraft are secured by one EETC which is split in tranches and each tranche is sold to multiple buyers in varying amounts. It is impossible to unwind those EETC unless they give up all the aircraft. No airline has been able to crack the EETC problem in bankruptcy and I don't expect AA to be the first. They are designed that way to protect creditors, that is why the interest rates are lower.
As I said to Carl, the underlying issue for them is not costs but revenue. Sure they can in the short term push costs down to a level that will help them out, but in the end they are too small a player in a market that is increasingly getting crowded with Delta and United.
If you were a corporate travel manager for a global business, whom would sign a contract with? Look at where you can go with Delta and United and then look at American. They don't compete. We are everywhere in the world and American has gaping holes in their network. This is not theory, it is happening every day as Delta steals more and more high value customers away from American and US Airways. Airways survives only because their labor force has gone completely insane and they are now operating on essentially regional airline wages. At some point the merry go round stops for Airways too. Why else has Doug Parker put on his high heeled boots and low cut dress and hung out on every street corner saying "Buy me, please. Come on big fella, don't you want to get in bed with me." There is no long term future there.
The problem that both airlines have is that if they merge 1+1 = about 1.4. After you eliminate duplication, there is not enough left there to compete with Delta and United. Where do either of those airlines go west of the international date line? How about Africa? Middle East? Wait Airways goes to Cancun so they have that booming business market to fall back on.
So American will scrape some costs off in bankruptcy, but if that is all they do then they still have serious long term problems. Their network doesn't compete and they are getting their butts kicked every day by Delta and United. They need to get to bigger, they need to expand their network, they need to recapture high value business travelers that are the life blood of an international network carrier.
Carl
12-05-2011, 06:23 AM
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American has a long term revenue problem. The only way for them to increase revenues is to get bigger. They need to merge and make American Airlines bigger. They need to increase their extended network through codes shares and JV's. It is very consistent.
Face it, Carl, you are just shooting in the dark here. You have no data, no numbers, no analysis, nothing. Oh, you have some wire reporter from the AP. Wow, that seals the deal.
12-05-2011, 06:33 AM
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Look folks, let me try to make this simple since we have so many people here trying desperately to "prove" their thesis. Nobody goes into bankruptcy because they have a revenue problem. NOBODY. There is no mechanism in bankruptcy court to fix a revenue problem. The ONLY reason bankruptcy court exists is to give you a certain time frame of protection FROM YOUR CREDITORS! By definition, what is a creditor? Answer, somebody that holds your DEBT obligation.
Let's take this a step further. You run a company that has zero debt but doesn't produce the revenue that your competitors do. What would a bankruptcy judge say to you upon entering court? He would say: Since you have no debt, there's nothing we can do for you. Maybe you should go to business school to learn how to produce revenue better.
I don't know how I can make this any simpler. I know this doesn't fit the template created here by alfaromeo and acl65pilot, but the facts are that AMR is in bankruptcy court. They are seeking protection from the creditors to which they have $29.6 billion in debt obligations. They are NOT seeking lessons on how to produce more revenue.
Carl
12-05-2011, 06:43 AM
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Carl claims that AMR's lack of profitability is debt related. Carl said AMR's debt was double Delta's.
In the 3Q, AMR spent $171 million in interest expense on about $8.2 billion in debt. Delta spent $229 million in interest on about $12.5 billion in debt. American reported a net LOSS of $153 million and Delta reported a net PROFIT of $547 million, after all special items. Do the math, if a magic fairy comes along and wipes out all of American's debt and let's them keep all their airplanes, American still has a third quarter where their profit is $18 million. $18 million profit in the third quarter, you know the money quarter, summer travel, the one that is supposed to support you the whole year. $18 million if they eliminate ALL THEIR DEBT. Sure they don't have a revenue problem, it's all about debt.
In the 3Q, AMR spent $171 million in interest expense on about $8.2 billion in debt. Delta spent $229 million in interest on about $12.5 billion in debt. American reported a net LOSS of $153 million and Delta reported a net PROFIT of $547 million, after all special items. Do the math, if a magic fairy comes along and wipes out all of American's debt and let's them keep all their airplanes, American still has a third quarter where their profit is $18 million. $18 million profit in the third quarter, you know the money quarter, summer travel, the one that is supposed to support you the whole year. $18 million if they eliminate ALL THEIR DEBT. Sure they don't have a revenue problem, it's all about debt.
In the third quarter Delta increased PRASM by 11% while American increased PRASM by 5.8%, but you know that has nothing to do with profitability, it's all about debt. It is completely unrelated to profit that Delta was able to raise fares to cover the run up in fuel prices while American lagged behind once again, revenue doesn't matter, it's all about debt.
So Delta has more debt, Delta pays more in interest every quarter than American. Delta also has been leading the industry in PRASM growth while American is the laggard. Delta makes a PROFIT in the third quarter while American has another LOSS. Delta will be solidly profitable this year and next while American is in bankruptcy.
Yes, Carl, proved it, it's all about debt. Revenue doesn't matter, it's all about debt. Hey, if some guy sitting on the desk at AP says it's so, it must be true.
Since we all know your true identity too, you are not an unbiased observer. But hey, let's not look at real numbers, they are just a deflection of the truth.
So Delta has more debt, Delta pays more in interest every quarter than American. Delta also has been leading the industry in PRASM growth while American is the laggard. Delta makes a PROFIT in the third quarter while American has another LOSS. Delta will be solidly profitable this year and next while American is in bankruptcy.
Yes, Carl, proved it, it's all about debt. Revenue doesn't matter, it's all about debt. Hey, if some guy sitting on the desk at AP says it's so, it must be true.
Since we all know your true identity too, you are not an unbiased observer. But hey, let's not look at real numbers, they are just a deflection of the truth.
Still noting for the record that you've come up with NOTHING to back up your original claim that AMR is where they are because of a lack of JV's and code share.
Carl
12-05-2011, 06:43 AM
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Geeze,
My eyes glassed over about a dozen pages ago. Guys who don't like each other having a "chicken or the egg" discussion.
What does ANY of this have to do with us? If AA breaks apart do any of you honestly think we will take any part of them. We are paying down debt, unless it's a free dead fish on the door step I just don't see it.
So, WHATGAS?
Ferd
My eyes glassed over about a dozen pages ago. Guys who don't like each other having a "chicken or the egg" discussion.
What does ANY of this have to do with us? If AA breaks apart do any of you honestly think we will take any part of them. We are paying down debt, unless it's a free dead fish on the door step I just don't see it.
So, WHATGAS?
Ferd
12-05-2011, 06:50 AM
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So here we have you saying backruptcy has nothing to do with fixing their revenue problems, but bankruptcy will fix the issues you listed (revenue problems). You contradict yourself in the same post.
Carl
12-05-2011, 06:56 AM
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I guess we better take the company's first offer since we are obviously just along for the ride
12-05-2011, 07:18 AM
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Geeze,
My eyes glassed over about a dozen pages ago. Guys who don't like each other having a "chicken or the egg" discussion.
What does ANY of this have to do with us? If AA breaks apart do any of you honestly think we will take any part of them. We are paying down debt, unless it's a free dead fish on the door step I just don't see it.
So, WHATGAS?
Ferd
My eyes glassed over about a dozen pages ago. Guys who don't like each other having a "chicken or the egg" discussion.
What does ANY of this have to do with us? If AA breaks apart do any of you honestly think we will take any part of them. We are paying down debt, unless it's a free dead fish on the door step I just don't see it.
So, WHATGAS?
Ferd
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