Any "Latest & Greatest" about Delta?
03-16-2012, 12:30 PM
Gets Weekends Off
Joined APC: Sep 2007
Posts: 1,238
So who do we contact at Delta for a paid move?
03-16-2012, 01:00 PM
Banned
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Position: DAL
Posts: 623
Let me take (yet) another shot at explaining some major shortcomings of LBP.
First of all, let's be clear: we're talking about shifting wealth. Let's set aside the idea of negotiating a new contract, so we isolate this discussion just to LBP. Let's just say we want to reach a LOA on LBP. We're not going to bring, for free, all pay to the 747 rate. So LBP would require some averaging, probably weighted by fleet size. But let's say, for argument's sake, that this is important to us.
For this generation, this pilot group, if we take a snapshot, we get winners and losers. Porbably everyone 757 and up loses money, and the DC-9, for several months at least, sees the greatest improvement. Everyone then chases QOL, and the system undergoes a massive realignment, as senior pilots, now much poorer, "chase QOL". Or maybe they do what pilots have always done, especially pilots that just took a paycut: they chase money. The only way they can do this is to get to the front end of a categoy, any category.
Then what?
Over time, passenger numbers grow, and capacity is added. Under the old model, pay is roughly related to size, though it's not fully proportional. There is no pilot cost incentive to pick small or large airplanes, though larger is a little cheaper.
But when you make them all the same, crew costs on a DC-9 are outrageous, vs. a 747. IOW, the incentives for large airplanes are obvious, and the disadvantages of small airplanes equally obvious. And, since capacity is increasing, Delta simply increases aircraft size. In fact, the incentive is to replace capacity (including growth) with less, but disproportionately larger, large airplane. We may see the A380, after all. Who doesn't benefit? The Delta pilots.
Under the traditional system, when capacity grows, we have a pre-set, guaranteed way of benefiting. Under LBP, a guaranteed way of losing.
And let's not kid ourselves by suggesting a new contract would change the damage of LBP. Even if there were significant raises, LBP still shifts wealth. If there were large % increases across the fleet, except for the largest airplanes, we would still see a rush from those airplanes to the top of every category, and we would still be left with a built-in loser.
But at least, the (fewer) pilots remaining would finally get to see more WB's on property, and they would get to be paid (very little) to sip their coffee as their junior, poor a$$ is once again enroute to Narita.
First of all, let's be clear: we're talking about shifting wealth. Let's set aside the idea of negotiating a new contract, so we isolate this discussion just to LBP. Let's just say we want to reach a LOA on LBP. We're not going to bring, for free, all pay to the 747 rate. So LBP would require some averaging, probably weighted by fleet size. But let's say, for argument's sake, that this is important to us.
For this generation, this pilot group, if we take a snapshot, we get winners and losers. Porbably everyone 757 and up loses money, and the DC-9, for several months at least, sees the greatest improvement. Everyone then chases QOL, and the system undergoes a massive realignment, as senior pilots, now much poorer, "chase QOL". Or maybe they do what pilots have always done, especially pilots that just took a paycut: they chase money. The only way they can do this is to get to the front end of a categoy, any category.
Then what?
Over time, passenger numbers grow, and capacity is added. Under the old model, pay is roughly related to size, though it's not fully proportional. There is no pilot cost incentive to pick small or large airplanes, though larger is a little cheaper.
But when you make them all the same, crew costs on a DC-9 are outrageous, vs. a 747. IOW, the incentives for large airplanes are obvious, and the disadvantages of small airplanes equally obvious. And, since capacity is increasing, Delta simply increases aircraft size. In fact, the incentive is to replace capacity (including growth) with less, but disproportionately larger, large airplane. We may see the A380, after all. Who doesn't benefit? The Delta pilots.
Under the traditional system, when capacity grows, we have a pre-set, guaranteed way of benefiting. Under LBP, a guaranteed way of losing.
And let's not kid ourselves by suggesting a new contract would change the damage of LBP. Even if there were significant raises, LBP still shifts wealth. If there were large % increases across the fleet, except for the largest airplanes, we would still see a rush from those airplanes to the top of every category, and we would still be left with a built-in loser.
But at least, the (fewer) pilots remaining would finally get to see more WB's on property, and they would get to be paid (very little) to sip their coffee as their junior, poor a$$ is once again enroute to Narita.
03-16-2012, 01:05 PM
Banned
Joined APC: Jan 2012
Position: DAL
Posts: 623
03-16-2012, 01:07 PM
Line Holder
Joined APC: Aug 2007
Position: 757/767 FO
Posts: 60
AE excitement
After having 45 below me when I entered the MSP 7ER F/O category almost 2 years ago, I am now going to be the PLUG...that's going to be fun as a commuter 
03-16-2012, 01:07 PM
Banned
Joined APC: Jan 2012
Position: DAL
Posts: 623
03-16-2012, 01:09 PM
Da Hudge
Joined APC: Oct 2006
Position: Poodle Whisperer
Posts: 17,473
Some forward progress sure would be nice.
03-16-2012, 01:11 PM
Banned
Joined APC: Jan 2012
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Posts: 623
03-16-2012, 01:14 PM
Banned
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Posts: 2,007
Is Delta Air Lines a Cash King?
By Jim Royal, Motley Fool
March 16, 2012
As an investor, it pays to follow the cash. If you figure out how a company moves its money, you might eventually find some of that cash flowing into your pockets.
In this series, we'll highlight four companies in an industry, and compare their "cash king margins" over time, trying to determine which has the greatest likelihood of putting cash back in your pocket. After all, a company can pay dividends and buy back stock only after it's actually received cash -- not just when it books those accounting figments known as "profits."
Today, let's look at Delta Air Lines and three of its peers.
The cash king margin
Looking at a company's cash flow statement can help you determine whether its free cash flow actually backs up its reported profit. Companies that can create 10% or more free cash flow from their revenue can be powerful compounding machines for your portfolio. A sustained high cash king margin can be a good predictor of long-term stock returns.
To find the cash king margin divide the free cash flow from the cash flow statement by sales:
Cash king margin = Free cash flow / sales
Let's take McDonald's as an example. In the four quarters ending in December, the restaurateur generated $7.15 billion in operating cash flow. It invested about $2.73 billion in property, plant, and equipment. To calculate free cash flow, subtract McDonald's investment ($2.73 billion) from its operating cash flow ($7.15 billion). That leaves us with $4.42 billion in free cash flow, which the company can save for future expenditures or distribute to shareholders.
Taking McDonald's sales of $27.0 billion over the same period, we can figure that the company has a cash king margin of about 16.4% -- a nice high number. In other words, for every dollar of sales, McDonald's produces more than $0.16 in free cash.
Ideally, we'd like to see the cash king margin top 10%. The best blue chips can notch numbers greater than 20%, making them true cash dynamos. But some businesses, including many types of retailing, just can't sustain such margins.
We're also looking for companies that can consistently increase their margins over time, which indicates that their competitive position is improving. Erratic swings in margins could signal a deteriorating business, or perhaps some financial skullduggery; you'll have to dig deeper to discover the reason.
Four companies
Here are the cash king margins for four industry peers over a few periods:
Company Cash King Margin (TTM) 1 Year Ago 3 Years Ago 5 Years Ago
Delta Air Lines 4.5% 4.7% (14.2%) 3.3%
Southwest Airlines 2.7% 8.8% (22.2%) 0.1%
United Continental Holdings 4.2% 6.4% (8.5%) 6.1%
Alaska Air Group 4.6% 8.8% (6.6%) (7.0%)
Source: S&P Capital IQ.
None of these companies meets our 10% threshold for attractiveness. Delta Air Lines, United Continental Holdings, and Alaska Air Group all offer current margins in the 4% range. All of these companies have seen fluctuations in their margins over the five-year period, but Delta and Alaska Air have actually seen their margins increase from five years ago, while United Continental has seen its margins decrease. Southwest Air Lines has the lowest margins of the listed companies, and has also seen its margins fluctuate over the five-year period. However, its current margins are also better than they were five years ago.
The airline industry suffered a great deal from a decrease in business and personal travel during the economic recession, when individuals and businesses were looking for ways to cut back on unnecessary spending. The industry also had to deal with increases in fuel prices, which cut even further into their profit margins. Like many other airlines, Delta survived by charging fees for baggage and food, in addition to fuel surcharges, which helped the company cover its expenses. While these fees helped Delta survive past challenges, the company continues to face the threat of rising fuel prices. In order to be successful in the long term, it needs to find a way to successfully face the fundamental challenges of the airline industry.
The cash king margin can help you find highly profitable businesses, but it should only be the start of your search. The ratio does have its limits, especially for fast-growing small businesses. Many such companies reinvest all of their cash flow into growing the business, leaving them little or no free cash -- but that doesn't necessarily make them poor investments. Conversely, the formula works better for slower-growing blue chips. You'll need to look closer to determine exactly how a company is using its cash.
Still, if you can cut through the earnings headlines to follow the cash instead, you might be on the path toward seriously great investments.
By Jim Royal, Motley Fool
March 16, 2012
As an investor, it pays to follow the cash. If you figure out how a company moves its money, you might eventually find some of that cash flowing into your pockets.
In this series, we'll highlight four companies in an industry, and compare their "cash king margins" over time, trying to determine which has the greatest likelihood of putting cash back in your pocket. After all, a company can pay dividends and buy back stock only after it's actually received cash -- not just when it books those accounting figments known as "profits."
Today, let's look at Delta Air Lines and three of its peers.
The cash king margin
Looking at a company's cash flow statement can help you determine whether its free cash flow actually backs up its reported profit. Companies that can create 10% or more free cash flow from their revenue can be powerful compounding machines for your portfolio. A sustained high cash king margin can be a good predictor of long-term stock returns.
To find the cash king margin divide the free cash flow from the cash flow statement by sales:
Cash king margin = Free cash flow / sales
Let's take McDonald's as an example. In the four quarters ending in December, the restaurateur generated $7.15 billion in operating cash flow. It invested about $2.73 billion in property, plant, and equipment. To calculate free cash flow, subtract McDonald's investment ($2.73 billion) from its operating cash flow ($7.15 billion). That leaves us with $4.42 billion in free cash flow, which the company can save for future expenditures or distribute to shareholders.
Taking McDonald's sales of $27.0 billion over the same period, we can figure that the company has a cash king margin of about 16.4% -- a nice high number. In other words, for every dollar of sales, McDonald's produces more than $0.16 in free cash.
Ideally, we'd like to see the cash king margin top 10%. The best blue chips can notch numbers greater than 20%, making them true cash dynamos. But some businesses, including many types of retailing, just can't sustain such margins.
We're also looking for companies that can consistently increase their margins over time, which indicates that their competitive position is improving. Erratic swings in margins could signal a deteriorating business, or perhaps some financial skullduggery; you'll have to dig deeper to discover the reason.
Four companies
Here are the cash king margins for four industry peers over a few periods:
Company Cash King Margin (TTM) 1 Year Ago 3 Years Ago 5 Years Ago
Delta Air Lines 4.5% 4.7% (14.2%) 3.3%
Southwest Airlines 2.7% 8.8% (22.2%) 0.1%
United Continental Holdings 4.2% 6.4% (8.5%) 6.1%
Alaska Air Group 4.6% 8.8% (6.6%) (7.0%)
Source: S&P Capital IQ.
None of these companies meets our 10% threshold for attractiveness. Delta Air Lines, United Continental Holdings, and Alaska Air Group all offer current margins in the 4% range. All of these companies have seen fluctuations in their margins over the five-year period, but Delta and Alaska Air have actually seen their margins increase from five years ago, while United Continental has seen its margins decrease. Southwest Air Lines has the lowest margins of the listed companies, and has also seen its margins fluctuate over the five-year period. However, its current margins are also better than they were five years ago.
The airline industry suffered a great deal from a decrease in business and personal travel during the economic recession, when individuals and businesses were looking for ways to cut back on unnecessary spending. The industry also had to deal with increases in fuel prices, which cut even further into their profit margins. Like many other airlines, Delta survived by charging fees for baggage and food, in addition to fuel surcharges, which helped the company cover its expenses. While these fees helped Delta survive past challenges, the company continues to face the threat of rising fuel prices. In order to be successful in the long term, it needs to find a way to successfully face the fundamental challenges of the airline industry.
The cash king margin can help you find highly profitable businesses, but it should only be the start of your search. The ratio does have its limits, especially for fast-growing small businesses. Many such companies reinvest all of their cash flow into growing the business, leaving them little or no free cash -- but that doesn't necessarily make them poor investments. Conversely, the formula works better for slower-growing blue chips. You'll need to look closer to determine exactly how a company is using its cash.
Still, if you can cut through the earnings headlines to follow the cash instead, you might be on the path toward seriously great investments.
03-16-2012, 01:16 PM
Gets Weekends Off
Joined APC: Feb 2006
Posts: 1,242
Is there a way to look up the seniority list alphabetically?
03-16-2012, 01:34 PM
Gets Weekends Off
Joined APC: Sep 2008
Position: Kickin’ Back
Posts: 6,971
Denny
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