sailingfun

They will curtail expansion however I suspect we would see a greater reduction at Delta because we have a large number of older aircraft that are paid for. It’s much easier to park a airframe with no monthly cost verses one with a 3 million dollar a month lease.

TED74

Why?

Filler

sailingfun

I am guessing you might be joking. Delta has long called the MD88 the accumulator fleet. They could be put in and out of service at virtually no cost and as such be used to quickly adjust capacity.
If you have a aircraft with a lease payment you still have to make that payment if you park it. If you lease a aircraft for 10 dollars a month to keep things simple would you park it or keep flying it even though it earns only 9 dollars a month. A dollar a month loss or a 10 dollar a month loss? Same thing applies if you own the aircraft with a mortgage payment.

TED74

I'm not joking at all.

My family has two cars, one is paid off and the other has a payment. This has zero effect on my choice of what to drive on any given road trip. We choose the one that matches our needs for each trip. I would think Delta matches aircraft capability and operating cost to our routes.

I always hear this "conventional wisdom" about paid off jets being easier to temporarily park and honestly doing understand it. Delta's profitability by aircraft matters not (unless I'm missing something).

I'd buy parking 88s and 90s because they (being older) are more expensive to operate, but not simply because they are paid off. If anything, there could be a case for flying them extra (and temporarily parking leased jets) to squeeze any remaining life out of 88s and 90s before retiring them.

sailingfun

That’s not how management thinks. I suspect if your older paid for car was a maintenance intensive gas guzzler you would park it first. Management will do the same. By definition in a downturn we are trying to cut not increase costs. That is why they call the MD88/90 the accumulator fleet and have in the past used it as such.

Sputnik

You buy cars presumably for transportation, not to make money. They are a sunk cost, so they don't necessarily cost more if you use them or not (other than operating costs).

An airline acquires an aircraft as a money making investment. The payments are 10s of thousands of dollars per day, whether the airplane is in the air 0 hours or 24 hours. In the latter case it's making money, paying for itself and adding to the bottom line. If the need arises to park airplanes, parking an 88 cost nothing. Parking a 321 has a daily bill.

Having the ability to park a chunk of airplanes at no cost is an advantage. Being able to pull a bunch of airplanes out of parking at no cost is also an advantage. And yes, there is no such thing as "no cost," so low cost.

Delta is killing it, with a fleet mix that defies conventional wisdom. So I'd say someone in revenue knows what they're doing.

TED74

As I implied above, if something is a gas guzzler I will park it. I happen to think that's why Mad Dogs get parked, and not because they are paid for. Sailing implies the same. If you look at our total balance sheet across the fleets, does it cost more to park a leased airplane than a airplane we own?

Is there an additional cost we incur by parking a leased aircraft? That lease payment will be there whether we are flying it or not, I just don't know the agreement well enough to know if there is additional cost to park something we planned on flying. It may very well make someone and you guys feel better to fly something that has a payment associated with it, but I sure hope our block hour decisions aren't based on what makes us feel good.

Han Solo

Agree. If say hypothetically we paid cash for the 321s and the 88s were on lease, would we be parking the 321s? In one post SF says that marketing (which I'm sure he means network) decides what and where we fly but here he contradicts himself and it's all of a sudden what we have lease payments on? Doesn't make any sense. The 88s are being parked because they are maintenance intensive gas guzzling junk, not because they happen to be paid for.

JamesBond

So then having a low debt load means bupkus. Delta should be doing what UAL and AAL are doing and leveraging the hell out of everything because it certainly seems to make no difference. I don't get it. I actually thought I did, but your missive makes me rethink the whole thing.

sailingfun

Management thinks having a ability to quickly make capacity changes is a advantage. Pilots tend to think otherwise.