Another Downgrade For Delta Sends Stock Down
- Thread starter FA Mikey
- Start date
RDU Jetblast
Veteran
BK lawyers are the only ones who make money on the deal. Their bills are paid first and in full. They're no better than grave robbers. In bankruptcy, you lose everything and emerge with little to be proud of. It is to be avoided at all costs. When avoided, the portfolio managers will be impressed and happy days will be here again. Remember when Big D's reputation was a "deep pocket airline". Those where the days weren't they?
Did you see the company announcement today? They expect to burn as much cash in the rest of the year as they did in the first half. That's $700 million, which would leave them with only $1.3 billion. That sounds like plenty, but it is $300 million less than Continental had at the end of June. Burning $ 1.4 Billion for 2004, then coming into 2005 with $1.3 billion and say, oil still at $44--I can do that math. 
WorldTraveler
Corn Field
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Delta is a much bigger airline than CO; in this turbulent and terrorist-ripe environment, $2B in cash on hand is really about the minimum for an airline of DL’s size. I expect that the critical components of DL’s cost uncompetitiveness will be resolved by the end of September if not before.
The sad reality is that by pushing DL into a corner, ALPA has only increased the leverage management has. While it was a reasonable guess to think that fuel, the overall economy, and airline yields would improve, ALPA was wrong on all three counts and DL management now can extract the cost savings they want with little pushback. While Delta’s $1B request puts DL pilots’ compensation in the middle of what other large US airlines would pay, DL could easily make changes to its business model that could redefine the competition as being LCCs – and it wouldn’t be hard at all for management to argue to a bankruptcy judge that DL pilots deserve even more than the $1B being asked.
ALPA has also done a great job of trying to deflect attention from their excessive pay by insisting that other stakeholders must sacrifice as well. The reality is that Delta’s other employees will probably face cuts and DL will be successful in re-negotiating debt and other obligations for the very same reason that they will be successful in getting cuts from the pilots outside of bankruptcy – because the process will be much more painful if it goes to bankruptcy.
The sad reality is that by pushing DL into a corner, ALPA has only increased the leverage management has. While it was a reasonable guess to think that fuel, the overall economy, and airline yields would improve, ALPA was wrong on all three counts and DL management now can extract the cost savings they want with little pushback. While Delta’s $1B request puts DL pilots’ compensation in the middle of what other large US airlines would pay, DL could easily make changes to its business model that could redefine the competition as being LCCs – and it wouldn’t be hard at all for management to argue to a bankruptcy judge that DL pilots deserve even more than the $1B being asked.
ALPA has also done a great job of trying to deflect attention from their excessive pay by insisting that other stakeholders must sacrifice as well. The reality is that Delta’s other employees will probably face cuts and DL will be successful in re-negotiating debt and other obligations for the very same reason that they will be successful in getting cuts from the pilots outside of bankruptcy – because the process will be much more painful if it goes to bankruptcy.
WorldTraveler
Corn Field
- Dec 5, 2003
- 21,709
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Moody's has given Delta yet another downgrade on its unsecured debt today.
Reuters
Moody's cuts Delta Air's unsecured debt rating
Tuesday August 10, 5:53 pm ET
NEW YORK, Aug 10 (Reuters) - Moody's Investors Service (News - Websites) on Tuesday downgraded its debt ratings on Delta Air Lines (NYSEAL - News), citing the company's deteriorating finances and grim cash flow outlook.
The agency slashed its senior unsecured debt rating to Ca, the second lowest rating, from Caa3.
The outlook on the ratings remain negative, Moody's said.
"Delta's ability to generate positive operating cash flow is highly dependent on successful renegotiation of the company's labor agreement with its pilots," Moody's said in a statement. "A rapid resolution of these negotiations is not expected in the near future."
I happen to believe that the resolution will come sooner (within 60 days) rather than later. Delta is very close to loosing its ability to run an airline; the cost problems must be resolved so the company can move on.
Reuters
Moody's cuts Delta Air's unsecured debt rating
Tuesday August 10, 5:53 pm ET
NEW YORK, Aug 10 (Reuters) - Moody's Investors Service (News - Websites) on Tuesday downgraded its debt ratings on Delta Air Lines (NYSE
AL - News), citing the company's deteriorating finances and grim cash flow outlook.The agency slashed its senior unsecured debt rating to Ca, the second lowest rating, from Caa3.
The outlook on the ratings remain negative, Moody's said.
"Delta's ability to generate positive operating cash flow is highly dependent on successful renegotiation of the company's labor agreement with its pilots," Moody's said in a statement. "A rapid resolution of these negotiations is not expected in the near future."
I happen to believe that the resolution will come sooner (within 60 days) rather than later. Delta is very close to loosing its ability to run an airline; the cost problems must be resolved so the company can move on.
