DAL has best earnings upside revisions in industry

[WorldTraveler]

and you've never been an FA or ever worked for DL but you seem to think that makes you an authority on the subject.

let's face it, that since the facts now overwhelmingly put yet one more black mark on the union track record, your next best attempt is to discredit the one who brings the information.



the facts OVERWHELMINGLY show that AA/US AND UA spend more of its money on outsourcing than DL.

we know that you are running to the locker room right now trying to find another deflated ball but the facts hit you straight up the side of the head - just as it did with dawg.

trying to argue that DL outsources more of its maintenance than AA/US or UA is nothing but the lie that you accuse so many others of telling.

 

[LD3]

 

but you seem to think that makes you an authority on the subject.

 
That is a classic.....

 

[700UW]

DL outsources all of their Airframe overhauls, US and AA do not.
 
Just because flies an airplane to a third world county for an AO and pays less than it would cost if they did it in-house, means nothing to those who have worked in maintenance.
 
DL sends out more work than AA and US, how is that too hard to understand?
 
Just because they spend less, doesnt mean they send out less work.

 

[robbedagain]

they sent an A330 to SIN for interior mods...    wasted flight  wasted fuel   wasted money when it could and should have been done at home

 

[WorldTraveler]

ONE AND ONE QUARTER BILLION DOLLARS.

that is what AA and US spent on OUTSOURCED maintenance in the most recently reported year.

UA spent even more.

DL spent the least among the big 3.


tough news for some to digest today.

A sad example of how badly unions have protected the jobs and revenue of the employees they represent.

and trying to argue that work saved is a better measure, do you honestly think that the money that was spent on outsourced maintenance couldn't have been spent on its own employees if it hadn't been spent on outsourced maintenance?

That money that was spent on outsourced maintenance was a loss to the employees who could have done that work.

 

[700UW]

You truly dont get it, it took chapter 11 to get work to be outsourced.
 
And DL outsources more work than AA and US.
 
You still dont get it, just because DL spends less, doesnt mean they dont outsource less.
 
Can you understand AO is outsourced, every single frame?

 

[eolesen]

WT knows all and we are just wrong. If he says the sky is red we should believe we are just color blind....

 
Yep. And that's why I made the decision it's not worth my time to bother reading or discussing anything written by someone wearing blinders. 

"Know the competition, respect the competition and be humble.
 
*All of our competitors are superior to us in some aspect of the business.
*Do not be dismissive of them or we will let down our guard and get beat."

Spot on. There are a small handful of people at any airline obsessed with "Winning!" and then there are the people who just focus on getting the job done...

 

[WorldTraveler]

perhaps Kev has a different view of the Rules of the Road but DL's execs regularly and repeatedly talk about what DL is doing to win in the marketplace.

Wondering if he or you bothered to watch the CNBC interview with DL's exec responsible for Asia-Pacific?

or looked at the presentation DL issued at the last DL investor day?

I didn't issue a downgrade on AAL stock today because they underperformed revenue and because analysts said

"We downgrade on a relative view that there is more compelling upside elsewhere in our coverage over the next six to 12 months. Until investors are assured PRASM underperformance isn't going to persist and/or integration risk is retired, we see limited scope for American Airline's [depressed] multiple re-rate," Credit Suisse said.

as much as it frosts you, I said MONTHS ago, perhaps years, that AA would underperform on revenue and I specifically cited S. Florida due to increased LCC competition, DFW because of the fall of the Wright Amendment, and DCA and LGA due to the merger divestitures. I didn't include PHL and ORD which AA execs included in the list of 50 new markets where they "underestimated" the revenue impact of new competition.

you did see that AA said they expect EVERY ONE of their revenue regions will likely be RASM growth negative for this quarter?

that is quite simply breathtaking. AA will get less revenue for its efforts this quarter in every corner of its network.... while at the same time that AA's costs will be going up 3-4% as part of new labor contracts.

further, I was dead on that AA's revenue performance has cost and likely will cost it 3 more quarters of being able to claim industry leading profitability.

the only thing that is spot on is that I absolutely nailed the revenue and cost related forecasts regarding the competitive situation in the industry despite the howls of people on here.

and Credit Suisse went on to sight low free cash generation at AA (a byproduct of taking on such high levels of debt related to refleeting) as well as to note "AMERICAN AIRLINES GROUP INC's return on equity is below that of both the industry average and the S&P 500" and ""The debt-to-equity ratio is very high at 3.44 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Along with the unfavorable debt-to-equity ratio, AAL maintains a poor quick ratio of 0.77, which illustrates the inability to avoid short-term cash problems."

Those aren't super encouraging words for a company that is one year into a merger when already one group of analysts is raising red flags that others eventually cannot avoid.

whether you want to or can admit it or not, it is becoming increasingly obvious that I was dead right that the AA/US merger was built on poor revenue fundamentals. There was and is little long-term revenue upside to merging a carrier whose network had long been built around monopoly markets but which would see increasing amounts of competition with a carrier that built its network around carrying low yielding connecting traffic that it was getting from other carrier strength markets.

feel free to ignore me if that is what you wish to do.

I'll continue to speak to key industry issues and providing analysis whether you participate in the discussion or not.

and based on the track record I have of speaking to key issues and outcomes, your choice to not argue with me would probably be a good thing.

 

[topDawg]

let me help you out, dawg, since coming face to face with the truth is hard for you.

there is a line in the MIT Airline Data project that is sourced from DOT data (provided by the airlines at the DOT's "request" entitled

"Sum of Services Purchased-Outside Flight Equipment Maintenance"

for DL, it is $1,067,046 (thousand) or DL spent just over $1 billion on outsourced maintenance which amount to 41.8% of their maintenance spend (see line "Maintenance $'s Outsourced")

AA spent $682,456 (thousand) or just under $700 million on outsourced maintenance which amounted to 30.3% of their total maintenance spend.

US spent $573,708 (thousand) on outsourced maintenance for 54.2% of its total maintenance spend.

combined, AA and US spent $1,255,000,000 or $1.25 billion dollars on outsourced maintenance which is more than DL.

Where is the MRO numbers, TEASLs numbers etc. 
 

You go by spend and not actual work sent out.

Showing what is outsourced by work instead of spend gives a more accurate picture.

exactly. We are talking about jobs........but WT can't do that because he doesn't know a got damn thing about any of this. 
 

tell that to the DOT.

Outsourcing is calculated on the basis of dollars spent. '

it is precisely because you and the labor movement refuse to acknowledge the statistics that matter that the labor movement continues to be decimated at the hands of mgmt. who has repeatedly succeeded at accomplishing their goals at the expense of out of touch union leaders.

btw, the figure for WN is $924 million in outsourced maintenance for 59.7% of the total maintenance spend and $1.4 billion outsourced which is 52.1% of UA's maintenance

when unions have done as poor of a job of protecting jobs as they have done at UA, US, and WN, why should any DL employee believe union salesmen's promises of what they can do at DL when they haven't been able to do it elsewhere?

Tell that to the DOT........? are you f.....
 
again when talking about jobs, work scope matter more than money spent. Because US does mostly power by the hour agreement with its fleet. Is this a bad thing? no any fool would trade engine overhauls for HMVs? why JOBS. HMVs will always bring in more jobs than any component overhaul. 
 
 

Spend vs Work a huge difference.

exactly. But because WT doesn't know anything about that he can on;y use the metrics that prove his (wrong) point
 

there is the union salesman again arguing that the data is invalid because it shows a picture which they don't want to hear.

AA/US and UA both outsource more of their maintenance than DL in terms of actual dollars and WN exceeds DL by almost 20 percentage points.

Unions have very little success to show for their "efforts" to keep jobs for their members.

If the union is protecting jobs then no he is completely correct. 
 
I know this is shocking to you, but generally trading jobs for profit is not what labor wants to do....... 

they sent an A330 to SIN for interior mods...    wasted flight  wasted fuel   wasted money when it could and should have been done at home

They send the 330 to SIN just for checks. 
While they are bringing in c-checks now I see no way possible that Delta does the heavies C checks on the 330 (they don't have D checks) Its a 7-10 year check.
I assume it will be basically like the little bus where the 7-11 day checks will be in house and any check where the seats get pulled will go to a vendor.  

 

[topDawg]

blah blah blah trying to start a pissing contest......blah blah blah.... 

FIFY

 

[WorldTraveler]

so I'll you to my question about whether you watched the latest CNBC interview or read DL's presentation from the Investor Day conference.

DL REGULARLY compares itself and its performance to other carriers and other carriers do the same thing.

it is part of the COMPETITIVE nature of business and in winning investors who often in the airline industry shift their investments from one company to another.

AA came out of BK with grand pronouncements of how well they would do... and very early into the game, they are facing some major headwinds, and I specifically pointed to many of those things long before yesterdays downgrade or AA's earnings call.

as badly as you all want to try to discredit what I say, it is clear that I was deadly accurate about how the AA/US merger would play out with respect to revenue and competition.

and of course the real reason why you want to discredit me on revenue and strategic issues is to hope that I am wrong on labor related issues as well.

you can argue all you want about how AA/US and UA don't outsource more work because the work DL sends out is valued differently but you ALL are naïve beyond belief if you think that any company is going to spend X amount on its own people and a value let's call Y on outsourcing and the two aren't linked.

it is precisely because the outsourced number is so large at some carriers that there is less for inhouse maintenance and the value for inhouse maintenance personnel is not growing

in contrast, by your own post DL is ADDING maintenance capabilities and personnel to its own system.

tell me what other carriers are doing to increase the size of their maintenance operations

 

[topDawg]

so I'll you to my question about whether you watched the latest CNBC interview or read DL's presentation from the Investor Day conference.

well I did post notes from the inverstor day call. So I would say that to do so i did have to listen to it.......
 

you can argue all you want about how AA/US and UA don't outsource more work because the work DL sends out is valued differently but you ALL are naïve beyond belief if you think that any company is going to spend X amount on its own people and a value let's call Y on outsourcing and the two aren't linked.

Putting words in my mouth again. 
We are talking about staffing not dollars that is the point i am trying to drive across to you. You harp on one stat but wont look at the others. 
 
let me put this on a small and simple scale, you tell me which is better for the employee. (and which airline would be Delta in this case) 
 
Airline X does a maintenance job that requires 10 employees. Airline X outsources the work airline Y does
Airline Y does a different job that requires 2 employees. Airlines Y outsources the work airline X does. 
 
Which airline is better for employees? Which airline is Delta? 
 

it is precisely because the outsourced number is so large at some carriers that there is less for inhouse maintenance and the value for inhouse maintenance personnel is not growing

in contrast, by your own post DL is ADDING maintenance capabilities and personnel to its own system.

yes and no. As i have pointed out before 
the B8Fs coming in house really did nothing as far as staffing goes. Really did nothing for the MRO (only 1 other airline in the world operates the B8F, United, and they don't send them to Delta for overhaul) 
 
The 330 c-checks is the only real growth here. 
 
but on the flip side, Delta is outsourcing 120 more engines (CF6-80E1 Trent XWB, Trent 7000). 
 
So net to net it is, at best status quo. More than likely it will end up being worse because of the two engine lines being replaced by the Trents.) 
 

tell me what other carriers are doing to increase the size of their maintenance operations

err...I don't know? I don't work for other airlines so I cant answer that question.... 

 

[WorldTraveler]

so far as YOU KNOW at this point, DL is outsouring those Trent engines - but the change in GE engines shows that DL does change what capabilities it keeps inhouse.

I don't know why they made the decision they did regarding swapping which types of engines they do inhouse vs. outsource, but even by your estimation, outsourcing is not increasing.

and I'm still waiting to celebrate with you when news comes out that DL is putting in a large engine test cell and that part of DL's purchase of RR engines for the new Airbii is that those engines will be done inhouse.

your example is valid but given the significant differences in the percentages of the percent of outsourcing and the value of outsourcing, it is pretty hard to argue that US - which outsources about 15% more maintenance than DL does - could do that same work inhouse without dramatically improving US internal employee expenses while the inverse is true for DL.

given that DL does engine maintenance inhouse which takes up less space but is more valuable in terms of revenue to the company - which is credited to Tech Ops - not Flight Ops or the Ramp - it should be clear that DL can use its assets - including people more efficiently and it is highly doubtful that the work that is outsourced at DL could be done inhouse for anywhere close to the same amount or that US wouldn't dramatically increase its own employee maintenance expenses if it did the work inhouse to the same level that DL does, even on a value basis.

 

[700UW]

You still can't grasp money spent vs actual work sent out.

 

[topDawg]

so far as YOU KNOW at this point, DL is outsouring those Trent engines - but the change in GE engines shows that DL does change what capabilities it keeps inhouse.

No, if we use your rules Delta is, no matter what, outsourcing the Trents. AT BEST a JV with RR is coming. (at best) because they have signed a long term TotalCare agreement that means they will be sent to a vendor. 
 
Now in theory that vendor could be a Delta/RR JV. So what does that mean to TechOps employees? well it "could" be coming to Atlanta
Or it "could" be going to Mexico or Asia..... 
 
Right now it doesn't look good. 
 

I don't know why they made the decision they did regarding swapping which types of engines they do inhouse vs. outsource, but even by your estimation, outsourcing is not increasing.

Like I said that isn't completely true. You see the data yourself. 
and if the PW4000 and CF6 lines go away without any replacement that is going to be a huge loss. Huge. In my honest opinion that will mean the F word...
 

and I'm still waiting to celebrate with you when news comes out that DL is putting in a large engine test cell and that part of DL's purchase of RR engines for the new Airbii is that those engines will be done inhouse.

Again, If you don't count TAESL as in-house for AA you won't be able to do so for DL. Delta isn't doing those engines in-house. It will be a JV or nothing. (and again, that doesn't mean it will be a JV worked by Delta employees. Could be in Asia, in Mexico, in the US staffed with contractors...... nothing stopping Delta from doing any of the above.) 
 

your example is valid but given the significant differences in the percentages of the percent of outsourcing and the value of outsourcing, it is pretty hard to argue that US - which outsources about 15% more maintenance than DL does - could do that same work inhouse without dramatically improving US internal employee expenses while the inverse is true for DL.

I don't know that as a fact. 
Engines don't get sent out because of labor. Engines themselves cost a metric ton of money to overhaul. Most of the time it is done 4-6 years and most true airframe overhauls now days are done every 6-10 years. 
Parker isn't doing the engine work because it is just easier to do power by the hour deals now. Its the same reason Delta is doing it. Could Delta overhaul all the engines they send out? other than 46 engines (T800/GE90s) they could do them tomorrow. Why don't they? Well OEMs are now getting away from allowing carriers to do their own work and wants it send to them (or a JV vendor) 
 
It is going to be interesting to see what happens to the engine overhaul game in the US. United has basically said they are going to get out of it. (at least for the big engines) because they aren't going to fight with the OEMs for the right to do the work. AA hasn't really said what they are doing
and all the signs point to Delta doing the same thing United is doing.
 
Notice what airlines like LH and AF do, they publicly play the engine OEMs off of each other to get what they want. AF has been in a pissing contest with Rollers over a TrentXWB overhaul center. I don't know if, even now, they have worked out a deal.
 
That wouldn't, IMHO, ever happen with this leadership team. 
 
but again, I don't know what kind of costs it would be for US to do more engine work in-house. I would almost bet that facility costs would be larger than the employees cost. (that is my point, Engines don't have the labor costs like airframe does because staffing is so low.)
 
 

given that DL does engine maintenance inhouse which takes up less space but is more valuable in terms of revenue to the company - which is credited to Tech Ops - not Flight Ops or the Ramp - it should be clear that DL can use its assets - including people more efficiently and it is highly doubtful that the work that is outsourced at DL could be done inhouse for anywhere close to the same amount or that US wouldn't dramatically increase its own employee maintenance expenses if it did the work inhouse to the same level that DL does, even on a value basis.

I have already told you most of the work Delta sends out costs about the same as it would if it was done in-house. I have seen managers say the key reason HMVs aren't done in-house is because 1) they can't get approval for more hangar space (but building mexico hangars they can do....*sigh*) 2) The guys on the 4th floor simply don't want to do it. (and/or they are to scared of wall streets reaction.) 
Margins just aren't there like people think they are. The money Delta "saves" is totally lost in potential profit and transportation cost.