Delta Air Lines Seeks 'Crown Jewel' for New York-JFK Hub: Nonstop Flights to London

[FA Mikey]

AA has grounded as many airplanes as they acquired from TW and most TW employees are on the streets. The fact that TW had better airplanes is immaterial. You also have to wonder how AA can be shedding planes in order to keep its profit margins up while DL is able to grow its network and acquire used airplanes from AA and still be profitable (which will undoubtedly be seen in just a couple weeks).

AA is shedding planes and unprofitable routes. Delta should try it, might have kept them from having to file BK. TW people on the streets, well this happens when a company is cutting unprofitable and those no longer needed. AA bought TW before 911. Everything changed after that. It works like this, the most junior people get furloughed. Then called back in seniority order.

Now explain to me this line "You also have to wonder how AA can be shedding planes in order to keep its profit margins up while DL is able to grow its network and acquire used airplanes from AA and still be profitable." Now how profitable is Delta. As I understand it, they had to file chapter 11. They have been shedding assets for years just to keep going.

DL still has an owned regional airline that they are rehabilitating and expect to sell. And of course we know that AA has never sold any of its assets - like Sabre or even its headquarters building. Unlike AA or UA, DL owns its headquarters complex.

Great for you, glad to hear there is still more Delta has to sell. Well, sabre was spun off starting in 1996, and completed in 2000. Unlike the Delta fire sales of the last couple years. Sorry no AA asset sales happening.

DL made an investment in Pan Am 2 which continued to bleed money heavily so DL pulled the investment. Those Pan Am 2 routes were sold to United which has discontinued most of them. DL in the meantime has built its own Latin American operation that is now bigger than both United's and what Pan Am operated at the time of the DL investment in Pan Am 2.

Doesnt that make it one in the same?

Let's discuss profitability again after DL posts its 2nd quarter numbers. Go ahead and get your punches in now, though, cause I have a feeling you won't be in such a great position to condemn DL in just a couple weeks.

Not condemning. There just are no profits out there. You talk as though there are. But where?

 

[artiefufkin1]

"As I understand it, they had to file chapter 11. They have been shedding assets for years just to keep going."

Why should we be going by your old information? Look at the Monthly reports "now". They are making money. And it will continue to get better Month after Month.

 

[JFK777]

AA paid TWA $445 million for BOS, JFK & LAX. Earlier TWA sold their ORD - LHR route to AA for $195 million, so TWA got a ton of money for their LHR slots. AA got Miami for free since Pan Am sold their LHR routes to UA but kept Miami and flew to LGW until it shut down. AA had Miami LGW service and switched to LHR when it took over TWA ops there. With UA selling to DAL I think Delta is getting a deal.

FOR Pan Am and TWA JFK-LHR was the cash cow. They flew it almost exclusively with 747's year round with 2 to 4 flights daily each. With Delta's feed they should be able to sell more then 2 767's worth of tickets daily. For Delta, they can now offer London service from the richest area in the USA from Maryland to Conneticut. This shoudl surpass the frequency they have from Atl to London in a few years.

 

[Fly]

Hey WT, they started a thread about YOU. Your infamous.

Here

 

[Cosmo]

You didn't manage to explain why AA manages to get higher average fares in ORD than does UA even though AA is just the visiting team. You also must be truly embarassed to say that DL's little rinky dink midwest hub in CVG happens to generate better revenue than UA's in the huge world class city of CHI. You also didn't note that BDA 2 encourages overcapacity in LGW markets since a carrier can gain additional frequencies in peak periods by increasing frequencies during off peak periods. It is precisely what DL and CO have done which drove down their average fares.

Come on, WT, you can do better than that. In order:

1.) American has the better ORD-LHR fare because of that nasty "S" curve thingy again, given that American has more daily nonstop flights than United (5 to 3), has been operating the route for a longer period of time, and has a partnership with British Airways, the third nonstop carrier in the market;

2.) Delta did not generate more revenue on CVG-LGW that United did on ORD-LHR, it simply had a higher average fare. The lack of any nonstop competition on the route will tend to enable a carrier to do that, especially when the route is one of the smallest U.S.-London routes with nonstop service. And I'm really sure the travelers in Cincinnati are happy about it, too, coming shortly after the DOT identified CVG, a fortress hub where Delta controls about 90% of the domestic O&D traffic, as the U.S. airport with the highest average domestic fares in the 4th quarter of 2005; and

3.) You believe that it is a sound fiscal strategy for Delta and Continental to operate excess capacity to LGW at generally unprofitable fares simply because the Bermuda 2 bilateral agreement supposedly encourages it? So this is a good idea? Ah, I get it -- you're a believer in the "make it up on volume" theory. And people wonder why airlines have, as a group, lost tens of billions of dollars in the past 6 years.

It's a very sad day for UA and quite a grand one for DL. But it also is just one more step along the path that I predicted years ago and you just laughed at me for. Your laughs are sounding a bit more nervous.

OK, let me make sure I've got this right. United sold its New York-London rights to Delta for $21 million, dropping an almost certainly unprofitable flight but keeping the LHR slots to use from other, almost certainly more profitable United gateways, including perhaps Denver should U.S.-E.U. Open Skies be implemented at some point in the future. Delta, on the other hand, is out that same $21 million for rights that are good only to LGW (at least for the near- to medium-term), a less desirable London airport than LHR, and has won the "honor" of taking on the buzzsaw known as "AA/BA" on the New York-London route. (Remember my comment about Continental's EWR-LGW fare that was only a few percentage points higher than United's JFK-LHR fare? And that was with more flights using larger equipment than Delta proposes, and moreover operating from a real hub. You've been warned.) And from this Delta is the winner?

And while you denigrate United for selling the rights to a point-to-point Transatlantic route (i.e., without a hub at one end of the route or the other), exactly how many such Transatlantic routes does Delta operate today? IIRC, the answer is zero. This makes your ranting on this subject somewhat hypocritical, don't you think?

I actually view this deal as a win-win since it allows both United and Delta to play to their own strengths. But if you insist that a "winner" be chosen, IMHO United has taken Delta for a sucker and wins hands down.

Incidentally, Delta must not be expecting the implementation of U.S.-E.U. Open Skies any time soon. Why else would they be buying a route from United that they otherwise could get for free fairly soon?

 

[WorldTraveler]

Apparently the CVG business community continues to support DL's nonstop service from CVG. The minute they stop purchasing DL's service, DL will reprice. Any person with a comprehension of the free enterprise system should be able to figure that out. Did you pass the gas station this week because you didn't like the price?

S curves are just poor excuses for UA's failure to make it in the eastern US to London market. In fact, UA's failure in the US to Europe and Latin America is directly related to its weakness in the eastern US. AA, CO, and DL have all done much better to Europe and Latin America because of their eastern US strengths.

So, that brings us right back to the point I've been making that you all get so upset about. UA can't compete in two of the three most significant international market groups because of its domestic route system as evidence by its continued shrinkage in those regions. It is doing very well to Asia and I certainly give them credit for making that region work for them. Problem is that you can't be a global carrier by serving one region of the world even if you do it very well.

UA's CEO is the one who has said more about merger activity than any other airline CEO since 9/11. It should come as absolutely no surprise that UA wants a merger because it is not holding its own in the current marketplace - and WN hasn't even begun its service to IAD, is just getting warmed up in DEN, and Virgin America hasn't even begun service to SFO or LAX which will certainly hurt UA more than any other carrier (remember that S curve?) The fact that an aweful lot of people seem to be interested in a CO merger tells they recognize UA's fragile position as well. Problem is that DL will undoubtedly be bigger and wealthier, better capitalized with lower debt ratios, and with stronger recent financial performance than CO in the next couple years - which will give a DL acquisition of UA a better chance than a CO-led one. Given that UA can't even buy a plane right now, talk of UA leading any acquisition is pure foolishness.

UA and US are both shopping for merger candidates to try and hide their failing business models. When one of US's most measured and intelligent pilots vouches for the failure of US's business plan, I tend to listen. UA people have never been willing to admit the problems that have caused problems for that company so it is no surprise they get so defensive when I talk about their failings. And lest you think I can provide no evidence of DL's failures in the past, you don't read what I write clearly. I surely have acknowledged DL's failures but I don't dwell in the past - esp. when those problems have been corrected, as I believe they have been with Delta.

You can talk about earnings this quarter but that is not a barometer of success - even for DL. In fact, any airline that doesn't make trouble is in serious doo doo. Thankfully, there are very few carriers in that camp.

You wouldn't be making me out to be an idiot if I didn't say anything about mergers and acquisitions. But I have been saying for years that I believe the survivors in the industry will be AA, CO, and DL so don't get your undies in too much of a wad, Mikey.

I have never been one to be content to comment solely on the press releases of the day but instead to interpret them in light of where I believe the future is going to take the industry. We obviously can't tell for quite some time whether what I have to say is BS or not but I just have a very strong feeling that you'll be thinking back some day that there was some nut on USAviation that spouted off that things would turn off this way.

I can assure all of you that if I leave this board before the next phase of industry restructuring takes place, I'll leave forwarding to you so you can send your accolades there if you so desire. In the meantime, I'll keep posting what I believe to be true even if it means some of have to beat a path to the pharmacy for a blood pressure pill refill.

 

[Fly]

You mean you'll continue to post when you aren't busy hiding under your couch.

I think we should start a World's Association of Crazy Kooks Organization (WACKO) fund to help him in case the INSOLVENT DElta ceases to exist.

 

[DLFlyer31]

Apparently the CVG business community continues to support DL's nonstop service from CVG. The minute they stop purchasing DL's service, DL will reprice.

This statement shows your lack of knowledge of this industry. If the business community doesn't support DL, they don't have to reprice. They can simply shrink the hub further. This is what DL is already doing at CVG.

In fact, UA's failure in the US to Europe and Latin America is directly related to its weakness in the eastern US. AA, CO, and DL have all done much better to Europe and Latin America because of their eastern US strengths.

Very true. UA can't be as big to Europe/South America, because they aren't as big in the Eastern US. Just like DL will remain a nobody in Asia, because they are so weak in the West.

Problem is that you can't be a global carrier by serving one region of the world even if you do it very well.

So how many regions in the world does one have to serve in order to be a gloabal carrier? Is there an official rule?

It should come as absolutely no surprise that UA wants a merger because it is not holding its own in the current marketplace -

Neither is DL...hence the BK filing. DL has been rapidly shrinking and is positioning itself to become nothing more than an airline with a big ATL hub and JFK. SLC and CVG are losers and everyone knows it. Both hubs are stalled out RJ orgies just waiting for the other shoe to fall.

We obviously can't tell for quite some time whether what I have to say is BS or not but I just have a very strong feeling that you'll be thinking back some day that there was some nut on USAviation that spouted off that things would turn off this way.

Just like I remember the nut who last year said DL would not file for bankruptcy.

 

[WorldTraveler]

UA was the world's largest airline not so long ago. DL has been #3 among US carriers for 15 years and still is. No change in positioning there. NW was knocked down a notch and so has UA. Funny that the carriers who are largest in Asia can't seem to make it work throughout their networks.

Of course DL could shrink the CVG hub if they can't get the fares they are asking. But they are. In fact, DL execs say that CVG is profitable so all of the doom and gloom regarding CVG is mere drivel for the discussion boards. To continue to discuss a topic which is no longer relevant shows a bent for argumentation or ignorance of what's going in the industry. So which is it?

I've said many times that I had hoped for an AA-style turnaround but it didn't happen. Bankruptcy is always a failure for a business and I acknowledge DL failed to adapt to the realities of the airline industry. Only AA has been nimble enough to continually adapt and they deserve commendation.


I'll remind that NW has no significant presence west of the Rockies yet they are the #2 US airline to Asia. Wonder how they did that? And you do you explain both AA and CO's growth in Asia, neither of which have a true hub west of the Rockies. Obviously a west coast hub isn't a requirement for an Asian presence. But based on DL execs statements, DL will grow its presence in LAX which COULD be a platform for Asian growth.... or they could do it all from the eastern US.

Of course global is a subjective term. So let's try another approach. AA, CO, and DL all have more balanced route systems than UA because all of the 1st three are #1, 2, or 3 in two international regions of the world while UA is #4 in 2 regions and #1 in one. Heck yes UA is a large Asian airline but no one outside of IAD, CHI, LAX, or SFO knows or cares about their Latin American or European flights. If UA was so global, they wouldn't be continually shrinking 2 out of 3 international regions.

You will be absolutely justified to call me a nut if things don't pan out the way I say they will. But you can't deny that I have said long before this latest announcement regarding DL acquiring UA's London route that UA would continue to shrink. I've also said that DL would come up with a superior reorganization plan and they are well on their way to doing it. I've also said DL non-pilot employees would keep their pensions and we are about a week away from that being confirmed.

So regardless of how much you want to throw mud, there is not one other person on this board that has more accurately predicted where the industry would go and has been right. None. Absolutely none.

 

[Bear96]

You will be absolutely justified to call me a nut if things don't pan out the way I say they will.

Ummm . . . I think that has already happened.

Don't you remember all those months throughout 2004 / early 2005 saying DL wouldn't have to file for bankruptcy because it had such brilliant management that a Chapter 11 filing wouldn't be necessary for glorious DL to return to profitability? IIRC, that was your mantra right until the few months leading to the filing once it became plainly inevitable.

Oops!

Nut.

 

[WorldTraveler]

and AA said the same thing until it averted a bankruptcy filing by a very thin margin.

Now, can you move on and discuss something intelligent? Doubtful, I don't recall anything meaningful that you have ever contributed to this board other than your cheap shots and after-the-fact quarterbacking.

What kind of forward looking thinking have you ever exhibited?

I'll happily admit that thinking beyond the press release leaves one vulnerable to getting something wrong. But I still would like to see example of what you believed would happen in the industry and had them happen anywhere near as often as I have.

I'm waiting.

 

[Fly]

When Delta finally files Ch 7, I doubt we'll ever hear from WT again. Notice, he only shows up when he thinks something good has happened, otherwise he is completely gone nowadays. Hey WT, did you see the profit UAL made last quarter?

fyi- I went to check out airliners.net. Even your high school friends seem to think you're a nitwit.

 

[JAMAKE1]

UA was the world's largest airline not so long ago. DL has been #3 among US carriers for 15 years and still is. No change in positioning there. NW was knocked down a notch and so has UA. Funny that the carriers who are largest in Asia can't seem to make it work throughout their networks.

Ya see, WT. It is statements like the one quoted above that has caused you to no longer be at all credible. I am not exactly a United cheerleader (at least not anywhere near to the extent that you have your pom poms out for Delta, but I digress). United lost its #1 stature because American BOUGHT TWA. When TWA's operations were merged into AA's, AA surpassed UA as the largest carrier. For the record (more like broken record, because it doesn't appear to ever sink in with you the first time, but again, I digress). I will spell it out ONE FINAL TIME. Since 9/11, ALL legacies have retracted and have re-deployed their (limited) assets to their STRENGTHS. Hence, that is why Delta has grown JFK and ATL at the EXPENSE of DFW and CVG. It is also why American has also grown JFK and ORD at the EXPENSE of San Jose and the westcoast, and why United has grown ORD, IAD, and SFO at the EXPENSE of MIA and JFK. United was a very distant competitor at BOTH locations (MIA/JFK). To suggest that United is no longer a global carrier is just laughable. According to your limited view of the globe, it only stretches to Europe and Latin America.

At one time (a long time ago) your postings were intelligent and insightful. Then, someone must have slipped you something funny in your glass of Delta Kool Aide, because you have lost your objectivitiy and reason and have become the second-most infamous person on this chat board. Sober up buddy!! <_<

 

[WorldTraveler]

Whose fault was it that UA couldn’t manage to pull off a merger that anyone would buy into and approve? AA had the sense to go buy TWA which had no antitrust concerns even if they did turn around and dismantle the whole mess. At least they rid themselves of a competitor in the Caribbean – only to gain 2 more in US and DL – and reduced a lot of domestic capacity. UA, OTOH, tried to acquire their cross town Washington network rival which put the whole deal on ice. How would the world have turned out if UA and US been allowed to merge? Just look at the messes they made on their own and extrapolate from their.

Part of business strategy is being able to best your competitor. AA mAAnaged to best UA in its merger strategy and become the world’s largest airline. AA had a goal and accomplished it. UA failed at its goal to build a nationwide and worldwide airline. The fact that UA continues to talk about mergers and acquisitions shows how disconnected they are with the fundamentals of the industry.


Yes, FLY, I did see those UA numbers which your company dragged out this morning. Please don’t tell me that you are proud of those numbers. After three plus years in bankruptcy, UA STILL has some of the highest unit costs in the industry which was no small reason why UA’s operating profit margin is sitting near the back of the group. If it makes you happy that you gave up your pension and went through all you went through to report back of the bus results, then you are truly to be pitied.

 

[DLFlyer31]

Of course DL could shrink the CVG hub if they can't get the fares they are asking. But they are. In fact, DL execs say that CVG is profitable so all of the doom and gloom regarding CVG is mere drivel for the discussion boards.

The profitability of CVG is temporary. As fares continue to skyrocket, traffic will drop and DL will make more cuts. Why do you think CVG is dropping down to only about 65 mainline flights this fall? Pretty pathetic for DL's second largest hub.

I'll remind that NW has no significant presence west of the Rockies yet they are the #2 US airline to Asia. Wonder how they did that?

That big NRT hub they have is the reason. Most of NW's flights from North America are routed through it. DL has nothing similar.

And you do you explain both AA and CO's growth in Asia, neither of which have a true hub west of the Rockies.

Neither AA nor CO are particularly large in Asia. They can add a few flights, but they aren't even close to rivaling UA or NW.

Heck yes UA is a large Asian airline but no one outside of IAD, CHI, LAX, or SFO knows or cares about their Latin American or European flights.

Except the thousands of customers who connect to the those flights daily. If you're going to ignore connecting traffic, then no one outside of ATL, CVG or JFK knows about DL to Europe.

But you can't deny that I have said long before this latest announcement regarding DL acquiring UA's London route that UA would continue to shrink.

Systemwide, UA isn't shrinking. They are growing. Unlike DL, which continues to shrink systemwide.

I've also said that DL would come up with a superior reorganization plan and they are well on their way to doing it.

DL's plan is no different than UAL's. Shrink areas you are weak and grow where you are strong. DL does have the "benefit" of having excess domestic capacity that they can throw at the international market. Of course, whether or not all these international routes pan out over the long-haul is another question.

So regardless of how much you want to throw mud, there is not one other person on this board that has more accurately predicted where the industry would go and has been right. None. Absolutely none.

Sorry, but your predictions aren't all that great. You got the DL bankruptcy prediction wrong which was a huge error. Your predictions of DL saving the pension aren't predictions, you're just repeating what Grinstein had been saying all along. Your prediction of DL flying JFK-LGW is not a prediction since DL has been wanting to fly JFK-LON for over a decade. It's not a prediction if you just repeat what DL management has already stated.