Delta Air Lines to Build Heavy Maintenance Facility in Queretaro, Mexico

[BoeingBoy]

The Whole Truth is that despite repeated posts indicating otherwise, it is impossible for him to acknowledge that anything deviating from the narrative he wishes to create might have merit.

Agreed.

Since your objective is clearly to find me wrong, then you will be disappointed that I don't admit that I am wrong if I am not.

Lie #1 - you are wrong regularly, but won't admit it. You just shuffle around changing what you said until you reach a position that isn't questioned. A flim-flam artist at his best...

You are the one that has attempted ENDLESSLY to justify noting costs which don't actually occur. it doesn't work that way, Jim,

Lie #2 - you even admitted that companies regularly use cost forecasts which may or may not ever occur.

You mentioned fuel and said that that airlines do account for costs that are NOT incurred

Lie #3 - I mentioned offsetting fuel prices by purchasing a refinery - you brought up hedging all on your own..

Lie #4 - you agreed that not just airlines but all sizable companies look at non-incurred costs. In labor negotiations, in selecting vendors, in selecting suppliers, etc.

If you want to start a campaign to note the actual number of American jobs that have been lost and convert that into lost American dollars on the payroll, then go for it, making sure that you note that the benefits brought in by insourcing AT SOME AIRLINES offset what is outsourced.

Ahhh - the big deflection. Change the subject to accounting standards used for quarterly reports while hoping that your shifting positions won't be noticed. Even there you support management - "note the benefits brought in by insourcing" when the outsourcing carrier is simultaneously using non-incurred costs to justify more outsourcing.

My one and only point all along has been to point out your double standard - supporting keeping as many jobs as possible while at the same time justifying management's penchant for using arguments most favorable for what they want (which is lower costs).

Jim

 

[BoeingBoy]

No, the marketplace is very active and involves buyers and sellers. Problem is that some want to sell ideas that are, shall we say, half-baked and without the "Good Housekeeping Seal of Approval."

Of course, you're the arbitor of what is half-baked or not and have the sole power to bestow the "Good Housekeeping Seal of Approval." How convenient for you...

It's odd that such a well-managed company as DL would let such a fount of wisdom get away - with an ego like yours you'd be a shoo-in for CEO & Chairman of the BOD...

Jim

 

[WorldTraveler]

Lie #2 - you even admitted that companies regularly use cost forecasts which may or may not ever occur.

Lie is a strong statement, Jim. It is also wrong.

And those forecasts don’t ever hit the financial statements, Jim, unless the costs are incurred.

If you can’t understand the difference between planning for costs and actually incurring them, then there really is no basis for discussion.

You have never paid for the car that you looked at and then walked off the dealer’s lot. It is that simple, Jim.

Lie #3 - I mentioned offsetting fuel prices by purchasing a refinery - you brought up hedging all on your own..

you said.

...an anticipated non-incurred fuel expense because of a refinery purchase comes to mind...(wasn't that in financial statements???)
Jim

And buying a refinery does not generate an entry for fuel savings on DL’s financial statements. DL has made statements about its reduced costs and has made those statements in SEC documents, but they are not part of DL’s financial statements.

I’m sorry if you don’t understand the difference but an investor presentation justifying the refinery purchase is not a financial statement.

Lie #4 - you agreed that not just airlines but all sizable companies look at non-incurred costs. In labor negotiations, in selecting vendors, in selecting suppliers, etc.

Yep. But I said those costs don’t ever hit the financial statements.

Repeat after me: costs don’t show up on financial statements based on forecasts.

Ahhh - the big deflection. Change the subject to accounting standards used for quarterly reports while hoping that your shifting positions won't be noticed. Even there you support management - "note the benefits brought in by insourcing" when the outsourcing carrier is simultaneously using non-incurred costs to justify more outsourcing.

My one and only point all along has been to point out your double standard - supporting keeping as many jobs as possible while at the same time justifying management's penchant for using arguments most favorable for what they want (which is lower costs).

Jim

No, Jim, this is about the 5000[sup]th[/sup] time that we have butted heads because you have made statements that are factually incorrect and won’t admit that you don’t understand the topic at hand, despite the fact that you try to act as if you do. No one else on this forum thinks they are experts on as many subjects as you do – and the accuracy with which you respond makes it obvious.

I agree with your idea about measuring labor costs to know how much labor has been lost due to outsourcing.
I agree that the measures that are used don’t really solve the problem of slowing the growth of outsourcing – for unions that put scope clauses containing such restrictions in their CBAs.

Where we part ways is when you fail to recognize that, other than for the purposes of labor knowing what they lost, such a statistic has no meaningful purpose.
Business doesn’t operate using that kind of statistic and neither does the BTS which reports on the amount of the ACTUAL expense outsourced vs. the total maintenance spend which includes in-house and outsourced maintenance.

It would be nice if you would be willing to find common ground on what we do agree on – but history shows that you will keep arguing. So, I will continue to debate your incorrect assertions.

And BTW, Kev, you would have taken most of the wind out my ability to debate if you had said that unions provided BETTER job protection in RIFs and layoffs instead of saying that DL had none.

Absent numbers - and all I have ever cited is system counts post BK, neither you or I can provide accurate, correct statistics on either of those points, making the argument of BETTER subjective.
But NONE is a position that can be shown to be true or false... and that is why I persisted in my discussion.

 

[BoeingBoy]

And those forecasts don’t ever hit the financial statements, Jim, unless the costs are incurred.

You mean like this when DL reported 2nd qtr results in it's SEC statement:

"During the June quarter, Delta’s subsidiary, Monroe Energy, closed its acquisition of the Trainer refinery. Work is currently underway to complete the turnaround and modify the plant to maximize its jet fuel production. The company expects the plant to be operating at full capacity in the fourth quarter. With Trainer at full capacity, Delta expects to save more than $300 million annually on its fuel expense."

How can that be??? Delta, mighty DL, reporting non-incurred anticipated cost savings on fuel due to the purchase of Trainer...

Keep wiggling like a worm on a hook...it's good for a laugh...

Jim

 

[Kev3188]

Of course, you're the arbitor of what is half-baked or not and have the sole power to bestow the "Good Housekeeping Seal of Approval." How convenient for you...

Funny how that works, isn't it?

And BTW, Kev, you would have taken most of the wind out my ability to debate if you had said that unions provided BETTER job protection in RIFs and layoffs instead of saying that DL had none.

There is no ability to exercise seniority in ACS. You yourself have said that many times. You can move to an open spot in station, or move put in for something on eBid. The end. Actual contractual language laying out a clear policy/procedure in the event of a RIF is MUCH better than what currently exists.

 

[topDawg]

Funny how that works, isn't it?




There is no ability to exercise seniority in ACS. You yourself have said that many times. You can move to an open spot in station, or move put in for something on eBid. The end. Actual contractual language laying out a clear policy/procedure in the event of a RIF is MUCH better than what currently exists.

whoa....this thread...yeah I'm not even going to go back and look at it.
but I'm sure it the normal stuff. Ok you kids have fun....

 

[Airlinelifer]

On an ebid their is no transparency, no name or seniority of the person filling the open position.

 

[WorldTraveler]

You mean like this when DL reported 2nd qtr results in it's SEC statement:

"During the June quarter, Delta’s subsidiary, Monroe Energy, closed its acquisition of the Trainer refinery. Work is currently underway to complete the turnaround and modify the plant to maximize its jet fuel production. The company expects the plant to be operating at full capacity in the fourth quarter. With Trainer at full capacity, Delta expects to save more than $300 million annually on its fuel expense."

How can that be??? Delta, mighty DL, reporting non-incurred anticipated cost savings on fuel due to the purchase of Trainer...

Keep wiggling like a worm on a hook...it's good for a laugh...

Jim

You - and perhaps others - really don't understand the concept of a financial statement, do you, Jim?
A statement about what DL will save in fuel costs is not a financial statement, even though it is also filed with the SEC. A financial statement is a balance sheet, income statement etc.
The Trainer refinery DID NOT result in any changes to DL's financial statements with respect to fuel purchases.

There is no ability to exercise seniority in ACS. You yourself have said that many times. You can move to an open spot in station, or move put in for something on eBid. The end. Actual contractual language laying out a clear policy/procedure in the event of a RIF is MUCH better than what currently exists.

No, you can't exercise your seniority at DL in ACS to BUMP another employee out of their job.
I'm still waiting for clarification but I don't think you can do that in any department at DL. FAs and pilots "bump" each other out of bases but that's as far as it goes.... in a RIF - which interestingly has not happened since the merger - DL employees are given a list of locations where they can transfer or financial compensation.

If you want system bumping, get 51% of your colleages to support a union. They voted against it, if you recall.

On an ebid their is no transparency, no name or seniority of the person filling the open position.

yes, Kev has said that before. Because DL is not subject to giving out positions by order of seniority alone.
If you want a seniority only system, convince 51% of your colleagues to vote in a union.
On multiple occassions they have said they don't want to trade what they have, including in the month or so of final orders on the representation process when 30,000 employees were moved off of labor's roles onto the roles of non-union workers.
That's how the process works.

 

[Glenn Quagmire]

You - and perhaps others - really don't understand the concept of a financial statement, do you, Jim?
A statement about what DL will save in fuel costs is not a financial statement, even though it is also filed with the SEC. A financial statement is a balance sheet, income statement etc.
The Trainer refinery DID NOT result in any changes to DL's financial statements with respect to fuel purchases.

I think you do not give many of us credit here WT. There are many on these boards that have graduate degrees (MBA, Finance, Law). We all are not just pilots, mechanics, board trolls, etc...)

You are both correct regarding reports/statements. Financial statements are contained in the annual and quarterly report (filing) to the SEC and shareholders. They contain what WT said above and they also contain the MD&A's that contain a discussion of the general financial condition and reaction of the company. Those are the "gotchas" that a corporation can use to include possible future problems or ventures that they think may be significant to future revenues or losses. I almost forgot about the footnotes. They contain additional info about the status of pension obligations, taxes, among other items.

I think semantics is at play here.

 

[BoeingBoy]

You - and perhaps others - really don't understand the concept of a financial statement, do you, Jim?
A statement about what DL will save in fuel costs is not a financial statement, even though it is also filed with the SEC. A financial statement is a balance sheet, income statement etc.

So you're reduced to taking a very small subset of items from financial reports filed with the SEC...so much trouble to keep from admitting three little words - "I was wrong". What happened to "company's don't use non-incurred costs" and "metrics w/o meaning?" It seems to have disappeared during all the tap dancing...

Jim

 

[BoeingBoy]

I think semantics is at play here.

WT has wiggled around to where he can claim others of being wrong but started out as saying (paraphrasing) that airlines don't use non-incured cost data at all, which is patently false as I demonstrated. So he's reduced to arguing semantics differences to escape being wrong initially. Pretty typical...

Jim

 

[southwind]

Funny how that works, isn't it?




There is no ability to exercise seniority in ACS. You yourself have said that many times. You can move to an open spot in station, or move put in for something on eBid. The end. Actual contractual language laying out a clear policy/procedure in the event of a RIF is MUCH better than what currently exists.

So if you don't agree with having a slot open somewhere, in order to bid that slot, what exactely do you propose ?
Being able to move to any position, anytime, anywhere and anyplace, whenever the mood strikes you, based on seniority ?

 

[WorldTraveler]

I think you do not give many of us credit here WT. There are many on these boards that have graduate degrees (MBA, Finance, Law). We all are not just pilots, mechanics, board trolls, etc...)

You are both correct regarding reports/statements. Financial statements are contained in the annual and quarterly report (filing) to the SEC and shareholders. They contain what WT said above and they also contain the MD&A's that contain a discussion of the general financial condition and reaction of the company. Those are the "gotchas" that a corporation can use to include possible future problems or ventures that they think may be significant to future revenues or losses. I almost forgot about the footnotes. They contain additional info about the status of pension obligations, taxes, among other items.

I think semantics is at play here.

No, Glenn, I do give you and a whole lot of other people credit and acknowledge that there are alot of smart people here who really do know the airline industry.

What I will not do is give anyone a pass on spouting incorrect information, especially to use it as the basis for constructing an argument which fails based on the use of incorrect data.

Examples:
Jim argued here that outsourcing costs should reflect the value of the lost labor in the transaction. I don't disagree with premise one bit and said that. But companies don't record costs they don't incur. Outsourced labor reduces costs but the value of what that work would have cost if it had been done in-house is not recorded.
Doesn't matter how much anyone wants to argue otherwise, costs reflect what actually have occurred - not what MIGHT HAVE BEEN.
Jim's idea is a great one if he wants to push the labor movement's agenda and show the value of lost work.
My counter is simply that the cost to other industries such as electronics is far larger since a much smaller fraction of that work is done in-house at all.

ex. 2. Kevin argue that DL had no process of appeal in termination cases or that DL ACS employees cannot use their seniority. Both statements are false. DL employees can use their seniority just not to bump someone out of a position which they hold, even in a RIF. DL has an appeals process which is documented and which includes peers.
I challenged the accuracy of those facts and the assumptions that flow from those facts - as in ex. 1.

ex 3. Dawg argued that UA employees have higher pay and benefits. I did not argue that was not true... but I did say you have to factor in that UA heavy maintenance is located in a much higher cost city and PMUA's overall operations are in higher cost cities than DL's. Further, if the goal is to protect American jobs - this is a discussion about outsourcing - then DL is doing a far better job of protecting American jobs for mechanics based on the percentage of outsourcing that DL and UA each do.
Further, whatever lower pay DL mechanics get is offset by the greater amount of in-house work DL does on its own fleet.
Factor in that DL insources $500M of maintenance work per year compared to about $800M in outsourced work and the net of DL's outsource is about 15%... far lower than any other US carrier.

I am more than happy to debate ideas - but no one should be surprised if I challenge faulty data, an incomplete review of the facts, or faulty conclusions that are built on bad or incomplete data.

There are people on this board who attempt to argue subjects which they clearly do not have adequate information to sufficiently argue. They should not be surprised if they are continually challenged...

You are absolutely right that financial statements include the notes to them as well... that statement is clearly made in every companies data.

here is what DL noted about the refinery in its quarterly SEC filing for the June 2012 quarter, the first after the refinery was acquired. They have filed no further financial periodic statements since that filing

Oil Refinery Acquisition
On June 22, 2012, our wholly-owned subsidiary, Monroe Energy, LLC (“Monroe&rdquo, acquired an oil refinery located near Philadelphia, Pennsylvania from
Phillips 66. Monroe invested $180 million to acquire the refinery and is expected to receive a $30 million grant from the Commonwealth of Pennsylvania and
Delaware County that will be used to offset the purchase price of the acquisition. The acquisition includes pipelines and transportation assets that will allow
Monroe to supply jet fuel to Delta's operations throughout the Northeast, including our New York hubs at LaGuardia Airport ("LaGuardia") and John F.
Kennedy International Airport ("JFK").
Monroe has entered into strategic agreements with BP and Phillips 66. Under a three-year agreement, BP will supply crude oil to be refined at the facility.
Monroe will spend approximately $100 million to convert the facility to maximize jet fuel production and will sell the jet fuel produced to Delta for use in its
operations in the Northeast. In addition to jet fuel, the refining process will produce gas, diesel fuel, and other refined products ("non-jet fuel products").
Monroe will exchange these non-jet fuel products for jet fuel from Phillips 66 and BP to be used in Delta's operations throughout the U.S. We expect that our
modifications to maximize jet fuel production will be completed this year and we will begin producing jet fuel in the fall.
14
Jet fuel costs have continued to increase in recent years, making fuel expense our single largest expense. Because global demand for jet fuel and related
products is increasing at the same time that jet fuel refining capacity is decreasing in the U.S. (particularly in the Northeast), the refinery mark-up or margin
reflected in the prices we pay for jet fuel has increased. Our ability to acquire jet fuel from Monroe and the strategic agreements with BP and Phillips 66 are
expected to reduce our fuel costs.

AND

The operation of an oil refinery by our wholly-owned subsidiary may pose risks to our consolidated financial results of operations that are different from
the risks associated with our airline operations.
Our wholly-owned subsidiary, Monroe, recently acquired an oil refinery complex located near Philadelphia, Pennsylvania. Our ability to acquire jet fuel
from Monroe and through strategic agreements with BP and Phillips 66 is expected to reduce our exposure to increases in fuel costs. Monroe's operation of
the refinery, however, may pose risks to our consolidated financial results of operations that are different from the risks associated with our airline operations.
Operational.


Because we plan to acquire a large amount of our jet fuel from Monroe, the disruption or interruption of production at the refinery could
have an impact on our ability to acquire all of the jet fuel needed for our operations. Disruptions or interruptions of production at the refinery could result
from various sources including a major accident or mechanical failure, interruption of supply or delivery of crude oil, work stoppages relating to organized
labor issues, or damage from severe weather or other natural or man-made disasters, including acts of terrorism. If the refinery were to experience an
interruption in operations, the financial benefits we expect to achieve from buying fuel from Monroe could be materially adversely affected (to the extent not
recoverable through insurance) because of lost production and repair costs.
Insurance


. Monroe's refining operations are subject to various hazards unique to refinery operations, including explosions, fires, toxic emissions and
natural catastrophes. Monroe's insurance coverage does not cover all potential losses, costs or liabilities and Monroe could suffer losses for uninsurable or
uninsured risks or in amounts greater than its insurance coverage.
30
In addition, Monroe's ability to obtain and maintain adequate insurance may be affected by conditions in the insurance market over which it has not control. If
Monroe were to incur a significant liability for which it is not fully insured or for which insurance companies do not or are unable to provide coverage, this
could have a material adverse effect on our consolidated financial results of operations.
Environmental.


Monroe's operations are subject to numerous environmental laws and extensive regulations, including those relating to the discharge of
materials into the environment, waste management, pollution prevention measures, and greenhouse gas emissions. If Monroe violates or fails to comply with
these laws and regulations, Monroe could be fined or otherwise sanctioned, which if significant could have a material adverse effect on our financial results.
In addition, the enactment of new environmental laws and regulations, including any laws or regulations relating to greenhouse gas emissions, could
significantly increase the level of expenditures required for environmental matters for Monroe.


AND

NOTE 2. OIL REFINERY ACQUISITION
On June 22, 2012 (the "Closing Date"), our wholly-owned subsidiary, Monroe Energy, LLC (“Monroe&rdquo, acquired an oil refinery located near
Philadelphia, Pennsylvania from Phillips 66. Monroe invested $180 million to acquire the refinery and is expected to receive a $30 million grant from the
Commonwealth of Pennsylvania and Delaware County that will be used to offset the purchase price of the acquisition. The acquisition includes pipelines and
transportation assets that will allow Monroe to supply jet fuel to Delta's operations throughout the Northeast, including our New York hubs at LaGuardia
Airport ("LaGuardia") and John F. Kennedy International Airport ("JFK").
Monroe has entered into strategic agreements with BP and Phillips 66. Under a three-year agreement, BP will supply crude oil to be refined at the facility.
Monroe will spend approximately $100 million to convert the facility to maximize jet fuel production and will sell the jet fuel produced to Delta for use in its
operations in the Northeast. In addition to jet fuel, the refining process will produce gas, diesel fuel, and other refined products ("non-jet fuel products").
Monroe will exchange these non-jet fuel products for jet fuel from Phillips 66 and BP to be used in Delta's operations throughout the U.S.
Jet fuel costs have continued to increase in recent years, making fuel expense our single largest expense. Because global demand for jet fuel and related
products is increasing at the same time that jet fuel refining capacity is decreasing in the U.S. (particularly in the Northeast), the refinery mark-up or margin
reflected in the prices we pay for jet fuel has increased. Our ability to acquire jet fuel from Monroe and the strategic agreements with BP and Phillips 66 are
expected to reduce our fuel costs.
We accounted for the refinery acquisition as a business combination. The refinery, pipeline, and transportation assets acquired were recorded in property,
plant, and equipment at $180 million based on our initial estimate of their respective fair values on the Closing Date. In connection with the closing, we also
purchased $50 million of inventory, primarily crude oil, that was at the refinery on the Closing Date, which was recorded in prepaid expenses and other.


No where in any of these statements has DL recorded an expense that it will not incur.
DL said they will incur savings from the refinery. That was not ever in question.

They did not say they would record an expense which they will not incur and that is the basis of the discussion with Jim.

 

[WorldTraveler]

WT has wiggled around to where he can claim others of being wrong but started out as saying (paraphrasing) that airlines don't use non-incured cost data at all, which is patently false as I demonstrated. So he's reduced to arguing semantics differences to escape being wrong initially. Pretty typical...

Jim

No, Jim, you are patently wrong.
Not only do airlines not record costs they haven't incurred but neither does any other company.
It is far different to say they project costs but it is far different to argue they record those costs.
If your argument is that airlines should note in some sort of footnote how much they saved on outsourced labor, then I can agree with that.
If your point is to argue that the maintenance costs which have been incurred are incorrect because they don't reflect the value of the cost it would have been if that work had been done in-house, then you are wrong based on the principles of accounting.

Take your pick which position you want... and then start your campaign if you want to do the former.

Once again, though, don't forget to include insourced maintenance which would significantly offset the value of DL's outsourced maintenance; if you can find those values for other airlines, include them too.

 

[Kev3188]

So if you don't agree with having a slot open somewhere, in order to bid that slot, what exactely do you propose ?

If all else fails, being able to exercise one's seniority on the system w/in their current classification (department).

Being able to move to any position, anytime, anywhere and anyplace, whenever the mood strikes you, based on seniority ?

We're talking about someone facing hitting the street, not someone that merely wants a change of scenery. Two very different scenarios.

ex. 2. Kevin argue that DL had no process of appeal in termination cases or that DL ACS employees cannot use their seniority. Both statements are false. DL employees can use their seniority just not to bump someone out of a position which they hold, even in a RIF. DL has an appeals process which is documented and which includes peers.
I challenged the accuracy of those facts and the assumptions that flow from those facts - as in ex. 1.

No I didn't. You've decided that's what I said in order to promote your idea of how the discussion should go.

I have said that the CRP is wholly ineffectual since no matter the verdict delivered by one's peers, it can always be overturned by mgmt.

Systems such as the CRP & FIT/EIG teams are paper tigers designed to give the illusion that employees have an actual say. DL is not the first company to use them, nor will they be the last.

One cannot also their seniority to freely move back and forth between departments. This is something the company explicitly promoted as an improvement over classification seniority. It simply doesn't happen that way.

In a RIF, you do not own your seniority; the company tells you where you can or cannot go (if anywhere). If you want to move from the ramp to the counter, you also have to interview.


My writing something that doesn't mesh with your narrative does not mean it's false.