Merger Rumor Mill Can Begin Now

[Bear96]

Uh-oh Michael, you apparently said something less-than-flattering about DL or implied DL is less than perfect -- watch your back -- the knives are sharpened and out! Now you're getting compared to "these airline employees" who know nothing about the world they live in!

Bear,
Since you seem to think I drop in just to irritate you ...

Nahhh, I wouldn't dare think someone as insignificant as me -- one of "these airline employees" the great WT swats about like annoying little mosquitoes -- would cause the great WT to actually drop by or anything like that. Besides I'm just a stewardess -- what could I possibly know about anything?

Actually, the way I picture it, is that you harbor great insecurities about DL, and great bitterness towards UA, for whatever reasons (those demons are yours alone to face, and frankly I don't care). So the reason you "drop in" when the news about UA is bad (which is, like, all the time these days so there's lots of low-hanging fruit for you to enjoy) is to try to make yourself feel better and get over whatever trauma you have suffered in the past that made you what you are today.

Of course, when the news about DL is bad, you kinda disappear for a while, which is consistent with my theory -- actually having to substantively defend the real criticisms about DL probably wouldn't help your therapy.

 

[mweiss]

Michael,
I thought you were more intelligent than most of the dribble I read from these airline employees but you have REALLY disappointed me.

Ouch! That would have really hurt if you had understood what I wrote. See below:

For the UMPTEENTH time for you and all of these teflon coated UAL clones

This one's hysterical. I was sounding the UA alarm around the beginning of 2000. I'm about the last person to call a "teflon coated UAL clone."

DL was about 2 years behind UA and AA in beginning a turnaround. I wouldn't even begin to expect DL to begin to reverse their losses since their former management team was more interested in raping the company for their personal pleasure than turning it around.

Exactly. Take the rose-colored glasses off for a moment, will you? DL has an interesting business plan right now. None of us have sufficient information to ascertain its success or failure. Even the people who designed the business plan don't know yet, so you sure as hell don't know it either.

Any no, Mr. Weiss, it is not contradictory to say that if an airline can cut costs and be viable as a merged airline they can do it on their own.

Nope, it's not. But that's not what you said. You said

if any of the legacy airlines could merge and create a viable company by eliminating redundancies in order to become profitable, they can do it and remain separate and independent companies.

The redundancies to which you referred, in response to my post, involve the functions that are necessary in any company, but not necessary to have two of. If you eliminate it in a standalone company, the company ceases to function. If you eliminate it as part of a merger, the company continues to function. Hence why your statement was contradictory. If eliminating the redundancy in merging creates a viable company, it tells you nothing about the ability of the entity to survive as a separate company.

And if you think any legacy airline has come close to stabilizing an airline, I've got stock for you in a couple airlines that begin w/ U.

I don't.

Oh, by the way, it's called "drivel," not "dribble." I don't typically try to correct people's grammar around here, but you sure asked for it.

 

[ualdriver]

actually, no I didn't pull the $1B out of thin air. Several analysts pegged UA's exposure to SF at about $600M. You must have missed the memo but Simplifares is a NATIONWIDE fare restructuring. Unlike the LCCs, DL is big enough that it can change the fare structure in EVERY marketplace in the US. Yes, UA hasn't matched in every market but that just exposes them to having their revenue siphoned off by every other airline including.... DELTA. And yes, I calculated the IAD exposure all by myself. Have a look at UA's IAD revenues and extraporate what happened to AA at JFK and you'll come up w/ a similar number too.

[post="249688"][/post]​

Yes, I understand it is obviously a nationwide fare plan. $600M for SF, huh? A billion bucks total yet the banks keep lining up. Are these the same analysts who said we should be dead by now? Hmmmmm.....I think you should recalculate our exposure. Independence puts a few Airbi on line (never mind the 100 RJ's they had) and suddenly we're toast to the tune of 400M (1B-600M right?) Hmmmmmm...........80M+ a month total, huh? I'll be looking for the beginning of this huge revenue drop when the FEB numbers come out. We might see a YOY revenue drop, but I seriously doubt to the tune of 1B. We shall see...........

 

[Fly]

ps... in case it's news to you, business travel is at its peak in the fall and winter months... many of us have places to go and people to see.

[post="249688"][/post]​

Are you serious? Fall and Winter = Peak Travel times 🙄 ooook :blink:

 

[WorldTraveler]

glad I got a good rise of at least 3 of you.

Actually, Bear, I look very candidly at all of the airlines and their real issues. See my new lengthy post under the Delta forum. An honest appraisal of DL's network issues but also a recognition of what DL does well.

Redundancies do(es) not necessarily mean two similar departments in two separate companies. It includes, for instance, the duplicated work that has to be done in the same airline or the inefficiencies created because of union regulations. All of the airlines have dealt with a number of these issues but the unions still prevent the unionized airlines from becoming as efficient as the LCCs or non-union airlines.

Fly,
I'm sure peak travel for you means when you can go ride cheap taxis in fun places but for those of us who pay the freight, peak travel means when business folks take to the skies. Remember, we generate the revenue, not the huge loads. That's why you should recognize and take care of us.

Yes, Michael, I know you have not blindly supported any airline and that is why I have appreciated your posts. However, your statement is (or implied) that DL has been bleeding more than other carriers of late. I ask you to take DL's OPERATING loss - not the NET loss for 2004 which included $2.3B of non-cash charges and compare that to UAL and AMR's losses for 2001-2004 and then tell me who has lost more money. DL made very clear that it waited for some stability to come to the industry before it started down a cost reduction path that might have to be revisited - exactly what UA and US have had to do and what AA now finds itself on the verge of doing again. DL had the luxury and financial strength to wait for it to become apparent what financial changes were really needed. Whether that strategy was right remains to be seen but in reality, DL's balance sheet is not much different from anyone else's in the industry except AMR/AA's and yet DL still has more underlying balance sheet strength because of their industry leading RJ holdings which can be monetized.
Finally, the reason why I am so optimistic about DL's recovery is because they have a long history of managing costs far better than anyone else in the industry - except for the six year period under the Mullin administration. DL hasn't lost sight of the need for cost control and I think you will succeed far better at cutting costs than any other airline. The fact that DL's CFO gets on a webcast and says they are right on target with cutting costs says they probably really are. Executives get hauled before judges for lying about such things.
And why don't you look up "dribble" and "drivel" in the dictionary. They both exist and the definition for the former is "to slaver; drivel". Whether you like to correct grammar or not, you do it alot - mostly to other people - along with wordsmithing; you just haven't yet done it successfully to me.

Finally, driver, here's the link for the estimate of the impact of Simplifares on UA's revenue. I stand corrected. The estimate was $500M for UA. Given that UA has not provided any number on the impact of Simplifares to their system, the only information investors have to work with is the estimates provided by industy analysts at places like Merrill Lynch. Once UA provides an estimate we'll all work with that number. And I wouldn't expect to see a full billion dollar decline in revenues. That's precisely why UA is adding so much Pacific service. The impact to revenue is still there but just offset by improvements over the Pacific. And you probably won't see the full impact of Independence's incursion into IAD markets until the summer but I can't help but think an "oh sh*# went up in Chicago when FlyI announced their out of bankruptcy restructuring.

http://www.marketwatch.com/news/story.asp?...rden=&minisite=

 

[mweiss]

Redundancies do(es) not necessarily mean two similar departments in two separate companies.

Of course not. However, my initial post was an explanation of how two companies that otherwise would lose money could be profitable when merged. With that as a base, what other redundancies might I have meant?

your statement is (or implied) that DL has been bleeding more than other carriers of late.

That may well have been your inference, but it wasn't my implication. My intent was to point out that DL has been bleeding too much for the company's own good. The fact that you may hit the ground a bit later than someone else doesn't make you any less dead when you hit. We don't yet know if DL has the pieces in place to pull out before it's too late.

Finally, the reason why I am so optimistic about DL's recovery is because they have a long history of managing costs far better than anyone else in the industry

Correction...better than any other legacy carrier. This is an important distinction. The choices are among various combinations of improved yields and reduced costs. Just because DL has done better than the other legacies at reducing costs doesn't mean that the delta (no pun intended) between yields and costs will be greater at DL than at other legacies.

And why don't you look up "dribble" and "drivel" in the dictionary.

Yes, why don't I? You think I didn't know that "dribble" is a word? Looking at Merriam-Webster, you'll see dribble as a noun (which is how you used it), defined as

1 : a tiny or insignificant bit or quantity
2 : a small trickling stream or flow
3 : an act, instance, or manner of dribbling a ball or puck

Which of those three definitions were you intending?

 

[KCFlyer]

Yes, why don't I? You think I didn't know that "dribble" is a word? Looking at Merriam-Webster, you'll see dribble as a noun (which is how you used it), defined as

1 : a tiny or insignificant bit or quantity
2 : a small trickling stream or flow
3 : an act, instance, or manner of dribbling a ball or puck

Which of those three definitions were you intending?

[post="250532"][/post]​

Gosh, I hate to be the grammarian, but I think he meant " To talk stupidly or childishly.", which is listed in the definition under "drivel".

 

[WorldTraveler]

or the defintion of dribble listed as "2. To slaver; drivel."

 

[mweiss]

or the defintion of dribble listed as "2.  To slaver; drivel."

[post="250688"][/post]​

In what dictionary? Not Encarta. I can't seem to find that definition anywhere.

 

[Ukridge]

"In what dictionary? Not Encarta."

What? You mean there is another dictionary and not just the Oxford? B)
Perhaps not exactly as described, but there is an archaic definition that may be related: http://www.askoxford.com/results/?view=dic...er=score%2Cname

Cheers

 

[mweiss]

What? You mean there is another dictionary and not just the Oxford? B)

I tried looking at OED.com, but they don't do free online dictionaries there. Didn't realize that there was another domain to use.

But, as it turns out, even the Oxford's definition of "dribble" seems to be missing the particular definition to which WorldTraveler alluded.

Thanks for the pointer, Uk! 😉

 

[Borescope]

Yes, I understand it is obviously a nationwide fare plan. $600M for SF, huh? A billion bucks total yet the banks keep lining up.

[post="249736"][/post]​

Well on the way to that fiqure, and it looks like it will be hit sooner rather than later.




"Article Published: Friday, February 25, 2005
UAL reports $326 million January loss


Chicago - United Airlines' parent company today reported a $326 million net loss for January,

The results reported today by UAL Corp. were worse than the $252 million net loss in the same month a year ago and fell short of the benchmark originally set by its bankruptcy lenders.


The holding company for United Airlines, which has not turned a profit since 2000, said it had an operating loss of $151 million in January despite a 3 percent increase in passenger revenue."

 

[ualdriver]

Actually, borescope, the quote you pulled concerns what he anticipates as declining revenues over 2005, based upon the simplifares and Independence out of IAD. January's numbers would be way too eary to determine whether or not we're going to take the significant revenue hit that Traveler expects due to those two "problems."

 

[Busdrvr]

"Finally, driver, here's the link for the estimate of the impact of Simplifares on UA's revenue. I stand corrected. The estimate was $500M for UA."



January despite a 3 percent increase in passenger revenue."

but wait, how can that be..... <_<

WT, do you REALLY think Flyi will exist this summer? just as a reminder, they had a -50% margin last quarter. And Jan wasn't any better (although they think load facors will be better in Feb due to a SALE).

yet DL still has more underlying balance sheet strength because of their industry leading RJ holdings which can be monetized.

Ya think? What will be the value of a high cost company flying RJ's that they acquired at prices WELL above today's going rate. I wonder what the coming RJ glut thanks to a Flyi liquidations will do to RJ values?

 

[WorldTraveler]

Bus,
Aircraft ownership costs and rentals will not make or break any airline. Reducing aircraft costs is a nice byproduct of the bankruptcy process but it cannot save an airline if the other pieces don't work.

Haven't had it confirmed, but I would strongly bet that DL will be picking up some of the CRJs that FlyI is parking. The GE agreement with DL gives GE the right to place about a dozen RJs with DL on top of the 30 or so FRJs that DL will very likely have to put into service.

The accepted industry mentality is that RJs can't be profitable in an LCC/low fare environment. Given that, DL has a host of point to point routes to/from Florida operating on RJs that probably do make money. In fact, by some of my calculations, DL probably makes more money flying point to point missions with RJs in an LCC/low fare environment than they do operating those planes in hub and spoke service to/from hubs in a fare environment that is not that much stronger. Yet, you have to have a somewhat robust network through your hubs so all of the other legacies are pushing their system unit costs up by replacing mainline flying with RJs because they believe overall system costs can be reduced by replacing mainline w/ RJ flying. You may have noticed that most of DL's recent new cities have had very little service before DL arrived which means they are probably being revenue supported one way or the other. RJs can be powerful tools; most legacy airlines are still using a five year old RJ deployment playbook.

And, yes, I think FlyI will probably be around through the summer - at least long enough to seriously erode UA's transcon revenues. FlyI joins AA and DL in being able to restructure their finances outside of bankruptcy. Goes to show that bankruptcy is just another business technique that no longer delivers what it used to be able to do because there are far less risky alternatives that work almost as effectively. And whether you want to accept it or not, a company in bankruptcy is less stable than one that is not.