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Old February 23rd, 2006, 02:02 AM   #181
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New York judge approves Delta management severance plan
By ALEKSANDRS ROZENS
22 February 2006

NEW YORK (AP) - A New York bankruptcy judge approved a Delta Air Lines Inc. severance package for directors and officers that is part of a plan to save the carrier $200 million annually.

The airline, which filed for bankruptcy protection in September, had asked for court approval to provide severance for as many as 144 directors and officers.

The carrier does not expect to actually terminate 144 directors and officers, Dan Lewis, spokesman for Delta, told The Associated Press. He said the carrier likely will cut 20 percent of that 144 total, costing Delta $3 million in expenses related to severance payments.

"I don't believe I have any choice but to grant the motion. The debtor has made a very compelling showing on record before me of the need for the severance plan that has been proposed," Judge Adlai Hardin, who is overseeing Delta's bankruptcy, said in granting the carrier's request.

The pilots union, the Air Line Pilots Association (ALPA), asked the court to reject the Atlanta-based company's severance proposal in light of Delta's request for pilot concessions. An attorney for the pilots, Michael Winston, likened the plan to a "soft landing" for management, and said the carrier's management should have consulted the pilots union about it.

Under the plan, directors and officers would receive six to 12 months of severance pay.

Delta, though, argued the severance plan was meant to stem departures of directors and officers. Lewis told the AP that the carrier has lost six executives to other companies in January and February alone, including a specialist involved with managing the airline's restructuring efforts.

Lewis said the cuts could begin as early as March. If all 144 employees eligible were terminated under the program, the cost to Delta would be $14.2 million, the company has said.

"We are pleased that the judge's ruling recognized the sound business judgment and the sacrifice of everyone at Delta," said Lewis. "We need to move forward with the restructuring of the company."

A spokesman for pilots union expressed disappointment with the judge's decision Wednesday.

"We are disappointed that management appears oblivious to the impact this (severance) program will have on employee morale," said Capt. John Culp.
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Old February 25th, 2006, 10:52 AM   #182
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From: http://sg.biz.yahoo.com/060225/3/3yyln.html
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Saturday February 25, 8:23 AM
Delta Air to cut Florida flights, JetBlue shares up

NEW YORK (Reuters) - Bankrupt Delta Air Lines plans to slash flights on many routes where its Song unit competes with JetBlue Airways Corp. , news that boosted JetBlue shares by over 6 percent on Friday.

The reduced competition on routes between New York City and Florida is likely to mean higher fares for summer travel and higher revenue for JetBlue, which recently posted its first quarterly loss since 2002.

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Delta said the cuts were capacity adjustments to seasonal demand changes and not permanent. "The schedule changes simply reflect a seasonal pull down in capacity for May, which is one of the lowest demand periods to Florida," said Delta spokesman John Kennedy.

JetBlue has made little secret of its struggle to raise ticket prices amid stiff competition from Song and from Continental Airlines Inc. , which has also added seats between the New York area and Florida.

The Delta capacity cuts, effective this summer, are of about 13 flights a day, or 25 percent, according to brokerage JP Morgan, which raised its rating on JetBlue shares to "neutral" from "underweight."

JetBlue, which has forecasted a loss for 2006, said the move would give it a boost.

"It's always good to see some rationality taking place," said David Ulmer, vice president of route and schedule planning. "This is certainly less capacity than we would have been assuming, though about what we hoped for."

In addition to the Florida reductions, Delta is slightly reducing flights to Los Angeles and Seattle, he said.

Delta's Kennedy said the adjustments in those two markets were partly due to the airline integrating Song into its network and adding first-class seats to its flights.

The No.3 U.S. carrier, which filed for bankruptcy protection in September, announced the following month that it planned to fold Song in May, about three years after it began flying. But it had kept rivals guessing about what that would mean for capacity.

Ulmer said he agreed with JP Morgan analyst Jamie Baker that the Delta change could mean more revenue than forecast starting in May and a full-year profit instead of a loss for JetBlue.

JetBlue shares closed up 74 cents, or 6.7 percent, at $11.82 -- a three-week high -- on Nasdaq.
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Old February 28th, 2006, 02:39 AM   #183
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Delta Pilots Walk Picket Line At Salt Lake City Airport
27 February 2006

SALT LAKE CITY (AP)--Delta Air Lines Inc. pilots brought their informational picket over stalled contract talks to Salt Lake City International Airport on Monday, warning that they may strike if an agreement isn't reached this spring.

About 50 pilots walked a picket line in front of the Delta terminal and handed out pamphlets detailing their grievances.

The Atlanta airline filed for bankruptcy protection in September, and the company is seeking wage and benefits concessions from the pilots to help it become solvent.

Pilots said they have already conceded enough. In 2004, the pilots agreed to $1 billion in concessions, including a 32.5% pay cut over five years. They also criticized an agreement last week by a New York bankruptcy judge that approved a severance package for as many as 144 directors and officers who will lose their jobs in reorganization.

"It sends a bad signal," said Capt. John D. Culp, a spokesman for the Air Line Pilots Association. "We're disappointed that management would pause to consider their own job security while they're demanding significant reductions in job protections for Delta pilots." Culp, of Atlanta, has been a Delta pilot for 20 years.

Salt Lake City is one of three Delta hubs, with Cincinnati and Atlanta. The pilots picketed outside Delta's terminal at Hartsfield-Jackson Atlanta International Airport on Feb. 17.

If negotiators for the pilots union and company can't reach a comprehensive deal on long-term concessions by Wednesday, a three-person panel would decide the company's request to reject the pilots contract so Delta can impose more than $300 million in cuts unilaterally. The arbitration panel would have 45 days to issue a ruling.

The pilots union has said it will strike if its contract is thrown out. The company has warned a strike would put the nation's third-largest carrier out of business.

A company official said Monday the picket has had no effect on business.

"This is an informational picket. It is not impacting our operations, and we don't expect that it will," said Bruce Hicks, Delta's spokesman for pilot negotiations.

Some passengers who came across the picket thought otherwise.

"If it looks like they're going to strike, I'd look at other options," said Ken Wzorek, 30 years old, of Salt Lake City, who works as an art director for an advertising firm.

Luke Bucci, of Reno, Nev., flies every week for his job as an executive for a nutritional supplements company. He said the picket reinforced his recent decision about booking flights.

"It's made me switch to Southwest ... I'm all for the pilots," Bucci said. "They're flying the airplanes. They're in control up there. So, I think they should be paid well."

The average Delta pilot earns about $150,000 a year, Culp said. He would not divulge what the top-paid pilots earn, but said 40% of their pay comes from working overtime.

Ed Thiel, a Delta pilot for 20 years, said passengers who know about the union's complaint have been supportive. Thiel, of Salt Lake City, said he's paid less than pilots with similar experience, flying similar planes and routes, at other airlines. About 350 Delta pilots live in Utah.

Hicks said the company is committed to ironing out a contract deal soon. "We need a consensual agreement. We can't get out of bankruptcy without one," he said.
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Old March 2nd, 2006, 02:18 AM   #184
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Delta, pilots headed to arbitration over pay cut talks
By HARRY R. WEBER
1 March 2006

ATLANTA (AP) - No deal was reached by a Wednesday deadline between Delta Air Lines Inc. and its pilots over long-term pay and benefit cuts, sending the carrier's request to throw out its pilot contract to arbitration.

The sole purpose of the arbitrators, who will hold two weeks of hearings at a downtown Washington hotel starting March 13, is to decide whether to grant Delta's request to throw out its contract with its pilots so the airline can impose up to $325 million (euro272 million) in cuts unilaterally.

The union that represents the Atlanta-based airline's 6,000 pilots says it will strike if its contract is voided. The nation's third-largest carrier has described a strike as "murder-suicide" and said such action would put it out of business.

The two sides had until 5 p.m. EST (2200 GMT) to reach a deal on their own or have a three-member panel of arbitrators step in. Nothing precludes the sides from continuing to negotiate up to and through the hearings.

The two sides agreed to arbitration instead of letting the bankruptcy court make the decision. Delta filed for bankruptcy in New York in September.

Negotiators for both sides met Wednesday, but did not reach a deal by the deadline. The date for another negotiating session is unclear.

There was no immediate comment from the union, though a spokesman said a statement was expected.

The company had offered to reduce its long-term concessions request to $315 million (euro263.5 million), while the union is currently offering about $115 million (euro96 million) in average annual concessions. Late Wednesday, the company said it lowered its request another $10 million (euro8.4 million) to $305 million (euro255 million).

The pilots, in late 2004, agreed to a five-year deal that cut pay and benefits by $1 billion (euro840 million) annually. It included an immediate 32.5 percent pay cut.

In December, Delta and its pilots reached an interim deal on pay cuts that would be replaced by the long-term deal the sides are currently discussing.

Also Wednesday, Delta said in a memo circulated among employees that it has offered to increase its pilots pay 1 1/2 percent at the end of 2008 and another 1 1/2 percent in 2009. Delta is now offering its pilots a $330 million (euro276 million) note instead of $300 million (euro251 million) in the event it terminates the pilots' defined benefit pension plan. The pilots are asking for a $1 billion (euro840 million) note.

Delta also said it has offered its pilots equity in the company once it emerges from bankruptcy. Its memo did not say how much.

According to the company, the average pay of pilots last year who worked the full year was more than $157,000 (euro131,337).

The arbitrators would have several weeks from the end of the hearings to make a decision, and rank-and-file pilots have not yet voted on a strike authorization, meaning no strike is imminent.
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Old March 3rd, 2006, 02:35 AM   #185
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Bankrupt Delta says lost $300 mln in January

LOS ANGELES, March 2 (Reuters) - Bankrupt airline Delta Air Lines Inc. on Thursday said it lost $300 million in January, bringing the total of its losses in the last four reported months to $1.5 billion.

The No. 3 U.S. airline, which filed for Chapter 11 bankruptcy protection in September, said $87 million of the $300 million loss was for bankruptcy reorganization costs, chiefly related to aircraft and facility leases and legal expenses.

The loss is slightly less than the $314 million net loss in January last year. It comes on top of Delta's fourth-quarter net loss of $1.2 billion. For full-year 2005, Delta's net loss was $3.8 billion.

Atlanta-based Delta has said it needs about $3 billion in revenue increases and cost savings to survive and exit bankruptcy. The carrier is in the process of renegotiating its aircraft leases and cutting labor costs, among other things, to achieve those goals.

Delta said on Thursday it had $2.1 billion of unrestricted cash on its balance sheet, up from $2 billion at the end of the last quarter.

The airline, which has been battered by high fuel prices and competition from low-cost carriers, also said that in February it hedged about 26 percent of its planned jet fuel consumption for the month at the average price of $1.75 per gallon, and would do more hedging as required to help manage costs.
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Old March 12th, 2006, 07:09 PM   #186
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From: http://atlanta.bizjournals.com/atlan...6/daily22.html
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Atlanta Business Chronicle - March 8, 2006

Delta still 'bullish' on Latin America, Caribbean
Atlanta Business Chronicle - 2:07 PM EST Wednesday
Delta Air Lines Inc. plans to continue expansion of routes into Latin America and the Caribbean.

To become the No. 2 U.S. airline serving Latin America and the Caribbean, the bankrupt Atlanta-based airline (Pink Sheets: DALRQ) reported it will add flights to Brazil, Ecuador, Jamaica, Mexico and Puerto Rico this spring and summer. New flights include routes to Sao Paulo, Brazil; Quito and Guayaquil, Ecuador; Kingston, Jamaica; Acapulco, Cancun, Cozumel, Ixtapa and Zihuatanejo, and Los Cabos, Mexico; and Aguadilla and Ponce, Puerto Rico.

The new routes are the latest in a series of more than 35 new flights to Latin America and the Caribbean added or announced by Delta in the last year as part of the largest international expansion in the airline's history.

During the past year, Delta flew more than 5 million customers between the United States and Latin America and the Caribbean. Delta Chief Operating Officer Jim Whitehurst said Delta currently is the No. 3 U.S. airline in Mexico, tied for No. 3 in the Caribbean, tied for No. 2 in Central America, and tied for No. 2 in South America in terms of number of destinations served.

"Clearly, we're bullish on Latin America, with growth of more than 30 percent to the region in the last year," he said. "This is critically important to customers wishing to travel from the region because of the incredible connectivity that Delta offers from Atlanta and because of the increased commerce and trade we can broker between regions of the world."
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Old March 12th, 2006, 07:13 PM   #187
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From: http://blogs.usatoday.com/sky/2006/0...ver_jetbl.html
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By Ben Mutzabaugh
Move over JetBlue ... Delta's joining you with a JFK hub

Delta Air Lines will add 12 non-stop destinations increase service to five others from New York JFK, the airline announced this morning. Delta COO Jim Whitehurst says the move is part of an effort to turn JFK into a hub that can funnel connecting passengers not only to Delta’s growing international destinations, but also to its cities within the Northeast and mid-Atlantic -– regions where the carrier already has a strong presence. Of the 17 cities seeing new or increased service, 15 will be in the Northeast and mid-Atlantic. The majority of the new flights will be on regional jets or turbo-prop (propeller) aircraft. Whitehurst says that will not only help Delta feed its rapidly growing schedule of international flights at JFK, but will also allow better connecting options. From the Northeast, for example, “we can take people over Atlanta, but it’s very circuitous to go (on Delta’s connecting flights) to the mid-Atlantic,” Whitehurst says. Once the JFK expansion is completed this summer, those passengers will be able to connect via JFK instead.

But Whitehurst also made the point that the domestic expansion at JFK dovetails with the carrier’s rapid international expansion there. “Obviously, feeds (from the new cities) are a big part in supporting that operation,” he says. As for Delta’s other hubs, Whitehurst says none are expected to be sacrificed significantly in order to grow the JFK operation. He did acknowledge, however, that there could be some “thinning” on routes with high numbers of daily flights. Whitehurst also downplayed competition within the New York market, where JetBlue already has a JFK hub and Continental has one in Newark. American also has a big presence at JFK. “We need to look at where our customers want to go,” he says.

What do you think of Delta's decision to build a big hub at New York JFK? Share your comments with other Today in the Sky readers.

UPDATE: Click on "read more" to see where Delta's new JFK flights are going to.

JFK routes that will get new non-stop service on 50-seat Bombardier regional jets, to be operated by Delta partner Comair: Buffalo (4 round-trip flights, starting June 8); Cleveland (2 flights, June 8); Montreal (1 flight, June 8); and Rochester, N.Y. (4 flights, June 8).

JFK routes that will get additional non-stop service on 50-seat Bombardier regional jets, to be operated by Delta partner Comair: Detroit (2 additional round-trips, starting June 8).

JFK routes that will get new non-stop service on 37-seat Dash-8 turbo-props, to be operated by Delta partner Freedom Airlines: Albany, N.Y.; (4 round-trip flights, starting Aug. 1); Harford, Conn. (4 flights, Aug. 15); Philadelphia (4 flights, July 15); Providence, R.I. (4 flights, Aug. 15); Richmond, Va. (2 flights, Sept. 5); Syracuse (4 flights, Aug. 1); and Washington Dulles (3 flights, July 5)

JFK routes that will get additnioal non-stop service on 37-seat Dash-8 turbo-props, to be operated by Delta partner Freedom Airlines: Baltimore (3 additional non-stop flights, beginning Sept. 5); Norfolk, Va. (1 additional flight, beginning July 5); and Washington National (2 additional flights, beginning Sept. 5).

JFK route that will get new and additional transcontinental service on Boeing 757 and Boeing 737-800 jets: Las Vegas (1 additional round-trip flight, beginning June 8) and San Diego (1 new round-trip flight, beginning June 8).
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Old March 14th, 2006, 05:28 AM   #188
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Delta says will likely end pilot plan

WASHINGTON, March 13 (Reuters) - Bankrupt Delta Air Lines Inc. said on Monday it was in a "race against time" to restructure and that the company would probably terminate its pilots' pension plan to save money.

"It looks more likely than not," a lawyer for the airline, Jack Gallagher, said about pension prospects at an arbitration hearing on the fate of the pilots contract.

United Airlines and US Airways terminated their pension plans in bankruptcy. Northwest Airlines could also do the same in its restructuring.

Pilots are members of the only major union at Delta, which sought bankruptcy protection last September, the same time as Northwest.

Although there is no disclosed timetable for dropping the Delta pilots' plan, it is clear that the airline believes the program cannot be saved even if Congress approves pension reform legislation that includes special help for struggling airlines.

Last week, House-Senate negotiators began work to hammer out a compromise pension bill by early April, but the fate of a provision to allow airlines to stretch pension contributions over a much longer period of time than currently allowed has not been finalized.

The Bush administration opposes the provision.

Northwest said it hopes congressional pension reform will help it avoid terminating its traditional plans.

Delta also manages a nonunion plan, which officials said could be saved if the pension bill is approved with help for the industry.

An official of the pilots union, the Air Line Pilots Association, acknowledged the company had previously said privately that the underfunded pilots' plan was likely to go.

Any attempt to scuttle pensions needs bankruptcy court approval.

The company has halted payments, in most cases, to the pilots' plan and said it has spent $2.6 billion since 2001 in lump sum payments to pilots who took early retirement.

Delta faces up to $1 billion in pension costs if pilots are allowed to take lump sum payouts this year, the company said. It has offered the pilots a 15-year, $330 million interest-bearing note to help supplement lost benefits, if their plan is terminated.

The day-long hearing at a Washington hotel was the result of an unusual agreement between Delta and the pilots to have a three-member arbitration panel in Washington -- not the bankruptcy court in New York -- determine whether the carrier is in deep enough financial distress to void the union's contract.

The 6,000 pilots have threatened to strike if their collective bargaining agreement is thrown out. The deal was one of the richest in the industry when it was struck in early 2001.

Delta says it needs more than $300 million in annual cost savings from the pilots, but negotiations have not produced a giveback agreement. Gallagher said the two sides are about $190 million apart on savings needed annually over a four-year period.

The pilots' savings are part of $3 billion in cost cuts and revenue increases Delta says it must reach to survive.

"Delta's long-term viability is very uncertain," Gallagher said. "It only has a short time to restructure."

Delta Chief Executive Gerald Grinstein said in an interview at the hearing that the airline is meeting its savings targets in every area but pilot costs, and needs a long-term savings plan in place very soon.

During the hearing, the chairman of the arbitration panel, Richard Bloch, urged both sides to reach a voluntary cost-cutting deal.

The pilots and the company say they still want to reach an agreement but the airline is pressing ahead for the authority to terminate the contract and impose its terms if a deal is not possible.

The hearing resumes on Tuesday.

The arbitration panel will hear testimony over the next two weeks and is expected to make a decision by mid-April.

"It's a race against time," Grinstein said. "We're working with borrowed money and there are time limits."
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Old March 16th, 2006, 02:59 AM   #189
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Delta Air Lines is living off borrowed cash: financial adviser
By HARRY R. WEBER
15 March 2006

WASHINGTON (AP) - Delta Air Lines Inc. is living off borrowed cash and needs to lower its costs if it wants to avoid the fate of nearly a dozen carriers that have liquidated or been sold after filing for bankruptcy since the 1980s, a restructuring expert testified Wednesday.

Timothy Coleman of The Blackstone Group LP, Delta's main financial adviser since May 2004, spoke before an arbitration panel on the third day of hearings that will decide whether the nation's third-largest carrier can void its contract with its 6,000 pilots so it can impose up to $325 million (euro270 million) in pay and benefit cuts.

"It isn't just about getting yourself out of bankruptcy, which we can do," said Coleman, his firm's senior managing director. "It's about getting out and staying out and being able to operate on a viable basis."

Coleman said Delta needs to have a cost structure comparable to competitors so it can afford to keep its ticket prices low. He provided a list of 11 airlines that filed for bankruptcy since 1982 but ultimately had to liquidate or be sold.

"Delta has to get itself to a point where it's not just relying on outside capital," Coleman said. "The liquidity they have right now is really borrowed liquidity."

Blackstone is charging Delta $200,000 (euro166,306) a month plus a fee of $10.5 million (euro8.7 million) for its services, Coleman said.

The pilots union has said it will strike if its contract is rejected. A walkout would put the Atlanta-based carrier out of business, Delta has said. The panel, which is holding hearings at a Washington hotel, must decide on Delta's motion to reject its pilot contract by April 15.

The pilots have offered a second round of long-term cuts, but strongly disagree on the amount Delta says it needs. The pilots previously gave Delta $1 billion (euro830 million) in annual concessions in a five-year deal in 2004, and they believe they should receive some credit for the savings they say the company will reap if it terminates the pilots' defined benefit pension plan.

The airline, which filed for Chapter 11 bankruptcy protection from creditors in New York in September, had asked the bankruptcy court in November to void the pilot contract. Shortly before a judge was set to issue a decision, the company and its pilots reached a deal on interim pay cuts.

That deal, equal to a little less than half of what the company is seeking on an annual basis, would be replaced by the long-term deal the two sides have been negotiating since December. They missed a March 1 deadline to settle on their own, sending the matter to arbitration.

In the latest negotiating proposals, the company has agreed to reduce its request to $305 million (euro254 million) in cuts annually, while the union said it is offering $140 million (euro116 million) annually. Delta has offered to reduce its concessions request further to $290 million (euro241 million) if the pilots' defined benefit pension plan is terminated, the company's vice president of labor relations, Geraldine Carolan, testified Wednesday.

Delta has lost roughly $12.6 billion (euro10.5 billion) since January 2001.
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Old March 16th, 2006, 11:07 PM   #190
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Coleman said Delta needs to have a cost structure comparable to competitors so it can afford to keep its ticket prices low.
A great example of why the current airlines are having so many problems - poor management! Quite frankly, I am almost as scared of this airline surviving with it's poor management and planning intact than I am of it not surviving. I would much rather see something new come out of it with good planning and good management.

Why can't the management get the picture that they will never be able to compete on price alone, and that the real thing they need to provide - and that which is sorely lacking in the industry - is quality service and amenities. Not flashy stuff or things that are unobtainable except to the very few ultra-frequent fliers, but stuff that the average person who only flies a few times a year wants. What is kiiling them ins't the cost - it's the lack of value.
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Old March 16th, 2006, 11:29 PM   #191
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From: http://www.dallasnews.com/sharedcont....1888109a.html
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More airline mergers on the horizon?
Early success of US Airways deal adds to buzz
11:01 AM CST on Thursday, March 16, 2006
By ERIC TORBENSON / The Dallas Morning News
TEMPE, Ariz. – The short-term success of US Airways Group's merger with America West Inc. could inspire more industry deals, or may simply stand alone as the rare combo that proved skeptics wrong, experts say.
"There's a lot of buzz in the industry about consolidation," said Doug Parker, chief executive of the combined America West and US Airways, the latter of which dangled perilously close to liquidation before merging with Mr. Parker's America West. "There's a lot of value to be created by putting two airlines together."

The US Airways deal was given long odds when announced in May, but it has exceeded most expectations even though much of the hardest work remains ahead for the new company.
The combined carriers' revenue is growing faster than the rest of the industry's, and executives are finding more cost savings than originally promised. Shares of the new airline are up about 75 percent since they started trading in late September. They closed Wednesday at $35.07, up 2.8 percent.
Industry watchers say investors are circling the industry in hopes of profiting from the next merger.
But it's not as clear that a mega-deal involving the top network carriers is probable or even possible.
"There will be some kind of consolidation," said Ray Neidl, airline analyst for Calyon Securities. "The success they've had at US Airways would give some impetus to other situations out there."
However, Mr. Neidl isn't sure that big moves are pending this year, "though when they do start, things could set up pretty quickly."
Up next?
The new US Airways is "off to a good start," and that may whet the appetite for more deals, said Philip Baggeley, an airline analyst with Standard & Poor's Ratings Service. But, he said, "the really hard part" of meshing US Airways' unions is yet to come and could still cause troubles.
Among the big carriers ripe for merger talks, Delta Air Lines Inc. and Northwest Airlines Inc. are most often mentioned by analysts.
Each is trudging through bankruptcy proceedings, and each will need to find exit money before emerging from federal protection, Mr. Baggeley and others predict.
"That's the likeliest window of opportunity," he said, though it could be a ways off as they struggle to first lower their labor costs.
Continental Airlines Inc. of Houston and United Airlines Inc. are also likely players, as both airlines have expressed some affection for each other. United chairman Glenn Tilton has been a vocal proponent of mergers as a salve for an industry that's lost more than $35 billion in five years.
US Airways' Mr. Parker said he's aware of lots of "capital that's out there looking" for another US Airways-like deal. "The key is that they've got to be able to get out of planes that they don't need, and above all they need to have the right labor costs," he said.
Conditions have eased
The traditional barriers to putting airlines together – regulatory hurdles, financing and labor resistance – are all much lower than before, especially when labor unions face off with management in bankruptcy court.
The airlines in Chapter 11 reorganization are typically winning deep cost cuts – despite protests from pilots, flight attendants and ground workers – with the threat of a federal judge imposing additional reductions to wages and benefits if unions don't agree.
Mr. Parker shed some US Airways planes and cut some unprofitable flying, but he remains committed to US Airways hubs in Philadelphia and Charlotte, N.C.
With $867 million of new money raised to support the new carrier, US Airways has solid liquidity and said Wednesday that it was nearing a deal to refinance some of its debt on more favorable terms.
Soon the carriers will combine key areas such as technology systems, frequent flier programs and their separate federal operating certificates.
They've lowered fares in many US Airways markets and have a hard fight to reposition the US Airways name as "low fare" in many domestic markets where the old version of the carrier charged very high fares.
The hardest task ahead may be integrating unionized workforces. Already, skirmishes between US Airways and America West ground workers in Philadelphia have resulted in some firings, but in other areas there has been progress, Mr. Parker said.
Some skeptical
Not everyone thinks that US Airways will thrive or that acquisitions are imminent.
"Do Delta and Northwest fit together? They don't – not at all," said Michael Boyd of the Boyd Group in Evergreen, Colo.
Mr. Boyd often provides the contrarian view on industry issues.
"I mean, there could be a shotgun wedding of sorts if one of these carriers really struggles, but no one wins when airlines merge. They always end up with less," he said.
It's Mr. Tilton at United, Mr. Boyd argues, who's behind consolidation talk. "That's because United's management team has no long-term plan for United," said Mr. Boyd, a frequent critic of United's restructuring efforts.

Although most of the merger talk centers on the top carriers, the smaller, low-cost rivals are also potential acquisition targets, especially if high oil prices continue to crimp their earnings.
Denver's Frontier Airlines Inc. has performed well, but observers wonder if it has enough cash to compete against a reinvigorated United Airlines and Southwest Airlines Co.'s new flights at its hub, which could lead to merger discussions.
Other carriers such as Spirit Airlines Inc. and ATA Airlines Inc. could face some liquidity problems in the near term if fuel prices remain high.
Mr. Neidl suggests that any combination of smaller carriers might be between Frontier Airlines and JetBlue Airways Corp, which have similar fleets and in-flight products.
"They both have the same sort of philosophy," he said.
North Texas outlook
As for North Texas' carriers, Southwest and American Airlines Inc. aren't seen as likely participants in mergers.
Although Southwest has the strongest balance sheet in the industry, it's focused on cutting costs and improving its own earnings through significant growth.
American needs to focus on paying down some of its $20 billion in long-term debt, some of that still carrying over from its 2001 purchase of assets from bankrupt Trans World Airlines.
Prior to US Airways' deal, that represented the industry's last big deal.
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Old March 17th, 2006, 02:31 AM   #192
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Quote:
Originally Posted by Cloudship
A great example of why the current airlines are having so many problems - poor management! Quite frankly, I am almost as scared of this airline surviving with it's poor management and planning intact than I am of it not surviving. I would much rather see something new come out of it with good planning and good management.

Why can't the management get the picture that they will never be able to compete on price alone, and that the real thing they need to provide - and that which is sorely lacking in the industry - is quality service and amenities. Not flashy stuff or things that are unobtainable except to the very few ultra-frequent fliers, but stuff that the average person who only flies a few times a year wants. What is kiiling them ins't the cost - it's the lack of value.
Unfortunately, the largest chunk of costs airlines face is labour, so unless the labour unions can accept drastic cuts to their pay and benefits, it is unlikely US airlines can advance too far in cost control.

Likewise, the market simply won't pay more on the revenue side either.
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Old March 26th, 2006, 06:19 PM   #193
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Delta seeks to add NY-Tel Aviv flight within a year
By Steven Scheer

TEL AVIV, March 26 (Reuters) - Delta Air Lines said on Sunday it aims to resume flying between New York and Israel within a year to expand its international business.

Delta, the third largest U.S. carrier which is operating under bankruptcy protection, on Tuesday will begin nonstop flights between Atlanta's Hartsfield-Jackson Airport and Tel Aviv as part of a dozen new routes planned to Europe and the Middle East.

"We intend to make this work financially and then we will move on to (adding flights to and from) New York," Glen Hauenstein, a Delta vice president, told a news conference. "Delta is committed to Israel...There are opportunities to grow tourism in Israel and the United States."

The earliest he sees adding a New York flight would be in December but "if not then, then spring of next year."

He said the carrier decided to start with Atlanta flights since it allows passengers to connect to 240 flights to 170 destinations daily.

Through Atlanta, Delta hopes to tap into the large Jewish community there as well as attract those wishing to visit the Holy Land from throughout the Bible Belt and Latin America, especially Mexico. It is also seeking passengers connecting in Atlanta from the West Coast.

Hauenstein said Delta's current Chapter 11 situation would not impact its operations.

"Chapter 11 is a process for restructuring," he said, noting that in 2005, 70 percent of U.S. capacity was in Chapter 11. "We expect to emerge from Chapter 11 the same time next year."

Israeli Tourism Minister Abraham Hirschson said the new Atlanta-Tel Aviv route will add another 100,000 seats for incoming tourists. Hirschson has fought hard to bring in more flights to Israel to boost tourism, which hit a 5-year high in 2005 at nearly 2 million people.

He said he expects between 2.8 and 3.0 million tourists in 2006.

Capacity on flights to Israel will rise even further this week when Germany's Lufthansa starts using larger aircraft on its Frankfurt-Tel Aviv route.

Delta expects the route to be profitable by next year and claim 35 percent of the market from the U.S.' Southeast and more than 12 percent of the entire United States to Israel.

Advanced bookings have given Delta a load factor of around 90 percent for the next few weeks, the airline said.

The route will use Boeing 777 widebody jets.

Along with Tel Aviv, Delta was also adding routes to Duesseldorf, Copenhagen, Athens, Nice, Edinburgh, Venice, Budapest, Dublin, Manchester and Kiev.

Delta will also become the first U.S. carrier to fly to Africa when it launches service to Johannesberg later this year.

Delta started flying nonstop from New York to Tel Aviv in June 2001 but flights were halted after the September 11 attacks in the United States.
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Old March 26th, 2006, 08:39 PM   #194
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Detla hub @ CVG is in a very unstable cindition
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Old March 27th, 2006, 04:23 PM   #195
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Quote:
Unfortunately, the largest chunk of costs airlines face is labour, so unless the labour unions can accept drastic cuts to their pay and benefits, it is unlikely US airlines can advance too far in cost control.

Likewise, the market simply won't pay more on the revenue side either.
But that cost pretty much goes directly into flying the planes. That's an example of shortsighted thinking - looking at purely numbers without thinking about impact. Cut that expense, you are also going to cut performance of the pilots, and you simply can't fly an airliner today without pilots.

Who says that the market will not pay more? Particularly if you offered somethign better than what other airlines were offering? That too is an example of the short sighted thinking that got them into this mess in the first place. simplly following the same easiest path that you always have is only going to lead you to the same place. You have to be bold enough to try something different - offer a better product for a higher price. Make people actually want to fly you versus the competitor, not want to avoid flying you in favor of your competitor.
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Old March 30th, 2006, 10:53 PM   #196
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The biggest labour cost issue is pensions. Depending the type of plan (define benefit or define contribution), the airline is on the hook to pay a huge sum of money. This is especially problematic for define benefit plans where contribution amounts fluctuate as the workforce ages.

Unions have also become powerful forces in skewing the market wage. This isn't solely confined to the airline industry, but that is a significant cause behind American airlines' long history of problems. Cost recovery through revenues is no longer realistic since the market wage has been distorted. At the same time, the consumer is not willing to pay more for the same service to cover the distortion.

With increased demands for efficiency, there needs to be more productivity with less numbers.

Low cost carriers have been very successful in general in the United States, with Southwest buckling the bankruptcy protection trend among America's legacy carriers. Consumers are very price conscious today. That's the new economic reality. The issue is more about cost rather than paying more for better service. The cabin will always have more economy class seats to fill and not everyone is willing or able to fly premium. Sure, prices can go up, and people will still fly, but there will be less people, and with less people, recovering the cost distortions will be even more difficult. This is a classic example of both a revenue and cost management problem.
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Old March 31st, 2006, 09:22 PM   #197
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Delta To Pass Along Fees To Customers On Some Flights
31 March 2006

ATLANTA (AP)--Delta Air Lines Inc. (DAL), which is operating under bankruptcy protection, said Friday that roundtrip ticket prices will rise as much as $9 on some flights because it will be passing along certain fees to customers that it previously paid for itself.

The U.S.'s third-largest carrier said it has traditionally absorbed passenger facility charges, but wants to recoup a portion of the costs by adding $3 to $4.50 each way to ticket prices for certain connecting flights within the U.S.

Such fees are imposed by local airports to pay for improvements.

Atlanta-based Delta filed for Chapter 11 protection from its creditors in New York on Sept. 14. It has reported net losses totaling $12.8 billion since January 2001, the year the industry downturn started amid the terrorist attacks.
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Old March 31st, 2006, 11:00 PM   #198
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the consumer is not willing to pay more for the same service
Exactly. Precisely why JetBlue had been (up until this past year) been doing so good. They provided better service. Unfortunately the airline industry is still caught in 80's thinking. Coach class or really fancy first class with little of real value for exhorbitantly higher prices. Why would someone pay 4 or more times as much to fly first class over a discounted coach seat? They could buy the whole row of seats for themselves.

Quote:
With increased demands for efficiency, there needs to be more productivity with less numbers.
So to increase productivity, you cut back on the people who are most critical to providing your product, and make them more unhappy and less productive, while retaining the backend functions which only serve to inflate the busioness without improving the product you are providing?
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Old April 1st, 2006, 12:27 AM   #199
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Here is what i think why US's airlines are so hard to make profit:
1. Slow Market Growth
The market is too mature to have good growth rate. In other words, not too much growth to sustain a good profit margin.


2. High competition
Domestic routes are overwhelmed by low-cost carrier (LLC). Full-service carriers lose money because of competition from LLC. And now even LLC start losing money because there are just way too many of them. LLCs start competing against each others. There are no competitive edge for LLC now if you compare to the market 5 years ago.

International routes has a lot of quality airlines from Asia/Europe/Austriala with better services.


3. Wrong business model
Passengers looking for quality of service would most likely look for non-US carriers. They are also willing to pay more for the comfort, and services. That could translate to better profit margin when you compare to US's carriers with lower cost (lower quality of service), lower revenue model. For example, passengers would pay more to choose airlines with IFE system on board. Even though IFE means heavier airplane, the extra fuel cost is negated by higher willingness from passengers to pay more. (again, higher profit)
As someone pointed out earlier, US carrier provides little "value" for the passenger. Not that they don't want to, but they can't, given the current financial situation.


4. High fuel cost
The average aircraft age of US's carriers are usually higher than carriers in other regions. That translate to less fuel efficient airplane, and higher maintaince cost.
Quite frankly, obesity also cost the airline, from flight attendance to passengers. It may sounds like a joke to you. But the reality is the airplane is burning a lot more fuel with all these increased weight. Still sounds like a joke to you? Airlines are now thinking or implementing ways to reduce weight as much as possible. From off-loading garbage early, using a lighter cart, printing magazine in thiner paper, more restriction for FA's and passenger's luggage, thiner paint. Just to save a few hundred pounds.
Inability to hedge long-term fuel contract to buy cheaper fuel also means more cost.


5. September 11th
Once you got into bankrupcy, it is pretty hard to turn things around with better services/ more fuel-efficient airplane/ more competitive pricing etc. Getting loans from banks seem impossible either when you are in bankrupcy protection, and such a uncertain future.


6. Staff cost
Again, employees in the airline sector are asking way too much for their benefits. Especially when the economy is getting better now with higher inflation, and interest rate, they tend to ask even more, or harder to compromise.
The older work force also means more cost on pension.
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Old April 1st, 2006, 12:34 AM   #200
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Quote:
Originally Posted by Cloudship
So to increase productivity, you cut back on the people who are most critical to providing your product, and make them more unhappy and less productive, while retaining the backend functions which only serve to inflate the busioness without improving the product you are providing?
The economic reality is people will need to be more productive. So for those who can deliver those results and handle more work, they'll keep their jobs. This can be done through a variety of different ways. For example, call centres can be routed through India, internet sales can be encouraged to reduce sales commission payouts, online check-in can be provided to reduce the staff needed at the airport counters, and staff rosters can be optimized to improve efficiency.

You don't necessarily have to cut the head count to achieve cost efficiencies, but headcount redundancy is a major issue especially with pensions, which is what airlines are trying to fix in their bankruptcy reorganization.

Having a million bodies provide a good level of service is not cost efficient. Having less people deliver an even better product is key. But given the labour climate in the US, achieving any productivity gains seem to be against the union agenda.
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