Antarius wrote:

ScottB wrote:

I still can't get over how boneheaded it was for B6 management to disclose that BOS was their most profitable operation.

I am confident this was nothing even remotely secret. DL and everyone have plenty of data based on LF and pricing, and unless they are a laggard in the market, can roughly estimate how everyone is doing.

AA stated once that CLT was one of their most profitable. I'm sure others knew that too.

Exactly any accountants can come up with a range. While it might not be a perfect number it wouldn’t be hard. FLL is currently the most profitable maybe Delta will run down there now. Anyway we keep looking at Boston like it is going to be static for jetblue now. They will be getting more gates soon and more flights are 321s. They are not even close to being done growing or are they going anywhere in Boston. Ed was right how hard was it really to bring Delta back up there. They had gates the space and already had a presence so it was kind of a no brainer.
Obviously when Delta wants something it goes for it.

If jetblue was sitting on an unused terminal in ATL they could probably really grow there or anywhere else. It’s really becoming a real estate game and most of it in the major city’s is locked up. Jetblue was to timid and lost a few opportunities but it is what it is.

The 321lr to Europe for jetblue out of Boston will be interesting.

SteelChair wrote:

Its a little tiresome hearing him opine about the great employee culture when DL has 30,000 fewer employees than AA because DL has contracted so much out....

Tiresome? No.

But it could have merit. If you outsource things that aren't your core business it allows you to focus on your core business.

anstar wrote:

SteelChair wrote:

Its a little tiresome hearing him opine about the great employee culture when DL has 30,000 fewer employees than AA because DL has contracted so much out....

Tiresome? No.

But it could have merit. If you outsource things that aren't your core business it allows you to focus on your core business.

Whats more central to the core of your business as an airline than the airworthiness of your airplanes?

NWAROOSTER wrote:

...... Delta had originally ordered the MD-95, 717, and did not continue receiving the 717 but had operated them long enough to fully understand the the aircraft's benefits and and deficits. .......

Delta never ordered or operated the 717, until the lease deal with Southwest. Where did you get that idea/info?

Ewww, I've never really looked at him before. It should come as no surprise that he is a reptilian...always in the eyes. Anyway the underbelly vibe of DL is dark, and I just look on at the DL fanboys in amusement since there are more important things in life to fight for than DL or any airlines.

The interview felt like something out of the 1970s. Odd!

I do not buy into the whole DL crap! Nope. ALso while their livery is nice enough, its already dated!

ScottB wrote:

NWAROOSTER wrote:

Delta had originally ordered the MD-95, 717, and did not continue receiving the 717 but had operated them long enough to fully understand the the aircraft's benefits and and deficits.

Spree34 quote is first paragraph............
Delta never ordered or operated the MD-95 or 717 before picking up AirTran's fleet secondhand in the deal with Southwest. Arguably their relationship with McDonnell-Douglas had soured over the issues Delta encountered with the MD-90 and MD-11 fleets (which led Delta to drop their substantial orders for both in favor of the 737-800 and 777).

You are correct Delta never bought any new MD-95s or 717s. The statement should had stated Delta bought MD-90s. The rest of my statement is correct. Delta increased their used aircraft purchases after merging with Northwest Airlines as Northwest bought many used aircraft such as the DC-9 and DC-10 as Northwest's used aircraft philosophy went to Delta along with some of their management .

I really enjoy listening and reading what Ed has to say. I honestly didn’t think I would like him as a CEO but so far I like the direction the company is heading

SteelChair wrote:

anstar wrote:

SteelChair wrote:

Its a little tiresome hearing him opine about the great employee culture when DL has 30,000 fewer employees than AA because DL has contracted so much out....

Tiresome? No.

But it could have merit. If you outsource things that aren't your core business it allows you to focus on your core business.

Whats more central to the core of your business as an airline than the airworthiness of your airplanes?

Nothing annoys me more than defending Delta (or any airlines) outsourcing of maintenance but....

SteelChair you are taking one small data point and making into something completely wrong.

So let us compare Delta, who sends ~45% of its maintenance out of house, to American who sends ~40% of its maintenance out of house.


Delta decided to send all of its overhauls out of house while continuing to do the majority of airframe work done in 21 days or less and good bit of painting(I’ll come back to these two in a minute) as well as the majority of its components and engines in house.
Does this drive lower employee numbers? Yes but we are talking marginally. I figure if Delta started doing the majority of its overhauls in house it would probably add maybe 1,000 mechanics. That isn’t nearly the gap you are making it out to be.
Delta has ALWAYS had fewer mechanics per tail than their unionized peers. This isn’t because of work sent out it’s because Delta’s work force is much more flexible than those with union contracts. Not having infighting every 3-4s when contract negotiations start helps as well.


Also you are completely ignoring the MRO side of the house. If you actually adjust the numbers to include MRO numbers, Delta would actually do more work in-house than American.

Finally all of this is completely ignoring the fact that American and US airways are still separated contracts for maintenance. It is very possible American ends up sending a huge amount of work out of house if they go down the road US did. Looking at the “new” American, every single engine they have ordered in the next generation are sent to vendors. The GE90, GEnX, LEAP, and even V2500 are all under vendor contracts with no sign from management they have any interest in doing the work in house. For the GEnX/GE90 it would require a new test cell in Tulsa as well. On the flip side, every single next gen engine Delta has coming in has in-house deals in place to keep the work in Atlanta and drive huge MRO numbers. The Trent 7000/1000/XWB and both versions of the GTF all will be in-house motors. Delta also still has legacy Northwest contracts that have a chance of coming in house as the end, such as the CFM56-5A and PW4168s.

As for the short term, if Delta were to bring back the few c checks lines they have started out of house, the painting that is done out of house and a few other things they would likely be below the outsourcing percent of American. Long term it isn’t hard to see American agreeing to bringing the work in-house to keep the legacy American scope numbers (iirc its 35% of base maintenance and 10% of line maintenance)

United and Southwest aren’t even worth talking about because they outsource a large amount more than Delta or American.


Once American get a JCBA with its mechanics let talk about just how much maintenance is done in house.

xdlx wrote:

I certainly hope ENOUGH PILOTS ON DL MAINLINE read the important....and elusive growth plan of "Utilizing Partnerships"!

During the last 20years that is all we ve done. CODESHARES, JV, DLConnection, how about flying our own metal? TO NEW DESTINATIONS. Now that is a novel concept.... and guess what? Is the only way to actually secure the future.

Settle down captain happy
You guys need to actually read what was said not just here but in things like the earning reports and such.

Ed and Glen have said multiple times that they want to grow the in house international side of the operation. The theme has been much of what was said after bankruptcy, get the company closer to 50/50 international/domestic ( I believe the actual target is 40/60 int/dom)
Two ways to do that, none of which involve growing JV partners.
Either they cut domestic back (obviously not happening) or grow the international side faster than the domestic side. The point Ed was making was that the international growth will come via the partner hubs more so than markets with little to no feed. That isn’t a new trend. The bulk of Delta’s growth has been to place like AMS, LHR, ICN, CDG and soon BOM. Delta isn’t going to run out and start SLC-FRA for example.
Also we will (finally) start to see the average gauge increase as larger A330s replace 763s.

*note that doesn’t mean adding a ton of airplanes. Adding a few extra weeks of operation to a seasonal Europe routes will grow the operation as well. I would expect new routes will still come fairly conservatively.


Having said that, it is an absolute joke that Delta is leaving Hong Kong. Really hoping the management team does something to figure that out.
Leaving and handing CX SEA has put the even more behind the 8 ball than they were. (Really didn’t think Delta could actually do worse for its Hong Kong position but they found a way)

LAXLHR wrote:

Ewww, I've never really looked at him before. It should come as no surprise that he is a reptilian...always in the eyes. Anyway the underbelly vibe of DL is dark, and I just look on at the DL fanboys in amusement since there are more important things in life to fight for than DL or any airlines.

The interview felt like something out of the 1970s. Odd!

I do not buy into the whole DL crap! Nope. ALso while their livery is nice enough, its already dated!

You know, as annoying as the people who fanboy an airline may be, they're a good deal more tolerable than the people who only rag on an airline. There's more important things in life than whinging on the internet and badmouthing someone's looks for Christs sake.

Also, belated as it may be to say this, Bastian was hardly as gung-ho as the thread title makes it out to be.

727200 wrote:

Here's average age of the some of the different DL subfleets:

757: 20.8 years
767: 20.9 years
MD80: 25.7 years
717: 16.7 years
A320: 22.8 years
A319: 16.4 years

That's 2/3 of DL's fleet by number of aircraft.

I would argue their fleet age doesn't even matter if DL achieves class leading operational metrics. If the average passenger walks on an A320 and thinks they're on a brand new plane with new interiors, PTVs, etc., aircraft age is irrelevant. Clearly this strategy is working for Delta as they lead AA and UA in overall performance.[/quote]


That's a joke, right?

I trust you have seen an airport operations from other than behind glass or the jetway. A new interior on a fossil doesn't change anything; its still a fossil. From a maintenance standpoint, your cost increase substantially the older a plane gets. US carriers generally retire aircraft in the 20 year range because it is no longer economically feasible to continue to run them. BUT, if you want to make your balance sheet look better, and return money to shareholders you can run the old planes, but at some point that line of thought will catch up ti you and 2/3 of your fleet will have to be replaced resulting in HUGE capital expenditures. Now, DL better pray that the economy stays good or when that fleet replenishment becomes due and the markets are tight, they could be putting a lot more planes in the desert than what they originally planned.[/quote]


Delta owns a lot of those old airplanes outright. Precisely so they can park them without penalty if the economy turns down. Unlike other airlines which have to keep paying lease / mortgage costs.
Delta's old planes get up and fly every day. Several times a day. Delta cancels less than 0.5% of their flights. Only Hawaiian is better
Passengers like the revamped interiors. Compare Delta 767 comments to AA 767 comments.
Delta seems to be replacing planes at about 25 years of age. If a similarly sized competitor replaced their planes at 12.5 years old, they would end up buying twice as many planes.

The problem with flying old planes is if fuel costs spike significantly the older planes become a liability. However that is offset by the fact that significant fuel price spikes come with recessions. So a lot of planes will need to be parked in the old Delta fleet and the newer competitors fleet. See my first point.

MSPNWA wrote:

DL is all about perception. If they can make people believe they are something they are not, it's a huge advantage in the marketplace.. What Bastian doesn't want to say to investors and the public is that their revenue premium is structural. They drive a revenue premium due to having market power in their relatively monopolistic core network. Instead they want people to believe that they have re-written economics by creating an airline that is in some sense not a commodity. Will DL's true reason for their revenue premium hold up over time? We'll see. But a structural advantage doesn't have as strong a perception in ever-changing economic times. What investors/employees/others want to hear is that they have an operation or product that is superior, and that's why they have a revenue premium.

Well Ed did say in the article, immediately after discussing DL's revenue premium, that "Literally, the hub structure is part of it."

deltal1011man wrote:

I really enjoy listening and reading what Ed has to say. I honestly didn’t think I would like him as a CEO but so far I like the direction the company is heading

SteelChair wrote:

anstar wrote:

Tiresome? No.

But it could have merit. If you outsource things that aren't your core business it allows you to focus on your core business.

Whats more central to the core of your business as an airline than the airworthiness of your airplanes?

Nothing annoys me more than defending Delta (or any airlines) outsourcing of maintenance but....

SteelChair you are taking one small data point and making into something completely wrong.

So let us compare Delta, who sends ~45% of its maintenance out of house, to American who sends ~40% of its maintenance out of house.


Delta decided to send all of its overhauls out of house while continuing to do the majority of airframe work done in 21 days or less and good bit of painting(I’ll come back to these two in a minute) as well as the majority of its components and engines in house.
Does this drive lower employee numbers? Yes but we are talking marginally. I figure if Delta started doing the majority of its overhauls in house it would probably add maybe 1,000 mechanics. That isn’t nearly the gap you are making it out to be.
Delta has ALWAYS had fewer mechanics per tail than their unionized peers. This isn’t because of work sent out it’s because Delta’s work force is much more flexible than those with union contracts. Not having infighting every 3-4s when contract negotiations start helps as well.


Also you are completely ignoring the MRO side of the house. If you actually adjust the numbers to include MRO numbers, Delta would actually do more work in-house than American.

Finally all of this is completely ignoring the fact that American and US airways are still separated contracts for maintenance. It is very possible American ends up sending a huge amount of work out of house if they go down the road US did. Looking at the “new” American, every single engine they have ordered in the next generation are sent to vendors. The GE90, GEnX, LEAP, and even V2500 are all under vendor contracts with no sign from management they have any interest in doing the work in house. For the GEnX/GE90 it would require a new test cell in Tulsa as well. On the flip side, every single next gen engine Delta has coming in has in-house deals in place to keep the work in Atlanta and drive huge MRO numbers. The Trent 7000/1000/XWB and both versions of the GTF all will be in-house motors. Delta also still has legacy Northwest contracts that have a chance of coming in house as the end, such as the CFM56-5A and PW4168s.

As for the short term, if Delta were to bring back the few c checks lines they have started out of house, the painting that is done out of house and a few other things they would likely be below the outsourcing percent of American. Long term it isn’t hard to see American agreeing to bringing the work in-house to keep the legacy American scope numbers (iirc its 35% of base maintenance and 10% of line maintenance)

United and Southwest aren’t even worth talking about because they outsource a large amount more than Delta or American.


Once American get a JCBA with its mechanics let talk about just how much maintenance is done in house.

xdlx wrote:

I certainly hope ENOUGH PILOTS ON DL MAINLINE read the important....and elusive growth plan of "Utilizing Partnerships"!

During the last 20years that is all we ve done. CODESHARES, JV, DLConnection, how about flying our own metal? TO NEW DESTINATIONS. Now that is a novel concept.... and guess what? Is the only way to actually secure the future.

Settle down captain happy
You guys need to actually read what was said not just here but in things like the earning reports and such.

Ed and Glen have said multiple times that they want to grow the in house international side of the operation. The theme has been much of what was said after bankruptcy, get the company closer to 50/50 international/domestic ( I believe the actual target is 40/60 int/dom)
Two ways to do that, none of which involve growing JV partners.
Either they cut domestic back (obviously not happening) or grow the international side faster than the domestic side. The point Ed was making was that the international growth will come via the partner hubs more so than markets with little to no feed. That isn’t a new trend. The bulk of Delta’s growth has been to place like AMS, LHR, ICN, CDG and soon BOM. Delta isn’t going to run out and start SLC-FRA for example.
Also we will (finally) start to see the average gauge increase as larger A330s replace 763s.

*note that doesn’t mean adding a ton of airplanes. Adding a few extra weeks of operation to a seasonal Europe routes will grow the operation as well. I would expect new routes will still come fairly conservatively.


Having said that, it is an absolute joke that Delta is leaving Hong Kong. Really hoping the management team does something to figure that out.
Leaving and handing CX SEA has put the even more behind the 8 ball than they were. (Really didn’t think Delta could actually do worse for its Hong Kong position but they found a way)

The MQA LOS technician list used to have over 10,000 names on it. Now? 6,400. They're not gonna be stupid and furlough you ala NWA, but they aren't gonna hire your kid or the kid down the street, at least not in any significant numbers. They have DGS people on the hangar floor working beside DL AMTs. They do not have the hangar capacity to bring that HMV work back even if they wanted to because they haven't made the capital investments in new hangars. And they won't be building any becausr its not in their plan. "Yea! You're the best!"

I agree that Delta has always been more efficient than the union carriers, but doesn't it seem ironic now that the scope clause at AA is saving hundreds of AMT jobs there while Delta jobs go overseas and Ed hypocritically preaches how much the Delta employees are loved? Think this isn't an issue? Millons of americans voted for DJT on the jobs issue alone.....they're sick of seeing good jobs leave. I can't believe DJT didnt tie this into the ME3 negotiation. I expect Delta to order 787s soon as a quid pro quo from that negotiaton though.

LAXLHR wrote:

Ewww, I've never really looked at him before. It should come as no surprise that he is a reptilian...always in the eyes. Anyway the underbelly vibe of DL is dark, and I just look on at the DL fanboys in amusement since there are more important things in life to fight for than DL or any airlines.

The interview felt like something out of the 1970s. Odd!

I do not buy into the whole DL crap! Nope. ALso while their livery is nice enough, its already dated!

What is the value of your post?

LAXLHR wrote:

Ewww, I've never really looked at him before. It should come as no surprise that he is a reptilian...always in the eyes. Anyway the underbelly vibe of DL is dark, and I just look on at the DL fanboys in amusement since there are more important things in life to fight for than DL or any airlines.

The interview felt like something out of the 1970s. Odd!

I do not buy into the whole DL crap! Nope. ALso while their livery is nice enough, its already dated!

Gosh I miss the old airliners.net when people posted things of substance and not opinion-laden drivel. What in God's name are you talking about? The underbelly vibe of DL is dark? Really? This was a standard piece about a large corporation's Chief Executive Officer. Did you expect him to badmouth the company that he's leading, and is, indisputably one of the greatest airline success stories of all time. DL has consistently been one of the best financially performing carriers for many years (regardless of the reasons), you can dislike DL for any number of reasons, but no one with any legitimacy can say that DL is not a well-run company.

Jeremy

jagraham wrote:

727200 wrote:

Here's average age of the some of the different DL subfleets:

757: 20.8 years
767: 20.9 years
MD80: 25.7 years
717: 16.7 years
A320: 22.8 years
A319: 16.4 years

That's 2/3 of DL's fleet by number of aircraft.

I would argue their fleet age doesn't even matter if DL achieves class leading operational metrics. If the average passenger walks on an A320 and thinks they're on a brand new plane with new interiors, PTVs, etc., aircraft age is irrelevant. Clearly this strategy is working for Delta as they lead AA and UA in overall performance.

That's a joke, right?

I trust you have seen an airport operations from other than behind glass or the jetway. A new interior on a fossil doesn't change anything; its still a fossil. From a maintenance standpoint, your cost increase substantially the older a plane gets. US carriers generally retire aircraft in the 20 year range because it is no longer economically feasible to continue to run them. BUT, if you want to make your balance sheet look better, and return money to shareholders you can run the old planes, but at some point that line of thought will catch up ti you and 2/3 of your fleet will have to be replaced resulting in HUGE capital expenditures. Now, DL better pray that the economy stays good or when that fleet replenishment becomes due and the markets are tight, they could be putting a lot more planes in the desert than what they originally planned.[/quote]


Delta owns a lot of those old airplanes outright. Precisely so they can park them without penalty if the economy turns down. Unlike other airlines which have to keep paying lease / mortgage costs.
Delta's old planes get up and fly every day. Several times a day. Delta cancels less than 0.5% of their flights. Only Hawaiian is better
Passengers like the revamped interiors. Compare Delta 767 comments to AA 767 comments.
Delta seems to be replacing planes at about 25 years of age. If a similarly sized competitor replaced their planes at 12.5 years old, they would end up buying twice as many planes.

The problem with flying old planes is if fuel costs spike significantly the older planes become a liability. However that is offset by the fact that significant fuel price spikes come with recessions. So a lot of planes will need to be parked in the old Delta fleet and the newer competitors fleet. See my first point.[/quote]

What? Do you know that DL does not have a considerably higher fuel bill than its competitors, even with this ancient fleet you keep talking about? And did you know that AA and UA also have hundreds of airplanes that are nearing or over 20 years old?

Jeremy

jfern022 wrote:

AA has leveraged the yard to pay for their fleet. Next downturn, they’ll have to keep flying those planes even if they are money losers to keep up those lease payments. DL can just park their fleet.

AA will likely keep flying more because their more efficient fleet is more likely to operate at an operating profit. That's good. All major airlines have enough owned airplanes to park without payments if needed. But that isn't the scenario an airline wants to place itself in.

What isn't good is having to park airplanes because their operation has turned into an operating loss. That happens first with aging, inefficient aircraft. It's a fast way to shrink your airline and lose market share. If a down time happens again, DL will be dependent on it not hitting their revenue stream. They need that higher revenue to stay flying.

Jeremy, you missed the point.

MM costs increase in direct proportion to age of the aircraft. With an older fleet, and in the number posted earlier, their fleet is old in relation to the 20 year rule, their costs continue to increase. Same applies to fuel as the engines are less efficient. So, while DL is able to make money while the economic times are good, at some point it is going to catch them; its a reality you will have to face. As such, the potential is there for them to park larger numbers of aircraft in the desert leaving huge holes in their route system. They obviously cannot afford to replace all their planes on a one-to-one basis, so they are living on the edge of the sword; sooner or later they will have to pay something to keep going.

727200 wrote:

Jeremy, you missed the point.

MM costs increase in direct proportion to age of the aircraft. With an older fleet, and in the number posted earlier, their fleet is old in relation to the 20 year rule, their costs continue to increase. Same applies to fuel as the engines are less efficient. So, while DL is able to make money while the economic times are good, at some point it is going to catch them; its a reality you will have to face. As such, the potential is there for them to park larger numbers of aircraft in the desert leaving huge holes in their route system. They obviously cannot afford to replace all their planes on a one-to-one basis, so they are living on the edge of the sword; sooner or later they will have to pay something to keep going.

No, you just didn’t have a good point is all. DL’s MD-80 fleet will be gone in less than two years and DL has enough planes on order right now to retire the A320, 757, MD-80 and MD-90 but somehow they can’t afford to retire planes one for one? It’s lunacy. You don’t think DL, the world’s most profitable airline and one with a great credit rating, could secure financing to replace an aging fleet of airplanes (even though they’re already doing this)? In a few years DL’s fleet will be just as new as AAs but they will do it by taking on considerably less debt, not sure how that’s a losing formula.

Jeremy

MSPNWA wrote:

jfern022 wrote:

AA has leveraged the yard to pay for their fleet. Next downturn, they’ll have to keep flying those planes even if they are money losers to keep up those lease payments. DL can just park their fleet.

AA will likely keep flying more because their more efficient fleet is more likely to operate at an operating profit. That's good. All major airlines have enough owned airplanes to park without payments if needed. But that isn't the scenario an airline wants to place itself in.

What isn't good is having to park airplanes because their operation has turned into an operating loss. That happens first with aging, inefficient aircraft. It's a fast way to shrink your airline and lose market share. If a down time happens again, DL will be dependent on it not hitting their revenue stream. They need that higher revenue to stay flying.

DL need the higher revenue to stay flying to service the $8 B debt versus AA which doesn't need the revenue to service the $26 B in debt.....not!

SESGDL wrote:

727200 wrote:

Jeremy, you missed the point.

MM costs increase in direct proportion to age of the aircraft. With an older fleet, and in the number posted earlier, their fleet is old in relation to the 20 year rule, their costs continue to increase. Same applies to fuel as the engines are less efficient. So, while DL is able to make money while the economic times are good, at some point it is going to catch them; its a reality you will have to face. As such, the potential is there for them to park larger numbers of aircraft in the desert leaving huge holes in their route system. They obviously cannot afford to replace all their planes on a one-to-one basis, so they are living on the edge of the sword; sooner or later they will have to pay something to keep going.

No, you just didn’t have a good point is all. DL’s MD-80 fleet will be gone in less than two years and DL has enough planes on order right now to retire the A320, 757, MD-80 and MD-90 but somehow they can’t afford to retire planes one for one? It’s lunacy. You don’t think DL, the world’s most profitable airline and one with a great credit rating, could secure financing to replace an aging fleet of airplanes (even though they’re already doing this)? In a few years DL’s fleet will be just as new as AAs but they will do it by taking on considerably less debt, not sure how that’s a losing formula.

Jeremy

Ding ding ding we have a winner!

The only part I take exception to is the statement that "in a few years DLs fleet will be just as new as AA's." It'll actually be newer because 1) it was bought later, amd 2) fewer number of ceo aircraft were bought. It'll be almost like they skipped a cycle.

Every hour that Delta flies an older aircraft is one hour less that Delta needs to fly a newer aircraft. This means that Delta can fly it's newer aircraft longer and possibly skip a generation.

I found this interesting...

Q: Can you draw similar strategic parallels between Seattle and Boston?

Bastion: We came at it from a different construct… Seattle was very much about Asia and again, controlling our destiny because Alaska was very clear that they wanted to remain open to doing business with any party, and were not interested in an exclusive arrangement with Delta. So that forced our hand.

How would have Delta and Alaska set up an “exclusive arrangement” that would not have raised US antitrust alarm bells? Are there other examples of two US carriers entering into an exclusive arrangement?

On another note...

Does Bastian’s office look like a relic from the 1980’s?

SESGDL wrote:

In a few years DL’s fleet will be just as new as AAs but they will do it by taking on considerably less debt, not sure how that’s a losing formula.

Only if AA completely stopped taking new aircraft. Your belief is fantasy. It would take DL 3-4 years at its current new aircraft delivery rate (50-60/year), and AA to completely stop taking new aircraft, for DL to catch AA in fleet age by 2021-22. Considering AA has about 250 aircraft on order, only about 60 less than DL, AA's fleet will be well younger for years to come barring something crazy happening there. The only way for DL to catch AA in fleet age is to ramp up deliveries even more from their already high impending rate, likely singificantly adding to its debt total.

727200 wrote:

Jeremy, you missed the point.

MM costs increase in direct proportion to age of the aircraft. With an older fleet, and in the number posted earlier, their fleet is old in relation to the 20 year rule, their costs continue to increase. Same applies to fuel as the engines are less efficient. So, while DL is able to make money while the economic times are good, at some point it is going to catch them; its a reality you will have to face. As such, the potential is there for them to park larger numbers of aircraft in the desert leaving huge holes in their route system. They obviously cannot afford to replace all their planes on a one-to-one basis, so they are living on the edge of the sword; sooner or later they will have to pay something to keep going.

Delta has over 300 planes on order and will be getting rid of a substantial number of their older planes in the next three years. Delta could go out tomorrow, buy an additional 200 737's on top of their existing 300 outstanding new orders on credit alone, and their debt and leverage position would STILL probably be 35-40% better than AA's is today. When their debt position is already 65% better than AA's, they have high credit ratings for an airline, and they have a RASM advantage over AA they can certainly afford to do that. Delta started their debt reduction strategy years ago specifically so that they would have the flexibility to do what was needed to weather future industry downturns. If DL has to park 20 year old planes it costs them peanuts, AA has to continue paying for their's regardless, in a serious downturn, they're either going to be flying them at a loss, or they're going to park them at a loss. AA would have no ability to downsize or contract without it costing them a fortune with a colossal amount of debt to service.

questions wrote:

I found this interesting...

Q: Can you draw similar strategic parallels between Seattle and Boston?

Bastion: We came at it from a different construct… Seattle was very much about Asia and again, controlling our destiny because Alaska was very clear that they wanted to remain open to doing business with any party, and were not interested in an exclusive arrangement with Delta. So that forced our hand.

How would have Delta and Alaska set up an “exclusive arrangement” that would not have raised US antitrust alarm bells? Are there other examples of two US carriers entering into an exclusive arrangement?

At the time AS was still very close with AA (which like the DL partnership has also largely disappeared on the domestic front since then) not to mention their slew of non SkyTeam partners, and AS is still not in an alliance. BOS doesn't have the transatlantic relevance to DL though in the same way that they pinned their transpacific prospects on SEA before the KE joint venture, and BOS was a more fragmented local market already to a large degree. The results of a transpac hub in SEA have been mixed, and they still have a 30 point market share deficit to AS in SEA, so I think BOS is probably pretty strategically distinct from what they'd envisioned for SEA.

DL plan for SEA was never market share - it was for international revenue. AS didn't want to play - and as I've noted in many posts last few years, AS would not exit a handful of marketing relationships with International airlines that operated out of SEA. SEA is profitable for DL. And DL has a hearty collection of SEA corporate flying because of its International flying that AS can't match - and it also helps lift the domestic.

WkndWanderer wrote:

questions wrote:

I found this interesting...

Q: Can you draw similar strategic parallels between Seattle and Boston?

Bastion: We came at it from a different construct… Seattle was very much about Asia and again, controlling our destiny because Alaska was very clear that they wanted to remain open to doing business with any party, and were not interested in an exclusive arrangement with Delta. So that forced our hand.

How would have Delta and Alaska set up an “exclusive arrangement” that would not have raised US antitrust alarm bells? Are there other examples of two US carriers entering into an exclusive arrangement?

At the time AS was still very close with AA (which like the DL partnership has also largely disappeared on the domestic front since then) not to mention their slew of non SkyTeam partners, and AS is still not in an alliance. BOS doesn't have the transatlantic relevance to DL though in the same way that they pinned their transpacific prospects on SEA before the KE joint venture, and BOS was a more fragmented local market already to a large degree. The results of a transpac hub in SEA have been mixed, and they still have a 30 point market share deficit to AS in SEA, so I think BOS is probably pretty strategically distinct from what they'd envisioned for SEA.

SESGDL wrote:

jagraham wrote:

727200 wrote:

Here's average age of the some of the different DL subfleets:

757: 20.8 years
767: 20.9 years
MD80: 25.7 years
717: 16.7 years
A320: 22.8 years
A319: 16.4 years

That's 2/3 of DL's fleet by number of aircraft.

I would argue their fleet age doesn't even matter if DL achieves class leading operational metrics. If the average passenger walks on an A320 and thinks they're on a brand new plane with new interiors, PTVs, etc., aircraft age is irrelevant. Clearly this strategy is working for Delta as they lead AA and UA in overall performance.

That's a joke, right?

I trust you have seen an airport operations from other than behind glass or the jetway. A new interior on a fossil doesn't change anything; its still a fossil. From a maintenance standpoint, your cost increase substantially the older a plane gets. US carriers generally retire aircraft in the 20 year range because it is no longer economically feasible to continue to run them. BUT, if you want to make your balance sheet look better, and return money to shareholders you can run the old planes, but at some point that line of thought will catch up ti you and 2/3 of your fleet will have to be replaced resulting in HUGE capital expenditures. Now, DL better pray that the economy stays good or when that fleet replenishment becomes due and the markets are tight, they could be putting a lot more planes in the desert than what they originally planned.

Delta owns a lot of those old airplanes outright. Precisely so they can park them without penalty if the economy turns down. Unlike other airlines which have to keep paying lease / mortgage costs.
Delta's old planes get up and fly every day. Several times a day. Delta cancels less than 0.5% of their flights. Only Hawaiian is better
Passengers like the revamped interiors. Compare Delta 767 comments to AA 767 comments.
Delta seems to be replacing planes at about 25 years of age. If a similarly sized competitor replaced their planes at 12.5 years old, they would end up buying twice as many planes.

The problem with flying old planes is if fuel costs spike significantly the older planes become a liability. However that is offset by the fact that significant fuel price spikes come with recessions. So a lot of planes will need to be parked in the old Delta fleet and the newer competitors fleet. See my first point.[/quote]

What? Do you know that DL does not have a considerably higher fuel bill than its competitors, even with this ancient fleet you keep talking about? And did you know that AA and UA also have hundreds of airplanes that are nearing or over 20 years old?

Jeremy[/quote]

Delta has been great about putting planes where they do best. There is another thread where it was noted that MD88s are about equal to 738s in fuel per pax for flights under 2 hours. They had a place in the fleet until Pratt dropped support for the JT8D.

But the simple matter of fact is that the 767s in particular burn more fuel than 787s (but not A330s). There will be a penalty if fuel prices spike. But the penalty will not be huge because large numbers of airplanes will be parked. It has happened before . . .

727200 wrote:

Jeremy, you missed the point.

MM costs increase in direct proportion to age of the aircraft. With an older fleet, and in the number posted earlier, their fleet is old in relation to the 20 year rule, their costs continue to increase. Same applies to fuel as the engines are less efficient. So, while DL is able to make money while the economic times are good, at some point it is going to catch them; its a reality you will have to face. As such, the potential is there for them to park larger numbers of aircraft in the desert leaving huge holes in their route system. They obviously cannot afford to replace all their planes on a one-to-one basis, so they are living on the edge of the sword; sooner or later they will have to pay something to keep going.

It's not age, it's cycles. Especially with regards to the widebodies. There are many threads on a.net about HMV5 and Delta's propensity to retire aircraft rather than do HMV5 on them. I am quite sure DL knows when each aircraft will hit the HMV5 point and what they are going to do about it. Per individual airframe.