American Airlines and Delta Air Lines are obviously not the best of friends, but on Thursday a top American executive congratulated Delta for its operational excellence.
“Delta’s done a great job: hats off to them,” Robert Isom, American Chief Operating Officer, said Thursday during a Credit Suisse investor presentation, as he displayed slides showing American’s improving operational performance – including more completions, on-time departures and arrivals and fewer mishandled bags.
All three global U.S. carriers – American, Delta and United – have been working to boost operational performance, one of a series of key improvements that are benefiting passengers as the carriers enjoy an era of unprecedented profitability.
Isom said Delta “is operating at a level that’s never been seen before, especially for an airline that large.
“Right now, we’re not too far from Delta in terms of departing aircraft on time,” he continued. “Where Delta is distinguishing themselves right now, I think, is with their completion factor.”
Delta CEO Richard Anderson has made it a priority to complete all flights. In the third quarter, Delta completed 99.9% of its flights and even had 40 days with zero cancellations. “In September alone we cancelled only 13 flights out of more than 83,000 flights and our competitors can’t match it,” Anderson said on the carrier’s third quarter earnings call. During Thanksgiving week, Delta cancelled just five mainline flights.
American is not doing badly, however. Isom’s graphs showed that during the third quarter, the carrier completed 99.3% of its flights, up from 96.4% in the first quarter. On time arrivals increased to 81.9% from 75.9%. On time departures increased to 66.4 from 61.3, while the number of mishandled bags was 3.80 per 1,000 bags in July and August, down from 4.64 in the first quarter.
Forbes
Delta Air Lines: Boeing offered us used 777s for $10m
Delta Air Lines Inc. Chief Executive Officer Richard Anderson said Boeing Co. executives offered him used wide-body jets for $10 million, defending his comment a month ago that he sees a bubble in long-haul planes.
Anderson surprised some in aviation when, in an Oct. 14 earnings call, he said Delta had been offered a 10-year-old Boeing 777-200 for that price. Analysts quickly challenged Anderson’s comment, suggesting a more appropriate price is around $40 million. However, in a recorded message for employees, Anderson on Friday fingered Boeing as having made the offer to Delta.
“We got that value from Boeing executives who had offered us those airplanes at that price,” Anderson said on the recording. He went on to say, “We were pleased that Boeing offered Delta used 777s for $10 million.”
Boeing had no response to Anderson’s message Friday, said spokesman Doug Alder. Following the initial comments last month, Boeing CEO Dennis Muilenburg suggested the Delta chief’s valuation was off-base. New 777s sold for $170 million 10 years ago.
“I’ll say just based on our understanding of the marketplace and what we
understand from our customers, that number is the wrong order of magnitude,”
Muilenburg said. “And, frankly, the value of the 777 is holding up very well in the marketplace. It is a unique airplane. In that 365-seat category, there is no competing aircraft out there. It’s a unique value proposition for our customers.”
Buying Opportunities
In his recorded message Friday, Anderson said the used aircraft bubble for now is confined to the market for wide-body jets, those planes with two aisles primarily used for international routes. That bubble will create buying opportunities for Delta, Anderson said.
“We can buy those airplanes and take parts off of them even if we don’t end up flying them,” Anderson said Friday of the used wide-bodies on the market.
He suggested that newer jets, including the Boeing 787, tend to be less reliable than the older jets Delta maintains with its in-house mechanics, citing its fleet of Boeing MD-88s, which average more than 25 years in age. Delta is known for flying a fairly old fleet, which it says reduces capital expenses when kept up properly.
JPMorgan Chase & Co. analyst Jamie Baker in October estimated the value of a decade-old 777 at $43 million, higher than Anderson’s valuation, but less than the average appraised value of $56 million favored by the planemakers.
Aircraft lessors, too, have taken aim at Anderson’s comments, saying a $10 million price might apply to a few run-down jets but aren’t representative of most models changing hands.
“Prices that he indicated simply don’t exist in the market for normal aircraft that are well-maintained,” John Plueger, president and chief operating officer of Air Lease Corp., told analysts earlier this month.
Anderson’s comments a month ago helped send Boeing shares down more than 4 percent on Oct. 14, the manufacturer’s biggest drop in almost a year, when it closed at $134.22. The stock has since rebounded, rising 0.1 percent today to close at $149.40.
Bloomberg Business
Delta Air Lines wants to acquire more Aéromexico shares
Delta intends to acquire up to an additional 32 percent of the outstanding capital stock of Grupo Aeroméxico S.A.B. de C.V. through a cash tender offer for MXP$43.59 per share. This investment will strengthen the airlines’ partnership, provide more travel options for customers in the U.S. and Mexico, and deliver the industry’s best customer experience.
Currently, Delta owns approximately 4.1 percent of the outstanding shares of Grupo Aeroméxico and holds an option to acquire an additional 8.1 percent. Separately, the Delta pension trust holds options to acquire approximately 4.6 percent of Grupo Aeroméxico. Following completion of the tender offer, Delta and the Delta pension trust collectively would own and/or have options to acquire up to a total of 49 percent of the outstanding shares of Grupo Aeroméxico.
“This new investment demonstrates Delta’s confidence in Mexico’s future and deepens our relationship with Aeroméxico, cementing Delta’s long-term commitment to the customers we serve to, from and through Latin America,” said Delta President Ed Bastian.
Delta intends to commence the tender offer once required regulatory approvals in Mexico and the United States have been obtained. The tender offer will be subject to terms to be disclosed and customary closing conditions, including the acquisition by Delta of a minimum number of shares in the tender offer. The transaction also is subject to approval by the Boards of Directors of Delta and Grupo Aeroméxico.
Delta and Aeroméxico launched their first codeshare in 1994. In 2011, Delta entered into an enhanced commercial agreement with Aeroméxico, and in 2012, Delta invested USD$65 million in shares of Grupo Aeroméxico, the parent company of Aeroméxico. In March, Delta and Aeroméxico filed an application with the U.S. Department of Transportation seeking antitrust immunity for a new joint venture on flights between the United States and Mexico. The request also was submitted for approval to the Mexican antitrust authorities, the Comision Federal de Competencia Economica (Federal Economic Competition Commission).
Delta Air Lines
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