Delta looses a half billion

steingar

steingar

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steingar
Delta hedged on fuel costs, but they didn't go as high as the airline expected. The tab is a whopping four hundred and fifty million. Story on CNN.
 
They will get it back,and then some ,from the customer.
 
Looks like their fares will be on the rise. Sounds like a similar situation that got them into chapter 11 in 2005.
 
They went to the casino, made some really bad bets, and lost their shirt. Simple as that. Other airlines (specifically American) refuse to make such gambles for exactly this reason.
 
Ive always hated delta. My parents try to give me their free delta miles and I turn them down.
But that's more so I don't have to go visit them than anything else.

JK mom and dad, love ya.
 
Norman said:
But the MBA who is the CEO will still get his bonuses. :mad:
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Quite possibly.

Here is why: While it sounds bad in CNN-speak, it actually may be a good thing for DAL. If you have been following them for a while, they have been facing a bigger looming problem: the IRS.

Delta had such huge losses dating back to the bankruptcy days and they have been able to carry those losses over ever since to offset the profits from a tax standpoint. There was some talk months ago how they were running out of losses to carry over and might actually have to pay some pretty big tax bills in the near future.

I suspect that this fuel bet probably just bought them some more tax fee income.

At any rate Richard Anderson retired a couple months ago. I doubt his successor would get blamed.

Delta will be just fine.
 
eman1200 said:
Ive always hated delta. My parents try to give me their free delta miles and I turn them down.
But that's more so I don't have to go visit them than anything else.

JK mom and dad, love ya.
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Everyone has their favorites. Just like SWA. Some love them, some don't.

Delta has always treated me well. Only other airline that treated me better was America West before Parker started taking over every failed state he could find.
 
Fearless Tower said:
Detour Everyone's Luggage Through Atlanta!
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I am sure Delta stood for:

Don't Ever Leave The Airport

Seems every time I have the misfortune of flying them I have to deal wit delays and cancellations.

I all fairness I hate ALL the legacy carriers equally.
 
Fearless Tower said:
Everyone has their favorites. Just like SWA. Some love them, some don't.
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I love everything about SWA except the way they do their seating arrangements. I like knowing I have an assigned seat, and that my family and I are able to sit on the same row. Unless you have an A or B board pass, you take what you can get.
 
I'd say that they need to rebuild the hedging department or send'em back to school. I wonder if they ever heard of financial instruments rather than physical contracts? Of course I don't know the fuel markets and they might not have the same things available that I am used to seeing.
 
Ryanb said:
I love everything about SWA except the way they do their seating arrangements. I like knowing I have an assigned seat, and that my family and I are able to sit on the same row. Unless you have an A or B board pass, you take what you can get.
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I gotta say I HATED everything SWA when I had the misfortune of regularly flying on the commercial airlines from 1995 to 2005.

Ear plugs to eliminate the noise of screaming kids were mandatory and, since they had the cheapest airfares of the day, they also had the lowest quality passengers. White Trash Airlines is what I used to call it.

Thank God I only fly commercially less than once a year these days. I think I'd have to kill somebody if I flew more.
 
Clark1961 said:
I'd say that they need to rebuild the hedging department or send'em back to school. I wonder if they ever heard of financial instruments rather than physical contracts? Of course I don't know the fuel markets and they might not have the same things available that I am used to seeing.
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You are assuming this is a bad thing. Again, stuff like this is how corporations protect profits from the tax man.
 
Delta will just use this to try to negotiate a cost neutral contract with the pilots while still getting their obscene bonuses.
 
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timwinters said:
....Thank God I only fly commercially less than once a year these days....
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interesting, flying "less than once". kinda like "I cheat on my taxes less than once a year". how many times have I cheated on my girlfriend? wait for it.........less than once!
 
I remember when Delta took delivery of their MD-11s. They took possession in the Bahamas, Bermuda, somewhere to avoid taxes. Legal so you can't fault them but not right in my book.
 
mscard88 said:
I remember when Delta took delivery of their MD-11s. They took possession in the Bahamas, Bermuda, somewhere to avoid taxes. Legal so you can't fault them but not right in my book.
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How is that different from the countless GA drivers who take delivery of their airplanes in strategic states to minimize taxes?
 
Fearless Tower said:
How is that different from the countless GA drivers who take delivery of their airplanes in strategic states to minimize taxes?
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I believe I wrote it's legal, just don't agree with it.
 
Fearless Tower said:
How is that different from the countless GA drivers who take delivery of their airplanes in strategic states to minimize taxes?
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It's very different! If they go broke , you the taxpayer picks up the tab and bails them out as in the past.....for big bucks. They do not do the same for GA drivers, except of course for corporate aircraft whose rules are written by lobbyists and battery's of lawyers and congress on the take.
 
Fearless Tower said:
Quite possibly.

Here is why: While it sounds bad in CNN-speak, it actually may be a good thing for DAL. If you have been following them for a while, they have been facing a bigger looming problem: the IRS.

Delta had such huge losses dating back to the bankruptcy days and they have been able to carry those losses over ever since to offset the profits from a tax standpoint. There was some talk months ago how they were running out of losses to carry over and might actually have to pay some pretty big tax bills in the near future.

I suspect that this fuel bet probably just bought them some more tax fee income.

At any rate Richard Anderson retired a couple months ago. I doubt his successor would get blamed.

Delta will be just fine.
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Unfortunately, a half billion dollar loss does not result in a half billion taken off their taxes.
 
I wouldn't grieve for Delta. The bastards charge for $100 for the second bag. God help your checkbook if you have 3. Their making/printing money. Rotten SOBS stoll Northwest who were user friendly and priced well.
If I could help, I'd bury them and laugh as they file chapter 11.
 
Clark1961 said:
I'd say that they need to rebuild the hedging department or send'em back to school. I wonder if they ever heard of financial instruments rather than physical contracts? Of course I don't know the fuel markets and they might not have the same things available that I am used to seeing.
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Well don't forget, they bought a refinery a few years ago.
 
Half a billion really isn't **** for a large airline. That's almost one and a half boeing 777's. If an airline wants to show a loss, purchasing new aircraft will surely do it.
 
GlennAB1 said:
Half a billion really isn't **** for a large airline. That's almost one and a half boeing 777's. If an airline wants to show a loss, purchasing new aircraft will surely do it.
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Not really. There's a little thing called capitalization and depreciation. Screwing up purchasing of consumables (i.e. Fuel) hurts far far more in the books than buying capitalized equipment.

From a shareholder perspective this is basically as if Delta execs took the money from all those baggage fees and said "Hey, we could double our money..." so they went to Vegas, put it all on red on the roulette table and then lost it all. They just look stupid. They were gullible enough to make a huge bet and someone smarter than them was more than keen to take the bet, and made out like a bandit.
 
Delta has given back a ton of money to shareholders, and of their selves. Which is fine. They brag about it while trying to get the pilots to take concessions. Not fine.
 
During the early 2000s all the airlines were losing tons of money except Southwest because of their aggressive fuel hedging. If you dug into their financial statements, the airline operations lost money but the hedges made more than the flying lost so they were still profitable. I was always surprised some Wall Street analyst didn't suggest they could do better by shutting down the airline operations and just have 20 people working oil contracts.
 
ColoPilot said:
I was always surprised some Wall Street analyst didn't suggest they could do better by shutting down the airline operations and just have 20 people working oil contracts.
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That's what GE did for a while. A bank with a electrical department.
 
Palmpilot said:
Unfortunately, a half billion dollar loss does not result in a half billion taken off their taxes.
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They saved billions through their hedging when the fuel prices were high. Now they lost some. What would business writers live of if everyone was profitable all the time.
 
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