Analyzing American’s New, Smaller May Schedule

American

As of this weekend, American will serve 299 destinations in May down from the 338 planned previously. But that decrease is really just on the international front. Domestically, thanks to the rules set forth by the US government for airlines that want to take stimulus money, American won’t drop any destination in the US. That, however, doesn’t mean it can’t slash schedules significantly.

The last schedule, which was already reduced in the international arena, has now been cut by another two-thirds. The entire airline will now operate about 2,230 flights per day on average. That may sound like a lot, but it’s nothing compared to what it used to fly.

The cut is so substantial that American couldn’t just trim around the edges. It had to effectively step back and create a new schedule that would meet the government rules (fly to each city at least 5 times a week) while also maintaining connectivity. The end results is a much smaller airline, but it’s one that still functions.

Of the 299 cities to be served in May, 87 were scheduled to be served from only one American hub. Here’s a Great Circle Mapper map showing those routes:

Maps generated by the Great Circle Mapper – copyright © Karl L. Swartz.

After this weekend’s change, that number climbs up to 146. Here are all the new routes that are now only served from one hub.

Maps generated by the Great Circle Mapper – copyright © Karl L. Swartz.

What can we make of this? Well, Honolulu is just keeping LAX as a lifeline. You can see that the two big centers of growth here were DFW which maintained service to a variety of cities that lost service from other hubs. Then there’s Miami which is the only link to much of the Caribbean. But this is only a small piece of the story. Here’s a bigger picture look:

This week \/ Last week >12345678+
187329981
230175421
3712644
41634
533812
6+37
Number of Cities Served by American Destination, May 2020


Four Hubs Disappear

The easiest piece to segregate here involves the four hubs that are effectively disappearing in May. Three of these are unsurprising.

  • Los Angeles will have 31 daily flights, most to the others hubs but also single daily flights to Honolulu, Los Cabos, Mexico City, and Puerto Vallarta.
  • New York/JFK will have only 11 daily flights to Bermuda, Charlotte, Los Angeles, Miami, and Phoenix.
  • New York/LaGuardia will have 25 daily flights to Boston, Charlotte, Chicago/O’Hare, Dallas/Fort Worth, Miami, Philadelphia, and Washington/National.

Those were the smallest and worst-performing hubs for American, so it’s no surprise to see them effectively become spokes. But what may be more surprising is that Washington/National has effectively become a spoke as well with only 31 flights a day. Other than to the other hubs, National will have flights only to Boston, Raleigh/Durham, and Tampa.

This may seem strange, but think about it another way. National, like the other three airports, is more about local traffic than connecting. And there isn’t a lot of local traffic anywhere. The best American can hope to do is aggregate traffic into a big connecting hub and hope to fill up a few flights. These four airports won’t really allow that to happen, so they get pulled down and American can focus elsewhere.

Dallas/Fort Worth and Charlotte Are the Main Hubs

DFW and Charlotte will both shrink dramatically, but they will remain big-ish hubs 7 days a week.

DFW North America/Caribbean Map generated by the Great Circle Mapper – copyright © Karl L. Swartz.

These are American’s bread-and-butter, and they are the most profitable hubs. Or at this point, the least unprofitable. They each have been running 9 banks per day, but DFW will drop to 5 with Charlotte down to 4. Remember, DFW was over 900 flights per day last summer. In May, it’ll be around 415. Charlotte is at around 315.

Charlotte North America/Caribbean Map generated by the Great Circle Mapper – copyright © Karl L. Swartz.

These two hubs will be the heart of American’s operation in the near term. Most cities will retain service into these hubs, so they will provide connections throughout the country. DFW will also have long-haul connections with daily service to London/Heathrow, Madrid, and Paris/CDG along with a thrice-weekly flight to Tokyo/Narita.

Miami is the Latin Gateway

The only hub that maintains a significant Caribbean and Latin presence is, naturally, Miami.

Miami North America/Caribbean Map generated by the Great Circle Mapper – copyright © Karl L. Swartz.

But even that isn’t enough to support a daily operation. For six days a week, Miami will see about 150 flights per day. But come Tuesdays, it drops to 31. Those flights all go to the other hubs, including 1 daily flight to London/Heathrow.

Note in the map above how little there is in the northwest of the country. The network has been culled.

Chicago, Philly, and Phoenix Become Part-Time Hubs

The last three American hubs do remain hubs, but they are only hubs five days a week.

Chicago North America/Caribbean Map generated by the Great Circle Mapper – copyright © Karl L. Swartz.

Chicago/O’Hare will have 159 flights a day most days, but Tuesday and Saturday see only 25 daily flights. Those all go to the hubs except for Waterloo (Iowa) which is an essential air service market. I assume that agreement requires daily service.

Philadelphia North America/Caribbean Map generated by the Great Circle Mapper – copyright © Karl L. Swartz.

Philadelphia will see 126 flights a day, but Tuesday and Saturday sit around 25. Again, that is mostly service to the hubs but also to Boston, Ft Lauderdale, Orlando, and Watertown (New York). The latter is an essential air service route, but the other three apparently have enough demand to require maintaining a single daily flight even on the down days.

Look at that map above and see just how little service there is west of Chicago, not even Denver or San Francisco have flights. The reality is that Philly is best for American as a Transatlantic hub, but there isn’t a single flight operating across the Atlantic that month. So, much of the feed has nowhere to go, especially the further west you go. Instead it’ll serve as a northeast to southeast hub for the most part.

Phoenix North America/Caribbean Map generated by the Great Circle Mapper – copyright © Karl L. Swartz.

Phoenix will be at a mere 85 daily departures, but again, come Tuesday and Saturday, it drops to 22. Those are entirely to the other hubs.

It should be noted that Phoenix lost the fewest destinations of the hubs that actually remain hubs in May. And the losses there are concentrated largely in the eastern third of the country where it was already fairly light as well as in Hawai’i.

What is this all about? Well, think about it this way. American has to keep flying to each destination five days a week to be able to keep its paws on the government money. That means that the 12 cities only served from Chicago, 8 cities only from Philly, and 8 cities only from Phoenix need to have flights five days a week to those hubs. At that point, does it make sense for American to operate flights that don’t connect into the network every day? No, it doesn’t. So, they build out skeleton hubs five days a week to meet the requirements.

Still Too Much

Yes, this is a big cut, but these airplanes are still going to go out with more empty seats than not. Having to keep serving every city certainly makes a difference here, but then again, so does the competitive situation. Does American really want to cut back too much and allow others to step in?

United seems ok with that. Over the weekend, it announced it would pull down Newark to only 15 flights a day for the near future. Of course, Newark is in the epicenter of the current outbreak, so this makes sense. And now, American has followed by slashing New York further for the rest of April (before the schedule we’ve been talking about here goes into effect). It sounds like a friendly signal that if other airlines are willing to cut back, American isn’t going to play games and try to steal share. The airlines shouldn’t have to resort to this.

We really need the government to step in. At the very least, let the airlines coordinate schedules and require codesharing/interlining so that consumers can get where they need to go by mixing and matching. I’d argue that’s not far enough, but it’s something. It would probably help convince American to pull down to a more sustainable point. Though it has gotten closer to reaching that level, even this dramatically-reduced schedule isn’t there yet.

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41 comments on “Analyzing American’s New, Smaller May Schedule

  1. Excellent summary of AA’s actions.
    Thanks!!!!

    Also agree with the government needing to allow temporary discussions and actions among carriers to eliminate wasteful flights while maintaining service.

    1. While DL and UA have announced that they plan major cuts in May, they haven’t actually released their big schedule changes for May yet. I’d expect to see them in the coming weeks.

  2. It’d be interesting to see how do this compare to their 90’s route network. I know PLH, CLT, and PHX were US hubs. But 150 flights out of MIA, seems like something from 1994.

    1. PHl as well.

      This also begs the question how viable will secondary airports be in the future? Will there be enough demand to support BUR, LGB, HPN & the like?

  3. Really enjoyed your analysis on AA’s draw-down of service. Would you consider doing this for UA and DL as well?

  4. Perfect summary. I think what we see today versus the end of the commitment will also be vastly different. AA only having 3 hubs? Unthinkable initially, but now very realistic.

    I wouldn’t be surprised to see the following occur as it relates to overseas flying (with government and airline coordination): AA keeps MIA to serve South America, UA keeps SFO to serve Asia, and DL keeps JFK to serve Europe. This keeps Most international routes available to the public, but allows for airlines to focus on their strengths. The environment is truly this bad right now.

  5. No, the government doesn’t need to step in to allow airlines to cooperate and they have provided no indication that they would do that. The whole purpose of the government grants is to help airlines survive long enough to develop medium to long term survival plans. Loans, if approved, provide longer term liquidity where there is indication that an airline has a strong business plan but no access to commercial markets.

    The hubs you all note are seeing the largest cuts in terms of destinations are all ones that American indicated years before this crisis were its weakest hubs. American, and to a lesser extent United, operated large portions of its network despite low or no profitability and consumed enormous amounts of cash.

    There is no reason for the government to allow AA or any other airline to be sheltered from making the tough decisions to shrink its hubs with a possible loss of service to some destinations on its network when the service requirements from the US government end.

    The issue for AA’s viability isn’t the very small amount of service at any hub anyway. AA’s viability depends on being able to get its costs down to levels that it can sustain on its own – after government money – in October.

    Given that AA had vastly more employees than any other airline while DL generated more revenue in 2019, it is doubtful that AA can get its costs down to levels to support its new, much smaller network that will be the “new norm” for months into the future.

    AA like some other airlines is offering generous employee separation and early retirement packages which means AA will carry large portions of the cost of its separated employees for years to come. That model is unsustainable in a post government support world.

    AA’s fleet costs are fixed at very high levels because of its massive fleet spending and the debt it took on to fund its fleet even as it bought back shares and had negative free cash flow.

    The amount of flights that American will operate from any hub won’t make a difference in AA’s ability to successfully restructure its business out of court. There is no certainty that AA will be granted loans; UA was rejected post 9/11. Even the US government is not willing to take on risks that are far beyond commercial financial markets.

    A bankruptcy filing is certain and it is far from clear whether AA can reorganize under Chapter 11 or will be forced to liquidate because of the very likely low levels of revenue that will persist for many months after government support ends.

    1. Agreed on the AA bankruptcy filing. The shedding of onerous debt and redundant employees. Question: Will the remaining employees take pay cuts? Answer: If they do, morale will completely tank, resulting in the final exodus of AA business travelers. But then, AA has been mistreating them ever since it kept its name but lost its soul in the merger.

      Doug Parker proved himself an industry visionary when America West white-knighted USAirways, thereby launching the greatest round of consolidation in industry history. But if he makes his Labor pay the price for his stock buy-backs, his final obituary will read more like Lorenzo’s than Kelleher’s.

      Jamie Baker, a respected industry analyst, today dropped AA two notches. The writing is on the wall for October, a typically slow travel period anyway. I believe he referred to “liquidity” as being an issue on 10/01. With Buffett divesting DL and WN, could he be preparing to provide DIP financing to see AA through the car wash and emerge the owner of a much more competitive American Airlines (for essentially pocket change) on the back side?

      1. good summary except that Buffett did not divest of DL and WN but reduced his stakes below 10%. He never was above 10% for AA or UA so he does not have to report his ownership changes in them – or any other company in which he owns more than 10% – as quickly as he had to report DL and WN.

        It is hard to imagine why he would choose DL and WN for larger investments before the crisis but change his mind now.

        Since you mention Debtor in possession financing, it is highly unlikely that any airline could survive in chapter 11 right now because they are then required to pay essentially every cost in cash. There is nowhere near enough revenue coming in at any airline to cover anywhere close to any airline’s costs and that is likely to be the case in October.

        Parker (or another AA exec) said that AA is “entitled” to $12 billion in government aid, indicating that they expect that they should be approved for loans. It is far from clear that the US government is willing to approve loans to AA or any other airline. The US government is not going to indiscriminately hand out billions in cash grants to cover payroll for 3 months and then automatically approve AA’s loan application.

        Remember that UA was denied a loan post 9/11 which sent them into the longest and most expensive bankruptcy in US airline history. Absent the revenue to operate in bankruptcy, no airline can exist in a long drawn out restructuring in court.

        1. You’re not seeing the forest for the trees, an unfortunate Virginia Avenue tradition. Exactly WHY do you think Berkshire-Hathaway lowered their holdings in DAL and LUV to below 10%? Everybody already knows they are big in the sector. They clearly did this so that they don’t have to disclose their true intentions. This gives them the flexibility to anonymously shed any or all of their industry holdings should the right, singular, opportunity present itself. Could that be a pre-packaged Fall bankruptcy at AA (of course, as Delta fans, we both know about strategic bankruptcy)? The sell-offs of DAL and LUV clearly indicate nothing is off the aviation table in Omaha.

    2. AA could make it through bankruptcy.

      First all the debt payments are immediately suspended, and potentially renegotiated. The airplane owners don’t have anywhere else to put those planes, so they’d rather get something for their planes from a weak AA than nothing.

      Plus you’ll have GE, Airbus, and even Boeing supporting AA through the bankruptcy.

      Remember that Enron in bankruptcy was actually awash in cash.

  6. so what I’ve been saying for what ? 3 weeks ? 4 weeks ? now finally Ed Bastian is willing to say out loud –

    “Even as Delta is burning more than $60 million in cash every day, we know we still haven’t seen the bottom..” – Ed, last week

    I already said the income statement balance sheet debt levels all that as of 12/31 doesn’t matter for a few weeks (and someone can dig up my old posts to corroborate that) – (https://s2.q4cdn.com/181345880/files/doc_news/2020/Delta-Air-Lines-Announces-December-Quarter-and-Full-Year-2019-Profit.pdf)

    DL had $2.882 bn cash or equivalents as of 12/31/2019 (feel free to add in the other components if it makes you feel better). That level of cash burn can sustain the company for a total of ….. 7 weeks, all things being equal (48 days to be exact).

    Everything is a double edged sword. When times are good, VS LATAM etc all help print cash for the parent. At times like these, it amplifies DL’s problems – 3.55% MU 8.8% AFKLM 11% Korean 20% LATAM 49% VS and that random oil refinery. That pain also becomes DL’s pain.

    1. Not a secret that DL is in a lot of trouble cash wise. They actually took additional loans of $2 billion. But even with that, they have publicly said they will run out of cash by June.

      Now, let’s say they get $5 to 6 billion as part of the bailout. That will only get them until Q4 if their burn rate doesn’t go below $50 million a day. Yes, I’m sure the traffic will pick up a little bit in the summer time, but they are also not going to continue to operate only 20% of their capacity. And more flights means more losses. And on top of that, people are going to be paying their tickets with travel bank dollars rather than cash. Airlines have been very busy hoarding cash and giving bonuses in travel vouchers as an incentive. That’s going to be a disaster when people do start flying again.

      And of course, those investments are all disasters. Say bye bye to VS.

    2. DL has actually pulled down about $7 billion in cash since the virus crisis began. No other airline has been able to access as much credit. Being able to access more cash is a result of Delta being the only one of the big 3 with an investment grade balance sheet.

      Cash levels as of Dec 2019 are meaningless. That is true for any airline.

      No US airline will likely face a liquidity crisis before 10/1/20 – and that is the whole reason why the grants are enough to allow airlines to come up with viable business plans in a much lower revenue environment.

      The goal for any airline is to cut costs down to levels that match much lower revenues – esp. after Oct 1. DL has the best track record of any US airline of managing costs; they will be the last airline that will be unable to come up with a viable business plan.

      I am not engaging in attacks on AA; I am providing financial reality that some either miss or don’t want to believe. AA had by far the worst financial performance of any US airline before the virus crisis – including being the poster child for stock buybacks gone wrong – and will not be a suddenly better run company with higher rates of survival just because they entered the crisis with more cash – all of which is net borrowed because their debt is far higher than their cash.

      And, UA did not have near as much cash as AA and still doesn’t have an investment grade balance sheet. That combined with UA’s much larger international network -which will take much longer to rebuild – is why UA was much more aggressive in cutting service and trying to hold onto cash from refunds early in the process; the government’s mandate to issue refunds is certain to aggravate all of the airlines but esp. United. Not surprisingly, DL has been one of the more generous large airlines – globally – with refunds; despite the portrayal of a being cash critical, they clearly have the cash to do what the government and consumers want in refunding tickets if asked to do so.

      Investments in other airlines do not increase costs to DL or create anything more negative than the loss of revenue from BA/JL does to AA or LH/NH does for UA. If those airlines go bankrupt, then it is a paper loss but the cash has been traded already. And DL has a presence in the board room of all of those companies, something airlines don’t have through non-equity joint ventures; Delta is well aware how well each of these companies are doing not just in the markets covered by the joint ventures but in the business overall. Aside from Delta, there will be many airlines fail worldwide and there will very likely be a wave of partner swapping while others such as IAG and UX might not happen at all or be pushed back while DL/LA is still moving forward.

      The refinery has paid for itself many times over even if never makes another cent for DL.

      1. DL themselves say they will run out of cash by June. What more needs to be said? You just cannot accept that DL can possibly make any kind of mistakes.

      2. Tim:

        No insult here, just curious. Do you work for DL? You look at all other airlines with jaundiced eyes, but have rose-colored glasses when it comes to DL.

      3. Once again, you are embarrassing Delta. You know, as everyone at Delta knows, that S&P lowered Delta’s security ratings to junk status. The entire Big 3 are now junk. So your statement that Delta has accessed more liquidity because it has investment grade securities is untrue. The real reason Delta has borrowed more is because it believes it might need more. I don’t think Ed Bastain told the people in Finance “Let’s borrow more than United and American just because we can.” Do you?

        As far as the refinery is concerned, it was never designed to be a profit center, per se. It was purchased primarily as an insurance policy, to ensure Delta would have a supply of fuel in the northeast at ANY price, in case traditional fuel sources were cut-off due to geopolitical events. When U.S. and Canadian fracking provided so much oil that we actually began EXPORTING oil again, the need for the refinery became moot. Initially, Delta sought a partner in the refinery. Now, Delta wants out of it entirely. I won’t be surprised if the refinery closes “for maintenance” or some such reason, until the crack spread widens. Since you assert that the refinery paid for itself many times over, please provide financial proof of that. I, for one, do not believe that.

        Look, we both are very proud of Delta. Your posts reek of Delta arrogance, which lowers Delta in the eyes of others and damages The Widget brand. For others (within the industry and casual observers), please fact-check everything he writes. I have asked the author of this blog to remove Mr. Dunn (as he has been banned elsewhere in the industry), but he declines. As a result, falsehoods are being submitted as truths.

  7. Thanks CF – I really appreciate this analysis, running even this level of schedule seems insane and will only make the gov money run out faster and will take the carriers longer to recover at the other end of this thing.

  8. Based on my very simplistic math, the departures shown are about a third of normal. That’s a big cut, but it doesn’t factor in gauge.
    Here are a few considerations.

    What is the bottom and when will we see it?
    What is the right level of service to meet basic needs yet keep cash burn as low as possible?
    What is the optimal size to provide essential service levels in the short term yet have enough readily available capacity in place to meet increasing demand when it happens?
    What is the optimal load factor to both meet demand and allow for enough physical distancing in the cabin? I tend to doubt that public health officials like the idea of 85% load factors, yet 15% is probably too low.

    Overall, I tend to think the marketplace is a better way to find the right levels of service than the government. The airlines have shown they can be quite nimble when it has come to adjusting capacity to meet demand. No matter what one’s views on government are, one word that doesn’t usually describe it is “nimble.”

    Unlike some commentators I’ve read, I’m not rooting for airlines to file for bankruptcy protection or go out of business, although some already have. Each airline has to find its right size, both during the crisis, and coming out of it. The idea of early retirement buyouts in bad times isn’t new. Most of the money to finance them is already in place – in the pension plans – which airlines have been funding during the relatively good economic times we’ve enjoyed. The additional costs for early retirement are minimal in the short run, but provide long term benefits. While short term survival is key right now, the future can’t be ignored. In a world where more and more meetings are being conducted via Zoom and other virtual platforms, air travel may not pick up as quickly as it might have absent these tools.

    1. > Overall, I tend to think the marketplace is a better way to find the right levels of service
      > than the government.

      In which case they shouldn’t force the airlines to keep service to every domestic airport.

      1. That’s moot at this point. Don’t forget the “golden rule” of financial transactions – “He who has the gold makes the rules.”

  9. AA is going to file chapter 11 in this year. That’s for sure. DL and UA probably will too. Despite our friend’s continued attacks on AA, they are not the only one that’s going to be running out of cash this year.

    On top of DL’s cash troubles, it’s investment have all become major disasters. If VS doesn’t get additional gov’t assistance the next couple of weeks will go under. What will DL’s London strategy be when it doesn’t have VS JV anymore. And the other airlines that will need gov’t assistance will probably see their shares diluted.

    And if airlines don’t become cash positive by this point next year, all the LCCs are going to run out of money too.

    ULCCs are most likely not getting the gov’t grant. If that’s the case, they will be the first to run out of money.

    1. Why do you think that ULCCs will not be given grant money? There is nothing in the legislation that selects one business model over another in the airline industry.

      As much as some would like to believe that the WHOLE industry will fall apart at the same rate, there will be significant differences in how well each airline can navigate this crisis.

      As much as some want to believe that people like Warren Buffet will ditch his preference among airlines in order to support what was the weakest carrier before the crisis and still the weakest carrier now, that is very unlikely to happen.

      As with all things, we will see… and CF’s blog posts stay active so what people said can be compared to current reality.

  10. The reality is, every last one of the airlines is going to wind up bankrupt and less bailed out. This is not a sustainable event for the industry.

    Like a bunch of other industries, they are just trying to survive as best they can. This is why I believe ultimately that the policy of trying to social distance ourselves until we find a treatment or a vaccine will fail. Because too many of our industries will fail and the economy will along with it.
    Like a bunch of other industries, they are just trying to survive as best they can. This is why I believe ultimately that the policy of trying to social distance ourselves until we find a treatment or a vaccine will fail. Because too many of our industries will fail and the economy will along with it.

    Something else to think about though. We really don’t want them cutting too much capacity here. Who wants to be on a crowded airplane right now? I say that as I am heading for the airport right now to catch one.

    1. People like you who are flying anyway are the reason that social distancing fails.

      Airplanes still won’t be crowded unless they cut 90% more of their flights anyway.

      1. I fly because I have to, Susan. I am a structural engineer with a firm that looks at damaged buildings after floods and storms. If you can live in your house you can’t stay home.

        Unless you want to take those people in they need someone to go look at their building to ensure its safety.

        You can keep your shaming, or in fact do anything else you can think of with it. I’m the one out here trying to keep things going and putting myself at risk.

  11. Those that are quick to claim that I am biased and attack other airlines while sheltering Delta from my criticism would do well to actually KNOW and then POST LINKS to the facts they claim.
    IN the course of the exchanges yesterday and today, the following have been incorrectly stated:
    1. The amount of cash that Delta has obtained through financing transactions since the virus crisis began.
    2. Delta’s debt rating; there are actually THREE corporate credit rating agencies (just as there are 3 consumer credit rating agencies). Delta still is investment grade at TWO of the THREE.
    3. The intentions of the refinery and its results. Nowhere did Delta ever say that they acquired the refinery to provide Delta with fuel at any cost. Nowhere. And the refinery has saved Delta over $1.5 billion in lower fuel costs compared to AAL and UAL – DAL’s most direct competitors. Fuel price is reported on EVERY US airline’s financial statements. For 2019, Delta’s cost per gallon for fuel was $2.02 while it was $2.07 for AA and $2.09 for UA. The refinery specifically contributed 2 cents/gallon in savings to Delta according to Delta’s financial statements.
    The embarrassment is those that attack others for providing information that they don’t want to hear and then get the “facts” they present wrong and then ask for someone to be banned from participation in a conversation to suppress fact-filled discussion and to highlight the bias and errors of other people.
    It is equally obvious that CF does not ban people for engaging in discussion. He understands his role in facilitating discussion and good for him.
    My position regarding the viability of airlines is much more in line with what professional investors have stated than what some people here would like to see.
    Delta was much stronger financially before this crisis – and that is not opinion but easily confirmable. American was the weakest US carrier financially, including with by far the largest debt.
    Delta has a long history of controlling costs better than its peers while American already had the highest unit cost per ASM and they are not taking steps near as aggressive in getting costs down as Delta or even United.
    We are free to have an opinion, esp. about intangibles but financial metrics can pretty consistently be compared from one airline to another.
    I, along with an increasing number of professional Wall Street analysts believe it is far less likely that American will be able to successfully restructure outside of bankruptcy than any other US airline.

  12. Thank you, Mr. Williams. You are correct. While we are all working feverishly to save Delta, there is a retiree who is playing CEO. Yes, we compete with the other carriers, but the arrogance of Mr. Dunn’s long history of posts here is a source of embarrassment for us. What is especially disturbing is his use of factoids to prove false conclusions.

    For example, he is correct that two of the three ratings agencies still have Delta securities rated exactly one notch above junk. Those two are Moody’s and Fitch. Standard and Poor’s lowered Delta securities to junk status. Comparing Moody’s and Fitch to Standard and Poor’s is like comparing Allstate and State Farm to Lloyd’s of London or your local bank to the Federal Reserve. Do you see my point here? The bottom line is that Delta securities are now considered junk bond status within the industry, despite Mr. Dunn’s “factoid.” And he knew that (as we all do) before this thread started.

    Getting back to the refinery, let’s accept Mr. Dunn’s “factoid” that it saved Delta 2 cents a gallon, just shy of 1% fuel savings. 1% is a significant amount, even though it might not seem that way to the casual reader. So the fact that Delta is a “motivated seller” when it comes to the refinery indicates to me that its obligations/liability there outweigh the cost savings. Otherwise, it would not be for sale.

    I’ll leave it at that as I need to get back to work now, trying to save the company I care for deeply.

    1. You do need to leave the subject alone because you are now walking back your statement that Delta is rated as junk when it is obvious that there are three ratings agencies and Delta is indeed still investment grade at two of them; feel free to show us where actual borrowing capacity is at junk levels because a company has investment grade ratings for just two of three.

      The refinery contributed 1% of Delta’s fuel savings but Delta still had a 5 cent (which is 2 1/2%) fuel cost savings compared to AA and UA in 2009. DL gained efficiencies in its fuel purchase and distribution programs of which the refinery was only part. The refinery has been part of Delta’s lower fuel prices. Feel free to let us know where Delta said it wants completely out of the refinery. It has said it wants to retain the benefits it has built from its fuel purchase and refining operations but not tie up its own money doing so. If you disagree, you should be able to provide links to Delta financial statements and exec statements supporting your version because I can certainly show you statements that they have made supporting what I am saying.

      I would suggest that you focus on saving Delta since you say that is your goal. When you make statements that are counter to actual fact and then manipulate the facts when they are presented to you, I don’t think anyone rationally believes I am the embarrassment.

      Since you continually bring up a.net, methinks you came out of the woodwork for the very same reason that place went into an uproar years ago – because I predicted that American would end up in bankruptcy. Despite endless protests that I was biased and picking on American, AA ended up in bankruptcy.

      I happen to believe that AA cannot restructure its business outside of bankruptcy and there are other professional airline analysts who believe the same thing.

      If you would like to argue that Delta has not accomplished what I say it has, then please get the facts right. I will always cite my sources.

      If you and others don’t like that I speak very honestly and directly about American, then I would suggest you lend some of the Delta mojo to helping AA ‘cuz they need it now more than ever.

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