I want to throw this question out there and hear what you guys think, because it’s something I’ve been thinking about quite a bit the past few days.
In this post:
Delta is extremely well run
Let me start by saying that I have the utmost respect for the way Delta Air Lines is run. On balance they’re the best of the “big three” US airlines — employees and management are on the same page, the airline consistently innovates the passenger experience, the airline is the most profitable, etc.
Obviously the current situation is unprecedented, though I think I’m not alone in assuming — at least on the surface — that Delta is best positioned to come out of this situation the strongest.
Delta is the best of the “big three” US carriers
Delta is best positioned to shrink
In addition to just generally being well run, Delta has one other major strength during this time. We’ve repeatedly heard US airline executives state that demand for travel won’t fully rebound anytime soon, and they expect that the airlines will shrink.
In that regard, Delta has an advantage — they have the oldest average fleet age, so it’s also easiest for them to retire planes early. Delta’s strategy has long been to keep older planes and just maintain them well, because from a passenger’s perspective that’s better than getting a new plane and configuring it uncomfortably (as American Airlines has done).
American’s brand new 737s — nothing to get excited about
You wouldn’t know that this Delta A320 is 29 years old
Delta can easily shrink:
- They have nearly 80 MD-80s/90s, which are an average of over 26 years old
- They have over 80 717s, which are an average of over 18 years old
- They have nearly 60 A319s, which are an average of almost 18 years old
- They have nearly 130 757s, which are an average of over 22 years old
- They have nearly 80 767s, which are an average of over 22 years old
Delta has a huge fleet of 767s
The point is, they have a lot of room to shrink without it being too costly. These are planes that were going to be retired at some point anyway, so they can just push forward that timeline a bit.
Compare that to American, which has by far the youngest fleet age of the “big three” US carriers, and doesn’t have much room to efficiently shrink at this point, beyond the nearly 150 planes they plan on getting rid of.
American has now retired all 767s
Delta’s unique investment strategy
Delta has essentially been pursuing global aviation dominance through equity investments in foreign carriers, joint ventures, and in many cases, both.
They’ve essentially written off the concept of the global alliances, realizing the value in instead strategically working with airlines that complement their network.
During good times that strategy could make sense, but if you ask me, Delta is in a really tough position right now. Let’s just briefly look at the current state of this strategy:
- Delta just spent $1.9 billion buying a 20% stake in LATAM; the deal closed weeks ago, and based on current stock prices, the whole company isn’t even worth $1.9 billion at this point (of course all airline stocks are depressed at this point)
- Delta owns a 49% stake in Virgin Atlantic, which is fighting for survival
- Delta has a transpacific joint venture with Virgin Australia, which is also fighting for survival
- Delta owns an 11% stake in Korean Air, and they also have a joint venture with them, as the airline fights for survival; perhaps the biggest issue is that Delta has completely adjusted their Asia strategy around Korean Air, so they’re pretty reliant on the airline (Delta doesn’t even fly to Hong Kong anymore, but rather routes passengers through Seoul)
- Delta owns a 49% stake in Aeromexico, which is struggling just like any other airline, but isn’t in the same position as Virgin Atlantic, Virgin Australia, etc.
- Delta owns a 10% stake in Air France-KLM; they’re handling the situation as well as they can, so I don’t view this as a huge issue
- Delta owns a 4% stake in China Eastern; again, I don’t view this as being particularly bad, as China is a huge market, and most of the Chinese aviation industry is likely to survive, given government intervention
Delta owns a 49% stake in Virgin Atlantic
To be polite, for the most part Delta’s global strategy has been around investing in airlines that aren’t particularly profitable. During good times maybe that works, while during bad times it’s a different story, especially as there are questions around how many of these airlines will survive.
Compare this to American’s strategy
As stated above, on the surface American seems like they’re potentially in the worst position to weather the current storm, given their new fleet and the fact that they’re generally lagging among the US airlines when it comes to important metrics.
However, when you look at their global strategy, I’d say it’s a different story. American “only” owns a stake in China Southern, and otherwise their partnerships are pretty strong:
- British Airways is well positioned to make it through this situation (better than Virgin Atlantic), and American has a lucrative transatlantic joint venture with them
- Qantas is well positioned to make it through this situation (better than Virgin Australia), and American has a lucrative transpacific joint venture with them
- Japan Airlines is well positioned to make it through this situation (better than Korean Air), and American has a lucrative transpacific joint venture with them
British Airways isn’t even requesting government aid at this point
Just to substantiate that a bit further, British Airways and Qantas both aren’t asking for government aid (unlike Virgin Atlantic and Virgin Australia), while Japan Airlines had been very profitable prior to this situation, while Korean Air wasn’t.
Japan Airlines has been much more profitable than Korean Air
Bottom line
My point with this post is to start a conversation and hear what you guys think, rather than suggest that Delta is in big trouble and American will sail through this without issue. I don’t at all think that’s the case.
However, as airlines fight for survival, it does make you wonder if Delta has any regrets about the strategy they’ve taken the past few years. They’ve been so focused on investing in global airlines, and that works great when times are good.
But when times aren’t good, it’s a different story. Simply put, many of the airlines that Delta has invested in are among the most vulnerable in the current climate.
It’s hard enough for an individual airline to recover from this situation, but when you have stakes in airlines around the globe, it seems like it makes the situation even more complicated.
Obviously the current circumstances are extraordinary, though even in a “normal” recession, one would have to wonder how this strategy would play out.
What do you think — does Delta’s global investment strategy work as well in light of the current circumstances, or is Delta now at a significant disadvantage?
Korean Air will receive government assistance. They're a massive airline and the flag carrier for South Korea. They've also become very powerful in East Asia and I personally really love flying with them (their livery is amazing as well). Putting my personal experience aside, the South Korean government will bailout Korean Air especially because South Korea hasn't been hit particularly hard by Covid-19 and they recently spent billions on the Seoul Incheon airport which would...
Korean Air will receive government assistance. They're a massive airline and the flag carrier for South Korea. They've also become very powerful in East Asia and I personally really love flying with them (their livery is amazing as well). Putting my personal experience aside, the South Korean government will bailout Korean Air especially because South Korea hasn't been hit particularly hard by Covid-19 and they recently spent billions on the Seoul Incheon airport which would be wasted if they allowed Korean air to go bankrupt.
In your praise of Delta’s business practices, you should also let your readers know about Delta’s scandalous treatment of a category of employees referred to as “ready reserve.” No benefits' low wages, on call, no pension, no bonuses and no respect. Explain how Delta manipulates their numbers to prevent a Union from being voted in and how these employees have to attend mandatory meetings where the company intimidates those workers to not join a union....
In your praise of Delta’s business practices, you should also let your readers know about Delta’s scandalous treatment of a category of employees referred to as “ready reserve.” No benefits' low wages, on call, no pension, no bonuses and no respect. Explain how Delta manipulates their numbers to prevent a Union from being voted in and how these employees have to attend mandatory meetings where the company intimidates those workers to not join a union. “Well run airline”? Sure, if you exclude respect, a living wage, and intimidation of workers rights as your benchmark.
Great topic. Equity holding vs global alliances. This current market correction will provide proof in the pudding as to which airline business model is the best global growth strategy going forward. Right now on paper, it appears Delta is in trouble and American is sitting pretty (with respect to alliances.) Demand for airline travel will return slowly, however, will Delta's equity partners be around to reap the benefits? Yes an older fleet is easily pared...
Great topic. Equity holding vs global alliances. This current market correction will provide proof in the pudding as to which airline business model is the best global growth strategy going forward. Right now on paper, it appears Delta is in trouble and American is sitting pretty (with respect to alliances.) Demand for airline travel will return slowly, however, will Delta's equity partners be around to reap the benefits? Yes an older fleet is easily pared down, however, how long is the wait list for newer aircraft? The NMA category of aircraft is currently backlogged. A321XLR's are behind schedule and the 737MAX is sketchy on customer acceptance. Delta & American will survive the current crisis but a deep look back on their global growth strategies must be considered.
Great article for discussion. Delta has always lagged UAL and AAL with respect to flying their own metal internationally. However, they by far have the best domestic service in the US in terms of bredth of their network and reliability. Everyone agrees International travel will be the longest to recover. UAL and AAL will have more issues in the recovery because of their larger exposure to international flights flown on their equipment. Delta's much smaller...
Great article for discussion. Delta has always lagged UAL and AAL with respect to flying their own metal internationally. However, they by far have the best domestic service in the US in terms of bredth of their network and reliability. Everyone agrees International travel will be the longest to recover. UAL and AAL will have more issues in the recovery because of their larger exposure to international flights flown on their equipment. Delta's much smaller wide body fleet may allow them to be more right sized and nimble going forward while capitalizing on are more rapid recovery of domestic flying.
Delta's point to point strategy puts them at greater risk. Point to point is a lot harder during downturns. The only thing they do have going for them is an ancient fleet that they can dump. But even then they just spent big money refurbing a lot of aircraft so theres a big write down on the horizon no doubt
@M
"This is a weird thesis the belies a lack of understanding in how business works."
After reading comments for a day, you would realize how many lack the understanding in how business works.
@Greg
I don't see airline market shares as cyclical. Competition in the last few decades made the leader position change hands. With the legacy 3, looking at the leadership at AA and UA you can see why DL has the...
@M
"This is a weird thesis the belies a lack of understanding in how business works."
After reading comments for a day, you would realize how many lack the understanding in how business works.
@Greg
I don't see airline market shares as cyclical. Competition in the last few decades made the leader position change hands. With the legacy 3, looking at the leadership at AA and UA you can see why DL has the advantage.
@Erick
It's an odd time to notice this but many have noticed since they rolled out these new lavatories. This is not just an A319/320 issue but also in the 737NG/MAX too.
https://www.reuters.com/article/us-berkshire-stake-airlines/warren-buffetts-berkshire-hathaway-sells-some-stake-in-delta-air-lines-idUSKBN21L393
Sold enough $DAL and $LUV to get below 10%. This no longer requires them to file each time they trade the names. Frees them back up to make larger moves if needed to sell without disclosing given large blocks take time to trade without bring attention to increased volume.
What no one is talking about is post virus restart, social distancing on aircraft will be a must, no one will want to sit in a middle seat, so with reduced passenger loads airlines might deal with the issue by blocking middle seats in coach, and only selling window and aisle seats and issue masks to all passengers. This method of operation might last for a year post restart.
Lucky,
Delta 319 have even more seats than aa 319.thoae 319 have tyni bathrooms that are positioned in half of the rear galley. This allowed them to accomodate more seats by removing those lavatories.
Why nobidy seems to talk about this?
Commenters on here keep saying CVG will see cutbacks maybe some 50 seater flights but overall every mainline flight in and out of Cincinnati has high occupancy numbers. Fly weekly and every flight I have been on even in January and February was over sold or at capacity. It's a strong focus city with large pilot base, from the days of being #2 in the network.
@JAB Jr: I haven’t heard as good a joke as what you say for a long time. I hope you realize that Delta is basically bleeding money in SEA and BOS while AS is reaping profits.
JAB - in a debt heavy industry like airlines you need to look at net debt plus market cap - total enterprise value. Delta is not greater value than AA and UA combined as an entity.
AA - 25bn
DL - 23bn
UA - 15bn
seatback is right - DL is basically ATL/MSP/DTW/SLC profit center - a token above breakeven in NYC and probably losing money in LAX and SEA.
Every...
JAB - in a debt heavy industry like airlines you need to look at net debt plus market cap - total enterprise value. Delta is not greater value than AA and UA combined as an entity.
AA - 25bn
DL - 23bn
UA - 15bn
seatback is right - DL is basically ATL/MSP/DTW/SLC profit center - a token above breakeven in NYC and probably losing money in LAX and SEA.
Every cycle has seen a different global network carrier act as a biz market share taker
In the 80s it was AA, in the early-mid 90s UA, in the late 90s - mid 2000s it was CO, in the 2010s DL
Who will be the next one?
These people, please. Delta is killing Alaska in Seattle. The fleet may be older but you can't tell when inside the cabin. The passengers love Delta over AA or UAL. Check the market cap of these 3 airlines. Delta's value is greater than AA and UAL combined. AA is in terrible shape financially, they could easily go chapter 7. UAL isn't in much better shape. No airline will survive this without government assistance. It's just...
These people, please. Delta is killing Alaska in Seattle. The fleet may be older but you can't tell when inside the cabin. The passengers love Delta over AA or UAL. Check the market cap of these 3 airlines. Delta's value is greater than AA and UAL combined. AA is in terrible shape financially, they could easily go chapter 7. UAL isn't in much better shape. No airline will survive this without government assistance. It's just too dire. But Delta was in best shape, they will continue their dominance when things return to normal.
Personally, I see Delta’s strategy with their international partners as somewhat more able to weather this crisis than say American. American’s partners may be stronger than their region by region competitors, but that doesn’t mean collective success. It just means somewhat less likely to fail. PriorityONE for Delta (see what I did there?) is of course their own survival, but as soon as they have that to a place they can predict outcomes they can...
Personally, I see Delta’s strategy with their international partners as somewhat more able to weather this crisis than say American. American’s partners may be stronger than their region by region competitors, but that doesn’t mean collective success. It just means somewhat less likely to fail. PriorityONE for Delta (see what I did there?) is of course their own survival, but as soon as they have that to a place they can predict outcomes they can hop directly into propping up their equity partners. Virgin Atlantic and Aeromexico are tapped out at 49% but LATAM, Air France-KLM, Virgin Australia, and I suppose China Eastern would be ripe for the picking. Delta can likely recover faster than any partner. They have the advantage. American can just hope to claw their way back to status quo. I like the upside on this wager.
This is a very near sided perspective. Investing in these companies didn’t hurt Delta as their cash on hand was quite healthy and they had manageable debt. Let’s be real Aeromexico, Korean, Latam, Air France, KLM aren’t going anywhere VA and VS aren’t as solid however I’m pretty sure they will be aided. I think Delta international strategy is more of a hub to hub model which tend to have higher yields/margins. Just look at...
This is a very near sided perspective. Investing in these companies didn’t hurt Delta as their cash on hand was quite healthy and they had manageable debt. Let’s be real Aeromexico, Korean, Latam, Air France, KLM aren’t going anywhere VA and VS aren’t as solid however I’m pretty sure they will be aided. I think Delta international strategy is more of a hub to hub model which tend to have higher yields/margins. Just look at what the carriers are flying in April largely “hub” like cities and less exotic places. Would JAL Qantas been better partners perhaps - but DL likes partners that are willing to take advice and learn operational / network analysis from them.
No one could have prepared for this, however I’m sure a crisis/recession was thought of when DL made these welll thought out agreements. Almost of their investment airlines haven’t been doing the best financial but mother DL has continued to have the best results in the industry - indirectly the other carriers they are tied to benefit!
Delta has one other advantage they have a longer burn time then UA or AA, IE in 3.5 months UA was gone before the bailout in 5.5 AA was gone but it was going to take 8.5 months for delta to run out of operating cash. Of the Delta partners Virgin Atlantic, Virgin Australia, and Latam are at risk Aeromexico, Korean, and AfKlm do not seem to be. Of the carriers in danger, Virgin Atlantic...
Delta has one other advantage they have a longer burn time then UA or AA, IE in 3.5 months UA was gone before the bailout in 5.5 AA was gone but it was going to take 8.5 months for delta to run out of operating cash. Of the Delta partners Virgin Atlantic, Virgin Australia, and Latam are at risk Aeromexico, Korean, and AfKlm do not seem to be. Of the carriers in danger, Virgin Atlantic is the most critical to protect and, if they cannot get a UK government bailout I would expect Delta to guarantee loans that virgin Atlantic needs to survive, probably along with AFKLM. For Virgin Australia, there might be some bailout money, and if not they might get some loan guarantees or similar but honestly I suspect given Delta has no equity stake there, and it's not as critical of a market they might be left to sink. Latam is Potentially the most likely to sink and one that I don't think delta could /would carry if it came to it, especially so early on in the relationship, so they may be left to sink.
I’m more curious how the “Delta family” Will react to unpaid leaves when AA is offering 25% pay for the same thing. And when they realize delta unilaterally cut their pay by 25% when united and AA didn’t do the same.
Not sure that family will respond as well once they realize the “family” was about profits and anti-unionization the whole time...
I actually think Delta is in bad shape. Look, when this is all over, all the airlines will be the same -bare service and no foo foo. People consider Delta the best because of their service which will not be back to like it was for who knows how long. Airlines will be spending years trying to get to a pre-covid world. American has strong alliances with strong airlines who can navigate returning aviation to...
I actually think Delta is in bad shape. Look, when this is all over, all the airlines will be the same -bare service and no foo foo. People consider Delta the best because of their service which will not be back to like it was for who knows how long. Airlines will be spending years trying to get to a pre-covid world. American has strong alliances with strong airlines who can navigate returning aviation to somewhat normal in their own territories with their own governments. Now with Air Moroc, AA has a string global network with key partners in best positions to return aviation to their respective continents allowing American to rebuild their domestic network. Trying to recover from this global pandemic will require massive efforts and Delta has too many invested liabilities globally to deal with at once. If Korean or Latam fail, Delta is basically locked out of a region while AA and UA will swoop in with their alliances.
Delta may only be best positioned to deal with this because they aren't heavily union. They can cut jobs and reduce pay and hours whenever they want. However, F/As may demand a union after this. Thousands of Delta employees just took months long leaves with no pay where as American is offering a small pay to leave for FAs. Been hearing many Delta FAs appalled at their lack of any protection when they see UA and American FAs contracts. I foresee terrible labor issues at Delta as the union question fight intensifies.
I think its going to take airlines years and years to fully recover from this and all will ultimately be ok. However, they will be very different airlines. Global pandemics requires the world to work together. Deltas go it alone will probably backfire because they just can't put any precious cash and resources to other airlines that are struggling and possibly bankrupt. Who would've thought just a few weeks ago we would be talking about this?!
@Sal
Sorry my bad I just assumed UX was a done deal. I see it is not due to close until the summer. Might be better to pay the breakup fee. WW is very quiet about the deal!
@Adam
DL/LA and IAG/UX are not really comparible at all. DL has already spent the 1.9 billion (that is now worth around 290 million) while IAG/UX has not been approved by the EU authorities yet so IAG can (and probably will) cancel the transaction by paying the $40 million breakup fee.
Great discussion, thank you, Ben!
A few unrelated observations:
@M Delta does not have as high of a depreciation expense on its income statement compared to other airlines with newer planes - agree, and it is a non-cash expense - agree.... BUT what you are missing is that Delta also does not have ownership-related expenses (fixed periodic lease or loan payments) on these older birds - THAT IS a (big) cash expense and in this...
Great discussion, thank you, Ben!
A few unrelated observations:
@M Delta does not have as high of a depreciation expense on its income statement compared to other airlines with newer planes - agree, and it is a non-cash expense - agree.... BUT what you are missing is that Delta also does not have ownership-related expenses (fixed periodic lease or loan payments) on these older birds - THAT IS a (big) cash expense and in this environment not having as much of it helps DELTA.
Maintenance - another advantage. Maintenance on parked planes that you own outright is minimal. Maintenance expense is closely related to the flying (i.e., engine overhauls and other periodic maintenance checks at certain "block hours" thresholds). As another reader noted, there may be a market for 2nd hand aircraft (cargo - sure!) and DELTA can either sell or lease its older birds and generate cash flow (AA would at best be able to cover its own obligations related to lease or loan payments while DELTA would generate additional cash).
Older planes are less fuel efficient but with the oil prices at record lows, the premium other airlines paid for shiny, efficient planes (and MAXes that aren't flying) is not worth the savings in the current environment. It definitely is not worth it from customer experience either (I enjoy flying on Delta's 20+ year well cared for plane with decent interiors v. American's new aircraft outfitted in Greyhound style (not just Oasis).
Delta has a number of new birds, too... and they are flying them (A350 on Detroit - Shanghai route is flying). Shanghai, Beijing too (China Eastern), not just Seoul, are strong hubs for Delta in Asia and both are opening up.
If, as another reader notes, executives plan for decades ahead, then Delta should strengthen (in some cases double down) on its key partnerships, perhaps exploit opportunities where it has not yet. It does not have to be cash infusion (i.e., the risk related to the optics of how the bail out money is used) to strengthen its global network for post-COVID world.
Delta was clever to jump on A220 early. Its growing fleet of the smaller, long-range, efficient (unrivaled given the size) and comfortable birds gives it an advantage (flexibility) over its competitors on key routes where UA or AA would have to either use regional jets (ugh) or fly larger and more expensive planes.
I commuted from NYC to DFW for several months on DL's A220. It was an envy of my colleagues who started out with AA but soon switched to DL given the in-flight experience and reliability... and, yes, perhaps it is another one-off "real life" anecdote that illustrates how little corporate fliers valued their AAdvantage/loyalty perks (I agree, SkyMiles is not great either but when you spend more than a full working day on the plane each week, the airport and in-flight experience matters, and perhaps matters more than the points). Delta is also transparent and consistent with its upgrades. I find that to be one of the biggest winning points in terms of loyalty. It is not dependent on whether the crew is running behind on D0.
One of my colleague, who is a seasoned executive and travels frequently, once told me she was "yelled" at by AA ground staff twice in one day at DFW... yes, perhaps an isolated example of one flyer on a particular day, but it is indicative of the brand destruction by unhappy employees, one flier at a time. Many corporate travelers are not price sensitive to insignificant fare variations.
Delta may have second-largest partners in some key markets but let's not forget the in-flight experience. Delta's requirement to align how its JV partner treat its Elites is a valuable piece in the partnership and some of these partners were also required to improve their in-flight offering to closer align with Delta's. It does provide another advantage: for US-Europe flights, DL fliers have more route/price/experience options with more hubs to choose from, so on balance I see it as better than having one or two dominant partners with a single hub. For those who travel frequently, making the same connection over and over again (via FRA, for example) loses its appeal.
Hopefully Delta will use the down time to accelerate scheduled cabin upgrades on some of its jets and, perhaps, retire others with the view to offer a VERY consistent on-board product no matter the size or the model of the bird.
Lastly, I am curious how the US3 networks will change once the travel restrictions are behind us. Will it be going back to exactly the same or will there be some surprises created by the current re-set? I think this, in part, will also depend on how the airlines treat their employees (i.e., news of mass lay offs may seriously impede their ability to come back strong in certain markets).
Challenging but also interesting times for the airlines!
Ben, thank you again for a thought-provoking, informative blog (and for attracting and engaging such a wonderful reader base - I very much enjoy the discussions in this forum and look forward to your daily digest and the discussions that follow (I started to check my inbox for OMAAT digest every day around 5 PM - love it!)
Deltas main concern has always been to keep the company non unionized. That's why they give these unbelievable bonuses to their employees. The employees know no better. Let's see how they (the employees) fare when covid 19 no longer exists. Also, I bet Delta wishes they had that money currently. I worked for them for decades in inflight. I know how they think and how they operate.
Spot on Adam, completely agree. Eskimo and John also get it.
If Delta is worried about it's investment in LATAM, IAG must feel even more regret for it's purchase Air Europa in November. And if we are comparing Delta investing in various airlines to Etihad and way back Swissair, Lufthansa Group owns several airlines 100% outright. Virgin Atlantic seems like the biggest risk to Delta as if it goes down it will hurt the European JV with AF/KL and weaken them in London. KE will be...
If Delta is worried about it's investment in LATAM, IAG must feel even more regret for it's purchase Air Europa in November. And if we are comparing Delta investing in various airlines to Etihad and way back Swissair, Lufthansa Group owns several airlines 100% outright. Virgin Atlantic seems like the biggest risk to Delta as if it goes down it will hurt the European JV with AF/KL and weaken them in London. KE will be be gov't bailed out most likely, as will AF/KL. So apart from wiping out the investments, the partners will remain intact and help feed Delta's international reach without exposure. It would seem that there will be more consolidation initially in the global airline industry and that will help all the legacies. Delta's outsourcing it's international reach (which has been commonly pointed out as a failure), especially in Asia, may turn out to be a god send when the dust settles. While it's harder to call yourself a true global carrier, I wonder how much the C suite is currently sweating it out in the Willis Tower with their unparalled global route network. Funny how things that we assume are forever can change in a day.
There is a post on GSTP about BA and all UK airlines.
I think that Richard Branson has enough money to give for Virgin and the UK government will give them money.
fascinating article. I regularly read businessweek and cnbc but did not know about this. Thank you. My two cents are that it sounds like this global strategy will hurt Delta in the short run, but post-corona it will only hurt if global air traffic does not recover.
@adam you beat me to it... No U in QANTAS. You'd think people would now well before now.
@m if you think that about QANTAS you have no clue mate
@John: Except Delta pulled out of Taiwan. It could have had a joint-venture China Airlines, but that wouldn't have been kosher with the communist Chinese state-owned China Eastern. China Airlines is also better than Korean Air. It also could have kept some intra-Asia flights out of Tokyo-Haneda. The idea that Delta stopped flying to Taiwan, Singapore and Hong Kong is incredible. And how much did Delta spend on Seattle when Los Angeles would have been...
@John: Except Delta pulled out of Taiwan. It could have had a joint-venture China Airlines, but that wouldn't have been kosher with the communist Chinese state-owned China Eastern. China Airlines is also better than Korean Air. It also could have kept some intra-Asia flights out of Tokyo-Haneda. The idea that Delta stopped flying to Taiwan, Singapore and Hong Kong is incredible. And how much did Delta spend on Seattle when Los Angeles would have been a smarter investment?
I’d like to see or hear how the airlines will emerge on the other side with regards to routes and hubs.
Will Delta maintain all of their hubs? Will they reduce or eliminate any, is so, which?
What about AA and UA?
@ sunviking82 — You posted the same comment, “ I also wonder if IFE screen will start to become a negative. I don’t know who touched it, was it cleaned, etc. . . Right now I much rather have my own device.”, on Gary’s View From the Wing blog.
One has to touch their seatbelt at a minimum, so your risk of infection would be just as high with or without using a built...
@ sunviking82 — You posted the same comment, “ I also wonder if IFE screen will start to become a negative. I don’t know who touched it, was it cleaned, etc. . . Right now I much rather have my own device.”, on Gary’s View From the Wing blog.
One has to touch their seatbelt at a minimum, so your risk of infection would be just as high with or without using a built in touch screen. Just being in a confined plane is what puts one at risk.
Once this passes, people will go back to flying and will once again choose Delta (and JetBlue) over AA. My main reasons for flying Delta are the built in seat back screens and the superior customer service, both on the ground and in the air. Plus, look around on any Delta flight. You will find the majority of people using the seat back screens (and the few people that aren’t just turn their screens off). But when I fly AA, I see few people using tablets. Most are trying to stream on their phones, which is not ideal, or they look bored.
I think comparing Delta to Etihad as a few are doing here is a bit extreme. Delta's investments - LATAM, Virgin, Korean, were all very established players in their respective markets, and at least for the first two, were poised for feasible major expansion. Etihad invested in more fringe airlines where the risk was extremely high, and they got burned because of it. I will say Delta's Asia strategy even in normal times has been...
I think comparing Delta to Etihad as a few are doing here is a bit extreme. Delta's investments - LATAM, Virgin, Korean, were all very established players in their respective markets, and at least for the first two, were poised for feasible major expansion. Etihad invested in more fringe airlines where the risk was extremely high, and they got burned because of it. I will say Delta's Asia strategy even in normal times has been a bit odd, they've scaled back service to Tokyo and HK and focused purely on Seoul, which I'm not sure is an ideal move.
Some people seem to misunderstand what Delta was doing by investing in and establishing JV’s with foreign carriers in competitive markets. It was all about gaining access that they didn’t have or would tie up too much capital and assets to grow organically.
Virgin Atlantic was a relatively cheap investment that gave Delta extraordinary access to a slot restricted business market. A $277 million dollar price tag for the buy in was an amazing...
Some people seem to misunderstand what Delta was doing by investing in and establishing JV’s with foreign carriers in competitive markets. It was all about gaining access that they didn’t have or would tie up too much capital and assets to grow organically.
Virgin Atlantic was a relatively cheap investment that gave Delta extraordinary access to a slot restricted business market. A $277 million dollar price tag for the buy in was an amazing bang for the buck. Delta has been working with VS to get them more focused on clear and profitable path. VS has had some bumps along they was with the 787 RR engine issues that necessitated buying/leasing other aircraft to take up the slack. VS is the perennial underdog in LHR with their fleet of 42 aircraft compared to BA with 282. It’s not surprising that they struggle when they’re fighting a juggernaut.
Korean Air was the last major partner in Asia that could be brought into a JV. Delta already knew it’s Narita hub was a losing game due to Haneda opening up to long haul flights and that most business people prefer nonstop or 1 stop flights to their destinations. Delta didn’t have a strong transpacific gateway on the west coast so they had to make a play for Seattle. As good as Seattle is, it doesn’t have the numberS LAX or the SFO markets have. The Japanese carriers are both spoken for so KE was the next best thing to bring into a JV so Delta could access Asia where they could not.
LATAM was a great play for the South American markets. Previously Delta only had GOL. GOL was good but nowhere near the market presence as LATAM. Now with on single investment Delta has unparalleled access to the South American market that would have taken decades and tens of billions of dollars to build out.
Virgin Australia was yet another opportunistic move to gain access to the Australian market. With QANTAS already being partnered with American Airlines there was no other choice. Delta could invest in VA or go it alone. Some feed is better than none.
This pandemic has wreaked havoc on the airline industry. Airlines that were once marginally profitable are now close to the brink of collapse. Even airlines that were flush with cash are now struggling to stay afloat. Delta will be fine even if some of their partners don’t survive this unprecedented downturn. If a partner fails Delta will have to reassess how they approach that market. They might dive in on their own or just be happy with a token presence. It just depends on the market and how much time and money Delta wants to invest.
Before the Virus there was a strong market for used 767's (To be converted to Cargo planes) all of the AA 767's were already spoken for and the new owners are getting them sooner. If that market is still strong Delta and UA will be able to make some money off there 767's.
Delta's strategy of relying on international partners will come back to haunt them. Look at how much United has made off Facebook and Apple by flying to so many destinations in Asia.
The fastest growing economies and countries remain in Asia. Relying on Korean Air was a big, big mistake. As big as mistake as abandoning Guam (they could be getting a subsidy now if they flew there), Taiwan, then Singapore last year, and...
Delta's strategy of relying on international partners will come back to haunt them. Look at how much United has made off Facebook and Apple by flying to so many destinations in Asia.
The fastest growing economies and countries remain in Asia. Relying on Korean Air was a big, big mistake. As big as mistake as abandoning Guam (they could be getting a subsidy now if they flew there), Taiwan, then Singapore last year, and ending Tokyo-New York a few years ago.
And now Japan is blocking Americans for the considerable future. It is conceivable that Delta's only Asia destination will be Seoul through the summer and early fall.
Domestically, people in the know fly Delta not because it's the best but because it's better than United and American. But all the downgrades, the devaluation of Sky Miles, and the selling of upgrades at rock-bottom prices left a sour taste in the mouths of many elites. Remember, loyalty is a two-way street. Delta would be very wise to undo so many of its bad loyalty program changes to get people back.
Imagine if Alaska and JetBlue merged. It isn't as crazy as you think, given they both have similar cult followings, notwithstanding America and Alaska coming together recently.
I wouldn't be surprised if the federal government declares more domestic routes to be "essential air service" routes, which would give Delta and other carriers subsidies over and above the bailout.
The LATAM partnership is turning out to be a disaster right now.
They spent 1.9 billion for 20% of an airline that is only worth 1.4 billion total weeks later.
@Adam
The Chilean government as already said that they are not doing a LATAM bailout, I doubt Brazil will and the other LATAM national governments don't have the resources for a bailout of this scale.
Delta will be the 1st to file for bankruptcy. Their international partners are in bad shape, international flying is going to be garbage for some time, will be stuck with A350s, A330s and 777s that are going to be too big for the post virus world, too many older narrowbodies. Perhaps a merger target for American if Delta shrinks.
Shouldn't American's joint venture with JAL be transpacific?
@Eskimo: Yeah, all the partners of DL, aka ‘founding chairman of anti state-aid forum’ should request for state aid to survive and contribute to DL’s profits. If nothing, it is emblematic of DL’s ever persistent hyprocrisy and the the failure of DL’s entire strategy. Talk about Karma!! LOL...
That NRT hub looking pretty good right now if KAL goes into the dumpster.
Also, buying an oil refinery isn't looking like such a great deal at the moment.
Why will this even backfire at all?
Stronger airline aside. DL buying LATAM is not much different than AA buybacks in a way, airlines buying airline stocks.
At a high level point, does this put DL in a really tough position right now?
Yes because DL loses on the investment, but so does other airlines who bought themselves.
Will this backfire?
No. Unless DL is stupid enough to inject more money into their...
Why will this even backfire at all?
Stronger airline aside. DL buying LATAM is not much different than AA buybacks in a way, airlines buying airline stocks.
At a high level point, does this put DL in a really tough position right now?
Yes because DL loses on the investment, but so does other airlines who bought themselves.
Will this backfire?
No. Unless DL is stupid enough to inject more money into their investments right now. Even if they can take their bailout loan to support (bailout) airline investments, DL will not do it. Looks very ugly on them. I can't see how DL will spend more 'cash' into their investments anytime soon.
What each respective airline should be doing?
Ask for a bailout. Latest news, VS just did that.
Lastly, you would think old planes are easier to retire?
I think it is over simplified. Not all of them could be retired. I don't really know how many as I don't track these down, but you have to factor in those big maintenance check and cost of refurbishing planes. There is a reason those 757 767 319 or 717 doesn't look that old at all. Definitely all the MD88/90 will go. What might retire is one of the whole 752 and 763 sub-fleet maybe the entire 753. I would say some A319/320 would semi retire and go to storage.
Whats not on the list and likely retire too are the A332.
I don’t know if the British people are willing to stomach seeing their taxpayers money go towards propping up Virgin Atlantic. If BA refuses government money, it makes Virgin look even worse, many feel that the government has more pressing issues, such as the COVID-19 outbreak and bolstering the NHS, rather than stroking the ego of a billionaire and saving an airline that doesn’t have any exclusive routes, all are flown by competitors, whether it’s...
I don’t know if the British people are willing to stomach seeing their taxpayers money go towards propping up Virgin Atlantic. If BA refuses government money, it makes Virgin look even worse, many feel that the government has more pressing issues, such as the COVID-19 outbreak and bolstering the NHS, rather than stroking the ego of a billionaire and saving an airline that doesn’t have any exclusive routes, all are flown by competitors, whether it’s BA or a foreign carrier.
I’m not so sure that an argument about competition really works. Yes, London is a bigger market than other European capitals, but when you look at other countries in the region, they all have basically one flag carrier. Germany? Lufthansa. France? Air France. Airberlin is gone and couldn’t make a go of it. What would be considered to be the second flag carrier of France? Corsair? French Bee? I think not.
His venture with Virgin Trains further deteriorated the reputation of the brand in the UK, so it will be interesting to see if Virgin survives or goes the way of FlyBe and Thomas Cook.
This is a weird thesis the belies a lack of understanding in how business works.
Delta owns equity stakes in those airlines. It is not responsible for their losses. If Delta has to write down those investments, sure it has less valuable assets, but there is no cash cost to this. If those assets bounce back, similarly, there is no cash gain.
It is also irrelevant that Delta can retire planes faster. That doesn't...
This is a weird thesis the belies a lack of understanding in how business works.
Delta owns equity stakes in those airlines. It is not responsible for their losses. If Delta has to write down those investments, sure it has less valuable assets, but there is no cash cost to this. If those assets bounce back, similarly, there is no cash gain.
It is also irrelevant that Delta can retire planes faster. That doesn't generate cash unless they have a resale market for old planes, which is unlikely given global conditions. Yes, they are not depreciating old planes -- unlike American depreciating new planes -- but again depreciation is not a cash cost.
So in essence, the "weaknesses" you ascribe to Delta's strategic may hit the stock price or bottom line (the ownership stakes above 20% have to be reported on the income statement) but do not have much to do with how Delta comes out of this. Perhaps a hit to borrowing costs but that presumes Delta is borrowing which seems unlikely in the short term.
If anything, being able to tightly coordinate across the network is a win for Delta.
Having strong but strategically irrelevant partners (JAL, Qantas) is not important. Qantas gets people to Australia, that's all it does. JAL mostly gets people to Japan (perhaps some to greater Asia, although I'd bet Cathay matters more for doing that). These are nice destinations, but outside of connecting... they don't matter much. But sure I'd rather have JAL right now than Korean as a partner. Except that Korea is also reopening for business, Seoul is a great hub for Delta, and Delta has the clearly superior China partner. But all of this is secondary. Why?
Because these airlines are US centric with most of the valuable overseas traffic to Europe and South America. American's partner is going to have long term issues with Brexit and the UK's abysmal response to COVID. And American absolutely botched Latin America. If LATAM collapses, that's great for American, right? Except it isn't because it means Latin American air travel has collapsed, which hurts AA more than Delta.
AA has no strategy. That's why it flipped on Alaska. Delta has a strategy. It's diverse and the airline is much better run.
You cannot have it both ways. During good economic times you criticize those airlines that play it conservative. Then in bad economic time criticize airlines that optimized global strategies. It’s easy to question things after the fact isn’t it.
I think this could prove costly for DL. While many of these airlines may survive, there may be significant dilution of existing shareholders as part of any rescue packages
All of this does make you wonder if LATAM has considered crawling back to AA... Delta only owns 20%, far from any controlling interest. It seems painfully obvious that any Miami growth plans Delta had are long since shelved. Will Latam allow itself to enter into one of the highly pro-delta JVs that Delta seems to love?
Definitely best positioned moving forward. Easiest among peers to quickly scale down and scale up should demand come back quickly. The only airline that has a lower net debt to EBIDTA ratio is JetBlue. Delta has net debt to EBITDA of 0.9 versus UAL of 1.44 and AAL of 3.39. Plenty of cash on hand and can survive longer than both UAL and AAL should lockdown mode extend longer than 2 months. Compared to the other two legacy, significantly fewer downside risks.
Delta is repeating the Etihad Partners story all over again...
I am very worried for Virgin Atlantic. Branson let Flybe go under, and is now very unpopular in the UK after failing to pay any personal tax here for decades. The big worry is, they were struggling before this crisis and just beginning to break even, and I cannot see Branson reaching into his pockets to save them, he won't even pay his staff any leave. However much people disparage BA, the employees are still...
I am very worried for Virgin Atlantic. Branson let Flybe go under, and is now very unpopular in the UK after failing to pay any personal tax here for decades. The big worry is, they were struggling before this crisis and just beginning to break even, and I cannot see Branson reaching into his pockets to save them, he won't even pay his staff any leave. However much people disparage BA, the employees are still receiving 80% of salary.
The government is also concerned about repeating the mistakes of the 2008 bailouts, bailing out the big guys while ordinary people had years with austerity.
Nice article on a very interesting topic. Years and years of failed airline investments, topped on the list by Swissair and Etihad - People have always said that DL’s case is different. In all cases, yes DL has been profitable. But every single partner is consistently loss-making. DL fanboys conveniently ignore that fact and focus on DL being the most profitable airline in the world. These are examples of times when these questions are really...
Nice article on a very interesting topic. Years and years of failed airline investments, topped on the list by Swissair and Etihad - People have always said that DL’s case is different. In all cases, yes DL has been profitable. But every single partner is consistently loss-making. DL fanboys conveniently ignore that fact and focus on DL being the most profitable airline in the world. These are examples of times when these questions are really put to test.
What an ironical moment for LATAM. Just before this crisis, they were in the best place they could have been in: leading partners in MIA and MAD, their international hubs, and member of a global alliance which was undoubtedly the best fit for them - most partners being well recognized in the world and well positioned to survive. And now they are entering the crisis with no alliance, and no MIA and MAD feed. I am so sad to see an airline with such potential go down the drain. LATAM will never be what it is or was... Thanks, DL!!!!
There is a lot of inaccuracy in this article. Delta is the best managed of the US3, that's true, and yes, they can expedite aircraft retirements since they have an older (but extremely well maintained fleet). A few things though aren't comparable, particularly, when tearing into AA so forcefully. AA's partnership advantage is that the absence of investment stakes is critical at a time when cash conservation is key. AA's alliance partnerships are very deep...
There is a lot of inaccuracy in this article. Delta is the best managed of the US3, that's true, and yes, they can expedite aircraft retirements since they have an older (but extremely well maintained fleet). A few things though aren't comparable, particularly, when tearing into AA so forcefully. AA's partnership advantage is that the absence of investment stakes is critical at a time when cash conservation is key. AA's alliance partnerships are very deep for the most part, and highly integrated. A lot of DL's expanded ones are just being formed as the COVID crisis took shape. Qantas does want a bailout and is fighting with Virgin Australia over one. Delta is not going to escape the crisis totally unscathed. It has a ton of exposure to Europe, remains weak in Asia with partnerships that aren't fully matured, and the LATAM strategy will take a lot of runway to get going as it was partially predicated on building out a larger focus operation at MIA, which for now, is likely shelved though down the road, if things recover, can be built at the expense of some other markets that will see growth cuts (BOS, CVG, even JFK).
@ Sharon
Raleigh is a focus city for Delta and has alot of tech and medical/pharma companies based there. These companies will be best positioned coming out of this and will still support business travel. I would expect Cinncy and Seattle to be cut back
It will get interesting when Delta takes aid from the US government and then uses some of that to bail out one of its international partners.
Ben -
First time reply, long time reader of your blog. In my opinion, Delta is the best positioned airline out of the big 3 (the best US Airline would be Southwest for multiple reasons). I will break down why.
An executive's job, in any business, is to plan in decades instead of months. I don't know much about the financial liquidity of Virgin Atlantic, Virgin Australia, Korean Air, LATAM, etc. but if we...
Ben -
First time reply, long time reader of your blog. In my opinion, Delta is the best positioned airline out of the big 3 (the best US Airline would be Southwest for multiple reasons). I will break down why.
An executive's job, in any business, is to plan in decades instead of months. I don't know much about the financial liquidity of Virgin Atlantic, Virgin Australia, Korean Air, LATAM, etc. but if we believe in Ed Bastian and the Delta Execs, most of these partnerships should pan out eventually. Short term, they need to stay afloat.
Delta had the least impacted business in 2019 from the 737 MAX, because they didn't own any. They had a strong 2019, which positions them well for the coming slowdown. They have the strongest balance sheet of the big 3, and if oil prices stay low (a complicated situation) they could emerge ready to reap the benefits.
Finally, airlines are receiving $60 billion in aid to keep them in business. When all of this is over, those metrics of customer satisfaction and on-time arrivals will be all that matters to the consumer, and Delta is consistently on top.
Stay safe and healthy.
- Ben
Who knows? No one can model a scenario(COVID19) like this. It's all luck and conjecture at this point. No airline will do anything more than survive going forward until either a vaccine or inexpensive, widely available treatment appears.
@adam
There is no ‘u’ in Qantas
The irony is indeed that LATAM could end up being a huge financial burden on Delta. It's still left to be seen how bad the outbreak will be in Brazil. The country is essentially locked down (despite Bolsonaro) as the population is ignoring his idiocy now. As such the cases have yet to start spiking like in the U.S. However, if the virus starts to hit the Favela in Rio and S.P. it could become...
The irony is indeed that LATAM could end up being a huge financial burden on Delta. It's still left to be seen how bad the outbreak will be in Brazil. The country is essentially locked down (despite Bolsonaro) as the population is ignoring his idiocy now. As such the cases have yet to start spiking like in the U.S. However, if the virus starts to hit the Favela in Rio and S.P. it could become catastrophic and out of control. The private hospitals are good in Brazil (ex. Albert Einstein Hospital in S.P.). But the public hospitals that most of the poorer population use would be overrun in a few days if Brazil starts to experience U.S. numbers.
My point being that the Brazil could be devastated and LATAM will probably not survive in that climate. A strange twist of fate in that everyone thought the move so genius and cunning just a few months ago.
I don't think Delta purposely chose weaker airlines to invest in but it operates as an alpha negotiator and drives hard bargains and other alpha-airlines in their markets are less likely to accept those terms than the number two airlines in a given market. This type of alliance depends on a strong lead. The question is whether Delta is strong enough to carry most or all of them through.
Delta itself is in the strongest position to survive or any US airline - by far. For the reasons that you've stated. And they are the most well managed of the big 3 US airlines.
When it comes to the international investments that Delta has made (versus AA), I think that this goes back to the early days of alliances, when American was very clever to strike deals and build relationships with many of...
Delta itself is in the strongest position to survive or any US airline - by far. For the reasons that you've stated. And they are the most well managed of the big 3 US airlines.
When it comes to the international investments that Delta has made (versus AA), I think that this goes back to the early days of alliances, when American was very clever to strike deals and build relationships with many of the very best airlines in the world. On the other hand, Delta was very late to that party and SkyTeam basically was left with the crumbs. Which is not to say that they're all "crumbs" as AF and KLM are quite venerable. But not as solid as BA or LH.
Because of these long-term alliances/relationships, DL has had to make do with airlines that are often second best. When they can steal one away (like LATAM), they do. Otherwise, they've made the most of their partnerships and investments - often providing a seamless travel experience. And they have done wonders with this strategy, at least until now.
Delta has been a leader and will continue to do so. The current period is rough and I don't dare predict what will happen. But I have a feeling that, when this is over, Delta will be still be performing the best of our big 3.
I also think that AA might be in a better position domestically / in the Americas. DL has a lot of old planes, true, but they have a lot of big new planes that will fly empty or on unprofitable routes as global air travel will take years to recover. AA's strong North and South American network will allow it to move traffic and they can use MAX/NEO aircraft to do it for a time...
I also think that AA might be in a better position domestically / in the Americas. DL has a lot of old planes, true, but they have a lot of big new planes that will fly empty or on unprofitable routes as global air travel will take years to recover. AA's strong North and South American network will allow it to move traffic and they can use MAX/NEO aircraft to do it for a time until traffic picks up. AA hits the major global cities and some key season spots, but allows IAG/JAL/China Southern/QA do move beyond these cities as do these carriers. I think OneWorld might be in the best shape and should be able to come back faster than the others.
Personally. . .UA is going to be in the worst shape, then DL.
And let's be real here. . .DL planes are also NOT more roomy and in better shape. They have been densifying for years and they too have small bathrooms. I also wonder if IFE screen will start to become a negative. I don't know who touched it, was it cleaned, etc. . . Right now I much rather have my own device.
It will be interesting to see how it plays out, but I think DL will need to retrench in BOS and SEA and shore up their hub cities. I think the fear of global travel will hurt them and UA more than AA.
I believe that while Delta will remain strong domestically, their international operations are going to be hit harder than their peers. If Virgin Atlantic and Australia collapse, American and United will keep strong transatlantic and transpacific partners while Delta will be on their own. It all depends on how much money Delta is willing to inject into their partners, but with their own financial situation, I would guess that it wouldn’t be a large amount.
I think Delta's partners will be ok. Richard Branson does not want Virgin to die.
I am sure AeroMexico will be alright. They are the only long haul airline of Mexico. Most concerning is Delta's stake in LANTAM as the company is a conglomerate of nations, which each do not have significant financial resources and do not want to fund the multinational consortium.
I am confident that Delta will fair well in this...
I think Delta's partners will be ok. Richard Branson does not want Virgin to die.
I am sure AeroMexico will be alright. They are the only long haul airline of Mexico. Most concerning is Delta's stake in LANTAM as the company is a conglomerate of nations, which each do not have significant financial resources and do not want to fund the multinational consortium.
I am confident that Delta will fair well in this crisis, and it will be interesting to see which planes they retire, I suspect the MD's will be retired first.
Which Delta hubs do you think will see a reduction in service? I am thinking Cincinnati and Raleigh, possibly Seattle.
@Adam
I don’t think Virgin Atlantic ceasing would be a huge loss. On Long Haul from LGW and LHR there’s already heaps of other carriers that fly the same routes while on Domestic and Short Haul their non existent since BA, Ryanair and Easyjet already have it covered.
I still think they are well positioned.
I'm expecting that LATAM, Korean Air and Aeromexico will be considered national champions by their governments and will get some sort of assistance. That will ultimately benefit Delta.
I'm less certain of Virgin Australia/Atlantic but I ultimately expect some help to be provided some sort of relief since letting either go under would leave the other competitor (Quantas, BA) with essentially a monopoly and the Gov wouldn't...
I still think they are well positioned.
I'm expecting that LATAM, Korean Air and Aeromexico will be considered national champions by their governments and will get some sort of assistance. That will ultimately benefit Delta.
I'm less certain of Virgin Australia/Atlantic but I ultimately expect some help to be provided some sort of relief since letting either go under would leave the other competitor (Quantas, BA) with essentially a monopoly and the Gov wouldn't want that to happen. That doesnt mean they wouldn't be weakened enough to effectively compete.
While Delta would certainly welcome the profits from those investments, I think the purpose of their investments were more to ensure feed and profits for Delta first and if the majority of them make it through, they would still achieve this for Delta.
When you have to pay for your friends, you never know who will be there for you when you run out of money...
Incredible how Delta succeed to avoid purchasing Boeing 787 series and 737 MAX.
I've honestly been asking myself this same thing myself. I'm so curious to read the comments on what everyone else makes of this.
I think it's obvious that Delta would have invested in "better" airlines if they could (as evidenced by stealing LATAM from AA, and a few years back trying to steal JAL too). But they were nowhere near as powerful as they are now back when the global alliance structures were getting set up, and so by the time they got this strategy going, they had to work with what was left. I think that's probably still better than not having tried at all, but I guess we'll see.
Korean Air I reckon will get some sort of Government support from Seoul.
The company Delta keeps from an international perspective is sketchy at best. When you add in Alitalia, it's even worse.
I'd love to understand where Delta's profits come from. ATL, along with MSP, DTW, and SLC must be hugely profitable and carry a lot for them. I imagine SEA, LAX, NYC, and their focus cities are general loss makers.
That's a very well thought out blog and you bring up some great points. However, you bring up some other things to consider like how is Qantas and BA not asking for bailouts while the US3 are asking for the WHOLE BANK? How is that even possible?