Delta/NWA merge effect on Pinnacle?
- Thread starter GlenWimpy
- Start date
Maximilian_Jenius
Super User
...not sure bout PNCL. bUT, I think that maybe RAH might buy Compass!
We all know it was created just to be sold anyways!
We all know it was created just to be sold anyways!
surreal1221
Well-Known Member
Where are PNCL's bases again?
DTW, MSP and MEM?
I think it'll end up in a base consolidation. Someone correct me if I'm wrong, but MSP and DTW are also NWA hubs, so I would imagine that MEM would be the first base to go.
Now, which ones they consolidate. . .who knows right now, but I'm willing to say that it'll be MEM before DTW or MSP.
I just hope ASA hasn't hired too many FOs. Same for PNCL.
DTW, MSP and MEM?
I think it'll end up in a base consolidation. Someone correct me if I'm wrong, but MSP and DTW are also NWA hubs, so I would imagine that MEM would be the first base to go.
Now, which ones they consolidate. . .who knows right now, but I'm willing to say that it'll be MEM before DTW or MSP.
I just hope ASA hasn't hired too many FOs. Same for PNCL.
OldTownPilot
Well-Known Member
You'd be at the mercy of the contract both before and after the merger. In reality who knows, your 8 ball is probably the most accurate answer out there.
If I remember all the -900s are owned by DL and all the -200s are owned by NWA. Those could all be transfered rather easily.
If I remember all the -900s are owned by DL and all the -200s are owned by NWA. Those could all be transfered rather easily.
Maximilian_Jenius
Super User
BUZZZZ...
The 900's at PNCL are owned (bought and paid for) by PNCL. Delta told them is they wanted a part of the DCI pie, they'd have to pay for their own jets!
taildragger173
Well-Known Member
PNCL will most likely do quite well with the merger. Their operation and resources would be spread out through out and around the new DL system. You might end up seeing new bases open.
WalterSobchak
Well-Known Member
Can't be sold under the current contract. Look at Us Air I don't think one will come too quickly after the merger. Both flow through's were intact for CZ and XJ under the previous talks. The NWA pilots like the flow back protection.
Polar742
All the responsibility none of the authority
As someone walking away from this arena, here's my take.
The downline influence will be the airline who's "express" or "connection" philosiphy survives.
First thing, though, is it will be an opportunity to "right-size", as the press release will say, the "regional jet portfolio".
Then, knowing that all the regionals live hand-to-mouth like the rest of the airlines, they will announce an RFP for the remaining flying. Although the outcome will be pre-decided, there will be a good show for the investors.
The winning regionals will be initially signed to keep all their capacity, and over time upgrading to larger aircraft that the competitors were operating.
There will probably be an additional RFP for more T-Prop flying as the mainline will be "concerned about our carbon footprint, and in order to provide a more 'green' service, we will use new generation turboprop aircraft on certain feeder routes. These new generation turboprops will use less fuel and emit less greenhouse gases than a comperable jet-powered feeder aircraft. Also, the new turboprops will add enhancements to the passenger cabin such as noise cancelling and roomy overhead bins. Proven to be just as safe as a jet, these new aircraft will be an exciting addition to our regional partner's fleet."
About 7-10 years after that and the 50 seaters have gone to the boneyard and turned into beercans, the bean counters will "discover" a large dearth of capacity in markets that could really use 50 jet service.
The downline influence will be the airline who's "express" or "connection" philosiphy survives.
First thing, though, is it will be an opportunity to "right-size", as the press release will say, the "regional jet portfolio".
Then, knowing that all the regionals live hand-to-mouth like the rest of the airlines, they will announce an RFP for the remaining flying. Although the outcome will be pre-decided, there will be a good show for the investors.
The winning regionals will be initially signed to keep all their capacity, and over time upgrading to larger aircraft that the competitors were operating.
There will probably be an additional RFP for more T-Prop flying as the mainline will be "concerned about our carbon footprint, and in order to provide a more 'green' service, we will use new generation turboprop aircraft on certain feeder routes. These new generation turboprops will use less fuel and emit less greenhouse gases than a comperable jet-powered feeder aircraft. Also, the new turboprops will add enhancements to the passenger cabin such as noise cancelling and roomy overhead bins. Proven to be just as safe as a jet, these new aircraft will be an exciting addition to our regional partner's fleet."
About 7-10 years after that and the 50 seaters have gone to the boneyard and turned into beercans, the bean counters will "discover" a large dearth of capacity in markets that could really use 50 jet service.
SlumTodd_Millionaire
Most Hated Member
Pinnacle's contracts with NWA and DAL are pretty tight. Even in the case of a merger, the surviving carrier will still be beholden to the agreements unless Pinnacle management agrees to re-negotiate them for some reason. I'm not sure how the other DCI carriers' contracts are written, though.
Polar742
All the responsibility none of the authority
Everyone's contracts are pretty tight. That's why they pay lawyers. There's ALWAYS an out. ALWAYS. Most have a change of control clause, a performance clause, and even in some cases, a served notice clause.
Not that I've seen it before or anything.
Maximilian_Jenius
Super User
Hahaha...ask Mesa about that!
Everyone's contracts are pretty tight. That's why they pay lawyers. There's ALWAYS an out. ALWAYS. Most have a change of control clause, a performance clause, and even in some cases, a served notice clause.
Not that I've seen it before or anything.
:yeahthat:
SlumTodd_Millionaire
Most Hated Member
Everyone's contracts are pretty tight. That's why they pay lawyers. There's ALWAYS an out. ALWAYS. Most have a change of control clause, a performance clause, and even in some cases, a served notice clause.
Not that I've seen it before or anything.
The only thing in the CPA with DAL is a performance clause, and I don't think that takes effect until they're flying all 16 airframes. Trust me, the agreement is safe in the case of a merger.
BobDDuck
Island Bus Driver
Having just been through a merger as a regional feed carrier, nothing is safe during the process. Legal or not, they can toss a contract if they want to.
SlumTodd_Millionaire
Most Hated Member
CPAs are not all equal. Some provide merger protections, some don't. The Pinnacle agreements provide merger protections. They can't just "toss them if they want."
kellwolf
Piece of Trash
Thing PCL has going for it is the contracts with NWA and Delta are both less than two years old. I could probably weasle some more info about the ASA for both carriers, but odds are whoever told me would be violating a non-disclosure agreement. You shoulda seen the tap dancing our instructor had to do the other day just to explain how PCL gets paid by NWA to keep from violating the agreement he signed when he was on the negotiating team.
The honest answer to the original question is......who knows? With PCL's performance in the tank and contract negotiations going nowhere, we could very well be shipped to Mesa-ville. Then again, our costs are so low, and we're the only regional that flies for both already, we might do well. It's a crap shoot. After hearing some of the vague details on how PCL gets paid by NWA, I have a VERY sneaky suscpicion that NWA has a hand in the slow negotiations. The merger might actually serve to speed up OUR contract. Who knows?
The honest answer to the original question is......who knows? With PCL's performance in the tank and contract negotiations going nowhere, we could very well be shipped to Mesa-ville. Then again, our costs are so low, and we're the only regional that flies for both already, we might do well. It's a crap shoot. After hearing some of the vague details on how PCL gets paid by NWA, I have a VERY sneaky suscpicion that NWA has a hand in the slow negotiations. The merger might actually serve to speed up OUR contract. Who knows?
Polar742
All the responsibility none of the authority
PNCL is publicly traded. The agreement should be on file with the SEC. I looked and couldn't find it, but if you know about the time of the Dl press release, the DL agreement should be available. I know Express I was acquired by NWA prior to becoming PNCL and being spun public. The NWA agreement should be with the IPO documents.
With, or without, all this speculation, there has to be congressional approval of the merger, then the upper deck gets restacked, then the chips will start falling.
I'll put my money on Q1 or Q2 '09, if the merger is approved, before the truffle shuffle at the commuters begins.
SlumTodd_Millionaire
Most Hated Member
Capacity purchase agreements (CPAs) and air service agreements (ASAs) are not required to be disclosed to investors. They are considered confidential documents that are not released to the public. Only the Board of Directors and the union leadership/negotiating committee get any details on these agreements. Even those of us on the MEC only got parts of the agreement. We've never seen the entire document.
Kell, is JB teaching ground school now?
kellwolf
Piece of Trash
General terms are available, but I don't think the "nuts and bolts" are available.
I found a few details, and the merger clause is actually pretty good. If NWA merges with another carrier, they could remove the 17 planes they gave is when the ASA was signed (no great loss.....they're already going to Mesaba) plus another 24. Except now they really can't. See, according to the ASA, after NWA emerged from bankruptcy, they lost that ability. It was a clause in there to keep us from having the rug totally yanked out from under us if someone bought NWA for pennies on the dollar when they were in bankruptcy. Now that they've emerged, that clause that allows them to pull the 24 planes is void.
Another thing the article says is that some performance formulas were re-written in NWA's favor. Now, THAT could be their "out" when it comes down to it. No doubt, the pilots will get the blame if that happens. "Those greedy pilots could have stopped this if they had just settled for our mediocre.....er, industry....standard, yeah, that's it....contract." They already love to point the finger at us for "losing" the 17 airplanes, the 76 seaters and another contract with another airline. Well, the 17 planes and the 76 seaters were probably going to Mesaba anyway, and WHAT other contract?
If you read between the lines in the article, you can sorta see how PCL gets their $$$ from NWA.
Translation: as long as what NWA is charged is more or less average for what other carriers charge, they can pay it. What that means to me is if the pilots straight up voted an industry average contract.....PCL's operating expense would increase ZERO. Why? The cost would get funneled to NWA since it was still be on par with industry average. Oh, yeah. NWA also pays for fuel. Then there's this:
So, basically, NWA pays Pinnacle cost + 8.0%. Now, the kicker is the performance issues. If we don't meet performance targets, we have to pay penalities. That could erase that 8% pretty quickly, which is why our stock is in the toilet right now. But, assuming we meet all performance targets with NWA, it's almost a guaranteed 8% profit margin. Seems to me they'd be willing to take a 1-2% hit on that 8% to get the pilots on their side to maximize the odds of hitting those targets. Instead, we're seeing performance fall b/c most guys are tired of doing everyone else's jobs to keep the operation running smoothly.....
NWA agreement runs until 2017, and it's currently for 124 airplanes (that's after taking out the 17 destined for Mesaba).
The Delta deal is also for 10 years for 16 airframes, but I can't find ANY details on that one.
PCL, yeah. JB is teaching upgrade.
I found a few details, and the merger clause is actually pretty good. If NWA merges with another carrier, they could remove the 17 planes they gave is when the ASA was signed (no great loss.....they're already going to Mesaba) plus another 24. Except now they really can't. See, according to the ASA, after NWA emerged from bankruptcy, they lost that ability. It was a clause in there to keep us from having the rug totally yanked out from under us if someone bought NWA for pennies on the dollar when they were in bankruptcy. Now that they've emerged, that clause that allows them to pull the 24 planes is void.
Another thing the article says is that some performance formulas were re-written in NWA's favor. Now, THAT could be their "out" when it comes down to it. No doubt, the pilots will get the blame if that happens. "Those greedy pilots could have stopped this if they had just settled for our mediocre.....er, industry....standard, yeah, that's it....contract." They already love to point the finger at us for "losing" the 17 airplanes, the 76 seaters and another contract with another airline. Well, the 17 planes and the 76 seaters were probably going to Mesaba anyway, and WHAT other contract?
If you read between the lines in the article, you can sorta see how PCL gets their $$$ from NWA.
Translation: as long as what NWA is charged is more or less average for what other carriers charge, they can pay it. What that means to me is if the pilots straight up voted an industry average contract.....PCL's operating expense would increase ZERO. Why? The cost would get funneled to NWA since it was still be on par with industry average. Oh, yeah. NWA also pays for fuel. Then there's this:
So, basically, NWA pays Pinnacle cost + 8.0%. Now, the kicker is the performance issues. If we don't meet performance targets, we have to pay penalities. That could erase that 8% pretty quickly, which is why our stock is in the toilet right now. But, assuming we meet all performance targets with NWA, it's almost a guaranteed 8% profit margin. Seems to me they'd be willing to take a 1-2% hit on that 8% to get the pilots on their side to maximize the odds of hitting those targets. Instead, we're seeing performance fall b/c most guys are tired of doing everyone else's jobs to keep the operation running smoothly.....
NWA agreement runs until 2017, and it's currently for 124 airplanes (that's after taking out the 17 destined for Mesaba).
The Delta deal is also for 10 years for 16 airframes, but I can't find ANY details on that one.
PCL, yeah. JB is teaching upgrade.
H46Bubba
Well-Known Member
Well there a provision to that. The 16 were part of Delta's order. So basically Delta said, " here you can have these 16, but you're making the payments. If Pinnacle defaults on the payments, or tries to use them to feed another airlines, the aircraft and payments are transitioned back over to Delta.BUZZZZ...
The 900's at PNCL are owned (bought and paid for) by PNCL. Delta told them is they wanted a part of the DCI pie, they'd have to pay for their own jets!