Delta stock set to crash... maybe

[Secret Squirrel]

http://seekingalpha.com/article/622701-bail-out-of-delta-before-the-stock-crashes

So this guy might be crying wolf a little. But what is the Delta pilot group giving up that is harder to get from the pilot group in bankruptcy, and what are they getting that is easy to take away? Playing with pension obligations is the beginning of the end for a lot of companies.

 

[waveflyer]

Yep...

At the very least delta's recent history should have you asking what loopholes are where

 

[redflyer65]

Wow. Doesn't paint a very good future for DL stock.

Cue the Genital/OYS and Scoot in 3...2...1.

I'm sure they will set this straight.

 

[pilotyip]

maybe covers it all, that way you can be right no matter what happens

 

[Secret Squirrel]

26 billion in debt. Any debt they are "paying off is in reality being shifted to unfounded pension obligation. Why do that? All their pensions are frozen right? How can they continue to fall behind?

 

[ultrarunner]

Ahhh....the gold ole' airline financial shell-game...there's a shocker...

But I'm sure someone on here will give it a good spin...

 

[jester757]

It will not matter, some other guy said the world is ending this year...

 

[igneousy2]

26 billion in debt. Any debt they are "paying off is in reality being shifted to unfounded pension obligation. Why do that? All their pensions are frozen right? How can they continue to fall behind?

Because they haven't been meeting their annual target for returns on their investments.

I'm not saying if this article has any merrit or not, but I wonder if this opens up the possibility of an AA/DAL deal.

Just sayin

 

[General Lee]

http://seekingalpha.com/article/622701-bail-out-of-delta-before-the-stock-crashes

So this guy might be crying wolf a little. But what is the Delta pilot group giving up that is harder to get from the pilot group in bankruptcy, and what are they getting that is easy to take away? Playing with pension obligations is the beginning of the end for a lot of companies.

Pension liability and actual debt are different things. The debt itself was at $18 billion in 2008, and will be $10 billion by next year, saving the company $500 million per year in interest. That's the actual debt side, which has been handled very well since 2008.

Pensions get paid out over time, not all at once. I think of it more like a mortgage, that you pay on over years. For example, I bought my Cobb County (AKA "Snob County") home last year for $840K. I put down $400K (my wife is an ad exec and does "real good"), but still OWE $480K. I got a really good interest rate for a 30 year loan, and it gets paid on time. As long as it gets paid, it's all good, and I'm always continually looking for a better rate, although I did great with that.

Now, stagnation at SWA may be a more pressing issue for people on this board. I do have another question though? How has the stock held up since this analyst posted this two weeks ago?


Bye Bye---General Lee

 

[kf4amu]

Pension liability becomes actual debt, especially when underfunded.

Then they go bankrupt and blame the pensions as the reason.