hokieincanecountry

No Room for Error at Air T

Hi Saj,

You claim that most of my points "were not relevant to the article. The airticle is about AIRT's revenue risks." I contend that all of my points dealt directly with "revenue risks," which you claim was the major thrust of your piece.

First, the Air Force has exercised each of its available options over the prior ten years. You are correct that the ten year period was covered by a four year contract and two three year options at the Air Force's sole option and not two five year contracts as I had stated, so; your comment is not relevant to my point!! The AF exercised each of its options--this was my point. These contracts with AIRT are "requirements type" contracts that don't specify any minimum level of orders; the AF is not obligated to place any orders whatsoever, but they have done business with AIRT for ten years now, exercising or extending each of its opportunities to do business with AIRT and have recently (four days before your piece was published) awarded a new contract.

My second point dealt with "revenue risk" on the FedEx contract. As I stated, FedEx has done business under this contract containing a "30 day cancellation clause" since 1980--nearly 30 years. Enough said.

My third point dealt with "revenue risk" regarding reported backlog levels, which you found a way to distort and mislead the reader in your piece by comparing March 31, 2009 vs. 2008 without analyzing the different timing of AF orders in the two years.

My fourth point dealt with "revenue risk" in the new Global Aviation Services (GAS) division. You attempted to mislead the reader by neglecting to tell how this operation was started and how it has grown profitably over the less-than-two years of its history. I believe that DAL will likely award additional work to GAS at some of its stations, to take advantage of the lower costs that the former NWA part of DAL is now enjoying. DAL needs to find many ways to reduce its costs.

Saj, deal with it!!

No Room for Error at Air T

Saj, your comments are weak and not responsive to the points made above!!

You should know that this is an internet blog and not a monthly business magazine with a cut-off date three and a half weeks before the date on its cover. You should "look around" before you push the "publish button" and not more than four days before doing so. If the "built in delay" for publishing is four days or more, then SA needs to get out of this business.

I believe that you have established a "template and matching headline" and then covered each of your supporting points using the most pessimistic of scenarios and thereby misleading the reader. 1. You don't point out that the Air Force has not failed to exercise its one year options for more than the last 10 years. 2. You don't point out that AIRT had done contract work for FedEx since 1980 with that same "30 day cancellation clause" in force. 3. In picking March 31 for backlog comparisons, you fail to recognize or acknowledge the change in timing of Air Force ordering for 2009 vs. 2008. 4. You distort the Global Aviation Services (GAS) division story; this operation only started in September 2007 with NWA as the launch customer. NWA previously had savaged its maintenance unions until they "whimpered like a young puppy, with its tail between its legs while wetting the rug." My point was that DAL will more likely outsource more of this work to GAS at certain stations than to take the former NWA work in house or award a contract to a competitor of GAS.

Saj, your analysis is biased, as you have selected only negative scenarios that probably have a low probability of occurence either individually or in concert.

Saj, IT'S TIME TO STAND AND DELIVER.!!!

No Room for Error at Air T

Saj, your analysis is both shallow and incompetent!!

You report (on July 17) that the 5-year Air Force contract expired last month (the second consecutive 5-year contract awarded to AIRT). What you fail to report is that on Monday, July 13 the Air Force awarded a new contract to AIRT (that carries a first year (of five) value based on BEQ's of $15.4 million). It is a contract that will become five years if the Air Force exercises all four one year options (which it has always done in the past).

You say that the March 31 backlog had declined, but you fail to report that the Air Force placed an order in early May for $11.5 million or to consider the different timing of Air Force ordering in 2009 versus 2008.

You point out that FedEx might cancel the air freight services contract, but you fail to tell the reader how long this contract has run. And, FedEx cannot perform these services more cost effectively in house (the unions would swarm). This contract is a great value for FedEx, and as long as AIRT continues providing this value and quality, the contract will go on and on.

You report that Delta (former NWA part) is the major customer for the Global Aviation Services division, but you fail to point out that NWA was the first (and major) contract that launched this division just about two years ago. You failed to report how AIRT has grown this business by adding both new customers and new stations. I will assure you that Delta cannot perform this work in house as cost effectively as can Global. And since the DAL maintenance staff is non-union, the end result may be that DAL will cost effectively outsource this work at some stations, and without dealing with any union bosses in the process.