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  • Why American Airlines Needs $5 Billion In Buybacks This Year  [View article]
    my comment was about his worth, not forecasting ability.

    However, you bring up a goods point that even with his failures he has succeeded well. I am sure we have all picked stocks that went down, but recovered from those decisions.
    Feb 12, 2016. 04:12 PM | Likes Like |Link to Comment
  • Why American Airlines Needs $5 Billion In Buybacks This Year  [View article]
    I enjoy palm reading and tarot cards too. Charts will influence some buyers and sellers, but most don't predict with certainty.

    I take in all information from all sources. If we both knew now, with certainty, what we will know in a few quarters, we would both be Donald Trump :)
    Feb 12, 2016. 03:30 PM | Likes Like |Link to Comment
  • American Airlines Group: Do Fundamentals Matter Anymore?  [View article]
    exit11, in case you haven't been watching, RT fares have increased by $6 this year (Jan 17, 2016) while the airlines are experiencing lowered fuel prices and record profits. If that does not sound like much consider that about 800 million passengers board planes per year.

    A second fare increase (Feb 5, 2016)was adopted by all the major airlines, but was rescinded when United reversed its initial matching of the second increase.

    The consolidated industry has a lot more pricing power, like never before. The past is the past. Load factors are up strongly this year, with most up 1-2 points over the same month last year. There is no evidence of consumer rejection of higher prices. Remember that air passenger demographics are not the average population and are not affected as much as the general population when recession hits.

    Also remember that there are no "desperate" airlines today to dump seats on the market below cost, and that without Part 121 certificates, there will be no new scheduled airlines in the foreseeable future.
    Feb 12, 2016. 03:08 PM | Likes Like |Link to Comment
  • American Airlines Group: Do Fundamentals Matter Anymore?  [View article]
    Tim, I am looking for some real insight in your opinions and comments.

    Yes, "true": hedges are disclosed, but you don't explain where the high level of reserves are coming from. $2.5 billion magically materialized on Delta's books? Time for another reality check. Maybe a better explanation in the upcoming annual report. I am sure the execs are negotiating with the auditors how to present this whopping mistake.

    Likewise, Southwest has also taken a hit on hedges.Their reserve as of 12/31/15 is $1.05 billion. Their presentation better discloses long term contracts.

    I wish you would cite your sources on the statistics as Delta just reported a January systemwide load factor of 81.3%, 2.1 points higher than 2016. Southwest reported 77.5%, 2.3 points higher than 2015. American reported 79.7%, 1.5 points ahead of 2015

    American embracing harmful strategies? I think you have stretched way too far! I need more fact based explanation on that.

    With American's GAAP earnings at $7 billion, vs. Delta's GAAP of $7.2 billion and Southwest's $2.2 billion, its hard to agree with your point.

    American will have reduced integration expenses going forward which will make them more profitable moving forward.
    Feb 12, 2016. 12:41 PM | Likes Like |Link to Comment
  • Why American Airlines Needs $5 Billion In Buybacks This Year  [View article]
    You say that buybacks would tank the profitability of AAL? How? Bad theory. You have to do better than that if you want to bash American. You even got two people to like your erroneous comment!
    Feb 12, 2016. 11:52 AM | 1 Like Like |Link to Comment
  • Why American Airlines Needs $5 Billion In Buybacks This Year  [View article]
    DayTrader52, keep drawing those lines! The lines you drew takes American to between 1 and 2 times earnings and less than pre investment cash flow. The market is discounting the kitchen sink, while ticket sales and loading are just clipping along normally, so far. The industry just reported record earnings and forecast first quarter margins to keep doing so.

    As for buybacks, its all relative. Would you be paying down that 3.6% secured debt or giving your shareholders an effective rate of return between 15-20%? Americans dividends are a whopping 2.5% of their earnings and 1% of their pre-investment cash flow. So would you increase taxable dividends, or give your shareholders the return in the upper teens?

    Investor fear is at a high right now and, based on history, airlines are the most feared industry, but, if managed correctly, can be the most profitable industry to invest in. Investors have to go both ways on the stocks and take advantage of misplacing by the market.
    Feb 12, 2016. 11:49 AM | Likes Like |Link to Comment
  • American Airlines Group: Do Fundamentals Matter Anymore?  [View article]
    Tim, I don't think you support your statement of what information investors rely upon, because there are different levels of understanding companies and their markets. Successful investors go past the company information.

    You suggest it is free to get out of hedging or that oil sellers with advantageous contracts will simply let Delta out of its agreements. I think you need a reality check!

    You miss the point I am making about Delta, as they say they are winding down hedging, they just wrote off another half billion dollars. There is an elephant there that is not adequately discussed. If you were an exec that signed a five year agreement that went bad, would you want that advertised? Note that Richard Anderson suddenly stepped down last week. He was a big proponent of buying the Trainer refinery which led to the signing of the long term supply agreement. Delta officially announces the success of the refining operations while writing off the losses on the oil. Hmmm... $300 million in profits and $2.5 billion reserve? Reality check time again!

    By taking the losses below the line, it has the effect of increasing operating margins for Delta. By applying the reserve to actual fuel expenses, Delta achieves the price similar to American, it's just an accounting gimmick that tends to hide bad decisions.

    As for regional difference in margins, they exist. There are many routes that the airlines fly that have low margins, but feed passengers into hubs where they make more money. Small cities also subsidize airline service, rather than have no service. The airlines give little insight into regional profitability within the US.

    As for company guidance, a site like this needs to Have comments that look past company info, otherwise you will be only investing based on the sugar coated information the company gives you. Since Delta's results are audited, they have been questioned about the handling of the reserves. The annual report should be out soon and will have more detail, maybe even a full disclosure of what happened.

    What most posters on here do not account for is an industry that has significantly consolidated to 5 airlines with over 200 planes, and an industry where is difficult for any of the others to ever get to 200, so, except for fringe strategy airlines like Allegiant, Spirit and Frontier, nobody is coming in with any real competition. There has been only one part 121 certificate issued in the last 10 years and that airline has only 3 planes used for charter. 10 years ago, there were about 10 scheduled airlines, many poorly financed, that competed only on price. Empty seats were discounted to below average cost just to generate cash flow. None of the top 5 airlines see price only competition as a winning strategy anymore. None of the top 5 are so poorly financed that they dump seats anymore. Pricing integrity is more solid than ever before, so all the pundits here that are forecasting big declines are doing so based on the dynamics of an industry that does not exist anymore.

    As for 1q operating margins, the first quarter is the worst quarter in the year. Historically, No major holidays, a low vacation rate and a lot of planes grounded during this period. Comparisons of q1 to full year 2015 mean little.

    Only looking at RASM, without recognizing the highly inflated margins will drive you crazy! I don't think you have a long term historical perspective of what margins were 3 years ago, these are excellent. There is no single metric that explains the industry or individual airlines. Nobody is discounting in an effort to oust competition as was common 10 years ago. Nobody is dumping seats and resetting customer expectations on pricing.

    Airlines had no problem raising fares as fuel prices increased in the 2010-2014 period, so your statement about inability to pass on fuel costs has no foundation. For sure there will be commodity spikes in the future, but the ability for the airlines to pass on costs at the current time is clear.

    I still don't know why you are so focused on the loss carry forwards. They are adequately disclosed. What's your point? There is no coverup and analysts consider their expiration in future after tax earnings. You keep repeating the issue as if it is going to sink the industry.

    If you are worried about risk, don't invest in airlines. If you want exceptional returns, you have to accept some risk.
    Feb 12, 2016. 09:24 AM | 1 Like Like |Link to Comment
  • Reuters: U.S. refineries' windfall from cheap crude running out of steam  [View news story]
    The Monroe facility in Pennsylvania is the Trainer facility owned by Delta Airlines that produces aviation fuel. The lower mix of spot oil means that the higher cost crude from North Dakota will have the effect of increasing output costs.
    Feb 11, 2016. 03:58 PM | Likes Like |Link to Comment
  • Boeing -9% but at least one analyst still says buy  [View news story]
    ajaxnotwimp, the real question is whether the market has already monetized Boeing's backlog in the current stock price. Up or down from here may be the next order or lack of orders.
    Feb 11, 2016. 03:29 PM | 2 Likes Like |Link to Comment
  • American Airlines Group: Do Fundamentals Matter Anymore?  [View article]
    ctravelusa, I am still waiting for you to take a short position to back what you say! Or are you so afraid you are wrong?
    Feb 11, 2016. 12:13 PM | Likes Like |Link to Comment
  • American Airlines Group: Do Fundamentals Matter Anymore?  [View article]
    As mentioned above, by my estimation, Delta's write offs on fuel will end with the expiration of the 5 year fuel supply contract in July 2019.

    When you look at margins, American is close to Delta with lower prices. That has a long term strategic implication.

    As for prices, Delta has big presence in unchallenged hubs. The ULCCs are moving in on American and United but, so far, not as much for Delta's hubs. That is and will change. Spirit is swarming Atlanta as we speak.

    You focus on CASM a lot. Since the planes cost they mostly use are the same, plane costs are close, seat layouts are fairly standardized, major contracts are close on costs and maintenance may vary some by fleet age, hedging losses are below the line, the result will be similar costs, yes!

    From an accounting sense, Delta is just charging taxes to the $8 billion NOL they wrote onto the books in December 2013. American just reported the same event as it wrote NOLs back on the books in December 2015. I am sorry if that makes you do more calculations.
    Feb 11, 2016. 12:10 PM | 1 Like Like |Link to Comment
  • American Airlines Group: Do Fundamentals Matter Anymore?  [View article]
    Tim Dunn, You are too focused on the revenue number, while margins are skyrocketing. I don't think you realize the magnitude of costs that have come out of fuel that have enabled lower prices while profitability increases. The reductions are a small portion of the cost savings including fuel.

    The Delta fuel info comes from a bunch of research I did a year ago. They signed a 5 year supply deal for 65,000 barrels per day of North Dakota oil to feed Trainer in July 2014 when prices were near $90. They never published details of the contract, except that the $2.5 billion in reserves tracks with the losses that would have been generated by a contract of that size. Delta does not clearly differentiate and what it considers a hedge vs. a long term delivery contract, so when they are up to $2.5 billion in hedging reserves, there are big things happening, right now about a $60 per barrel loss, or about $3.8 million per day. Do the math, but by my calculations, Delta still has a giant exposure if prices stay down or go down further. The other airlines have only a small percentage of hedges, so that is not really a material issue.

    As for the issues, the NOL carry forwards only apply to the airlines that went bankrupt, restructured, then are now able to use NOLs that were previously written off. Delta and American are beneficiaries of this. A simple analysis backs out the NOLs and you now have comparability. I don't understand why you have an issue if the comparability is that simple. Just use pretax earnings if you have to.

    This industry does publish a lot of information, but not enough. I stopped buying Delta when I calculated the numbers.

    You suggest that airlines would not pass on fuel increases if/when that happens? Evidence? Are you advocating suicidal activity on the part of the airlines? Regardless of the DOJ, there is no reason for any member of the airline group to accept losses due to increased cost. There is no evidence of collapsing margins at this time. Forward bookings, at current reports from the airlines, seem to be holding at the current level, so load factors look stable.
    Feb 11, 2016. 11:53 AM | 1 Like Like |Link to Comment
  • West Coast Troubles At JetBlue?  [View article]
    thjtax, your comment on LAX, is there a slot or gate shortage there?
    Feb 11, 2016. 11:20 AM | Likes Like |Link to Comment
  • Why American Airlines Needs $5 Billion In Buybacks This Year  [View article]
    goldbaum, with all airline and all indices down around 15%, down who meets your test of a good stock? Or do you just prefer to continue bash American?

    You never answered my question of why you have so much interest in American if you sold out?
    Feb 11, 2016. 11:19 AM | Likes Like |Link to Comment
  • Why American Airlines Needs $5 Billion In Buybacks This Year  [View article]
    Bill brown, You say "NO ONE among the professional analyst community has stepped forward to offer a full-throated but conviction on the stock"

    YOU ARE TOTALLY AND RECKLESSLY WRONG! A 20 second google search yields a half dozen current buy recommendations on AAL. Even the services that survey recommendations have a composite buy recommendation! Where did you miss all this?
    Feb 11, 2016. 11:07 AM | 1 Like Like |Link to Comment