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  • Delta Air Lines Flies High With Strong Cash Flows And Substantial Cash Balance [View article]
    Harm Elderman, any stats to back that up?
    Mar 28, 2015. 12:27 PM | Likes Like |Link to Comment
  • Can Lower Airfares Help Virgin America Soar? [View article]
    Feria, Good article. Let me comment of your observation that lowered prices would work for VA. Of the 4 largest traded LCCs (LUV, SAVE, JBLU and VA), VA has the lowest after tax profit rate, even given the years of losses so far. With a profit after tax rate of just over 4% and the others LUV at 6.1%, JBLU at 6.9% and SAVE at 11.7%, discounting, using the current model, is suicide. So you drop ticket prices 4% and you make nothing. With a 79.2% load factor, they may get some extra passengers, but you have to put 4 extra passengers per plane on just to absorb a 4% decline. Their load factor is not that bad.

    Based on these kinds of statistics, when combined with strategies, I put VA at the bottom of my airline investment list. They have a lot of competition in most of their markets, which they manage well. The 13 flights a day out of Dallas, mostly contested, are barely material to their overall performance, so anything they do there is not likely to have a material impact on earnings.
    Mar 27, 2015. 02:56 PM | 1 Like Like |Link to Comment
  • Delta Air Lines Flies High With Strong Cash Flows And Substantial Cash Balance [View article]
    Valens, I generally agree with your analysis. The two areas I am concerned about is (1) the impact of the 5 years of North Dakota oil they committed to last summer when oil was at much higher prices, and (2) Fleet age, among the highest in the industry, which is not on the financial part of the balance sheet. With current backlogs at 3-5 years at Airbus and Boeing, Delta will have to place mega-orders for planes in the next few years. American is digesting the replacement of 350 MD-80s with 727s and 320s in a buy that is around $25-30 billion. The numbers in the industry are big and will stay that way.

    Each of these can have an impact on the assets of the company, though the current cash flow is so high that it hides the impact of those factors, a replacement of a few hundred planes will take a lot of cash.
    Mar 27, 2015. 02:07 PM | 2 Likes Like |Link to Comment
  • Barron's 400 rebalance adds/drops multiple names [View news story]
    dhturk, Almost $43 billion dollars of airline purchases last year disagree with your singular opinion. I don't think that you realize that they are not the old American and will have the youngest fleet of any of the big 4 airlines this year.
    Mar 25, 2015. 03:45 PM | Likes Like |Link to Comment
  • U.S. airlines fares rise in February [View news story]
    IndyPEG, am doing analysis that adds bag fees and denser seating. If JBLU can capture these fees, they are highly undervalued. Consensus earnings put them at 10-12X 2015 earnings, and more to come from growth this year.

    Southwest is in a holding pattern, at 13-14X 2015 earnings, it is waiting for more planes and the Hobby expansion to get finished later this year. Till then, they are going to be a bit flat by only redirecting flights through Dallas, no big improvement to earnings.
    Mar 24, 2015. 09:19 PM | Likes Like |Link to Comment
  • Even as oil prices plunge, airfares stay high in U.S. "uncompetitive oligopoly" [View news story]
    This article represents the customer and it is clear that Andrew Ross Sorkin is NOT aware of airline economics and would rather see a continued chain of bankruptcies in an economically unviable industry just so that he can get lowered airfares.

    Message to Andrew Ross Sorkin: Look at the piles of debt the industry has amassed buying new planes and tell us how they are going to pay that off. Look at the production schedules at the major aircraft manufacturers and you will find that they can't make the planes fast enough. Look at the US safety record. Look at the ability of new airlines like Spirit to thrive and grow in today's market. Look at the competition and options between New York and Florida and California. Look at the labor relations is the industry, the best in decades. Look at todays prices vs. 15 years ago, you are still doing well.

    I am sorry you can't get tickets as cheaply as you would like, but the overall health of the industry is getting better and that will be good for investors and customers.
    Mar 24, 2015. 09:10 PM | 6 Likes Like |Link to Comment
  • U.S. airlines fares rise in February [View news story]
    Cant wait to see the 1Q earnings.
    Mar 24, 2015. 09:55 AM | 2 Likes Like |Link to Comment
  • Barron's 400 rebalance adds/drops multiple names [View news story]
    I just checked the Barrons 400 balanced fund and it is only worth $219 million. Since stocks are "balanced" in the fund each has about 1/4% investment, or should be about a $500-600K investment in each stock. There are a lot of individuals on this thread that probable own a whole lot more in those stocks than that.

    The net impact on these stocks is almost immaterial.
    Mar 23, 2015. 05:08 PM | 2 Likes Like |Link to Comment
  • Lufthansa operations more or less resume [View news story]
    Looks like American Airlines all over again. When the union demands are out of line with any possible long term strategy, they will blame management and ask for more. With Ryanair and other moving transatlantic in a few years, the legacy European airlines are all in jeopardy.
    Mar 22, 2015. 04:27 PM | Likes Like |Link to Comment
  • Handicapping the Seattle airline battle [View news story]
    vasukiv, While Atmosphere didn't supply, yes there is market data. Delta has 84 departures today and Alaska has 280 departures. Delta will have 120 by next summer. http://usat.ly/1xfC4g6

    As for the threat, check the USA Today coverage of the airport expansion http://usat.ly/1xfC4g6

    With a Delta simple move to nearly half of ALKs business at Seatac and terminal expansion coming, this is a real issue, not a mere supposition.

    One good thing is that ALK has among the highest profitability of any airline, which will protect it for a while.
    Mar 18, 2015. 05:18 PM | Likes Like |Link to Comment
  • Virgin America hit by negative Credit Suisse note [View news story]
    LongShort345, I suggest you look past the P/E to look at profitability. Of the non-network carriers that compete in its market, VA has the lowest profitability at 1% TTM as compared to 4% for Southwest, 6% for JetBlue, 11% for Alaska and 12% for Spirit. Why is profitability important? It is an indicator of the flexibility an airline has in lowering fares or responding to competitive attacks by others. VA has a small fleet, is growth limited due to few aircraft deliveries and its limited market footprint. As a result, it has limited options making it competitively vulnerable.
    Mar 18, 2015. 05:00 PM | Likes Like |Link to Comment
  • Handicapping the Seattle airline battle [View news story]
    With a broader frequent flyer base, Delta will take business away from Alaska. This move is a small deal for Delta but a big deal for ALK.
    Mar 18, 2015. 11:13 AM | Likes Like |Link to Comment
  • Why Spirit Airlines Is A Great Buy [View article]
    Ngwaiyeong, every time I quote the fare statistic, I am reminded that 40% of their revenues are ancillary fees.
    Mar 18, 2015. 10:54 AM | Likes Like |Link to Comment
  • Virgin America hit by negative Credit Suisse note [View news story]
    Too few planes and too many thin markets with stiff competition for VA. I consider VA a buyout candidate for the right price, but with a market cap of $1.5B, it might be pricey. Possible buyers would be ALK or JBLU.
    Mar 18, 2015. 10:50 AM | Likes Like |Link to Comment
  • Why Spirit Airlines Is A Great Buy [View article]
    Good article! One note is that before the current rush of aircraft deliveries, Spirit had near zero debt. It is only recenty that they have taken on more debt, since cash flow covered non-capitalized aircraft rentals until now. With high margins and low legacy costs and a rental vs. lease strategy, Spirit will not incur high debt levels as its competitors while maintaining flexibility in its fleet.
    Mar 17, 2015. 09:06 AM | Likes Like |Link to Comment
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