let me compliment you on your polite behavior on this board. re "strong" demand
"strong" is a qualitative term, it is not a number. Parker could say that demand is "strong"
Does that mean that it is incorrect to say that demand has shown some signs of "softening" No.
Take the shareprice as an example. At $39, it is fair to say that the shareprice is "strong" in the manner that compared to a year ago ordec 2013 or jan 1 2014 it has moved up "strongly" reflecting the "strong" demand, and likewise compared to the major indices which are relatively much flatter in the respective time periods.
But then take a look at the shareprice vs the major averages since july 24. Clearly softer reflecting the softening demand. and the lowered guidance vs expectations. If any of the major's ceo's said "demand is weak", the stocks would be much lower.
So they say the demand is "strong" , but it LESS strong.
Speficially, AAL's official guidance for q3 was for a lower pretax margin in q3 than q2, and more recently in the aug8 release july traffic report, GUIDANCE for prasm for the 3Q , 1-3%, "strong" but not as strong as the slope of the recent past.
one also has to look at forward bookings and the affects we are seeing AS WELL as risks to further softening. I don't profess to know exactly what will happen, we will have to see, but clearly there are signs that a less euphoric phase is setting in.
bearsrun- no I am not short, AND I have not yet, nor am I telling or have any desire to influence people to sell their shares. Please do not tell lies & distort my communication.
Why do I post? a number of people on the board who have been in communication with me for many years , too many for me to answer individually. I answer their queries here in a composite manner.
TO ALL, can we agree to behave well and treat each other reasonably, fairly and generously?
Thanks airlineprofessor. I am one of those who gains a lot from your posts. There are a few whose posts interests me and I read them. Others whose posts reflect negativity and name calling, are waisting their time. God Bless airlineprofessor.
Hahaha..."Why do I post? a number of people on the board who have been in communication with me for many years , too many for me to answer individually" ...
Name one (that is not you). While your at it, tell the board about your "followers". That usually gets a pretty good laugh on all the other boards you shill on. C'mon Bernie, you can do it!
airlineprof. there are various reasons for the "softening" of pps since july 24. it cannot only be attributed to less "strong" Prasm and margins for upcoming Q3. while a factor to some (traders), there are plenty of shares being bought for long term holds. Longs knew this back in the spring, and now, that Q2 would have the highest margins and prasm, as this is a seasonal business and quarters eps always fluctuate depending which one it is. Q3 slwoing down growth is not a huge surprise. to look this short term, you must include other short-term factors like fuel, etc. Just want to throw in that i been saying street expectations for AAL have been too high too fast, while it took DAL years to get its act together.
wrgsh, This is where yoy does come into play. At least for a stock like AAL. being newly merged, it is important to comp the combined company vs the old 2 separate entities. This is what investors, at least myself, want to know. are the synergies working? how is the new management (old amr holder) doing. yoy appeals to both speculators (pre-merger who are selling off now and keeping pps low) and fundamental investors (now divy as well) who now see better yoy numbers and yoy predictions.
mark ... that's a good point about "being newly merged". I guess I was speaking too generally when I should have been looking at angles relating to AAL specifically.
That said, the fact that they are going to make in the $5.50 range is a "testimoney" to the YOY improvement of AMR and things working out. Last year when Parker said that in 2014 AMR would be accretive to LCC's 2013 eps, I was impressed. LCC made in the $5+ range. They really got the AMR side going YOY.
And another slant, I believe it was in one of the recent webcasts (or CC), Parker confirmed synergies of $1.5 billion with $.5 billion coming from costs. And the bulk was still to come. A good chunk of that is sitting in the 2015 eps estimates.
airline ... lower PRASM gains from one quarter to another doesn't necessarily mean business is softening. It's a YOY number. And the airlines said comps would become difficult, but business was still strong. Absent the 1% decrease in PRASM and margin guidance due to Venezuela (which was explained), fare increases, that went into effect in Q3 of 2013, weren't there in Q2 of 2013 ... YOY comps are tougher, but not necessarily because business has changed. Be careful getting wrapped up in a YOY number.
Share price is soft.
airline ... and I don't want to imply that fare increases from the prior year are the only thing that can have an effect without softer business being the cause. For example, the business leisure mix could have improved in Q3 2013. Having that same benefit this year and other things being equal would produce flat PRASM, but still strong business.
Easter can impact Q2 YOY PRASM ... has business changed? No, Easter did.
And to your point about the momentum in the stock being less. Well, last summer we were looking at a 2-3 PE ... now it is 7, but should still be higher ... what can I say? And going into 2015 there are synergies to increase earnings and now fuel is looking like a plus ... that 7 PE is going to shrink if the stock price doesn't get going.