They have only come down over the past month and even more in the past week. What are the fish seeing that I'm not? I thought with the credit card deal, cabin segmentation, new revenue management, and additional buybacks, 2017 EPS should be higher?
A few interesting points from CC:
- Management expects that they will have to pay cash taxes starting in 2019 or 2020
- Economy basic and premium is expected to be $1 billion / year
- No negative impact from Brexit in short term
A couple of years ago when LCC was grossly undervalued, Helane Becker asked Parker on a conference call if they would go private. Parker said something like, "it's safe to say we're always going to have equity." So I don't see it going private at least not in an amicable manner.
But they are not actually "paying" taxes, because the $417 million provision goes against the NOLs.
From the most recently quarterly report: "Beginning in the first quarter of 2016, we recorded income tax expense with an effective rate of approximately 38%, which is substantially non-cash as we utilized the NOLs described to offset cash income taxes due."