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US Airways Group, Inc. Message Board

iahphx 221 posts  |  Last Activity: Aug 4, 2016 2:41 PM Member since: Apr 2, 1998
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  • Reply to

    Earnings for next year

    by not_a_short Aug 4, 2016 11:51 AM
    iahphx iahphx Aug 4, 2016 2:41 PM Flag

    Sounds optimistic, but certainly possible. It truly is bizarre how the Street can ignore these huge profits quarter after quarter FOR YEARS.

  • Reply to

    Each share grows in value

    by not_a_short Aug 4, 2016 12:19 PM
    iahphx iahphx Aug 4, 2016 2:39 PM Flag

    I would like to see them double the dividend as they buy back the stock. With a doubled dividend, I'd actually WANT the stock to stay cheap for awhile as they buy back all the shares, since there'd be little opportunity cost in owning the shares.

  • Oil had a relief rally today, but the most interesting thing in the inventory numbers was the fact that Lower 48 oil production showed no week-over-week decline. We'll have to see if this holds, but it seems like a possibility given the increased rig count. If the trend holds, I wouldn't want to be long oil. Of course, that's on the fundamentals. Whether Wall Street would care about the fundamentals is always an open question.

  • It's kind of buried in this story Ted Reed did yesterday about whether LUV should charge bag fees (an interesting topic -- I don't know the correct answer), but Jamie Baker has noted that LUV matched an industry-wide $3 fare increase on Friday. This doesn't surprise me in the least, but Wall St. seems remarkably clueless about the very real pricing power the industry has these days. As I've repeatedly said, you can't expect fares to rise when costs (fuel) are in freefall, but they will rise when this tailwind abates. I would suggest that this is absurdly obvious, which makes the Street's worry about unit revenue (despite massive profitability) incredibly wrong.

  • Reply to

    Delta CEO on CNBC right now

    by jalopysrus Aug 2, 2016 4:35 PM
    iahphx iahphx Aug 3, 2016 10:50 AM Flag

    No question this is very bizarre. Wall Street would be correct in not basing a company's valuation on some sort of short-term "one off" profitability, but AAL's hyper profitability has now lasted 2 years -- and there's no sign of it ending! As I've mentioned on this board before, the value of my AAL shares has declined by about 25% due to massive p/e reduction ever since the company started "unexpectedly" minting money, buying back shares, paying a dividend, etc. This is simply insane and perhaps the worst investment "luck" imaginable. I'm OK since most of my shares were bought in the single digits back when AWA and LCC (the predecessor companies) were highly speculative investments, but jeez. This was the equivalent of investing in Bill Gates back when he was tinkering in his garage and making only a few pennies on the explosive growth of Microsoft. It sucks.

  • Reply to

    Delta CEO on CNBC right now

    by jalopysrus Aug 2, 2016 4:35 PM
    iahphx iahphx Aug 3, 2016 12:01 AM Flag

    It kind of boggles the mind that CNBC could send such an unqualified reporter/anchor to interview Hauenstein (couldn't somebody have at least adequately prepped her?), but the CEO said all the right things. I know Uncle doesn't like it when I say it, but Wall St. was being pretty darn stupid today: massively overreacting to a known short-term DAL blip/issue and ignoring the fact that the company is making billions of dollars. As I've said, I've never seen it so frreakin' easy to lose money betting on an industry that's doing so amazingly well. We're now 2 years into this mega profitability and it's showing no signs of stopping.

  • iahphx iahphx Aug 2, 2016 4:42 PM Flag

    You know my theory about the airline stocks. Fundamentally, nothing has changed in 2 years. But the end is coming. The day of the billion-a-quarter profits will end. Someday.

    I guess the question is whether they'll be any AAL shares outstanding when the end actually comes.

  • Reply to

    Delta July PRASM down 7% as expected

    by unclespeaking Aug 2, 2016 9:17 AM
    iahphx iahphx Aug 2, 2016 12:32 PM Flag

    DAL is down 6 1/2% now. I would submit that the airline sector is uniquely cursed in this respect. No other sector could sell off in this fashion by reporting results that were in-line with management guidance of 2 weeks ago.

    And now oil has even rolled over and below $40. How profitability can be irrelevant is truly remarkable.

  • Reply to

    Delta July PRASM down 7% as expected

    by unclespeaking Aug 2, 2016 9:17 AM
    iahphx iahphx Aug 2, 2016 12:27 PM Flag

    From the DAL transcript, 2 weeks ago:

    Glen Hauenstein

    At a system level, with these plans in place across all of our entities and the trends that we see today for the September quarter, we are forecasting system unit revenues to be down between 4% and 6% on a 1% to 2% year-over-year capacity increase. We expect July and August to be at or slightly below the bottom end of that range with September markedly better than both of those months.

    All that said, our results for the third quarter should be a record as we expect to generate a pre-tax margin of 20%, consistent with what we posted a year ago.

    Julie Yates

    Good morning. Thanks for taking my question. Glen, I just want to clarify on the PRASM cadence for the third quarter, you mentioned that July and August were looking weak and just to help calibrate expectations, should we expect to see July RASM worsen from June’s down 5% and then improve steadily with September being the best month of the quarter?

    Glen Hauenstein

    I think that’s probably exactly how you would read it.

  • Reply to

    Delta July PRASM down 7% as expected

    by unclespeaking Aug 2, 2016 9:17 AM
    iahphx iahphx Aug 2, 2016 10:05 AM Flag

    C'mon guys -- you expect the short term action to be "rational"? Emotional is as good as it's going to get. I'd also ponder the idea that the continued collapse in oil prices means more profits for the industry but a slower turn to positive RASM (my theory, which seems well established now, that you can't raise PRASM when your costs are falling). What Wall St does with all this, I have no idea. It won't be rational, though.

  • Reply to

    Jet Fuel

    by unclespeaking Aug 1, 2016 9:55 AM
    iahphx iahphx Aug 1, 2016 12:23 PM Flag

    Again, falling fuel has been quite easy to predict here. It's partly seasonal, and partly due to the obvious over-supply. These 2 things drive out the speculators who, we know, control the price way more than the actual real supply/demand.

    But, like Brexit, predicting the real fundamentals isn't necessarily a recipe to actually predict stock price movement. It's why the short term is basically dead from a fundamental standpoint.

  • iahphx iahphx Aug 1, 2016 12:17 PM Flag

    I'm for raising the dividend for 2 reasons. First, the market cap is so low it won't cost the company much cash. Two, with the market so irrational and unpredictable, as an "owner" it's nice to get a piece of these multi-billion dollar profits in your own pocket. Heck, I've been using my dividends to buy stock during the panics. It's like a personal buyback. I suspect others are doing the same.

  • Reply to

    Short Interest Rises

    by not_a_short Aug 1, 2016 11:32 AM
    iahphx iahphx Aug 1, 2016 12:13 PM Flag

    You simply can't try to understand this market in "rational" terms. Maybe they're basing their investment decision on charts or something. In the real world, the only way you'd "rationally" choose AAL as a short opportunity is if you knew that somebody was about to strap a bomb to themselves and walk into a major USA airport. Otherwise it seems a very low probability bet. But, as we've seen, Wall Street's walk seems pretty random, so maybe common sense is overrated.

  • Reply to

    Why are 2017 estimates so low?

    by dmspilot00 Jul 27, 2016 10:33 AM
    iahphx iahphx Jul 27, 2016 12:49 PM Flag

    Of course, low estimates mean analysts will have to raise them. The Street seems to like upward momentum -- they're certainly more concerned about that than overall profitability. Obviously, if profitability "mattered" this stock would not be at $36 today.

  • Reply to

    Oil Inventory Up 1.7m, WTI crashes under $42

    by unclespeaking Jul 27, 2016 10:56 AM
    iahphx iahphx Jul 27, 2016 12:47 PM Flag

    What's spot jet fuel now? I think I'm seeing $1.19. Obviously, that good money -- WAY better than if fuel was at $1.50 and RASM creeped up a point!

    You can see the disconnect between profitability and airline stock prices, though. You'd have to be living under a cave here not to be observing that oil prices are, again, cratering. You'd also have to be living under a cave not to think this will boost airline profitability.

    But Wall Street continues not to care.

  • Reply to

    Ted reed article

    by dca1186 Jul 26, 2016 10:51 AM
    iahphx iahphx Jul 27, 2016 9:46 AM Flag

    I guess until PRASM stops controlling share price, airline management will need to humor Keay.

    BTW, isn't AAL's decision to switch from PRASM to RASM forecasts a pushback against this nonsense?

    All I can say is that I, like ALK's CFO, care a lot more about profit than PRASM (or RASM). This is particularly true because I KNOW there is an interrelationship between cost and unit revenue (costs go up, airlines fly less, unit revenue goes up). So PRASM isn't going to predict profitability. For example, right now, costs are going down again because fuel is going down again. The airline industry is supposed to be raising fares in such an environment? Constant unit revenue would seem fantastic!

    That said, if nobody cares about profit, my focus isn't going to be very financially successful in the short term.

  • Reply to

    Ignore appears to be back

    by johnb_dca Jul 26, 2016 2:00 PM
    iahphx iahphx Jul 27, 2016 9:30 AM Flag

    I was getting error messages last week when I attempted to use the back door, but today the link seems to be working. Obviously the whole thing is a PITA. Is the "ignore" function still working for you?

    Any idea whether yahoo will restore the old format? I can't believe anyone likes that "conversations" feature. Maybe we'll have to ask Verizon (yahoo's new owners) to switch it back. :)

  • Reply to

    Market now ignores terror attacks

    by iahphx Jul 22, 2016 4:21 PM
    iahphx iahphx Jul 22, 2016 8:19 PM Flag

    Yeah, oil is now just a loser investment that everyone ignores. :)

    This is very good for airlines because I don't think the non-financialized oil price is north of $40. I'm not even sure it's much north of $30. Only time will tell.

    Of course, the market things a dollar made from cheaper fuel isn't worth anything. When there are no more shares left in AAL because they've all been bought back with "cheap oil profits," we'll see if the market changes its mind.

  • Interesting new dynamic. In the past, airline stocks always went down in a knee-jerk reaction to terror attacks. Now, they don't move the needle. I suppose it's a good thing. I also suppose that the travel industry isn't helped by a constant stream of these attacks. Stability is good for this business.

    I also think the more terror attacks, the more likely it is that Trump gets elected. Not sure if that's good or bad for airline stocks, though.

  • Reply to

    3q Margin

    by cavalier2015 Jul 22, 2016 10:25 AM
    iahphx iahphx Jul 22, 2016 11:17 AM Flag

    Which means the market cap here is less than $19 billion, which is almost $2 billion below what yahoo says it is. Any guess as to the forward p/e estimate?

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