Listen, you know the drill here. So does the street as AAL pares its loses significantly. When you see 'tard like behavior such as this from one of the greenest of airline analysts, a bottom is nye.
Doug Parker is a very smart man and NIRP = low energy and many years of cheap debt ahead. AAL will be $100+ in 2-3 years. Once he vacuums up as many shares as he wants this will become a hedge fund hotel, low float, huge volatility and high share price.
And what the total authorized is going forward, rate of repurchase per last several q and guesses on how much is getting repurchased this q? 550m shares right now is less than a $15b mkt cap; I believe the day aal went public it was $23 x 680m shares which means this stock is now at its IPO valuation after earning nearly 2/3s that amount in profit in 2 years. Doug's strategy is brilliant because interest rates are much more conducive to refinancing debt and buying back stock at these levels and revisiting the debt after the share count is reduced to 4-450m in my opinion. Shorts are wrong on this one and I love the piling in by dumb hedge funds, going to be some moves here akin to 2008-10 to counter this decline real soon. I own 3750 stock ave $32 and 125 Jan 2018 $30 calls. Think this stock is worth minimum .5 price to sales in 18 months with just $5 eps. $42b revs x .5 = $21b mkt val / 450m shares end of 2017 = $46-47 stock that trades at 9x eps still below historic norms. Once debt is extinguished aggressively in 2018 and beyond this is a company that trades at 1x price to sales or $40-45b mkt cap with $5-6/share eps = $80-100 stock imo
Used to Doonie - and like every other "hater" on airline pilot forums, you're true to form.
The reality is, RJET will right size itself over time. In 1-2 years the company will be back earning $1-1.50/share, like it always has, and the stock will trade where it belongs.
It's very expensive to build an airline with 200+ frames from scratch; especially a consistently profitable one (even in the worst of times such as now). RJET under $3 will amply reward those willing to take the risk of buying in. And BTW, BK is not always the end (see AAL = $.28/share to $13) - RJET has a huge enterprise value and quite a bit of cash on its balance sheet to successfully restructure outside of BK court.
Get lost and go over to the pilot forums..
This stock is priced as if it is a SEVERELY DISTRESSED asset, which I just don't buy...I'll buy the stock instead and put my $$ where my mouth is. And for fair disclosure, I've bought and sold RJET the last 7 years and made about 5x on my invested capital FWIW.
This morning felt like a hedgefund blowing up....yawn....which it probably my was.
Look this could see $4-5 again overnight. However, I'm a non-margined long term investor using covered calls to generate income. I am quite happy to buy today at $3.0x several times and sell February $4 calls for $.10-.15 which I've done all morning.
My way of thinking is if I lose the stock at $4 in 50 or so days I'm receiving a 35-40% return on my investment. Most likely, it will take this year to get the company back on track which will limit upside, but if after writing calls for 3-4 months the picture improves, I will cease and hold uncovered for I believe the company is worth far more than $4 when the skies clear....
There are catalysts that remain to fuel a sharp rebound. Any positive chatter about contract renegotiation for one, and there is the outside chance the FEDs relax piloting rules to their previous state in the near future which would send this stock soaring in short order.
And at these levels, the company is valued at 6-7% of enterprise value and 10% of revenues. Meanwhile, its chugging along slightly profitable while all this sorts itself out. So it begs the question; what's a fair valuation right now ? Provably $4-5/share until remaining hurdles are cleared. After that, look at Bob McAdoo's projections if you care to be bullish ($10/share). All I know is the stock was priced slightly below these levels on BK concerns several months ago which is simply not in the cards short term any longer with the new agreement.
The market is nuts at times but you have to trade the market you're given. All I know is RJET went from $2.50 to nearly $7 overnight on the pilot agreement and now it's $3 again and that hurdle has been cleared. The stock trades as if it hasn't and that's simply not the case....
First and foremost, there is no question Bedford is disliked by his employees and that his track record is lackluster at best; after all, the man bought Frontier and sold it for a loss and it's now purportedly scheduling an IPO and has become one of the most profitable ULCCs. That said, running a CPA airline is not rocket science and although there are definitely hurdles to get over with new contracts, a major one was removed with the new Teamsters agreement.
Factually, we are entering a prolonged period of low energy prices; although RJET pays very little of their fuel cost, it's a huge boon to its flying partners and will provide some "wiggle room" for future contacts. People, legacy management knows they need strong flying partners and are well aware of staffing issues as they will ultimately affect even themselves if they are not thoughtful about how they proceed into the future. The new contract is a good faith first step toward restoring managements credibility over the long term. As far as the hardware; look, Republic arguably has the most attractive mission-adaptable fleet in the industry. ERJ is the best metal in their marketplace and will likely be their best bargaining chip going forward. For Christ sake, look at SKYW - just now they are implementing new metal and look at their order book; they rolled the dice with the MRJ and look where they are now on that; delayed another year! I'm actually shocked not one of these so-called analysts has raised this concern with SKYW!
Anyhow, RJET will continue to shrink for now. However, there are good odds the company will rightsize as it always has over the last 40 years and capitalize going forward. Look, the stock was in the $2s twice before over solvency concerns with Frontier and the pilots' TA - both of those are in the rearview mirror now and the company can now focus on carving out its niche going forward which I personally believe will be a fairly successful one in which buying at these levels will reward.
Ummmm...downgrades RJET at $2; rallies to $5. Upgrades it at $5 w $8 PT - rallies to $7. Drops 50% in 2 months and now he downgrades.
Let me also point out he threw in the towel on GOL and LFL today - had a buy on Gol from $7 to $0.58. Now he cuts to hold.
Dougy reminds me of myself. Rough around the edges, never was really supposed to amount to much, picked on by his peers, yet sort of the "Eminem" of airline CEOs. In the words of Eminem, "now tell the people something they don't know about me!" - exactly...Doug, Douglas, Doug-E-fresh...3 DUIIs, a gambler - but ice water for blood...a real poker player...and ALWAYS a winner more than a loser.
Read your reports and make your picks, but I know where I'll place my bet. Doug was a visionary on consolidation, fuel consumption and putting a merger together with a seemless integration.
LISTEN TO ME. When a stock (LCC aka US AIRWAYS) goes from $0.88 to $56.20 without any restructuring inside of BK court, IT IS ONLY NATURAL for it to consolidate its gains. AALs price action can be attributed to NOTHING MORE OR LESS than this. Soon, and I expect by year end, this consolidation phase is going to END and AAL is going to have ALOT of catching up to do.
I know where I will be situated when it happens.
Is when Nostra has to sit facing his seatmates. If you had the wife I have, you'd understand why. I start thinking about her and seatmates see Large Unit in Pants. NOT LIKE.
And will enjoy doing so @ $41, 40, 39, 38, 37, 36, etc. LCC aka DOUGY made me rich beyond my wildest dreams. Slowly, I will climb back into the cockpit for the ride to $100 and above which is where all of the legacies traded for many years with higher oil....
Uncle, lest we not forget that LUVs international operations are plumbing the depths of RASM and CASM to boot, at least initially and for the forseeable future...not to mention THEY are the ones competing with SAVE and JBLU.
And now, I will book my first class tickets to Jamaica on AAL in order to avoid traveling like a barn animal thank you very much.
So she can check her chiapet-self in and fly down below where she belongs...
Helane Becker, who if you follow this sector and stock, would not raise her opinion on LCC @ $4/share after "meeting with LCC management" back in 2009-10. I had personal conversations with her and told her she was mistaken, yet she preferred UAL at the time which is now hardly up 100% vs 1000% for LCC (AAL). At the same time, Goldman said to SELL DAL @ $9 and UAL @ $19 and William Randow of CITI said LCC was insolvent.
So, and I don't post much anymore, here we are with 3-4 genius analysts who once again tell you not to own AAL; that it's worth only $45, etc. Meanwhile, I submit the following:
Douglas Parker has been the most visioanry airline CEO and continues to ignore Wall St.
AAL has the highest cash flow of any airline on earth
AAL has the most undervalued stock price of almost any company on earth of its size
AAL now has upset Wall Street because it can afford to obliterate its competition and has stated it is going to do so. People, it's not DAL and UAL that AAL is competing with - it's SAVE and LUV. As long as fuel stays at these levels and RASM stabilizes in next year, AAL can obliterate it's competition for dozens of reasons and come out the strongest of all of the legacies. And oh by the way, in doing so, can make $4-5 billion of net profit per year....do you understand you little meeHoles what that means - it means AAL will crush its competition and retire millions of shares of stock simultaneously !!
It also means that in several years either the stock will trade north of $100 OR be off the market altogether (privatized)
The shenanigans surrounding the movement in this stock are already under investigation and it wont be much longer before the trend reverses and AAL leads the sector higher once again.
I have the time to wait and Doug has already made very well to do and he'll do it again.
Uhh, no...that was Warren Buffet who coined that phrase and you start the airline BEFORE, while you're a billionaire, not AFTER you become a millionaire...
Delta owns 9% you effing moron
I2, you cannot even spell or formulate a thought !