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Microsoft Corporation Message Board

wgrsh 92 posts  |  Last Activity: Jul 13, 2016 10:14 PM Member since: May 11, 2005
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  • Reply to

    Maybe parker does know something after all

    by dca1186 Jul 13, 2016 11:22 AM
    wgrsh wgrsh Jul 13, 2016 10:14 PM Flag

    // That would mean you know their earnings //

    Bears ... just a discussion of what their cash may look like down the road. Just assuming low end of margin guidance going forward to calculate a profit, looking at their capex, and required principal payments every year ... (taking into account the non-cash taxes for as long as they last, adding back depreciation, etc. etc. etc.)

    And unc ... as long as the debt is mostly equipment trusts related to aircraft capex let's not say they are buying the aircraft with OCF ... (I know it is all fungible) ... let's talk the CF. And when they say they can renew the debt, I think that is afterwards and they negotiate new debt based on the residual value.

  • Reply to

    Maybe parker does know something after all

    by dca1186 Jul 13, 2016 11:22 AM
    wgrsh wgrsh Jul 13, 2016 3:51 PM Flag

    unc ... the point of the discussion (or the direction the discussion was going) was to compare future sources of cash, added to current cash, and look at how that compares to the required debt payments over the next 3-4 years. Personally, I don't think it is a problem if they hit the low end of what they think their margins will be, but to a degree, I think this issue is at least part of the "short story". How low can margins go (and for how long) before it is a problem?

  • Reply to

    Maybe parker does know something after all

    by dca1186 Jul 13, 2016 11:22 AM
    wgrsh wgrsh Jul 13, 2016 3:30 PM Flag

    // By the way, Cash ain't "Profit", Cash is Cash. //

    Do you really think I don't know the difference? The implication of "have cash (profit)" was that profit is a source of cash, not your backward interpretation of cash is a source of profit. That was your backward interpretation not mine uncle.

  • Reply to

    Maybe parker does know something after all

    by dca1186 Jul 13, 2016 11:22 AM
    wgrsh wgrsh Jul 13, 2016 3:11 PM Flag

    Thanks for the future capex.

  • Reply to

    Maybe parker does know something after all

    by dca1186 Jul 13, 2016 11:22 AM
    wgrsh wgrsh Jul 13, 2016 2:53 PM Flag

    // I'm thinking cash taxes will not begin before 2020 //

    Maybe I figured it wrong but doesn't it look like sometime in the last half of 2017?

  • Reply to

    Maybe parker does know something after all

    by dca1186 Jul 13, 2016 11:22 AM
    wgrsh wgrsh Jul 13, 2016 2:36 PM Flag

    // But at some point I think margins would (find) an equilibrium point. //

    Yes, AAL thinks margins will settle between 2014 and 2015 margins. Essentially all of 2014 was with high fuel. 2013 is difficult to figure for AAL, but I think when they separated out the companies LCC made about $1.1B ... and there were more fare hikes in early 2014. 2013 was all high fuel.

  • Reply to

    Maybe parker does know something after all

    by dca1186 Jul 13, 2016 11:22 AM
    wgrsh wgrsh Jul 13, 2016 2:29 PM Flag

    Looks like it will be a while, but starting to trend down from the 2017 debt level in 2018. They do have cash (profit) needs going forward, so I'm sure the above will be considered in dividend discussions. And for that matter that is why AAL said they were going to keep an extra $2b in cash over what they need.

  • Reply to

    Maybe parker does know something after all

    by dca1186 Jul 13, 2016 11:22 AM
    wgrsh wgrsh Jul 13, 2016 2:12 PM Flag

    // "debt reduction" plan (when and how much). //

    The annual report has the amount of planned debt to be paid back each year through 2020 and then a lump sum for the years beyond. For example this year they are planning about $2.5 b, but they also have $4.5 in additional capex debt. I think in 2017 it is $1.5b, 2018 is $3.5b and the same in 2019. They can always do more if profits are high enough.

    Anyone have the capex plans going forward off the top of their heads? Otherwise, I can check when I have time.

  • Reply to

    Maybe parker does know something after all

    by dca1186 Jul 13, 2016 11:22 AM
    wgrsh wgrsh Jul 13, 2016 1:39 PM Flag

    // The airlines have shown they can produce large profits during good times. //

    Generally I know what you're saying, but I don't know if the 1.5-2.0% GDP growth can be considered particularly "good times". There is room to grow earnings if times ever get really good again. So, airlines have shown large profits in mediocre times.

    Then there is always the fuel drop if times are bad. (Parker's natural hedge) And fares are strong when times are good and oil is up.

  • Reply to

    PRASM guidance a little better

    by iahphx Jul 13, 2016 9:09 AM
    wgrsh wgrsh Jul 13, 2016 10:51 AM Flag

    If my notes are correct, then Q1 2016 prasm was 12.43, and AAL said it would be trough prasm. Q4 2015 prasm was 12.69. Q4 can only be down 2% without a change of guidance. Actually, credit card rev should make that flat rasm in Q4, and if they beat the trough by the 1.5-2.0% ... flat prasm and positive rasm in Q4. Should definitely have positive yoy revenue in Q4 with the additional asm's.

    I understand that they can always change their guidance.

  • Reply to

    PRASM guidance a little better

    by iahphx Jul 13, 2016 9:09 AM
    wgrsh wgrsh Jul 13, 2016 9:52 AM Flag

    // If they could only get an upgrade in the multiple. //

    I would think if the industry shows they can manage for good margins, stabilized or growing prasm with stabilized or growing casm, that would go a long way in showing "it is different this time", and I would think the airlines then might just get some "multiple" respect.

  • Reply to

    PRASM guidance a little better

    by iahphx Jul 13, 2016 9:09 AM
    wgrsh wgrsh Jul 13, 2016 9:30 AM Flag

    cav ... you can figure it out. AAL said Q1 prasm would be the trough. If that it still true, Q4 prasm can be down at most by - 2%. It looks like Q2 prasm is beating the trough by 2%. It is not my opinion. It is just straight arithmetic if they continue to beat the trough by 2%.

    And even if they don't beat it by 2%, with 2% asm growth would put revenue flat yoy (excluding credit card rev)

  • Reply to

    PRASM guidance a little better

    by iahphx Jul 13, 2016 9:09 AM
    wgrsh wgrsh Jul 13, 2016 9:16 AM Flag

    The midpoint of down 6-7 % prasm beats the Q1 prasm trough by about 2%, which means they have a good chance of going to flat prasm by Q4. And that would be higher yoy revenues (plus credit card revenues).

  • Reply to

    Repurchases

    by xazp Jul 13, 2016 8:41 AM
    wgrsh wgrsh Jul 13, 2016 9:11 AM Flag

    8-K filing

  • Reply to

    4:50pm

    by unclespeaking Jul 11, 2016 3:23 PM
    wgrsh wgrsh Jul 11, 2016 7:08 PM Flag

    When DAL came out with the 2H hedge loss of $450 m, they probably lost a proportional amount in Q2, which would be probably 65-70 cent total from unhedged (assuming they use what AAL uses).... what did they say about fuel $1.95 -2.05?? Kind of a rough way to think about it. Nevertheless, crack spreads were reported dropping long ago with everyone around the world refining like crazy since Q1. The fuel game is always interesting. Still would like an eps estimate that is an easy beat.

    Still looks like at least flat prasm and topline growth with a credit card deal in Q1 ... maybe even without a credit card deal. As long as they don't change their prasm trough call about last Q1.

  • Reply to

    King Fish Speaks

    by cavalier2015 Jul 8, 2016 4:58 PM
    wgrsh wgrsh Jul 8, 2016 10:12 PM Flag

    Well to a degree I agree with you, but fuel did continue to drop as well. Now the Ulccs/lccs are going to be faced with labor and fuel cost increases. We'll see how they respond. JBLU just had their chain jerked. LUV had some special one time situations with a bump at Love and then this year at Hobby with international. They even said they may go to negative growth next year, and plan no more than 2% for years to come (probably based on a GDP growth assumption).

    I agree, capacity isn't coming off tomorrow ... the summer schedule was planned a while ago.

  • Reply to

    King Fish Speaks

    by cavalier2015 Jul 8, 2016 4:58 PM
    wgrsh wgrsh Jul 8, 2016 9:29 PM Flag

    // Fish said today, well know soon if they will do whats needed(scale back growth) //

    I had to marvel that they said that. They know darn well almost all airlines have announced that they are planning to scale back. I don't know what they don't know about it.

    And that puts it back as to when the market will know it. Maybe the fish saying it is the start ... just like the Q4 2014 CC prasm comments that initiated the fears.

  • Reply to

    King Fish Speaks

    by cavalier2015 Jul 8, 2016 4:58 PM
    wgrsh wgrsh Jul 8, 2016 8:22 PM Flag

    Cav ... the airlines are making good money, but the market runs on fear and greed. The Prasm situation, even though it hasn't destroyed earnings, has allowed the creation of the "fear" story about something that is going to happen but hasn't. And fear has a real impact on stock prices.

    What's Parker to do? He understands the fear, but what's to correct at this point if earnings are reasonable. The prasm situation didn't correct this year because fuel unexpectedly fell further at the beginning of the year. Parker hasn't been proven wrong yet.

    Personally, I'd prefer the industry showing they'll adjust first, and stamp out the fear. Have this negative sentiment change, and then do a dividend increase when greed is moving things. Recent airline dividend increases at other airlines didn't help much in this atmosphere of fear.

    I think the industry has taken the initial steps to manage itself ... what it will take and when the market will see that is the question. Let that happen first.

  • Very appropriately with the UK being an island, AAL had a small (two day) island reversal surrounding Brexit. And today, that smaller island reversal was embodied in a larger island reversal. Pretty interesting.

    Also on the day before the Yates downgrade, AAL pushed back above the gap left back in 1/2014, and on the day of the Yates downgrade it dropped back down, but then closed the day above that old gap. Felt good about that.

  • Reply to

    Pay down the debt

    by gchen914 Jul 6, 2016 2:26 PM
    wgrsh wgrsh Jul 6, 2016 3:17 PM Flag

    // What's the difference between being in the Dog House and Cat House? //

    One can be in the dog house for being in a cat house ... maybe worse.

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