// Sure, why not dumping them all since there's no way to lose money on printed money that costed nothing. Less //
Could be that the Fed doesn't think it is the right time to shrink the money supply by the $4.5 trillion ... could cause deflation, which is what they avoided by doing QE1 and QE2. Meanwhile they are giving the Treasury about $90 billion a year on what they earn from their balance sheet.
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.
// 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.
Just adding to unc ... AAL guided to 2014 to 2015 margins going forward. Essentially, $4.2B to 6.2B. This year they should hit near the midpoint, and for 2017 I'm deferring an estimate until I see what the industry does with fares and capacity this fall ... and also what bears said about the fish thinking about fuel going to $60 (that'll make the airlines adjust). Anyway, the industry in general has been making those margins since 2013 (LCC did that in 2013 pre-merger). That's going to be almost 5 years of consistently good margins, during generally weak economic times, and no credit for it. Somebody will notice someday.
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).
cav ... maybe you think an oligopoly is something it isn't. By all definitions it is an oligopoly (domestically), and there are benefits. Does that mean there is always stability? There have been huge cost changes, and it will take a little time for margins to stabilize. It shouldn't have been a surprise to see fuel bottom in Q1 and have prasm follow it down ... that was a surprise dip in fuel and it changed the timing on prasm recovery. In the mean time the airlines all made good money.
As far as Munoz goes, he could have been referring to capacity in the domestic market, but that is planned to be reigned in ... a positive and rational first step in the right direction. However he very well could have been thinking internationally about capacity. And thinking about possible consolidation taking place internationally. European carriers have been talking about the need to consolidate, and you probably heard about DAL's and UAL's possible moves on Avianca (was that on Munoz's mind?).
And I probably agree with the few possible domestic mergers that iahphx mentioned.
// Smart how simply Math works? //
Maybe even more than a dime lower. Though I have to ask how much lower than 590 million shares are you expecting?
// //AAL has to account for taxes now, but doesn't actually pay any.//
Nope, it's just accounting "issue", they don't really pay tax //
Unc ... you're generally right about many things, but your remarks about posts are a little confusing sometimes. Above iahphx said, "AAL has to account for taxes now, but doesn't actually pay any" and then you said, " Nope, it's just accounting "issue", they don't really pay tax" You said "Nope" to iahphx and then said the same thing he said.
There usually is a "price leader", but companies can take turns. Historically, different airline companies have been doing it since 2009. And many times the shape of fare increase isn't accepted by all, so it fails. DAL put one through recently ... SAVE went along but AAL and LUV didn't. They'll come up with one ... eventually.
What will the market do in the interim?
// money gotta come out from either borrowing, Cash on hand, or even line-of-credit. //
Well, they have 10.6 billion to play with before more "borrowing, Cash on hand, or even line-of-credit."
unc ... nobody is talking about the $3 million they paid in taxes ... people are discussing the taxes associated with the NOLs ... don't assume everyone is confused except you.
// I don't see how Delta's PRASM can go from -5% to 0%, without AAL's PRASM experiencing a similar sized improvement //
I mentioned this a number of times. AAL said prasm troughed in Q12016. Now if that is true (Brexit did enter the equation since that guidance), Q3 should be no lower than down 5%, Q4 in the down 2-3% range and flat in Q12017. Their current guidance is beating that by about 1.4%, but as I said Brexit may take that beat away. It still leaves flat prasm in Q1 2017.
And I thought Julie said it will be 9-12 months for prasm improvement ... that is only a quarter or so different than the above.
Capacity is being knocked down going into the fall and 2017 ... we'll see what the industry does ... time will tell.
unc ... isn't their planned financing going to cover their capital expenditures for aircraft this year ... leaving only the non-aircraft capex of $1.2 billion?
Calm down unc ... I was just wondering about something, not getting a headache. By the way, you must have gotten so concern about the headache you assumed, you missed my question to you about rigs.
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.
I agree, the margins won't be as good in Q3 as last year, but then again AAL always said that margins in 2016 would be lower than 2015 ... and most likely bump up in 2017. On a positive note, Q4 should show top line growth yoy and that is not counting the credit card deal when ever that happens. Who knows about the topline in Q3 ... there have been fare initiatives. I just don't know how broad they have been and other restrictions, or how far out in the future their impact will be.
The short story is that it isn't different this time. But the industry has been behaving in a different way since 2010 ... the market will be surprised if the industry continues to behave in that "different" way. So far, I feel, capacity announcements going forward support the "it is different this time". I don't know what it will take for the market to recognize that.
// 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.
// 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.