Believe he said margins would be somewhere between 2014/2015 and it may have been based on 85$ oil as another poster claimed..profits should still be solid in 2016 and imo oil will stay low barring a MEast blowup..the really good thing is that aal is making record profits, buying back shares, likely increasing divy during this capacity/revenue challenge and merger integration phase. Not the worst of scenario by any means.
The industry will work through it// Agree, unfortunately as stockholders we will have to wait quite awhile most likely for the worm to turn...though we have already been waiting so hopefully some of these matters are already baked in the cake.
Good point, believe that is correct...imo it will be more like 70$ maybe less if get Iran nuclear deal and no MEast blowups which is not looking good right now.
Dal trading around 8x 2016 estimates, luv always trades at a premium...imo aal's multiple will expand to 10, maybe even 12 or higher over the next year or two if capacity growth declines..
Kirby estimated 2016 margin would be maybe14-15% excluding buybacks which would add 1-2% , if work off 44B sales and 35% tax rate come up with around 6.50 ...of course could have significant synergy savings/revenues and fuel could be lower than this year but unlikely it will be imo..and good chance will be higher
To play devil's advocate if aal's 2016 AFTER tax eps is around 6.50 share and you go with an 8 PE the current pps is not that nuts...I said when oil tanked in 4q of 2014 that it could end being too much of a good thing and I was unfortunately correct. 80$ brent would have been better for stock imo..now we have too many airlines getting beer muscles due to low fuel costs.Buybacks and divvy increase will mitigate capacity increases and revenue pressure to a limited extend..
Oil down over 3% and aal/airlins down 1.5%, Wolfe conference has to be the reason.. we will see if Hunter Keay has any comments but capacity and margin news were not good imo...maybe if oil continues to selloff we will get a bounce but wti oil would have to drop to around 50$ or less imo to get pps to 52-53$..
Guessing due to Wolfe conference today, I listened to most of it and nothing very positive per capacity discipline for this year and into next and said current high margins unlikely to hold into 2016...
Title of USA Today article about unhappy aal customers. While I feel the article overstates the problem, I also feel, and so does management, that aal, not lcc, had and still has customer service and other issues that will take another couple years to remedy and will hurt revenues if not remedied sooner vs. later . As I have said before, aal went BK for good reasons, they ran a crummy airline. The flip side is that there is a lot of room for improvement and aal's current management is very qualified to get the job done..
Yup, with weak revenues and fuel up a nice fat divvy increase will at least stabilize pps. I know I will be more inclined to hold thru rough periods if divvy solid.
Can take that divvy increase to 60c I have been expecting to the bank and may be more...see if any comments at tomorrows conference but likely will have to wait until 2q ccall for announcement..