Agree, hopefully will happen before market crashes or fuel spikes up ! AAL has very good management or else company/stock would be in much worst shape now
I'm not assuming anything per fuel rising or that aal will immediately be able to raise rates if fuel rises substantially. Costs should be fine IF fuel does not rise substantially, I am not assuming Brazil et al will get weaker, they are now weak and no signs of improvement anytime soon. Margins will not be 17% in 2016 or as high as 2015, management has said as much.
AAL clearly has to start showing prasm/revenue improvements and be positive prasm in 2016..anyone that believes otherwise is deluding themselves. The only other way aal stock will rise is if the market for whatever reason decides to assign a higher multiple to aal.
//But why do they have to start increasing revenue?// Ok, your selling lemonade for a buck and your making a record profit 75c profit because lemons are super cheap this year but your costs of labor, sugar, cups and rent have all gone up. At the same time your gross sales have been dropping yoy and are projected to continue to drop and the price of lemons is likely to increase, possibly substantiall. Also, your dropping your lemonade to 90c because Larry's Lemonade(lcc's/ucc's) is grabbing your customers and Big Betty(brazil/LA) one of your largest customers, is not buying much lemonade anymore because she has diabetes.
Get the picture? While your doing very well selling lemonade now, your mid to longer term outlook is threatened by the combination of rising costs and declining revenues...
Its because revenues are down 4% yoy and aal has a lot of pricing pressures, other issues. Ive said it many times, if not for super cheap fuel aal would not be making anywhere near what they will make this year or next year. Revenues HAVE to start increasing yoy, its that simple imo..
//That's because the LTC liability is so huge and unpredictable // Agree, best case is that have eps unpredictably higher than estimate like 1q and some positive capital/credit/spinoff news
Yes, these lcc/ulcc have caused a lot of capacity/pricing issues and as you indicated LUv has outperformed aal big time since Black Wednesday
Dropping all direct non stop flights from Akron to Florida which were an old AirTran routes and have high loads. Flights from Akron will now be directed to Atlanta...of course Allegiant just has been adding flights from Akron non stop to Florida, ditto from Pittsburgh and Cleveland. Perfect example why Allegiant has been doing so well, their filling the gaps the legacy carriers are leaving and have little non stop competition.. LUV apparently doing this to maximize their fleet per analyst.
Agree, will be very interesting report and ccall Friday. Maybe be a boring report but that will be good if no more LTC landmines and may get lucky and have an eps beat. Alot depends on how LTC reserves flush out for the quarter...gnw's eps can easily be up/down more than expected every quarter due to all the unpredictable sources of earnings. 1Q was a good example, handily beat estimate.