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US Airways Group, Inc. Message Board

iahphx 101 posts  |  Last Activity: Sep 12, 2014 4:52 PM Member since: Apr 2, 1998
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  • Reply to

    The Barrons/Wolfe Research piece is very good

    by iahphx Sep 12, 2014 2:18 PM
    iahphx iahphx Sep 12, 2014 4:52 PM Flag

    Venezuela weirdly "mattered" because it wrecked the upward RASM momentum which seems to have wrecked the momentum in the stock. Odd that a "one off" fairly trivial problem could do that, but we're seen quick-trigger responses to immaterial revenue developments before.
    The final repeal of the Wright Amendment is going to have more lasting impact, but I'm not really sure if anyone has ever quantified the impact to unit revenue. I'd guess it will be like Venezuela, but maybe at a slower rate and -- as the Wolfe report suggests -- be swamped in the numbers by good revenue developments. LUV obviously isn't the threat they used to be: an article out yesterday notes that they now have about the same costs as the legacy carriers. So there's not going to be a price war in Dallas. Logic would suggest they can grab a bit more O/D traffic in Dallas from travelers who find Love Field to be more convenient. In the overall scheme of the corporate profits though, this would seem to be barely material.

  • Reply to

    The Barrons/Wolfe Research piece is very good

    by iahphx Sep 12, 2014 2:18 PM
    iahphx iahphx Sep 12, 2014 3:18 PM Flag

    I'm a bit skeptical that anyone is selling because of the Wright Amendment or Venezuela. Anyone smart enough to spot those issues would also see the many upsides, and the obvious value at current price levels.

    I think this is know-nothing "fast money" selling. We'll see.

  • Reply to

    The Barrons/Wolfe Research piece is very good

    by iahphx Sep 12, 2014 2:18 PM
    iahphx iahphx Sep 12, 2014 2:45 PM Flag

    I like when analysts tell me things I don't know. That means they know something!

    I was particularly interested in their comment about the Wright Amendment repeal. Given that this is the airline industry, I don't spend much time thinking about what will go right -- I worry about what will go wrong. I am a bit concerned that we could get a "Venezuela-like" impact on RASM based on LUV's new Dallas routes. I still think that's possible (but not necessarily probable), but Wolfe puts it in perspective.

  • You can find the link through yahoo news. Very good analysis of the company and the stock, IMO.

  • So I've called every bottom so far in this stock this summer, and I'm thinking we're getting close again. This one is a bit tougher because the stock is moving on nothing. The stupidity of the situation is that it's going down as oil/jet fuel collapse -- which is directly putting money in AAL's coffers as the airline is completely unhedged.

    At the same time, it's pretty darn obvious that there's no slowdown in air travel demand in the USA. Like has anyone seen a real sale this month -- normally the slowest ticket buying time of the year?

    This ain't rocket science, so eventually somebody's going to point this out. And, on Tuesday, Scott Kirby will address investors. My guess is the downward trend ends by Tuesday, but at the moment, I can't peg it with more precision.

  • AA President Scott Kirby is giving investment presentations next Tuesday and Thursday. If you don't know who he is, you should -- he's probably the best strategist in the business, and his speeches are always interesting.

    My guess is that he will likely say something that will energize investors next week. Under the circumstances -- a low stock price and a lot of potential here for the company to make a lot of money in the next year -- I would bet that the stock price rises on his comments.

  • Reply to

    Oil ... big story

    by wgrsh Sep 10, 2014 11:05 AM
    iahphx iahphx Sep 11, 2014 1:22 AM Flag

    While it's great for the airline industry (and, really, all of humanity) to see falling oil prices, the problem is that we really have no idea what will happen next. As I always say, everyone who has tried to use traditional fundamentals to predict oil prices the past dozen years has eventually looked like an idiot. The prices simply don't move on fundamentals; reporters just make up "explanations" for the moves. Right now, you could easily write BS stories about how various "tensions" would be raising oil prices.
    I've always thought "some day" this financialization of the oil market would end and we might see something approaching fundamentally-driven oil prices. I have no idea if now is that time. My overall theory is that with USA production going gangbusters (because of high prices) and with demand lackluster (again, because of high prices) oil prices should eventually fall. That remains my theory. But whether the next $5 bucks is up or down, I don't think anyone really has a clue. The market is simply too FUBAR.

  • Reply to

    Sell the rumor example ...

    by wgrsh Sep 9, 2014 10:25 AM
    iahphx iahphx Sep 9, 2014 1:31 PM Flag

    Yeah, selling an airline stock because unit revenue is down 1% from the most optimistic forecast isn't very compelling. That's like an average ticket price being $300 instead of $303: it's a rounding error. Indeed, I wouldn't be surprised if the "loss" is due to the TSA recently increasing its screening tax by about -- you guessed it -- $3.

    And, of course, profitability is determined based on revenue minus cost. On the cost front, a 1% decrease in revenue is easily overwhelmed by a $3 decrease in oil prices (or, perhaps more precisely, a 9 cent decrease in jet fuel). We have that this quarter. So the idea that AAL's profitability is materially "down" here is just inaccurate. And that profitability comes with a very low p/e.

  • iahphx iahphx Sep 9, 2014 8:21 AM Flag

    I guess you're trying to stir up fear, but there will be no earning estimates revisions based on this information.

  • iahphx iahphx Sep 9, 2014 8:20 AM Flag

    They do not "suck," but they've guided down the RASM number by 1% -- the same as the other airlines. In the real world, this is a rounding error, but on Wall Street, traders have to trade, right?

    The improvement in fuel costs is way more important than this, but lost in the noise.

    Note that the airline is expecting 10 to 12% margins for the quarter, which is extremely healthy for the airline industry.

    All this said, this is why I cautioned a poster last week not to buy before today's number. When one airline reports "disappointing" news, others tend to follow, and shareholders tend to get repeatedly whacked for the same miniscule change.

  • Reply to

    dumb seller keeps hitting this stock

    by iahphx Sep 5, 2014 2:30 PM
    iahphx iahphx Sep 5, 2014 3:38 PM Flag

    Probably safer to buy after Tuesday's revenue release. It's just too unpredictable; I have no idea. There's obviously huge strength in domestic RASM, with more uncertainty in the int'l revenue situation. Airline stocks tend to sell off if unit revenue is 1% below "expectations -- which, in the real world, is just a rounding error.

  • Seems pretty obvious that there's somebody trying to unload a bunch of AAL stock and is doing it rather foolishly. We keep going up, and then getting slammed, while other airline stocks are performing much better. Only solution is when they're done unloading -- and I don't know how to predict that.

    BTW, AAL will release some unit revenue/traffic information on Tuesday. Hard to predict what it will look like. One interesting theory on the Street is that AAL will do better than DAL because DAL is adding capacity foolishly (like in SEA). But there are a lot of unpredictable potential issues with AAL, too -- most notably at DFW, as LUV will be adding capacity there with the wind down of the Wright Amendment. Too many moving parts to get an easy handle on things. That said, Parker & Co will certainly outperform everyone else over time. They always do, and they have lots of room for improvement as they rationalize AA's business.

  • Reply to

    Terror alert grounds six US flights.....It Begins

    by apsco1 Sep 1, 2014 11:31 PM
    iahphx iahphx Sep 2, 2014 10:42 AM Flag

    This excerpt involves airlines that no longer exist. Because it is from an article published a decade ago.

  • Reply to

    Oil is going to $80............

    by homerunguy2000 Aug 22, 2014 10:20 AM
    iahphx iahphx Aug 22, 2014 1:55 PM Flag

    It's way too risky to bet on, but you could certainly make an argument that "financialization" in the oil market is receding here. I mean, the prices look weaker than they've been the past few years given the "news feed." For years, oil went up on "news" that had nothing to do with supply and demand ("tensions"), and now that happens far less often. I have no idea what happens next. Logic would suggest supply exceeds demand, but logic is very dangerous to bet on in the oil market.

  • Reply to

    Oil is going to $80............

    by homerunguy2000 Aug 22, 2014 10:20 AM
    iahphx iahphx Aug 22, 2014 10:28 AM Flag

    Do you really believe this? Because anyone who's ever tried to make a bet on oil moving on some "fundamental" has looked like an idiot the past dozen years. Read about "financialization" and you may understand why. Oil will do what it's going to do, and any attempt to predict price movements is futile. The good news is that there's a lot of oil out there and high prices make demand tepid, so the airline industry is largely shielded from a price spike.

  • iahphx iahphx Aug 8, 2014 2:18 PM Flag

    OK, so I know that none of my "critics" is going to acknowledge the grey-beard wisdom I dispensed today, but I do hope you've learned something. It's really a good idea to know something about the company you're betting on, or people who do know are likely to be able to take advantage of you (of course, almost a third of this game is luck, so I'm going to lose a good percentage of the time, too).

    You'll need to find another guru next week: I'll be personally increasing the "load factor" this week while on vacation. :)

  • Reply to

    It's Najarian's Turn On FM Now

    by vincent90157 Aug 8, 2014 12:45 PM
    iahphx iahphx Aug 8, 2014 12:52 PM Flag

    Thanks, but those foreign plane crashes have NOTHING to do with AAL's traffic numbers. Zero. Zilch. Nada.

    Now if people perceive foreign travel to be dangerous, there could be a future impact. That seems unlikely; there's certainly nothing so far that would have any impact on AAL's traffic (with the tiny exception that I expect US's one daily flight to TLV to have weak traffic in Q3).

  • iahphx iahphx Aug 8, 2014 11:57 AM Flag

    My ability to call bottoms in this stock frightens me a bit. I'm beginning to wonder if it's like the old days, when words on this board actually matter. I'm skeptical of this, and tend to think it's just coincidence, but I know that I'm going to be executing my trades first before I say anything!

  • Reply to

    AAL load factors fall

    by mongolianswampstopper Aug 8, 2014 11:01 AM
    iahphx iahphx Aug 8, 2014 11:52 AM Flag

    Only know-nothings will agree with you.

    Note the tiny decline in load factor. Tiny declines are very useful to airlines with very high load factors (AAL's recent load factors are WAY above normal) because you want to "reserve" seats on your planes for high paying last-minute biz customers. Basically, you're selling fewer cheapo seats in advance and waiting for those seats to get snapped up at higher fares. As you can see from the numbers, the strategy is working exactly as intended: load factor declined slightly, but unit revenue increases. Give the folks in yield management a slap on the back!

    But, as I said, this is way beyond the knowledge or interest of the mo-mo crowd.

  • Reply to

    AAL load factors fall

    by mongolianswampstopper Aug 8, 2014 11:01 AM
    iahphx iahphx Aug 8, 2014 11:21 AM Flag

    It is always interesting to me how many people put real money into the stock market without understanding what they're investing in. Of course, this sometimes works (rarely in the long term, though) because fundamentals do not always closely correlate with stock price.

    My Airline Investing 101 lecture today will consist of why a declining load factor isn't necessarily bad for an airline. Indeed, it can be good for an airline, as today's AAL announcement actually is. This is because it's not very important how many butts you have in the seats, what's important is what those butts are paying. At the end of the day, you add up all the money collected and divide by the seat count: that (simplified) is your unit revenue. If the unit revenue is going up that's good. This often happens because when you jack up airfares (as the industry has been doing), fewer people travel, but the ones who do pay significantly more. So there is nothing wrong with a "falling load factor," as long as unit revenue is increasing.

    Now back to the normal silliness.

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