// You'e not listening what I've been saying ... //
Unc, I wasn't trying to counter anything you've been saying, (and I would always listen to you, if I could hear you). I do read your posts (always too). Anyway, the market in general is pausing, doing a pullback, whatever ... hopefully in a number of days, or even 1-2 weeks (whatever time the market needs) this will play out and the market can get moving again.
// Parker will defend ... //
I know many see that $44+ area as support, and it could be, but this market and a ton of stocks have unfilled gaps, including AAL. And, at any point, it can be very normal for stocks to drop to their 20 dma, or 50 dma. And a 3-5%(+/- a few) can happen at anytime especially after a 4-5 week advance. So ...
There is a lot of focus on long term debt, and it is certainly good to be lower. However, compare AAL's net tangible assets to DAL's (after 8 years vs 2 years) ... DAL should have paid done debt, since it seemed they were financing their $8 billion more in goodwill (and more than $8 billion counting other intangibles). Both companies have about the same long term liabilities, granted DAL is less. But AAL with newer airplanes/equipment and DAL with goodwill and other intangibles ... Who has better assets?
AAL will get around to paying down debt ... I'll leave it as their call instead of getting bunched up over one item of the balance sheet without a discussion of the overall balance sheet.
It was DAL's Q2 CC where I heard it, so it's been out there.
... and regards the FX, the dollar may get stronger ... it all depends.
In the DAL CC, the analyst asked the question using PRASM, and I suppose Anderson could have answered in RASM (about flat in Q1) ... I wasn't very precise, Unc, but I do fully understand the difference.
Yes, DAL previously forecasted going to flat PRASM going into Q1. And for the legacies, all will have the dollar/fuel surcharge negative part to PRASM fall off the yoy comp. That doesn't necessarily mean an improvement, but hopefully that aspect is stabilizing.
With fuel and PRASMs changing so rapidly over the last year, it was hard to get a feel for where long term margins may end up. I think there will be more confidence in what margins the industry can make as fuel and PRASMs finish their adjustments over the last year. If things stabilize ... margins look pretty good. The industry can tweak things from there.
// You kind of wonder who was SELLING //
I've wondered if there weren't some hedge funds that were in some trouble over other things that dropped ... e.g. energy, other commodities, etc.. And besides airlines did go up quite a lot ... not to say there wasn't more room, but they did have profits in the airlines. But I'm just guessing.
If carried interest get attacked, I could see some further selling of long term assets ... of course that would be out of selfishness, not a fiduciary action ... they would never do that, or would they ... ?
cav ... we can disagree ... I say it was probably part of both ... buybacks and other metrics. Other airlines moved metrics to the higher end of range as AAL did with margins, and AAL had buybacks too. All airlines moved up strongly today ... buybacks and no buybacks.
I doubt a change in guidance for 2016 as well, so we agree. But I sense things are stabilizing. Besides, I think AAL was just being conservative in their 2H2016 call ... and nothing says they can't be close to flat in 1H2016 as some of the other carriers are talking about. Actually, I think it was Keay that said they should tone down their optimism ... and they did :) A week or so later after Keay's statement, AAL threw out the 2H2016 statement during a webcast.
// Shares outstanding in Q3 were 672 million //
Guidance in the SEC filing today was that 681 million shares would be used for Q3 (fully diluted, which they use)
663 will be used for Q4 (until further guidance) and 692 will be used for full year 2015 ... but obviously less shares going into 2016.
// Large buybacks likely why pps up so much ... //
All airlines were up, even those not doing buybacks, though some others are doing buybacks. And AAL's buybacks are a factor, but it is not all one thing and not any of the other things. I feel there seems to be some stability showing up in the metrics that were considered unknowns a number of months ago. Such as, how far will prasm drop? How much capacity will be added? What kind of margins are we looking at? Where will fuel go? Where will the economy go? More airlines are reporting those metrics as stabilizing (at decent levels).
Have a good weekend.
// The stock price sure does move around a lot more than the fundamentals. //
Sure does. For now we are in a range until we're not. (AAL, as well as many other airlines, left gaps this morning (for what it is worth).) Those taking it up, can take it down. Who knows from day to day? Still, this ends the week on a high note.
// I understand that revenues will be down slightly and salaries are up, but still doesn’t seem like enough to justify the low estimate for next quarter… //
That pretty much is the bulk of the explanation. If you put a pencil to it, you'll adjust your qualitative feelings.
// The Econ is not healthy if the price is below that range //
Some say that, but that is just an unsupported cliché ... (I assume you mean that if oil (commodities) are low that indicates softness in the economy.) Commodity prices have been manipulated for so long the talking shirts have no idea what the proper price for commodities should be... and many are still spewing the kool aid explanations used during the "manipulation" of the last decade. Though a weak economy would cause weaker commodity prices if commodities were properly priced in the first place, I wouldn't say changing commodity prices (at this point) mean anything about the economy.
// barring a war with Russia //
Let see where the war machines will come from ... (and I realize you weren't saying there will be a war)
GDP ... about $2.5 trillion
140 million people
US and EU has:
GDP ... about $35 trillion
800 million people
But, there is probably a Putin put in the market.
Well, at least the gap at 38.77 is covered from yesterday. We'll see where things go.
As far as oil goes ... gee whiz, it's down ... if you want to be conservative, figure earnings going forward at $60 Brent. Those earnings are still good enough for a surprisingly higher stock price. When the market recognizes that is a guess.
Shale will come back at some price point. China has an estimated 500,000 bbl/day going to storage which is filling fast (subtract that from demand). Other countries have to pump to meet budgets, or cut and give up market share to shale.
cav ... definitely agree that it is safe to say that AAL may trail DAL going to flat prasm, but improvement may be the same. On a side note, I find it amusing that analysts/articles say they like DAL better since they are further along with merger integration ... What? DAL has been merged for over 5 years (When did DAL do their res system, 2010?)? When do they become one airline?
Eventually, margins may take on more meaning, especially if the industry can show some indications of prasm stability.