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US Airways Group, Inc. Message Board

wgrsh 767 posts  |  Last Activity: Sep 18, 2014 4:23 PM Member since: May 11, 2005
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  • Reply to

    Cheap Jet Fuel

    by melodias23 Sep 18, 2014 12:42 PM
    wgrsh wgrsh Sep 18, 2014 4:23 PM Flag

    Over the past 3 years the lows for heating oil were defined by $2.78 (2011 and 2013) and $2.70 (2012) ... below $2.70 we get into territory not seen since heating oil jumped from the 2010 range of $1.90-2.30.

  • Reply to

    Is it possible to understand oil pricing here?

    by iahphx Sep 18, 2014 2:54 PM
    wgrsh wgrsh Sep 18, 2014 3:53 PM Flag

    I can imagine some currency manipulation. But a stronger dollar will cheapen oil for "us".

  • Reply to

    Cheap Jet Fuel

    by melodias23 Sep 18, 2014 12:42 PM
    wgrsh wgrsh Sep 18, 2014 3:37 PM Flag

    You're not missing something ... so far the market is missing it, or doesn't believe it ... "it" being that oil will stay down.

  • Reply to

    Is it possible to understand oil pricing here?

    by iahphx Sep 18, 2014 2:54 PM
    wgrsh wgrsh Sep 18, 2014 3:18 PM Flag

    And I can add that new rules for commodity derivative speculation, and the supply and demand picture for oil may also contribute to the downward pressure that the strengthening dollar started ... we'll see.

    But high oil did have a positive ... it forced the airline industry to learn capacity discipline ... I hope they never forget that if oil greases the path to profits.

  • Reply to

    Is it possible to understand oil pricing here?

    by iahphx Sep 18, 2014 2:54 PM
    wgrsh wgrsh Sep 18, 2014 3:08 PM Flag

    Gee whiz iahphx ... the strengthening dollar and its impact has been talked about for well over a month. It's impacting many commodities.

    The weakening of the dollar in the 1970s was a major part of oil going up then, as was the weakening in the mid 2000s ... this is reversing some of that.

  • Reply to

    Cheap Jet Fuel

    by melodias23 Sep 18, 2014 12:42 PM
    wgrsh wgrsh Sep 18, 2014 2:01 PM Flag

    About 1.1 billion gallons/quarter ... from memory.

  • Reply to

    Cheap Jet Fuel

    by melodias23 Sep 18, 2014 12:42 PM
    wgrsh wgrsh Sep 18, 2014 1:50 PM Flag

    Jet fuel falling if it holds ... and the dollar strengthening is not short term ... is 10% off an annual $13 billion fuel bill. That's a lot of lipstick.

  • Reply to

    This should take us to $11

    by wgrsh Sep 12, 2014 10:18 AM
    wgrsh wgrsh Sep 17, 2014 2:21 PM Flag

    It had a stutter step after breaking the reverse head and shoulders a week ago, but on its way. Fundamentals are getting better and technically the H&S should push us to $11 ... and we'll see what we have when we get there. Long term this is all good.

  • Reply to

    Oil up $2.20 (2.20%)

    by getintoh20 Sep 16, 2014 2:54 PM
    wgrsh wgrsh Sep 16, 2014 3:55 PM Flag

    Oil products are priced off of Brent, not WTI. Brent is up a smaller percentage, and Brent just rolled to the November contract ... this price action happens every month when the contracts roll. Besides oil isn't jet fuel which is probably up a much smaller percentage.

    And of course nothing goes straight down, or up ... oil has had a substantial drop.

  • Reply to

    AAL is not priced for perfection

    by iahphx Sep 15, 2014 2:28 PM
    wgrsh wgrsh Sep 15, 2014 2:41 PM Flag

    Weird things always happen ... probably says it all. What ever is going on is not confined to the airline stocks ... plenty of weird stock price movements. It's options week, and sometimes the Monday before is weird (for whatever reason) ... Alibaba too. The bulk of the trades could even be HFT ... just a funny, or as you say, a weird day.

  • Reply to

    This action is stupid

    by iahphx Sep 12, 2014 1:37 PM
    wgrsh wgrsh Sep 12, 2014 4:35 PM Flag

    I'll give it a thumbs up too ... and yours.

  • Reply to

    The Barrons/Wolfe Research piece is very good

    by iahphx Sep 12, 2014 2:18 PM
    wgrsh wgrsh Sep 12, 2014 3:34 PM Flag

    I agree ... Venezuela and Wright are just things that have to be managed through. This isn't the first time Parker had to compete with LUV. And the Wright amendment has been watered down over the years. A 10% drop in fuel is over $1.2 billion ... that can overcome a lot of problems too. Plus a better economy is never bad for the airlines.

  • Reply to

    The Barrons/Wolfe Research piece is very good

    by iahphx Sep 12, 2014 2:18 PM
    wgrsh wgrsh Sep 12, 2014 3:10 PM Flag

    The Wright amendment has been out there. A number of weeks ago Kirby made a comment about it on TV ... generally what Keay said. And I agree with Keay about not getting credit for 2015 estimates yet (2015 estimates right now look like this year's eps plus $900 billion in synergies). I can throw in also AAL is not getting credit for the potentially lower fuel costs if the dollar keeps its strength ... which is looking more likely that it is not going to be temporary.

    But the market is looking at the glass half empty with Venezuela and the Wright Amendment. You have to have faith that Parker can compete.

    I've wondered about currency risk from the stronger dollar, and don't know ... so worry. But DAL made the comment they have a natural hedge with their partners ... not sure if AAL can say the same. Currency risk is a one time deal once currencies stabilize.

  • wgrsh wgrsh Sep 12, 2014 2:38 PM Flag

    I agree, lower commodities should help the consumer and that should help the economy in a non inflationary way. Long term rates should just ease up without an inflationary premium steepening the yield curve giving the Fed some wiggle room. What a scenario!

    And I like the guy from the CME who made the comment that if WTI broke $90, it could be a quick trip to $75-80 ... but who knows ... we'll find out.

  • Got a little reverse head and shoulders ... should take us to $11 ... and see how things look then. Fundamentals are improving.

  • Reply to

    oil may go under

    by fredd008 Sep 10, 2014 9:06 PM
    wgrsh wgrsh Sep 11, 2014 11:50 AM Flag

    I'll take $70 oil ... no problem with that.

    One caveat that I only hear once in a while relating to the profitable level of oil is that production is very energy intensive, so as the price of oil drops the breakeven level drops along with it. If that "wonderful" day ever comes when oil breaks $70, we'll find out who wants to produce at less than that.

    We'll all be happy with just a decrease of just 10% off the costs used in the eps estimates that are out there.

    Second caveat ... what iahphx says is true ... who knows what oil will do next? Oil has done this in the past and each time it was a head fake ... so, until the world resolves the "financialization" issues ... who knows? This time, there is something going on with "all" commodities though.

  • Reply to

    Oil ... big story

    by wgrsh Sep 10, 2014 11:05 AM
    wgrsh wgrsh Sep 10, 2014 7:33 PM Flag

    airline ... yup, I know ... jet fuel is a short step away from type II heating oil. I was just hyping off a 3 year chart of gasoline and heating oil looking for breakdowns ... just amazing the way these commodities are dropping. Though with oil and oil products dropping ... jet fuel should generally follow, and it looks like they are dropping enough to make seasonal variations just noise. Amazing ... a 10% drop is about a $1.3 billion/year cost savings for AAL ... I don't think that is factored into 2015 earnings yet. This is not just an oil story as far as commodities go.

    Might even see some benefit in Q4 ... and Venezuela will be there so AAL could use some help (that might be the last quarter of Venezuela comparison problems ... though there will still be things to resolve.

  • Reply to

    Oil ... big story

    by wgrsh Sep 10, 2014 11:05 AM
    wgrsh wgrsh Sep 10, 2014 11:55 AM Flag

    A stronger dollar moves oil down. A weakening dollar such as in the 1970s and mid 2000s pushes oil up.

    And it will be good to have the geo-political risk out of oil too.

    Re: the Chinese ... back in June the Chinese started to looked into commodity fraud over the last 10 years. Fake supply and demand to use as collateral for bank loans done with derivative swaps. Wow ... the world was using a lot of commodities ... or were they? These derivative swaps (unregulated in 2000) screwed things up. So far the Chinese found this fraud with gold, but where there is one cockroach ... you know the saying.

    I don't know who in the world has a true picture of the world with all this garbage, but I do know lower oil is good for airlines ... best for unhedged airlines like AAL.

  • wgrsh wgrsh Sep 10, 2014 11:30 AM Flag

    And AAL sold off all their hedges at $112 oil ... got to love it.

  • AAL uses 4.3 billion gallons of jet fuel. The last time gasoline was this low, heating oil was at $2.70. Many are calling for another 10% coming off oil. Below $2.70 there is a lot of air ... who knows where it will go. 2015 could very well have jet fuel off 20 cents ... if not more than what 2015 eps estimates are using. That is an extra $860 million in cost savings to the bottom-line. AAL already is guiding for flat non-fuel CASM in 2015. Things look good.

    I don't know when the market will move the stock, but this is hugely material.

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