// SO again, is anyone concerned about the overall drop in traffic?, .. //
markus ... Short answer, no. AAL had a two edged sword. They cut capacity, but made it up with the extra seats. So, in the current quarter revenues have "both" of those impacts. I would think AAL's yield is holding up just as well as other carriers.
All airlines are in a pullback, not just AAL. I think the real reason for the malaise is not operational, but the question of how soon oil rebounds. Nobody knows, but people aren't going to accept the current oil situation as normal unless it becomes normal. So, a short term benefit is good, but not a huge bump to valuations.
I'm sure if oil starts rising, it will stop at a level that is still very profitable for the airlines, but that remains to be seen and many don't believe that yet. As far as I'm concerned, if Brent stays at $80 or below, things are good.
Well ... maybe that was just because there was general stability in prices, and you saw a correlation but the correlation wasn't the causative correlation. Just do a search and you'll find numerous article dating back many years that state oil products are based off of Brent.
This happens every year ... certainly not worse than last year. Didn't DAL say the other day that one of the reasons for their prasm weakness was fewer cancellations than last year? I know AAL said during the CC that was a component of their prasm projection, among other things (extra seats, currency, etc)
// would have the affect you think it would on refined products //
I agree, Brent would have to follow the drop in WTI to change that. We'd just export the jet fuel to other places in the world and get a higher price ... that's why jet fuel is essentially tied to movements of Brent.
unc ... thanks ... I vaguely remember the Saudis switching ... thanks. Do you recall the reason they ditched WTI? Did it have anything to do with the persistently weak dollar, or something else?
unc, I think the majority of the talking shirts think oil will rebound in another year, and the current drop, (and whatever it does in the short term ... even going to twenty), is just a relatively short term aberration that will play out and then oil will go up.
Of course, I understand what is discussed on the board.
If I'm not mistaken, Exxon sold off some of its oil assets a few years ago ... and I can add at probably top dollar ... pretty smart. They're probably on the hunt to get some back. But that said, it's good to hear someone say oil may sit in this area for longer than what most think. Using the current level oil AAL gets 80% of that $5 billion.
Also, if the US is going to pump, pump, pump at $75 ... what is going to allow oil to go higher? And then there is the strong dollar impacting the situation. At $75, AAL gets half of the $5 billion. And by that time the company should be generating additional income from the synergies. It's hard to make this story look bad.
I can understand the majority of people feeling that oil has to go up, and the current situation is an aberration ... not having it go up disrupts their view of the world ... that's tough to overcome.
// AAL better keeps its guidance Monday //
Kirby said this week that he felt pretty safe saying they still see the down 2-4% prasm.
And with all the talk about figuring what fuel will be, and what to use to figure it out, AAL is probably the best source. When fuel wasn't volatile they usually hit it, and now with the volatility, they update guidance that has changed from previous guidance. If they feel fuel will be outside its previous guidance, they'll update.
Anybody here recall the reason that Brent and WTI flipped a number of years ago? Brent was always less than WTI ... and the crack spread was seemingly less as well.
// A crashing WTI price helps 80% of the economy //
It depends on whether these benefits are just temporary or longer term. Many feel consumers won't spend if these windfalls are perceived to be short term ... rather save/pay off debt. Even Moody's came out today saying airlines will get a temporary windfall with fuel, and capacity discipline. (Funny that capacity discipline has been in place since 2012 and started a few years before that ... temporary?)
Lots of different opinions out there when things change fast ... we'll see. At worst, the currency change will provide some long term savings with fuel over previous years.
Besides just reiterating what was said in CC about the added seats, Kirby also emphasized (mentioned as well in CC) that the seats added weren't available in the inventory to be sold until after the fact. So, when they came back online, it almost ensured some empty seats, which he said would be corrected over time.
Only parts of the world to worry about are 4 countries in South America ... others look okay. Growing in Asia, strength in Europe, domestic strength.
Dallas situation was what they expected and the 50 other markets they didn't expect problems from ... those problems are dissipating and resolving.
So, AAL, and airlines, are just trading here until the market changes sentiment.
Thanks again Fly, so if the company had to cut back instead of flying 82-85 avg, they could lower that to, say 70 hours and not layoff?
Now that I have a pilot here ... what are the minimum number of hour per month and the max hours per month (even with overtime). Just want to know what flexibility the company has.
In the Q1 guidance, the company gave 698 basic shares outstanding and 719 diluted shares. I don't know how to use that with the numbers you posted.
FOB (freight on board) is either FOB shipping point, or FOB destination, and by the time it gets to destination, it has some transportation costs added to it (by someone), where ever the destination is ... probably not the last cost to be added on before it is used by the airline
AAL usually does a good job estimating fuel costs and when they state it, it is always conditional on the forward curve as of a certain date, so this change in fuel costs as the quarter unfolds, shouldn't be a surprise to anyone as spot fuel, oil, etc. is changing. The company has been consistent in their guidance method over the years.
Their later fuel guidance is certainly closer than their first guidance. And if there is a lag, and that lag is 3 weeks, then at the end of this week figure the average for the quarter.