// That's the diluted share count guided. //
I'll go back and look, but is it the guidance 8-K at the end of January that you are referencing?
// 698m shares in the 8-K //
I'll bet the difference between that and the diluted share count are the shares held for the disputed claims.
// you just don't want to talk about it, trust me. //
Well, the potential write-off is known and out there. If the market wants to be surprised by it, it'll be surprised. If not, it won't be surprised.
bears ... ok, thanks ... was just wondering if I missed some news out there today.
Yes, the prasm comps YOY seemed explained to me in the CC, but spooked others I guess.
A small percent due to currency, residual VZ until June, and added seats that couldn't be presold. But having said that, when airlines want to pullback, they pullback, and use anything as an excuse.
bears ... they said something today about VZ? Just wondering, though agree with what you said.
And I think the biggest VZ hit has past being in Q3 & Q4 of last year with a smaller hit in the beginning of this year and no YOY impact after June.
// Not surprised it's moving in tandem with oil -- //
It'll be interesting to see how oil reacts as the dollar strengthens further on this next leg.
unc ... yes, aware of the other half of stress test coming.
The positions I'm building is for overtime ... and I started on pullbacks in the sector over the last few months ... definitely not today. And the sector may stutter until the realization of the start of rate hikes.
Did you hear anyone saying they liked financials over the last few months? ... especially after the recent strength in the long end and talk of putting off the rate hike. Some stocks dipped and stabilized ... thought I'd take a shot ... long term part of portfolio.
Not changing view on airlines.
unc ... I've been building a position ... but going more with regional than money center. See how it turns out over the next couple of years.
markus ... I think AAL cut revenue seats and added seats that still need to develop revenue. You're seeing that, and worrying. But they will develop those added, no cost seats, and that will balance things out by the end of the year ... maybe even provide a positive impact to profits.
// fare prices are down about 3% on average //
PRASM is down 3%, not fares.
Let's look at an imaginary airline with 11 airplanes each flying one route/day, 10 seats at a fare of $100. Stay with me on this.
The airline cuts capacity by dropping one route and loses $1000 in revenue, but also saves $900 in costs. So it loses $100.
The airline adds a seat to the other aircraft so now it has the same ASMs (PRASM is down (fares are still the same)), and this extra seat has no cost. If it fill just one of those extra seats it clears $100 and profits don't change YOY.
Pretty simplistic, but think this is what AAL is saying about what's going on for that component of the PRASM decrease. Anyway, compared to last year (ex-fuel), it is labor costs that will cause the profits to be different.
markus ... Let say fuel is the same as last year ... what percent of this years miss will be due to labor expense and what will be due to the revenue you worry about?
markus, you didn't comprehend what I said. You said they won't duplicate last year, and I agreed, but (ex-fuel) meaning I understood that eps would be higher due to fuel, and the main reason they wouldn't beat last year (ex-fuel) is the labor expense. That's the biggy.
And given that you didn't follow me in that, you probably didn't understand what I meant about costs.
// i disagree that we can't hit results due to labor expense, as fuel more than covers it at this time //
Gee whiz, markus ... I know I don't articulate things as well as they should be, but I did say, "Generally, true (ex-fuel). "
// anyone expecting last years results will be disappointed //
Generally, true (ex-fuel). And that is because of the labor expense bump, but synergies will get that back over time. That said, the revenue change you're worried about was "self-imposed". But if you look at their capacity cuts impacting revenue, it was the type that also cut costs. The extra seats that brought capacity back up, are essentially free of costs. Also, I think, as the year goes on, things will improve in the areas you are concerned about, but take into account the "costs" involved with the capacity movements.
// nothing makes sense anymore //
The problem may be that you are trying to predict daily price movements ...
markus ... get a grip ... you're going to be a father soon. Family needs youl
// 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)