// durability of its earnings //
If you believe Parker when he says the company can make more than its cost of capital over the business cycle, then the earnings become "durable" ... let's assume it's believable.
Any time the inverse of the PE is greater than the cost of capital, buying back shares will always lead to a higher EPS (over the business cycle) than paying off debt and reducing interest expenses. The big assumption is making more than the cost of capital over the business cycle.
Also, all companies operate under capital rationing so there are a lot of moving parts and assumptions that go into these decisions ... that why they get paid the big bucks.
Well said, John.
Looking at things on a given day, month, or year can sometimes seem good, and sometimes seem bad. What matters is how things look over the business cycle. Didn't a financial sage once say, "We'll know in the fullness of time."
Unc ... I'm noticing some out performance from the DJT. The transports led the market downturn by 3-4 months last year, and now they seem to be picking up. It rallies more and doesn't pull back as much recently. It's early, but bears watching (no pun intended)
Unc ... yes, a leading indicator of the economy. The post was meant in that light ... though if the economy is ok, airlines will be ok. Just have to watch it.
Also, I realize that China has its internal debt problems in back areas of the economy, but that aside, I get the feeling the market is trying to put out a the early 70s scare of free floating currencies. Back then when Bretton Woods free floated Japan's and European currencies, those economies were a greater percentage of the world economy at the time than China is today. Obviously, China is large, but it won't be the same as the impact in the 70s. So, there will probably be some bumps, but the economy will keep chugging along.
And back then, the dollar weaken tremendously, and oil surged ... that's not going on. Low oil and a chugging economy is good for airlines.
// ... we show Rig Counts reducing again. Real data shows that we're still producing over 9.2m bpd, and storage at Cushing and MidWest all at all-time high level. //
I still recall the article I read about a year ago that said 380 rigs (multi-well rigs) do 80% (or was it 90%?) of the drilling. If that is at all true, the percentage of rigs going off should only be applied to the 20% ... maybe ... I'm certainly not in the oil business, but that article does raise the question.
Unc, We really killed Japan by free floating .... really? It was artificially pegged ... it was a time to let things work out. Japan did well after the free float.
I still haven't worked out in my mind what will happen to the yuan ... I know some big boys have placed bets ... I'm not sure I see it that clearly yet.
// Japanese almost bought the "whole" USA in the 80s? //
Unc ... you probably read the book that came out in the early 90s, I believe. It was titled, "What the Japanese don't own in America". When you open the book, the pages are blank.
I have a lurking suspicion that the yuan could strengthen after some gyrations. But isn't Soros and Bass betting on a weakening? Have to assume they did their homework. Maybe the weakening idea has to do with their bad debts they will have to fix. China certainly has trade surpluses with the EU and us, but know too that trade is only part of the equation. I'll have to keep thinking on that one.
// It's not like here that you not only print and you have to tell people how much you print. //
Unc ... maybe what happens in China, may not stay there. So, even without saying anything, it might become obvious. Anyway, still thinking about it. It would be good if they can be more transparent so everyone isn't guessing.
// Do they really have Right Planes to get there? //
If they go the long way around the earth, then no. But that is true for everyone.
// ... did not announce the Q2 dividend...not sure that there will be one. //
When did AAL announce the Q1 dividend? Won't Q2 be announced with the Q1 CC for payment in May?
A few days ago there was an article that mentioned there were 5 fare increases so far in 2016, and 3 stuck. The article mentioned it was an average $22/ticket round trip. If true, I suppose it will be a few months before the impact given the lag in bookings. Does anyone know the real story about these supposed fare increases?
Unc ... I believe the article talked about a $22 increase on a ticket in the $450 range ... 5% is big ... and so is half that amount. And thanks ... read yours too.
Regardless, it's good to see the airlines starting to stabilize and maybe moving revenue in the right direction.
I didn't put a pencil to this, but just looking at some charts and graphs, it looks like oil would have to average close to $57/bbl for Q2-4 2016 for oil to average what it did in 2015 ... I could be off since I normally use the back of an envelope. So, it seems tailwinds are gathering.
Has anyone ever heard that about 380 rigs do 80% of the drilling? I feel sure I read that about a year ago. It talked about the multi-well rigs that can do 4-18 wells in a single spot and then crawl to another spot. That's instead of the older 1 rig/1 well, dismantle, move, setup again (costly and time consuming). Anyway, just haven't heard any discussion here, or on the news when reporting "rig" count, as if all rigs were equal.
// Is this done by the companies? //
Most, if not all, have planes they can park, and numerous other ways to reduce capacity. And labor contracts now, as opposed to the "old" days, allow for labor savings too without onerous penalties.
// Somebody took it seriously after-market beating Uncle by a penny to $42.83. //
Maybe someone turned on the up escalator.
// but the earlier the better //
The pundits have been talking about "value" over "growth" recently. HA went up more than 10 bucks in a flash. Things could change soon.