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.
Domestically, things are ok. I would think the legacies have near the situation with LUV as far as domestic prasm goes. I thought LUV's prasm was down about 3.5%. And the other half of the prasm problem for legacies is with the global demand, and dollar, fuel surcharges. The dollar and fuel surcharges will eventually lap themselves yoy. Things just have to play out.
There seems to be a tone change with the pundits not believing the industry has changed and are reverting to old ways. That is an easy sell to investors.
Market pundits in all sectors have been jumpy lately ... Armageddon one day, not Armageddon the next ...
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.
// BTW, I find it interesting how little discussion of cash taxes there is. //
iah ... I think everyone understands that situation, even before they reversed the NOL's and had to report the non-cash taxes.
It's a "show me" situation ... I don't know what it will take. If oil averages what it did last year, EPS will be lower than current estimates ($4.xx) ... don't know what share count the market will use in their thinking (GAAP share count or what?). That's still pretty good for a $30 stock. Anyway, for that to happen, oil needs to get up into the high 50s very soon and stay there for the rest of the year. Near the $60/bbl level ... that's pumping territory.
Just read cav's comment about Kirby and margins ... if those margins are achieved, nothing to worry about.
// LUV's PRASM was down 3.63%; but RSAM was one penny Up from 13.67c to 13.68c //
One's a YOY number and one is a nominal change. And I was never implying LUV isn't doing well, just that domestically operations aren't that different.
LUV had a good year hedging in 2008 ... lost out every year since.
There are three variables in the PE. Earnings, growth of earnings and the interest rate to discount those earnings. If you assume no growth in earnings, there is just earnings and the interest rate. A no earnings growth PE is (let's just grab a figure), let's say, 15. If a company makes $2.70/share, the stock should be fairly valued at about $40 (15 times $2.70). Will AAL average $2.70 over the business cycle?
(I realize there is a time value of earnings that would come into play the more variable the earnings are even if they "average" $2.70 ... )
Look at DAL ... low debt, higher dividend, and they are only 12-13% higher per share. But their earnings per share are 9% higher. So, does lower debt and higher dividend add anymore than 3-4% to share price?
// ... at 2015 4q call he said 1q prasm would be the "trough", ... //
cav, I took the term "trough" as being nominal and not YOY. I didn't necessarily take Kirby's statement as saying much, since Q1 nominal prasm could very well be the lowest for the year, but still have other quarters show YOY declines. I didn't check out the numbers to see if that was right way to look at it.
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.
// 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.
Definitely volatile price movements around earnings and dividend time. Even some people isolating the variables to play the game ... even more so than in the past.
The legacies have all indicated they would manage capacity.
I don't know how many listened to LUV's Q1 webcast, but they indicated only 5-6% increase this year (I think that was mostly out of Houston), and then to average only 2% growth over the 3 years ending in 2018 ... seems to me that means essentially no growth in 2017-2018.
(This pilot shortage needs some discussion ... seems more and more articles about it are popping up.)
// LUV is same as everyone else with declining PRASM //
Guess I didn't hear their Q2 prasm forcast correctly. Thought they said it would be in the flat range.
// 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.
I have to add something else the market is not considering. Just as the airlines will adjust capacity/fares for (fuel) costs, they will also do that economic conditions. What will happen in the next "recession"? The industry will manage to make margins, not lose money. It may take a few quarters to adjust, but they will adjust.
Also, in the past, the change going into a recession went from a 4-5% gdp to negative. Now the fall will be from a 1.5-2.0% gdp ... makes for an easier adjustment. I get the feeling the market is assuming the airline industry will get "hammered" in the next downturn ... that may be a mistake to think that.
If we ever get back to a 4-5% growth rate in gdp, revenue will grow and margins will be made on that growth instead of on a 1.5-2.0% growth rate.